Darling holds his nerve

The Chancellor's refusal to panic has won him respect, but his biggest test still lies ahead

So the government has ripped up the new Labour rule-book with a return to redistributive taxation, nationalisation and work-creation schemes. The same spinners who once laid burnt offerings at the feet of the gods of the free market now sing the praises of state intervention.

In this world turned upside down, one government figure has been consistent in his reading of the situation. From the early summer, Alistair Darling has been saying that we are living through the gravest economic crisis the country has faced since the first half of the 20th century, and that the government must do all it can to protect the British people from the effects of the storm.

The Chancellor began his statement on this week's pre-Budget report in apocalyptic terms, speaking of an "unprecedented global crisis". There was a time when he would have been accused of talking down the economy. Such an idea now seems absurd. At the end of August, during his infamous interview with the Guardian's Decca Aitkenhead, the Chancellor merely said that economic conditions were "arguably the worst they've been in 60 years". The only quibble now with Darling's assessment would be that he ever judged that it was "arguable". At the time, the sky fell in on Darling, with a series of attacks that included disgraceful briefings from Gordon Brown's allies against the Prime Minister's most loyal lieutenant. In fact, Darling had been warning of the seriousness of the situation for almost three months. In an interview with the New Statesman in early June, he said: "If you ask fundamentally what's changed . . . self-evidently it's the credit crunch . . . The IMF has said that it is the biggest shock to the world's economic systems since the 1930s."

It is hard to think of a historical political figure who has survived such a battering, from oil price rises to a bank collapse

Watching Darling's performance in the Commons on Monday, what was striking was his extraordinary calm. Some have put this down to his background as an Edinburgh lawyer, but this isn't an adequate explanation. Just before the £500bn banking bailout in October, a journalist was overheard asking Darling how he remained so unruffled in such turbulent times. He said it was the wrong question, adding: "Now is not the time to panic." He has not panicked, yet. At the height of the briefing campaign against him, he also held his nerve. Darling is popular among political journalists and despite his identification as a "Brownite", he is seen as a non-sectarian figure in Westminster.

There is still the distinct possibility that the PBR will unravel (and the news that the Treasury considered raising VAT to 18.5 per cent does not help matters). Some within the Labour family salute the aims of giving the economy a £21bn boost, while wondering whether it will be enough. But few are turning their fire on Darling himself. For example, Frank Field, the leader of the 10p tax rebels, said he believes the fiscal stimulus may yet turn out to be inadequate. But he recognised that Darling had been clever not to put a limit on how long the measures would take to work. "Alistair has given himself all the time in the world," he said. "Now he will just keep saying that the measures need to be given the chance to work."

There is no doubt now that Darling stays calm under pressure. It is hard to think of a historical political figure who has survived such a battering. Quite apart from the collapse of the banking system and a vicious campaign to undermine him from within his own party, the Chancellor has dealt with Northern Rock, the loss of computer disks from H M Revenue & Customs containing the personal data of 25 million individuals, fierce criticism of his decisions on capital gains tax and corporation tax, the stagnation of the housing market, wild fluctuations in the prices of oil and huge rises in the cost of household fuel.

There is at least one area where Darling remains vulnerable, however, and that is over the policy to abolish the 10p tax rate, which he inherited when his predecessor left for No 10. In the PBR, Darling announced an increase of personal tax allowances by £130 a year to soften the impact on those who lost out. But the real question for the Labour high command should be whether this will be enough. If backbenchers feel renewed pressure from their constituents on this issue, the possibility of a rebellion over the Budget in the spring will re-emerge.

The revival in the fortunes of the man at No 11 coincides with a new sense of direction throughout Downing Street. The National Economic Council has helped open up dialogue between departments and there is no longer the feeling that cabinet ministers are huddled in their individual silos. The increasing influence of the affable MP for West Bromwich East, Tom Watson, since his appointment to the Cabinet Office at the start of the year, has helped stamp out some of the more thuggish briefings. And despite differences over the emphasis of the PBR, the Treasury and No 10 are said to be working well together.

A new test of Darling's nerve will come in the new year when unemployment begins to bite. If the news bulletins are led every day by job losses up and down the country, Labour backbenchers are already talking about being afraid to show their faces in public. Darling has demonstrated his integrity over the course of the past year and consistently delivered a brutally honest assessment of the economic crisis. But if unemployment hits three million in 2009, these qualities will count for nothing.

This article first appeared in the 01 December 2008 issue of the New Statesman, How safe is your job?

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Theresa May's big thinker - an interview with George Freeman

The Conservative policy board chair on the meaning of Brexit, state intervention and whether "Mayism" exists.

