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September 9, 2011 9:54 pm
When Alistair Darling oversaw Britain’s roads and railways as secretary of state for transport, one of his officials dubbed him the “minister for immobility”. Unkind as it seemed, the epithet conveyed a sneaking admiration. His predecessors in the job had been beset by crises and scandals. Darling kept the trains running and his department off the front pages.
An even temperament and innate caution, leavened with a dry, sometimes acerbic wit, served him well in government. By the time Gordon Brown finally wrenched the prime ministerial crown from a battered Tony Blair in June 2007, there were only two other cabinet survivors from that bright New Labour dawn a decade earlier. Jack Straw was one, Darling the other.
The Treasury was the prize Darling had hankered after. Better still for the new chancellor, things looked in good shape. Voters were enjoying a long period of uninterrupted prosperity and New Labour’s economic miracle appeared more or less intact. “The landscape seemed extraordinarily tranquil,” Darling now recalls wistfully. This time, he imagined, he would not be clearing up someone else’s mess.
Within a couple of months the clouds had gathered over Northern Rock. Another year and the global financial system was in meltdown, with the British economy falling into its deepest recession since the 1930s. New Labour had relied on the banks to square the circle of fiscal prudence and fast-rising public spending. The crash sent public borrowing through the roof. Ignominious defeat at the hands of the voters was the inevitable end point to Darling’s 1,000 days at Number 11.
The former chancellor, I suspect, would not claim his memoir to be a work of great intellectual heft or insight into the forces that took once proud banks such as RBS to the brink of collapse and thence into state ownership. Economists will still be arguing about all this when – and it is when rather than if – the next financial tsunami hits. Doubtless they will get it wrong again.
Instead, the former chancellor has written a refreshingly unvarnished account of what happened – revealing just how close Britain came to complete financial shutdown. It is a gripping tale told well, forsaking the guile and hyperbole that is a more familiar trademark of political memoirs.
Unsurprisingly, much of the publicity around the book has focused on a relationship with the prime minister that, once the crisis hit, was rarely far from breakdown. As chancellor, Brown drove Blair from office. As prime minister he tormented his successor at the Treasury. Darling does not pull his punches. “Appalling”, “volcanic” and “brutal” are some of the adjectives applied to Brown’s behaviour. The criticisms are the more striking for an absence of obvious malice. The chancellor was never admitted to Brown’s inner circle but, as friends and parliamentary neighbours in Scotland, the two men went back a long way. The partnership should have worked.
Darling offers credit where it is due: Brown made the right call in backing the comprehensive recapitalisation of Britain’s banks in the autumn of 2008. And he played something of a blinder in choreographing the leaders of the G20 nations at the London summit a few months later. The rest, though, was all chronic indecision interspersed with frequent rages.
Brown had spent a political lifetime in his quest for the keys to Downing Street, leaving behind the bodies of countless rivals, real and perceived. When he got there, he had no idea what he wanted to do with the power he had so long craved. The enterprise, Darling came to realise, was doomed. Brown was not so much the leader of the government or his party but of the small faction gathered around him. Among this group, Ed Balls, the present shadow chancellor, was primus inter pares. He does not come out of the story well.
It was economic policy, though, that saw Darling’s relationship with Brown break down completely. The prime minister was in denial, first believing the downturn would be short-lived, then refusing to acknowledge that a necessary fiscal stimulus had at some point to be followed by a credible plan to get the deficit under control. He sought to replace Darling with Balls, but lacked the political strength.
This argument about spending versus fiscal retrenchment is still being played out, with Labour leader Ed Miliband in Darling’s role and Balls still loyal to Brown. Miliband would be wise to take Darling’s advice that the voters simply won’t listen “unless you are prepared to show some humility and honesty”.
Elsewhere, Darling’s account of the Treasury’s negotiations with the banks, which ultimately saw RBS and Lloyds part-nationalised, adds texture and detail to a now familiar narrative. You can picture Darling shaking his head in dismayed disbelief as the likes of RBS’s Tom McKillop and Fred Goodwin refused to accept any responsibility. Goodwin left one meeting, Darling reports, as if he was heading for a game of golf. The faces have changed but nothing much else: even after the pain of the past three years the bankers are worried only about the size of their bonuses.
Darling makes some useful corrections to received wisdom. Mervyn King, the autocratic governor of the Bank of England, has thus far emerged relatively unscathed from the financial crash. Yet he was guilty of a string of misjudgments as the crisis unfolded. The book recounts how the Bank covered its tracks by rewriting history. The governor, meanwhile, engaged in frankly scandalous politicking to shore up his position with the incoming Tory-led government. Historians will not be as kind as have been many contemporary commentators when they come to offer an objective assessment of King’s role.
We learn too how far the Treasury has fallen from the days when it could claim to be Whitehall’s Rolls-Royce. As the crisis unfolded, Darling was faced with a set of young officials many of whom owed their rank not to experience or expertise but to past willingness to do chancellor Brown’s bidding. The irony was that once he had left the Treasury, Brown imagined this chosen few had all turned against him.
The same officials are now cheerleaders for George Osborne’s plan to eliminate most of the deficit during the present parliament. Things are already going wrong. The slowdown in the economy is cutting tax revenues and pushing up the welfare bill. The enterprise could yet be derailed by recession. As for the banks, they are mounting a fierce counter-attack against anything that would cut their profits and bonuses. This story has some way to run.
Philip Stephens is the FT’s chief political commentator
Back from the Brink: 1,000 days at Number 11, by Alistair Darling, Atlantic, RRP£19.99, 352 pages
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