The MT Interview: Alistair Darling

The former Chancellor of the Exchequer delivers his verdict on the fledgling Coalition, the financial crisis and a certain recently-published memoir.

by Chris Blackhurst
Last Updated: 09 Oct 2013

It was Enoch Powell who said: 'All political lives, unless they are cut off in midstream at a happy juncture, end in failure, because that is the nature of politics and of human affairs.'

I cannot help thinking on this as I greet Alistair Darling, who was until a few months ago the Chancellor of the Exchequer. His new office is at the top of Portcullis House, the building MPs use across the road from the House of Commons.

The room is completely empty, apart from a desk in the corner with a few papers on it, a computer, a bare meeting table and a few chairs. On the bookshelves there are just a handful of volumes. Among them is Tony Blair's memoir, A Journey, which stands out because it's got yellow Post-It labels - presumably the sections relating to Darling - sticking out of the side. An assistant sits in a small ante-room, listening in.

It's not clear whether they've put the phones on silent or nobody is calling - whichever it is, the absence of their ringing adds to the sense of loss. Only a few months ago, Darling had a suite of rooms at the Treasury that were full of vital documents and files, and an army of staff constantly coming and going, handing him messages, seeking his thoughts, chasing his signature. And, of course, the home in Downing Street.

He stood for election as an MP again because he wanted to carry on being chancellor, as well as serving his constituents. 'I'd like to have finished the job,' he says. 'I'd like to have seen us into recovery and well into the future. But we lost the election and we lost pretty convincingly. The other lot didn't win it, we lost it.'

His frustration is palpable. 'For the three years I was chancellor, there was only about a month when things looked all right. The rest of the time, we were dealing with a hurricane.'

He's annoyed too, with his own party, with the hierarchy and with the election planners - and that must mean with his then leader. During their long years together, Darling and Brown worked harmoniously, despite Brown's increasingly difficult nature. They had much in common as members of Labour's Scottish mafia, yet they are very different personalities.

Towards the end, their relationship soured, when Darling committed the cardinal sin in the eyes of Brown and some of his advisers of speaking his mind on the extent of the recession. In the summer of 2009, Brown wanted to replace him with Ed Balls, but Darling refused to take another post - he'd rather resign from the Cabinet than accept a lesser job. Despite all this, the two seem to remain on good terms - or perhaps he is saving the truth for his own memoirs.

Since the election, he says, 'it's only cuts - that's all we hear about.' The new government has 'tried to define itself around cuts'. Yet, during the campaign, they were barely mentioned. 'We're going to have the debate this autumn we never had in the election.'

Surely, Labour was just as culpable in that regard? 'Absolutely. By not saying more about what we would do we've now left the ground that has been taken by others. The result is they can do it on their terms.'

Governments, he says, need 'a mandate as to where they can and can't go'. But this government has a 'mandate of silence. This was the first election campaign where we didn't have a day devoted to health, education, the economy ... Instead we had the TV debates that took up half of the campaign. The debate we're having now, about cuts, is the debate we should have had during the campaign. It's true, the fault lies with all of us.' And that includes his former boss.

Now, after Labour's election failure, he is preparing to leave frontbench politics. He's still shadow chancellor, but not for much longer; yet he will remain an MP. 'It has been an honour and a tremendous privilege but I believe it's time for me to return to the backbenches, from where I shall look after, with great pride, the constituents of Edinburgh South West.'

But those words cannot mask the sense of disappointment. Darling has spent the past 22 years, ever since he was appointed home affairs spokesman by Neil Kinnock in 1988, in frontline politics. For the entire run of Labour's spell in power he was a member of the Cabinet - as chief secretary, work and pensions secretary, transport secretary, Scottish secretary, trade and industry secretary and finally, chancellor - a feat equalled by only Brown and Jack Straw.

He may follow Lord Mandelson and Blair and write his account of the formation of New Labour and government. He could throw himself into his constituency and take on external advisory posts here and there. He might, one day, make a political comeback - he is 57 - and he has talked of spending only a 'year out'. For the moment, however, this is it.

Darling's is a well-known image, with its mop of silver hair and those dark, imposing eyebrows. He's wearing a typically sober suit and silk tie. His voice, too, is instantly recognisable. That soft, lilting Edinburgh tone, often imparting bad news - at least, when he was chancellor.

In the flesh, he's much warmer and funnier than his public persona suggests. He's not touchy-feely like Blair but he's nothing like as formal and reserved as he seems on TV, when he's usually seen making showcase speeches - for the Budget or at Mansion House - or being quizzed on Newsnight.

His humour is deadpan and bone dry. He's a master of understatement. In conversation, he often likes to pause and look at the person he's talking to, to see if what he's said has hit home.

Politically, he's neither a bruiser nor a spin merchant. He ploughs his own furrow, doing it his way.

The glitter of London is not for him, either. Home is in Edinburgh with his wife, Maggie - Scottish, ex- journalist and a fizzing firecracker of noise, wit and energy. They have two children, now in their early twenties. It was in Edinburgh that he cut his political teeth, serving as a councillor while at the Bar (he became a lawyer after going to Loretto, the private school near Edinburgh, and attending Aberdeen University, where he headed the students' union). It's hard to imagine now, but back then he was a Leftist firebrand. He was a Trotskyist in his youth, and on the Lothian Regional Council he protested against the rates laws imposed by Margaret Thatcher's government in Westminster.