Theresa May’s three months as Prime Minister have been marked by ruthless changes of both personnel and policy, from grammar schools to fiscal targets. The man tasked with overseeing the latter is George Freeman, a newly bearded 49-year-old who jokingly describes himself as “a designated thinker”.

“It’s a huge privilege,” Freeman told me when we met recently in Westminster. “As [May] has indicated, she’s determined to open up the policymaking process to good ideas from a much wider pool.”

After entering parliament as the MP for Mid Norfolk in 2010, Freeman distinguished himself as one of the most intellectually energetic Tory MPs. He founded the 2020 group of Conservative modernisers and became the first ever life sciences minister in 2014. Before this, he had worked for 15 years as a biotech entrepreneur.

Politics is in his blood. The Liberal prime minister William Gladstone was his great-great-great-uncle and Mabel Philipson, the first female Conservative MP, his great-aunt. Yet Freeman attributes his reformist zeal to the belief that “with privilege comes responsibility”. He boarded at Radley College after his parents, both alcoholics, divorced and has spoken of his “emotionally damaged” childhood.

It is unsurprising that May, confronted by the greatest policy challenge since 1945 – EU withdrawal – has called on his services. The chair of the Prime Minister’s policy board, to give Freeman his official title, was a passionate Remainer but told me “we are now all Brexiteers”. The “Brexit roar”, he explained, was “a mixture of very deeply felt concerns and complaints about globalisation, powerlessness and the growing gap between London and [other] places . . .

“There’s an understanding that if we simply delivered Brexit, and didn’t tackle the rest, we would only have dealt with some of the problem.”

His ambition was “to do for our generation what Disraeli did in the 19th century, in understanding that the extraordinarily challenging pace of franchise extension was also a huge opportunity to harness and fashion a New Model Conservative Party”.

Besides abandoning the surplus target (“to boost growth and investment in infrastructure”), Freeman cited welfare policy as a point of departure. The government would “better differentiate” between changes in the welfare budget and systemic reform – a division that May believes was eroded by George Osborne.

The Prime Minister underlined her commitment to industrial strategy by naming a new department after it. But what does it mean? “I think there is a recognition that we are embracing something unrecognisable from the failed ‘beer and sandwiches’ interventionism of the Sixties and Seventies,” Freeman said. “Twenty-first-century Conservative industrial strategy is about backing our science, innovation and knowledge economy, and other sectors where we have serious global leadership.” He spoke of “stepping in where only the state can”, citing the publicly funded Diamond Light Source synchrotron facility, which he recently visited with the astronaut Tim Peake. The government must be not merely “pro-enterprise”, but “more enterprising”.

May has endured her heaviest dissent over education, and Freeman was notably lukewarm about the idea of new grammar schools. “As well as her position” on the latter, he emphasised, “the Prime Minister set out a much broader vision”. Asked whether he understood MPs’ objections to academic selection, he said “there will be all the usual consultation and discussions through parliament about specific measures”.

The Prime Minister has entered office with greater ideological definition to her thinking than David Cameron, who struggled to reconcile his early vision with austerity. Can we speak of “Mayism”? “I’m not sure the ‘ism’ is helpful or appropriate at this stage. The Prime Minister is very strongly driven by her conservative values, and converting those values into effective policies to tackle the challenges we face. I think we have to wait for the judgement of history to define the ism.”

Freeman is close to “DC” (as he calls Cameron) and praised his premiership. “I was very sorry to see him go. But in the end, given the way the referendum turned out, it was inevitable. I thought he handled that whole last week in the most exemplary way: typical of the man. In time, I think he will come to be recognised as a transformational leader who brought the Conservative Party to terms with modern Britain.”

He rejected the former education secretary Nicky Morgan’s suggestion that May would struggle to “reach into” the marginal seats that the Tories won under Cameron. “Theresa May is appealing widely across whole swaths of the country as a One-Nation leader,” he declared.

With the re-election of Jeremy Corbyn, Freeman said, “the centre ground of British politics, once dominated by Blair and New Labour, has been vacated . . . That is a huge opportunity for a One-Nation Conservative Party to demonstrate our relevance beyond our core vote to those around the country who have clearly felt so marginalised.”

Corbyn’s triumph “illustrates the extraordinary challenge for mainstream political parties in this age of asymmetric, post-Brexit politics . . . We now have to use the opportunity of incumbency in government to tackle the root causes of the insurgency that has taken out the Labour Party.”

Freeman acknowledged the risk that Labour’s divisions would produce an internal Tory opposition.

“It also creates a question for the Conservative Party. Will we turn in on ourselves and generate our own arguments, or unite and reach out into the space that Corbyn has vacated?” 

George Eaton is political editor of the New Statesman.

This article first appeared in the 29 September 2016 issue of the New Statesman, May’s new Tories