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23 February 2024

Darling under fire after Northen Rock decision

By Jodie Ginsberg

The decision to nationalise Northern Rock has renewed criticism of the government's handling of the affair and raised fresh questions over Chancellor Alistair Darling's ability to manage his brief.

But the man chosen for his reputation as a safe pair of hands is unlikely to face the sack just yet - despite increasing voter dissatisfaction - not least because of the damage that would do to the reputation of his predecessor, and now boss, Prime Minister Gordon Brown.

Darling has faced a string of problems since taking the job of Chancellor eight months ago: the first bank run in over a century triggered by problems at mortgage lender Northern Rock, the loss of disks containing millions of personal records, badly received tax plans, and a worsening economic outlook.

"[Darling's] political future doesn't look good," said Vincent Cable, economic affairs spokesman for the Liberal Democrats.

Prime Minister Gordon Brown, however, does not want to lose him yet. Losing a Chancellor - the second most powerful job in government - less than a year after taking office would be seen as humiliating and an admission that mistakes have been made.

"There's been no suggestion that he is being blamed," said a friend of Darling.

While some have speculated that schools minister Ed Balls could soon take Darling's job, last month's reshuffle putting Yvette Cooper, Balls' wife, into the number 2 job into the Treasury suggests that this is not the gameplan for now.


Voters, however, are unhappy.

Just hours before the nationalisation decision was announced, The Sunday Times published a poll that showed voters blame Darling for deepening economic gloom in the country and believe he should be sacked.

"By 44 per cent to 27 per cent, respondents believe the chancellor should be replaced following his clumsy handling of the Northern Rock banking crisis and bad news on the economy," the newspaper said.

Things have gone from bad to worse for the shock-haired chancellor.

Last November, Darling was forced to admit that a government blunder had put half the country at risk of identity theft after personal details of 25 million people were lost in the post.

It was the second crisis to hit in quick succession.

In September, Britain suffered its first bank run in 140 years after Northern Rock fell foul of the global credit crunch and had to borrow emergency cash from the Bank of England.

The government, which spent the last decade wooing business in an effort to shake off its pro-labour image, desperately wanted to avoid taking Northern Rock into state hands, not least because a series of perceived missteps by Darling have already unsettled business groups.

Darling's plans to reduce inheritance tax in October were derided as a gimmick and last month the Chancellor was forced to climb down over a single flat-rate capital gains tax, following ferocious lobbying by business groups.

Plans to introduce a charge on wealthy foreigners who live in Britain but are non-domiciled for tax purposes have also sparked intense criticism, with many worrying that Britain could lose its status as a leading centre for international business.

Edinburgh-born Darling, 54, is well-liked in the Westminster village for his dry wit and ready smile. But he is in a tight corner and facing a gloomy economic outlook.

Tight public finances mean Darling does not have the resources to offer the economy a fiscal boost even though the Conservatives have made tax a key issue.

Next month's Budget will be key for the Chancellor's long-term future in that position. (Reuters)