This needs saying over and over again. Brown is the sole arxchitect of the unparallelled shasmbles that is the British economy and every day he stays in power makes it worse; “Worse” because he continues with reckless borrowing; “Worse” because he is completely under the thumb of Brussels; and “Worse” because he is in total denial.
In 1940 one man rallied the nation and saved us. In 2009 one man is wrecking the nation
Christina
TELEGRAPH
10.7.09
You can bank on the Hand of Gord to create another disaster
Labour's financial reform paper highlights the problems of having a failed chancellor as PM, argues Jeff Randall.
A few months ago, I asked a senior Conservative MP how he viewed the difference between the Chancellor and the Prime Minister. "Very simple," he replied. "If I were on holiday, sitting at a bar, and Alistair Darling walked by, I'd say hello and invite him for a drink. In the same situation, if Gordon Brown turned up, I'd dive under the table."
It wasn't quite the answer I was looking for, but you get the drift. Despite their ideological disagreements, most senior Tories do not regard Mr Darling as a bad man. Away from the glare of Westminster, he can be friendly and occasionally off-message. By contrast, Mr Brown is seen as a dysfunctional automaton whose capacity for self-criticism has been wiped out by his craving for political advantage.
Like Sir John Major, another grey man, Mr Darling was handed the keys to No 11 just as the economy was heading into recession. In both cases, Britain had enjoyed a policy-induced boom that boiled over into bust. But whereas Sir John's predecessor, Nigel Lawson, left front-bench politics after quitting Downing Street, Mr Darling's forerunner moved next door. This is proving to be a headache for the Treasury, and a disaster for Britain.
The problems of having a failed chancellor as prime minister were highlighted again this week, when Mr Darling unveiled his hybrid White-Green Paper on financial regulation reform. He was in the unenviable position of having to explain (but not criticise) what went wrong under the previous system, and propose changes to it, but without being able to do what was really necessary: scrap Mr Brown's ill-conceived tripartite arrangement.
With his boss at the G8 meeting in Italy, having another crack at saving the world, Mr Darling was left to pick through the rubble of Labour's making. He did his best to demonstrate loyalty while conceding that, between them, the Bank of England, the Financial Services Authority and the Treasury had allowed the development of unsustainable business models, financial products that even the sellers did not understand, and vast bubbles of debt.
When the crunch came, and Northern Rock began to crumble, there was a gaping hole where leadership should have been. As Richard Lambert, the director-general of the CBI, put it: "We did not know who was in charge."
In creating yet another new body to oversee the machinery – the Council for Financial Stability – Mr Darling gives the game away. It will, he says, monitor and link the work of the Bank, the FSA and the Treasury. Clearly, they were not joined up as intended, otherwise there would be no need for remedial action. This, I fear, is the application of an Elastoplast on a wound requiring surgery. Badly diseased limbs must be amputated, not covered over.
Either Mr Darling is indulging a newly discovered sense of mischief or he has lost his faculty for spotting irony. Three proposals in particular are worthy of sketch writers on Have I Got News For You: a clampdown on executive pay, the need for greater competition in financial markets, and a demand that banks hoard more capital during fine times to protect them from storms.
Having just approved a £9.6 million pay package for Stephen Hester, the chief executive of Royal Bank of Scotland, it's hard to know where Mr Darling thinks his new regime of austerity should begin. If a bank that is 70 per cent owned by the state cannot impose modest remuneration in the boardroom, what chance that other venal financiers will be handing out hair shirts?
As for competition, thanks to the intervention of Mr Brown, Lloyds Bank was permitted to buy HBOS, creating the biggest force for monopoly the British retail banking market has ever known. Before the takeover was nodded through, the pair accounted for about one third of all mortgages, the same proportion of domestic current accounts, and operated 3,000 branches. If Mr Darling were really concerned about competition, this monster would be broken up. But with the Hand of Gord on the deal, that is not an option.
Now for the bit that defies parody: the Government's call for prudence. Earlier this year, Mr Brown wrote in The Sunday Telegraph: "We will need to do more to make sure banks put aside more capital during the good times so that they are better insulated from downturns." Mr Darling echoed this sentiment in his blueprint for a safer system. Not unreasonable, you might think, except that – as the Tories chant, ad nauseam – Mr Brown failed to fix the roof when the sun was shining. He was disgracefully profligate.
Just like the banks, he emptied the coffers in a chase for glory. As the Centre for Policy Studies points out: "In effect, he [Mr Brown] bought the growth by… borrowing £34 billion a year for six years, by condoning record levels of personal debt and bank lending."
All true, yet Mr Brown remains in denial. He refuses to concede that he had any role in Britain's over-exposure to the ravages of recession, even though Mervyn King, the Bank of England's governor, told him: "We came into this crisis with fiscal policy along a path that was not itself sustainable."
Once again, Mr Darling is left to tip-toe through the minefield of the Prime Minister's exploding ego and the booby-traps of responsibility without commensurate power. He knows that Government excesses will be reined back after 2011. The Institute for Fiscal Studies estimates that over the next decade Britain must shrink state spending (or increase taxes) by about £90 billion. Even the Treasury's own numbers suggest a substantial cut.
But with his spin-driven neighbour still promising "Labour investment", Mr Darling can only hint at a fiscal tightening. Anything more candid would result in consignment to the Prime Minister's sin bin. It is a farcical situation, like playing Fantasy Economics, only with real-world consequences.
With any luck, this game for losers will soon be over. In a rare moment of precision on what he would do were he to become chancellor, George Osborne has promised to reunite central banking with supervision of the financial system, by sidelining the FSA and returning full authority to the Bank of England. This offers a sharper, simpler solution to the mess created by Mr Brown's characteristically over-complex regulatory edifice.
As it stands, the Bank can set off alarms and flash warning lights, but has no mandate to intervene. As Mr King admits: "These are unlikely to be effective when people are being asked to change behaviour which seems to them highly profitable." Putting the Bank in sole charge would not eliminate the risk of catastrophe, but it would recalibrate the odds in our favour.
Having spent too long under the table, the Tories are at last offering a genuine alternative on an important issue
Posts
