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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Voters are turning against Brexit but the Lib Dems aren't benefiting

Labour's pro-Brexit stance is not preventing it from winning the support of Remainers. Will that change?

More than a year after the UK voted for Brexit, there has been little sign of buyer's remorse. The public, including around a third of Remainers, are largely of the view that the government should "get on with it".

But as real wages are squeezed (owing to the Brexit-linked inflationary spike) there are tentative signs that the mood is changing. In the event of a second referendum, an Opinium/Observer poll found, 47 per cent would vote Remain, compared to 44 per cent for Leave. Support for a repeat vote is also increasing. Forty one per cent of the public now favour a second referendum (with 48 per cent opposed), compared to 33 per cent last December. 

The Liberal Democrats have made halting Brexit their raison d'être. But as public opinion turns, there is no sign they are benefiting. Since the election, Vince Cable's party has yet to exceed single figures in the polls, scoring a lowly 6 per cent in the Opinium survey (down from 7.4 per cent at the election). 

What accounts for this disparity? After their near-extinction in 2015, the Lib Dems remain either toxic or irrelevant to many voters. Labour, by contrast, despite its pro-Brexit stance, has hoovered up Remainers (55 per cent back Jeremy Corbyn's party). 

In some cases, this reflects voters' other priorities. Remainers are prepared to support Labour on account of the party's stances on austerity, housing and education. Corbyn, meanwhile, is a eurosceptic whose internationalism and pro-migration reputation endear him to EU supporters. Other Remainers rewarded Labour MPs who voted against Article 50, rebelling against the leadership's stance. 

But the trend also partly reflects ignorance. By saying little on the subject of Brexit, Corbyn and Labour allowed Remainers to assume the best. Though there is little evidence that voters will abandon Corbyn over his EU stance, the potential exists.

For this reason, the proposal of a new party will continue to recur. By challenging Labour over Brexit, without the toxicity of Lib Dems, it would sharpen the choice before voters. Though it would not win an election, a new party could force Corbyn to soften his stance on Brexit or to offer a second referendum (mirroring Ukip's effect on the Conservatives).

The greatest problem for the project is that it lacks support where it counts: among MPs. For reasons of tribalism and strategy, there is no emergent "Gang of Four" ready to helm a new party. In the absence of a new convulsion, the UK may turn against Brexit without the anti-Brexiteers benefiting. 

George Eaton is political editor of the New Statesman.