The Last Days of New Labour
Ex-chancellor Alistair Darling’s account of his 1,000 days in office reveals much about the rot at the heart of Brown’s Labour government.
A Journey by Tony Blair, The Third Man, by Peter Mandelson, Behind the Black Door, by, er, Gordon Brown’s wife – it’s fair to say New Labour, the party Tony, Gordon and Peter built, has not been short of obituaries. But the latest addition to the funeral pyre, former chancellor Alistair Darling’s Back from the Brink: 1,000 Days at Number 11, is different.
For a start, as you would expect from an author with such a papery-thin public profile, it is a far, far blander offering than those of his colleagues. Just as Darling’s personal life is shielded, so his prose is desperate to remain unremarkable. Political commentators on the look out for gossip will also be disappointed. Any bile that he might have spewed towards his erstwhile comrades, quite understandably as it turns out, has long since been swallowed.
But, in some ways, Darling’s portrait of his period as chancellor of the exchequer – June 2007 to May 2010 – provides a far more revealing, not to say damning, eyewitness account of the last gasp of New Labour, from a paranoid Brown ensconced in his Number 10 ‘bunker’, to the nasty, off-the-record briefings dished out to journalists by Brown’s inner circle. This, you have to remember, is written by a true New Labour apparatchik. Not only was Darling a fully signed-up supporter of Blair and Brown’s leadership after the death of Labour leader John Smith in 1994, but Darling was also - alongside Jack Straw and Brown himself - one of the ‘only survivors of the long march of the Labour Party from its resurrection as New Labour, through its triumph at the polls in 1997, to its defeat in May 2010’. So for the distinctly undemonstrative Darling to reveal, no matter how unwittingly, the self-serving pointlessness at the heart of the New Labour machine – a machine that he had committed the best part of his life to – is quite something. His disappointment, therefore, is not to be taken lightly.
But first, the ostensible subject of the book: the government’s handling of the economic crisis. What is shocking about Darling’s account – considering it is written by a man who was effectively in charge of economic policy – is just how clueless he, his colleagues at the Treasury and the prime minister were about what Darling was to call ‘the worst downturn in 60 years’. It really did just seem to happen, like a sudden storm springing up over a previously tranquil sea.
Right from the start of his chancellorship in the summer of 2007, with the sub-prime mortgage crisis already cutting its way through swaths of US creditors, Darling seemed to be in denial. ‘[The Treasury’s] in good nick, both the department and also the economy, which is strong and stable after 10 years’ growth’, he told an interviewer in June 2007. It’s not that there weren’t warning signs. But even the run on the smallish Northern Rock bank in September 2007, ‘a canary down the mine shaft’, as Darling calls it, failed to alert the government to what was potentially in the offing. Yes, the government responded by effectively nationalising Northern Rock, but no one seems to have considered the extent to which the packaged-parcelled-and-sold-on-debt, or ‘financial instruments’ as they were known, had been passed around the financial system. Ten years of economic ‘growth’ was very gradually, but very clearly, deflating.
Darling’s inaction is perhaps understandable. He comes across less as an actor in the political drama, than an observer. Like a hung-over Poirot or a really slow Columbo, he keeps being told what is happening without realising it. It takes the terse, unsociable Sir Fred Goodwin, head of RBS, to turn up at Darling’s Edinburgh home on a Saturday afternoon in December 2007 for Darling to even get a whiff of the proverbial heading rapidly towards the fan. Goodwin tells Darling that the markets are worried that RBS doesn’t have enough capital to withstand future financial aftershocks. He then reassures Darling that this is not the case. This, as you can imagine, is not reassuring. ‘After Sir Fred had set off back into the cold winter air, I rang my private secretary and told him that we should start worrying seriously about RBS and the other big banks. I had no specific inside information but the conversation had left me feeling deeply uneasy. If RBS, the largest bank in the world could be in trouble, what about the others?’
