SPECTATOR
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TROUBLESOME TORIES
Once again, a brown hush puppy has been firmly lodged in the Tory party's col- lective mouth. Only days ago, the shadow Cabinet set out its line on the single curren- cy. It is its intention to fight the next elec- tion on a platform of opposition to EMU. Gordon Brown, by contrast, has made it clear that Labour is likely to go into the next election advocating EMU, at least on Principle. The battle lines appeared to be drawn.
Until, that is, the former chancellor Ken- neth Clarke called for a cross-party coali- tion in support of a single currency. Mr Clarke is not the only pro-European to be unhappy about the new Tory position on EMU, but he is the most significant. Other troublesome Tories, like Peter Temple- Morris, are publicly agonising over whether to defect to Labour.
Mr Hague should permit Mr Temple- Morris to leave the party if he cannot sup- Port, at least in broad terms, the position agreed by the shadow Cabinet. The prob- lem posed by such rebels must be dealt with now. The Conservatives cannot afford five years of being held to ransom by a tiny minority. Mr Hague would gain consider- able authority by making clear that he is harpy,- to lose a few Euro-defectors.
But Mr Clarke presents a different kind Of problem. He is a big politician. The pub- lic like him. So do many in the Conserva- tive party; he nearly became their leader. He can plausibly depict himself as the architect when chancellor in the last gov- ernment, of the prosperity that Britain now enJoYs. His departure would deprive the Tories of an asset. But there is no reason for him to leave. Mr Clarke's position is similar to that held by several members of the shadow Cabinet. He believes that Britain should not enter a single currency until the British and Conti- nental business cycles come together. He Would not take Britain into a weak euro, if Political pressure from Spain and Italy undermines the authority of the European Central Bank. He is far from certain that he single currency will actually work in Practice.
, Unfortunately, the former chancellor is P°Ted. After 18 years as a minister, the backbenches are a dull spot. He cannot resist the opportunity to tweak his party leader's political tail. He miscalculates. The political terms of trade have changed since Blackpool. The Conservative party had a long look at their new young leader. They liked what they saw, and even more what they heard. Hague's conference speech was a success, and many now believe that he has what it takes to end Mr Blair's honeymoon.
Conservatives are also prepared to sup- port their leader's line on monetary union. There are still divisions. Some argue that joining a single currency, whatever the cir- cumstances, involves an unacceptable sur- render of sovereignty. This concern is understandable. Handing over the levers of monetary and fiscal policy to an unelected European body would undermine the accountability of parliament to the elec- torate. Gordon Brown's determined dis- missal of this concern in his statement this week underlines once again that Labour cannot be trusted to defend the British sys- tem of government.
But there is room in the shadow Cabinet, and in the wider Conservative party, for those whose only objection to monetary union is economic; who do not reject join- ing the single currency on principle, but think that Britain must wait until it is in its economic interests to do so. This is the camp to which Ken Clarke belongs. So he should, without compromise, be able to stick with his leader's line. If he cannot exercise this simple discipline, one day the party's patience will be exhausted. Despite his many and varied charms, the well of for- giveness could eventually run dry.
It was a black week for the world's stock markets when Wall Street recovered. For a moment, it looked as though the 'irrational exuberance' (Mr Greenspan's phrase) that has dogged the exchanges for months had finally ended. Sadly, the spiral of rising prices and surging optimism seems about to resume.
Professionals know that, on almost any objective measure, shares — on Wall Street in particular, and to a lesser extent in Lon- don — are wildly overvalued. But ordinary investors have come to view stock markets as a risk-free money machine, into which they put their money and then sit back and watch it grow. One day soon, the market will begin to fall in earnest. And the higher it goes now, the further it will drop when the long-awaited correction finally hap- pens.
There will be those who ask why we should care if a few greedy people lose their shirts. But a market crash would destroy the faith of ordinary investors in shares, setting back the creation of a share- holder democracy in Britain. It would hit consumer confidence in the real economy. And it would undermine the real role of the markets, as an efficient mechanism to sup- ply the best companies with the capital they need for growth.
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