Prime Minister admits City regulation too weak to avert economic collapse
Brown accepts responsibility Picture: Getty
Published Date: 01 February 2009
GORDON Brown has admitted that regulation of UK banks "wasn't strong enough" during his time as Chancellor, in a frank admission the Government was partly to blame for the financial crisis.
In a BBC interview today, the Prime Minister says that new plans to tighten banking regulation – to be unveiled in the next few weeks – can be read as "an acceptance" that they were too weak before the crisis.
Brown's first concession that the banking regulations laid down by him as Chancellor were at fault comes as aides urge him to adopt a more "humble" approach towards the financial crisis. Before now, the Prime Minister has blamed the financial crisis exclusively on global forces and the collapse of the US sub-prime market.
In The Politics Show interview, Brown is asked whether there were "mistakes that you made when you were Chancellor". He replies: "We're toughening up the regulatory system. That is an acceptance that it wasn't strong enough to meet what was effectively... a global financial freezing up." He goes on: "No regulatory system in the world, as I know, had ever planned for that happening. We thought, if we kept inflation low and interest rates low, then the economy was capable of dealing with problems as they arose."
He added: "What nobody banked on was that the very systems that were designed to spread risk across the world actually spread contagion across the world.
"Now, that's the lesson that's got to be learned, that you've got to plan internationally to deal with what is essentially a financial crisis that happens all over the world."
Brown has been increasingly at odds with other senior figures, such as Sir John Gieve, the deputy governor of the Bank of England, who admitted before Christmas that "we hadn't kept pace with the extent of globalisation". Sir John said that the regulatory system needed to be tightened to prevent credit getting out of hand.
The change of tack by Brown comes with renewed question marks appearing over his medium-term future, as polls show that the Tories have restored a huge lead over Labour. The slump in Labour's polling has also led to fresh speculation that Brown may be planning a reshuffle of his senior Cabinet team, with Alistair Darling's name being mentioned as one who may lose his job.
But shadow chancellor George Osborne said last night that Brown's words still fell short of an apology.
He said: "What is it about Gordon Brown that makes it impossible for him ever to admit mistakes? Everyone from the bankers to the regulators have said sorry for the boom that turned to bust, and the debt crisis Britain now faces, except the man who was Chancellor of Exchequer throughout the age of irresponsibility."
Evidence of Brown's more candid approach was seen in Davos yesterday when he conceded that there was "no clear map" for how to get through the financial crisis.
He said: "This is the first financial crisis of the global age. And there is no clear map that has been set out from past experience to deal with it.
"I'm reminded of the story of Titian, the great painter, who reached the age of 90, finished the last of his nearly 100 brilliant paintings, and said at the end of it: 'I'm finally beginning to learn how to paint,' and that is where we are."
Brown's first concession that the banking regulations laid down by him as Chancellor were at fault comes as aides urge him to adopt a more "humble" approach towards the financial crisis. Before now, the Prime Minister has blamed the financial crisis exclusively on global forces and the collapse of the US sub-prime market.
In The Politics Show interview, Brown is asked whether there were "mistakes that you made when you were Chancellor". He replies: "We're toughening up the regulatory system. That is an acceptance that it wasn't strong enough to meet what was effectively... a global financial freezing up." He goes on: "No regulatory system in the world, as I know, had ever planned for that happening. We thought, if we kept inflation low and interest rates low, then the economy was capable of dealing with problems as they arose."
He added: "What nobody banked on was that the very systems that were designed to spread risk across the world actually spread contagion across the world.
"Now, that's the lesson that's got to be learned, that you've got to plan internationally to deal with what is essentially a financial crisis that happens all over the world."
Brown has been increasingly at odds with other senior figures, such as Sir John Gieve, the deputy governor of the Bank of England, who admitted before Christmas that "we hadn't kept pace with the extent of globalisation". Sir John said that the regulatory system needed to be tightened to prevent credit getting out of hand.
The change of tack by Brown comes with renewed question marks appearing over his medium-term future, as polls show that the Tories have restored a huge lead over Labour. The slump in Labour's polling has also led to fresh speculation that Brown may be planning a reshuffle of his senior Cabinet team, with Alistair Darling's name being mentioned as one who may lose his job.
But shadow chancellor George Osborne said last night that Brown's words still fell short of an apology.
He said: "What is it about Gordon Brown that makes it impossible for him ever to admit mistakes? Everyone from the bankers to the regulators have said sorry for the boom that turned to bust, and the debt crisis Britain now faces, except the man who was Chancellor of Exchequer throughout the age of irresponsibility."
Evidence of Brown's more candid approach was seen in Davos yesterday when he conceded that there was "no clear map" for how to get through the financial crisis.
He said: "This is the first financial crisis of the global age. And there is no clear map that has been set out from past experience to deal with it.
"I'm reminded of the story of Titian, the great painter, who reached the age of 90, finished the last of his nearly 100 brilliant paintings, and said at the end of it: 'I'm finally beginning to learn how to paint,' and that is where we are."
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