Mr Darling reveals far too much

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 nation’s view of how serious an economic crisis we are in. A few casual remarks about how conditions will be the “worst they’ve been in 60 years” 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 couldn’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 can’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 Labour’s main problem is presentational. “We patently have not been able to tell people what we are for”. Labour’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 public’s lack of understanding of Labour, but Labour’s inability to deliver the fairer society and the stronger economy they promised.

Knowing our Chancellor had “no idea” of the severity of the crisis facing them until recently is not going to help build confidence. Knowing that he knows the public is “pissed off” 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.

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8 Comments

  1. Simon
    Posted August 30, 2008 at 9:59 am | Permalink

    He's mad, in the 70's we had a three day week,

    in 80-82 we had the death of the Midlands,

    in 90-92 we followed the impossible German Mark,

    or maybe things are going to get alot worse.

    Or maybe he means we haven't had decent economist since Keynes?

  2. Iain
    Posted August 30, 2008 at 10:23 am | Permalink

    With much of an economy relying on confidence the last thing you want is for the man in charge of the economy to suggest its all going to hell in a hand cart and he doesn't have a clue. Sober realism? yes, slang and extreme rhetoric ? God, No!

    But we are also being given a glimpse of the strained relations between the Chancellor and PM, never good for an economy, for Darling is clearly having a pop at the previous Chancellors record, and resenting No 10's interference in his department.

    Its bad news all round.

  3. Ken
    Posted August 30, 2008 at 11:43 am | Permalink

    I agree with the "totally out of touch" point. I know that most people in the City already think Darling is out of his depth, but this type of confirmation is really quite undesirable. How can someone this incompetent claim that he is fit to be the Chancellor? Do his officials not bother to inform him of these crises? Or are the reports that the Treasury has been gutted of more experienced staff true? I noticed that the Treasury as pretty successful in briefing against Mervyn King in the aftermath of NR, so they obviously have maintained some skills.

    Financial crises of this sort also provoke political economy problems, with no one wanting to provide the final push/pull (to bail out or push into insolvency) a bad bank. It is the Chancellor's job to be the referee and ultimate decision maker. This lack of grip is very worrying since I foresee several further financial crises on the horizon ranging from onshore banks with bad business models to overseas banks taking deposits onshore with really bad business models and the possibility of a major US bank collapse, in line with Rogoff's comments. After the appalling performance of Darling and Burnham with NR, I really worry about the UK's political management of financial problems.

  4. James
    Posted August 30, 2008 at 12:30 pm | Permalink

    Frankly, I believe this is just more Labour spin. Paint the worst possible senario and then when it turns out only half as bad,Labour can then seek praise and re-election for yet again saving the economy.
    I don't believe things will get as bad as 60 years ago but we are surely heading for a recession of sorts. It is not a bad thing to learn a bit of thrift, we cannot keep increasing borrowing money indefinitely (although this government believes it can).
    Labour appear to be nothing about the situation, mainly because they haven't a clue what to do.
    Roll on a Conservative Government.

  5. Johnny Norfolk
    Posted August 30, 2008 at 3:21 pm | Permalink

    Sounds as if Brown has told him he has lost his job. If its not that then thing are very bad indeed.

    He is only confirming what we all know apart from the rest of the Labour party, most of the media and of course the BBC.

  6. Posted August 30, 2008 at 5:40 pm | Permalink

    John, you're being characteristically modest about all this, but it does rather prove the point you've been making all along, going right back to your early prediction that the contracting out of interest rates to the Bank would be tested only over the full cycle.

    I have no intention of being as unassuming on your behalf as you are being: see http://www.hannan.co.uk

    Reply: Thank you Daniel – much appreciated.

  7. mikestallard
    Posted August 30, 2008 at 6:40 pm | Permalink

    What more is there to add?
    In our little town, we have a Headmaster, Mr Bennett, whose ground was cut from under him by the Conservative County Council who did not honour a promise which he had made, as Headmaster. They publicly broke his word and more or less wrecked a pupil's chances of A Level and University.
    Mr Bennett walked out with "stress" in the middle of term. That embarrassed them. From start to finish, he never spoke out against his masters in Cambridge, though. He had the decency not to. I have had to piece this together, therefore, from gossip and the local paper's laconic reports. A fine man.
    Mr Brown, when Chancellor, never spoke out against the Prime Minister.
    Mr Darling, to add to all these other faults, has done just that. He admitted that it was No 10 that briefed about the Stamp duty.
    That is the sign of a truly weak character.

  8. Politico
    Posted August 30, 2008 at 8:03 pm | Permalink

    It is the portrait of a man at the end of his tether. He cant do his job, for his boss is doing it for him.

    I suspect he is preparing the ground for some pretty radical policies in the coming weeks. Redistribution anyone?

    The Tories are unprepared for a radical Labour streak.

  • About John Redwood

    John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College, and has a DPhil from All Souls, Oxford. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.
    Published and promoted by Thomas Puddy for John Redwood, both of 30 Rose Street Wokingham RG40 1XU
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