The portrait of the Chancellor in the Guardian today by Decca Aitkenhead is devastating. Intended to lift the veil on the private man and to help him project his image and his message, the interview reveals a man completely out of his depth without a clue about the financial crisis swirling around him.
The first incomprehensible error is to give such an interview and to use it to make serious statements about the state of the economy. If Mr darling must show his human side and invite people to his holiday home has should stick to talking about the scenery and the marmalade. It is is not the right time or vehicle to adjust the nationâ€™s view of how serious an economic crisis we are in. A few casual remarks about how conditions will be the â€œworst theyâ€™ve been in 60 yearsâ€ will travel the world and lead to fundamental reappraisals of forecasts everywhere. There is no revision to the Treasury forecasts accompanying this statement. So we now know the Chancellor thinks the optimistic forecasts from HMT about growth prospects this year and next are a bunch of lies, but his forecast of a recession remains unquantified. If we take him seriously he is saying the Treasury have now to revise their forecast down to show big drop in GDP 2008-2009, bigger than the recession in 1974. Why couldnâ€™t he make a proper statement from the Treasury accompanied by proper revised forecasts? I have felt for sometime waiting for the Autumn Statement before we get a revision to forecast is to wait too long. In this situation markets expect up to date information. They get it from companies, who have to tell us of worsened trading expectations, so why canâ€™t we get it from the Treasury?
The second error is to reveal just how out of touch with the financial world this man is. He tells us the first he knew of the financial problems in money markets last summer was when he saw an FT article about the ECB pumping money into their money markets! He tells us he rang the office from Majorca, but of course did nothing. The rest of us were writing and worrying about the lack of liquidity all that August, telling the government to act. Clearly they were too busy holidaying. The next he knows is when back in Edinburgh and he spots a run on Northern Rock, which forces him to London! The rest of us were watching the grisly events around Northern Rock unfold before the run began. In such circumstances I would expect the Head of the tripartite regulatory structure to be getting daily reports on the situation, and to be using his grace and favour house in London to manage the crisis from there. The Guardian journalist did not seem to recognise just how serious this admission is.
The third error is still thinking Labourâ€™s main problem is presentational. â€œWe patently have not been able to tell people what we are forâ€. Labourâ€™s problem is not presentational. We all know what Labour is for. It is for an ever bigger public sector, it is for more and more spin doctors and presentational gimmicks, it is for more government advertising, it is for keeping them in power, it is for higher taxes and higher benefits, it is for an ever bigger money go round with Peter paying Peter via the intermediary of the government, it is for incompetence at managing the financial affairs of the money markets and the public accounts, it is for massive borrowing. The issue is not the publicâ€™s lack of understanding of Labour, but Labourâ€™s inability to deliver the fairer society and the stronger economy they promised.
Knowing our Chancellor had â€œno ideaâ€ of the severity of the crisis facing them until recently is not going to help build confidence. Knowing that he knows the public is â€œpissed offâ€ with Labour undermines his position further, as the choice of language is not what we expect of a senior figure. There is still a deafening silence on what Labour is actually going to do about the falling house market and the mortgage famine, still a silence over when and if they are going to exert some discipline on the public accounts, still confusion over how they are going to sort out the muddle in the money markets and the problems with banking. The botched nationalisation of the Rock has made their position so difficult. It is eating cash the government and taxpayer cannot afford, whilst having to throttle back its lending and sack many of its staff because it is in the public sector. Returning it to the private sector at almost any price would help to tackle the mortgage crisis, and save the public money.