You would think Darling’s gut feeling might prompt some sort of action. But what happens? A confident budget is given in March 2008 and predictions of economic growth are issued. Two days later, American investment bank Bear Stearns collapses. It’s perhaps unfair to single out Darling and the UK government since they weren’t the only ones basking in denial. In this regard, his account of the International Monetary Fund meeting in April in 2008 is revealing: ‘Looking back at those two days, there was a great sense of marking time, waiting to see what would turn up. There was no sense of urgency.’
While there might have been a lack of urgency, there was no shortage of gloom: ‘As the 2008 summer recess approached, it seemed to me that any hope had faded away that the economic downturn of the past year might have been temporary. No matter who I spoke to – economists, business leaders, commentators – everyone felt that the economy was heading in the wrong direction.’ It was in this mood that Darling gave an interview to the Guardian in August 2008. Although it was supposed to be a ‘colour piece’ to be published on the eve of Labour’s party conference, such was its content that the Guardian published it three weeks early – on the front page. ‘Economy at 60-year low’, the headline chirruped. Brown’s cabal were livid at what they saw as a betrayal of Brown.
Things would quickly change, of course. Lehman Brothers collapsed in September 2008, RBS among others was bailed out by the state in October, Iceland’s banking system imploded, Bank of America had to be rescued, Citigroup was broken up, the Irish government nationalised Anglo Irish Bank… the list of failing financial institutions, with assets turning into liabilities overnight, goes on and on. In fact, Darling’s narrative is one of unmitigated crisis, with the Treasury, sometimes aligned with international partners and sometimes not, portrayed as fire-fighter in chief. But while there is plenty of last-minute action from Darling and the government there is little sense of how things might be better in the future. They are always reacting, never envisioning.
What seems to underwrite this hyperactive paralysis before the economy, with desperate last-ditch measures being trumpeted as political masterstrokes, is a sense that the economy is well and truly out of anybody’s hands. It is a semi-independent force, to which states and trans-state bodies can only react, not direct. Little wonder Darling seems to have a watch-and-wonder approach to the economy: ‘We are witnessing a power shift – certainly economic, and increasingly political – that will not be reversed and which we in the developed economies have yet fully to appreciate, or even fully understand.’ That admission of incomprehension, remember, comes from someone who has just been at the heart of economic policymaking in the UK. Later in Back from the Brink, Darling gives us an anecdote from 2007 to show that he is far from alone in his bleak economic prognoses. ‘[The Chinese vice president for financial affairs] was justifying China’s caution on trade. I said that in the short term things were very difficult, but I was worried about the medium-term prospects, too. He replied that he was also concerned about the medium term: the next hundred years, he said, could be very difficult. I wondered how many general elections there would be at home between now and then.’
Darling’s dry-witted gloom is not the antithesis to early New Labour economic optimism, epitomised by Brown’s claim that he had put an end to economic boom and bust. Both the pessimism and the optimism are flip sides of the same approach: that the economy, a global force of nature, is largely impervious to political action. It’s just that where before 2007, the state was happy to enjoy the fruit of the booming financial services sector, receiving 25 per cent of its corporate tax revenue from the now demonised bankers, admits Darling, so it reaped the consequences of a busted financial services sector in the form of massive drop in tax revenue.
But if Darling combines cluelessness with gloomy fatalism, then Brown comes across as simply deluded. In 2008, writes Darling, ‘[Brown] thought I had become the prisoner of the doom merchants within the Treasury’. Brown’s scepticism towards Darling’s economic views certainly made for a strange political spectacle. As Darling waned miserably, so Brown waxed optimistically. In August 2008, in direct response to Darling’s worst-downturn-in-60-years interview, Brown told journalists that ‘we would see an economic recovery in six months’. At every stage, in fact, Brown seems to have wanted to paint a reassuring, vote-winning picture of the economy, with Darling stood next next to him with the equivalent of a ‘The End is Nigh’ placard.
