Three hundred and ninety-five tonnes of gold were sold from the reserves between July 1999 and March 2002. The proceeds were in three tranches of $1.1 billion, $1.3 billion and $1.1—$3.5 billion in total. The purpose was a restructuring of the foreign currency and gold reserves aimed at achieving a better balanced portfolio—something that other countries are also achieving. The sterling value of the gold sold has risen to $4.2 billion, but a one-off reduction in risk of approximately 30 per cent. was achieved, as measured by value at risk, and the independent National Audit Office concluded that the sale had achieved value for money.
As the Chancellor obviously has great difficulty in admitting the scale of this fiasco, will he confirm the Treasury's own figure that the average price obtained during those gold sales was $275 an ounce, whereas the price today is $642 an ounce? That amounts to a total loss to the Treasury of more than $4.5 billion. As the Chancellor was warned at the time about the recklessness of those sales, does he agree that the depths of incompetence reached in that fiasco rule him out of being considered for further office?
What the right hon. Gentleman fails to tell us is that we restructured the portfolio, and what causes him most grief is the fact that one of the items that we bought was euros, which have increased in value since the purchase, at greater benefit to the Treasury. I am not going to take any lectures from the right hon. Gentleman, who was a member—in fact, for a time he was Parliamentary Private Secretary to Lord Lamont—of the Government who were in office when £28 billion of our reserves were sold on Black Wednesday, a total of £40 billion of reserves were sold after that, and £3.3 billion was lost to the United Kingdom. That was the biggest fiasco in history, and the right hon. Gentleman should be ashamed of himself.
Will my right hon. Friend confirm that achieving the shrewd and successful management of the economy over the past 10 years has required more than looking at three years of gold reserve prices? Will he further confirm that he has absolutely no intention of introducing a third fiscal rule that will wipe £22 billion from this country's public spending?
The most damaging thing we could do in terms of the stability of the economy would be to adopt a fiscal rule that would require us to cut public expenditure by £18 billion tomorrow. Conservative Members would have to explain to their constituents about the schools and hospitals that they were closing and the nurses and teachers whom they were laying off. We will continue with our prudent management of the economy, and that includes restructuring the reserves of the economy in such a way that we are not dependent on one volatile item.
In his last months as Chancellor, will the right hon. Gentleman have the frankness to apologise to the British people for selling, despite my warnings at the time, almost half of our gold reserves at the lowest gold price for 25 years, and just before there was a sustained rise? I warn him that I intend to do my best to haunt him throughout his premiership by repeatedly reminding him of that folly.
I look forward to continuing interventions from the hon. Gentleman while I hold the position of Chancellor. Almost every other country has done exactly what we have been doing to restructure and rebalance our reserves. It is the right thing to do; it is right not to be dependent on one volatile currency. The results were tested by the National Audit Office and it said that it was the right decision, and represented value for money. If I had taken the hon. Gentleman's advice, which he gave me very forcefully—indeed, even more forcefully in 1997—I would not have made the Bank of England independent; he said that that would lead to deflation, unemployment and ruin for the British economy. The opposite has happened.