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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How to think about the EU result if you voted Remain

A belief in democracy means accepting the crowd is wiser than you are as an individual. 

I voted Remain, I feel sick about this result and its implications for what’s to come. But I’m a believer in democracy. This post is about how to reconcile those two things (it’s a bit unstructured because I’m working it out as I go, and I’m not sure I agree with all of it).

Democracy isn’t just fairer than other systems of governance, it’s smarter. It leads to better decisions and better outcomes, on average and over the long run, than countries that are run by autocrats or councils of wise men with jobs for life. It is simply the best way we have yet devised of solving complex problems involving many people. On that topic, if you’re not averse to some rather dense and technical prose, read this post or seek out this book. But the central argument is that democracy is the best way of harnessing ‘cognitive diversity’ — bringing to bear many different perspectives on a problem, each of which are very partial in themselves, but add up to something more than any one wise person.

I don’t think you can truly be a believer in democracy unless you accept that the people, collectively, are smarter than you are. That’s hard. It’s easy to say you believe in the popular will, right up until the popular will does something REALLY STUPID. The hard thing is not just to ‘accept the result’ but to accept that the majority who voted for that result know or understand something better than you. But they do. You are just one person, after all, and try as you might to expand your perspective with reading (and some try harder than others) you can’t see everything. So if a vote goes against you, you need to reflect on the possibility you got it wrong in some way. If I look at the results of past general elections and referendums, for instance, I now see they were all pretty much the right calls, including those where I voted the other way.

One way to think about the vote is that it has forced a slightly more equitable distribution of anxiety and alienation upon the country. After Thursday, I feel more insecure about my future, and that of my family. I also feel like a foreigner in my own country — that there’s this whole massive swathe of people out there who don’t think like me at all and probably don’t like me. I feel like a big decision about my life has been imposed on me by nameless people out there. But of course, this is exactly how many of those very people have been feeling for years, and at a much higher level of intensity. Democracy forces us to try on each other’s clothes. I could have carried on quite happily ignoring the unhappiness of much of the country but I can’t ignore this.

I’m seeing a lot of people on Twitter and in the press bemoaning how ill-informed people were, talking about a ‘post-factual democracy’. Well, maybe, though I think that requires further investigation - democracy has always been a dirty dishonest business. But surely the great thing about Thursday that so many people voted — including many, many people who might have felt disenfranchised from a system that hasn’t been serving them well. I’m not sure you’re truly a democrat if you don’t take at least a tiny bit of delight in seeing people so far from the centres of power tipping the polity upside down and giving it a shake. Would it have been better or worse for the country if Remain had won because only informed middle-class people voted? It might have felt better for people like me, it might actually have been better, economically, for everyone. But it would have indicated a deeper rot in our democracy than do the problems with our national information environment (which I accept are real).

I’m not quite saying ‘the people are always right’ — at least, I don’t think it was wrong to vote to stay in the EU. I still believe we should have Remained and I’m worried about what we’ve got ourselves into by getting out. But I am saying they may have been right to use this opportunity — the only one they were given — to send an unignorable signal to the powers-that-be that things aren’t working. You might say general elections are the place for that, but our particular system isn’t suited to change things on which there is a broad consensus between the two main parties.

Ian Leslie is a writer, author of CURIOUS: The Desire to Know and Why Your Future Depends On It, and writer/presenter of BBC R4's Before They Were Famous.