The reason seems clear enough. Brown wanted to win what was to be the next general election and Darling’s misery-mongering was not helping. Yet, while this seems obvious, it also reveals a lot about the exhaustion of New Labour. It came to exist almost solely as an electoral machine. Its purpose, its end was simply to win the next election. And the next. And the next. Beyond the perpetuation of its own power, there was nothing, no societal vision, no grand political idea, to cohere it as a party. And it is on this point that Darling is particularly scathing. Of the election-that-never-was in the autumn of 2007, Darling writes: ‘The problem for me was, what would Gordon say to the country that actually required a new mandate? In what way would he seek to differentiate himself from Tony Blair? What did he want a mandate to do that was different? That was not clear… It was obvious to me even at this early stage of his premiership that there was no sign of clarity or direction. It was all about tactics rather than strategy. No one seemed to be asking the obvious question: what was it that Gordon wanted to do during his premiership.’
In the absence of a big political idea that might have bound New Labour to something other than its own survival, what prospered was a vicious form of office politics. Which was hardly surprising. Without grand politics, petty personal battles flourished. The result was, as Darling describes it, a courtly style of governance in which individual loyalties and betrayals were all that really mattered. Darling, being a largely unmoved sort, was apart from much of this. ‘I was not tribal’, he writes. This is probably why he observes the gangs and cliques so acutely: ‘[Brown’s] style of operating was like an old-fashioned court: he was the centre around which trusted courtiers moved. He had worked like this throughout his career, since his earliest years as a student politician at Edinburgh University.’ This was particularly apparent in August 2008 when Darling was meant to deputise for Brown who was ‘allegedly on holiday’: ‘Actually I did not [deputise for him]. Gordon and his court had decamped to Southwold, in Suffolk, where he was still very much not on holiday. Shriti Vadera, his economic adviser, was there, and Ed Balls and his press secretary, Damian McBride, visited. It was almost like the summer camp of the king in days of old.’
As Darling was to discover to his cost, if you’re not seen to be with the court, you are deemed to be against it. And as such, that was a signal for someone like Brown’s de facto press secretary Damian McBride to ‘brief’ against you. Or as it’s otherwise known, bitch to the press. Darling was to confront Brown about this, but Brown said he had nothing to with it. ‘[S]ystematic anonymous briefing from people you have known for years, and who are supposed to be on your side’, reflects Darling, ‘is deeply unpleasant. Living next door to it – literally – made it all the harder. I was reminded of the words Henry II uttered about Thomas a Becket: “Will no one rid me of this turbulent priest?” He didn’t order his knights to go and kill Becket, but they believed they had his blessing to do so.’
Such a way of operating, with a courtly clique at the top determining government affairs, was not an innovation of Brown’s. Nothing was. It was just the way New Labour had always done things, writes Darling. ‘Once in government, both Tony Blair and Gordon Brown were reluctant to consult with – or, indeed, to trust – their colleagues on key issues. Iraq, identity cards, tuition fees, the economy – all would have benefited from proper collective discussion.’ Debate had given way to ‘governance by dictat’. Towards the end of Back from the Brink, Darling revisits this theme when reflecting on the workings of the New Labour cabinet: ‘We would sit down, hear the business in Parliament for the next fortnight or so, and then be told about a policy announcement that was going to be made sometime that day… Both Tony and Gordon were reluctant to have open discussions if there was any possibility of controversy. There were other policies [beside the bailout] that would have benefited from a far earlier and thorough debate. Iraq is perhaps the prime example. Or Afghanistan, when there was a discussion but only as a prelude to the announcement by John Reid, the defence secretary, that we were deploying troops there. Too often, the discussion was simply around the reporting back of the latest development, rather than providing an opportunity to stand back and ask where we were going.’
Indeed. New Labour’s absolute commitment to their electoral mission trumped all else, it seems. In the depths of economic stagnation, however, something else was needed. As Darling’s valedictory tome suggests, the question of ‘Where are we going?’ could not be postponed for ever.
Tim Black is senior writer at spiked.
Back from the Brink: 1,000 Days at Number 11, by Alistair Darling, is published by Atlantic. (Buy this book from Amazon(UK)).