Subject: Sterling withdrawal from the ERM

Date of disclosure: 09 February 2005

Request:

Request of government studies on the aftermath of and lessons to be learnt from 'Black Wednesday'

Disclosure:

Release of Treasury studies on the aftermath of and lessons learnt from Sterling's exit from the Exchange Rate Mechanism in September 1992

1. Introduction
2. Guide to the procedures for releasing the documents
3. Guide to exemptions applied and redacted text
4. Guide to the papers and full list of documents

1. Introduction

The Treasury is today releasing papers under the Freedom of Information Act 2000, following a request, from the Financial Times newspaper, received by the Treasury on 5 January, 2005. The request was:

I am writing to make an open government request for all the information to which I am entitled under the freedom of information act… Please disclose details of government studies on the aftermath of and lessons to be learnt from Black Wednesday.

The papers being released today contain the Treasury’s analysis, carried out in the months and years following sterling’s exit from the ERM in September 1992.

These explanatory notes aim to give the reader a general guide to the papers and the process by which their release has come about under the Freedom of Information Act 2000. Because the documents in question relate to events under a previous administration, the Treasury press office will not be able to provide additional further background briefing on the contents of the papers.

2. Guide to the procedures for releasing the documents

Who is responsible for approving the release of the documents?

The papers released today relate to events under a previous administration formed by a different political party to that of the present Government. As such, under the long established conventions for handling papers of a previous administration, based on fairness, serving Ministers in the Treasury and wider Government, and their special advisers have played no role in considering any of the documents for release. They have not seen any of the papers in question in advance of their release.¹

In this case, decisions on the documents to be released are the responsibility of Treasury officials and, ultimately, the Permanent Secretary to the Treasury. In considering the papers relating to the UK’s exit from the ERM in 1992, the Treasury has taken advice from the Cabinet Secretary and the Department for Constitutional Affairs, the department with overall policy responsibility for freedom of information within Government.

Why are the documents being released today?

The freedom of information request was received by the Treasury on 5 January 2005. The Treasury strives to meet the twenty day period for responding to freedom of information requests specified in the Act. In this case, the Treasury sought a short extension as allowed by the Act, in order to complete our consideration of the public interest in relation to the exemptions from disclosure specified in the Act (see also Note 3: guide to exemptions applied and redacted text). The material is now being published, with exemptions applied where relevant, following an extension of six working days.

Who has seen these papers prior to their release?

As part of applying the public interest test under the Act before releasing the information, the Treasury has consulted a number of individuals involved at the time, as well as the Bank of England. Those consulted are able to comment on the papers and suggest that text should be included or excluded within the terms of the law. While their views are taken into account, the ultimate decision on what to publish remains with the Department holding the papers, in this case the Treasury.

As the Cabinet Secretary, Sir Andrew Turnbull, has stated,² it is in line with long established precedent to consult, where possible, the Ministers at the time. Therefore, in this case the Treasury has shown, in advance of release, both the full set of papers and the versions for publication to the Rt. Hon. John Major, C.H., the Prime Minister at the time, and the Rt. Hon. Lord Lamont of Lerwick, the then Chancellor.

It is not normally the Treasury’s intention to comment publicly on the process for consulting externally in advance of freedom of information releases. However, given the press reporting in this case, we can confirm that neither Mr Major nor Lord Lamont have suggested any edits or deletions to any of the papers.

Within Government, officials only, and not Ministers nor their political advisors, have seen the documents in advance of their release.

¹ ^{Under the Freedom of Information Act, certain exemptions can only be applied by Ministers. Where this relates to a previous administration, these decisions will be taken by the Attorney General. However, the Treasury has not sought to apply any of the exemptions requiring Ministerial approval, and hence this case has not been referred to the Attorney General at this stage.}

² ^{See the letter to The Times, 5 February 2005, from Sir Andrew Turnbull, Secretary to the Cabinet and Head of the Home Civil Service.}

3. Guide to exemptions applied and redacted text

Under the terms of the Freedom of Information Act 2000, there are 23 exemptions from the rights of access. These exemptions mark out the limits of the right of access to information under the Act. The Act recognises that the disclosure of certain categories of information may be harmful to the wider public interest.

A full guide to the exemptions applicable under the Freedom of Information Act is available from the Department of Constitutional Affairs at http://www.dca.gov.uk/foi/guidance/

In this specific case, the Treasury has applied three exemptions to specific sections on the papers held by the department on sterling’s departure from the Exchange Rate Mechanism in September 1992. These are:

Section 27: international relations. Under the Act, information is exempt if its disclosure would, or would be likely to, prejudice relations between the United Kingdom and any other state, international organisation or international court, the interests of the United Kingdom abroad, or the promotion or protection of the United Kingdom of its interests abroad. Information is also exempt information if it is confidential information obtained from a state other than the United Kingdom or from an international organisation or international court.
Section 29: economic and financial interests of the United Kingdom. Information is exempt if its disclosure would, or would be likely to, prejudice the economic or financial interests of the United Kingdom or any part of the United Kingdom.
Section 35: policy advice. Information is exempt if it relates to the formulation or development of Government policy, or Ministerial communications, or the provisions of advice by any of the Law Officer or any request for the provision of such advice, or the operation of any Ministerial private office.

These exemptions are all qualified exemptions under the terms of the Act. What this means is that if a document, or any part of a document, falls within the scope of an exemption, this is not in itself enough to prevent its release. Instead, the public authority holding the information is required to apply a test as to whether disclosure would be in the public interest, with a presumption in favour of disclosure.

In this case, Treasury officials have considered that in respect of the parts of the text which are not being released, the disclosure of the information concerned would, or would be likely to damage the public interest within the scope of the specific exemption. Those sections have been excluded, or redacted from the text. Redactions are clearly marked in the text.

In line with standard procedure across Government when releasing internal Government papers, the names of officials, and, where appropriate, other individuals, have been deleted.

One document has been redacted in full under the Section 29 exemption.

The Treasury regrets that the inadvertent email to the BBC revealed some of the earlier, and in some cases out of date internal discussions among officials about how to implement the FoI Act. The BBC release contains some information that the Treasury does not believe should have been put in the public domain.

Finally, the Freedom of Information Act gives a general right of access to information, not specific documents, on request. Therefore, certain sections of text have not been included on the grounds that they are not relevant to the question being asked.