He went into national politics because he wanted to get things done. He's a pragmatist, more given to finding a fair, practical solution (the lawyer in him) than worrying where what he's doing stands in relation to political idealism. That has been a strength but also a weakness: Darling has always been the dark horse, quiet, unaligned to any faction or to any one figure.

While that probably explains why he was able to survive in Cabinet for so many years under Blair and then Brown and emerged unscathed from their personal rivalry, it has also made him something of a political loner. He's very much his own man, not given to membership of one tribe or another.

That's how he wants it. After all, this is a man whose favourite music is by the downbeat American Leonard Cohen and who declares he is at his happiest at his 'retreat' on remote Lewis in the Outer Hebrides, at the family croft he shares with his mother and sisters.

That doesn't mean he isn't smarting. He knows that he will be forever identified in the public eye with economic disaster, with a state spending deficit of some £170bn. It's a shame, because there are many, inside and outside the Treasury, who speak extremely highly of Darling. He's seen in the City, too, as one of the few senior figures who had a good war.

He was regarded as clear and straightforward, not given to playing the same political games as others, more interested in doing his best for the nation than boosting his own reputation. It was his misfortune to be plunged into economic crisis. No sooner did he get the job in June 2007 than the credit crunch erupted, and from then on there was no respite.

'I used to deal with Alistair quite a lot on Northern Rock,' says a Treasury insider. 'He wanted to do everything by the book. We'd say: "We can let this be known, we can get it out there" about a piece of news, and he'd say: "No, I want it to be announced in Parliament first." And that would delay everything. He was as straight and upfront and honest as it's possible to be.'

However, adds the Treasury source: 'He'd take forever to make decisions. It wasn't so much that he was prevaricating but that he wanted more information - he wanted to be able to assess everything before making up his mind. That was frustrating - it would affect those working for him as they spent a lot of time collecting information rather than getting to the point where decisions were actually made.'

At the Department of Transport, where Darling was secretary of state for four years till May 2006, another ex-colleague said: 'He was a lovely guy, very open, very helpful, but things were held up all the time.'

It's now being widely recognised that Darling played a key role in saving us from total meltdown. Indeed, he acknowledges as much when asked what was the high point of his chancellorship. 'Two years ago this month, we were staring into the abyss. We were right at the edge. Royal Bank of Scotland came within just two hours of having to close its doors - that's how near it was.'

He adds: 'People forget now but at the end of 2008 you would not be viewed unfavourably if you talked of recession tipping into depression. It was thought the financial world would collapse and unemployment would soar. That has not happened. It's now pretty clear, for instance, that we (the taxpayers) are going to get all our money back that we put in to rescue RBS.'

Darling allows himself a smile. 'And even the recent borrowing figures were better than predicted. It's still high but it's already £10bn to £12bn less than a few months ago.' But he suddenly looks rueful. 'Chancellorship is all about judgment. However, the harsh nature of politics is that if the banking system does not collapse and the economy does not collapse thanks to your efforts, you still don't get many Brownie points, as you can see.'

Visibly warming to his theme, he says: 'Being chancellor is about judgment calls. You get advice from civil servants, but in the end it's down to you. In August 2008, it was my judgment that we were heading into the worst recession for 60 years.' He pauses. 'In my judgment, it was right to start telling people things were going to be difficult.'

He did just that, saying in an interview that the economic times we are facing 'are arguably the worst they've been in 60 years'. As he has recounted since, the 'forces of hell' in the shape of some of the prime minister's spin doctors were set loose, to discredit him and pour scorn on his claim. It wasn't just them, he says now. 'Newspapers dispatched their commentators to write screeds of stuff attacking me.'

He shakes his head at the madness of it all. 'If anything, I deserved criticism for saying 60 years when I could have said 100 years. But, on any view, the banking system was about to collapse and we faced one of the deepest downturns in modern times - whether it was 60 or 100 years.'

He smiles that wistful smile again. 'I was right, but the reaction I received was pretty heated.'

How does he feel now about the criticism? 'In politics, only a few have ever spoken their mind. When you do, it can be pretty torrid. But it wasn't just at Westminster - the BBC and the papers attacked me. Yet it was a rather tame summarisation of the situation.'

He was, as he sees it, doing his job. 'It's true that as chancellor you have an obligation to be careful about what you say because you come into information and you have to be careful about what you do with that information. But a chancellor who takes a Panglossian view of the world where everything is fine won't command the respect of business, the public and the markets.'

I gesture towards the Blair book, so conspicuous on his shelf. What does he make of it - in particular the reference to him being frustrated as chancellor under Brown? 'Tony said I was a brilliant chancellor who didn't implement the policies I wanted to. It's true, I wanted to put up VAT and couple it with help for the low paid, which is better than what the present government is doing. But the top rate of tax was something I wanted to do that we did - because we'd got to reduce the deficit and it seemed fair that people who have done well out of the economy doing well should pay more.'

Where he takes exception to Blair's book in relation to his time as chancellor is the former prime minister's assertion that by adopting an interventionist Keynesian approach to the banking crisis, Brown and Darling went on to develop an appetite for state ownership and control. 'Tony knows me well enough - he knows I'm not in favour of "big state". But it's also clear the government should make a difference.'

For example, he says, if you take Britain and business today, 'there are challenges to the economy from the East. That's where the government still has a role to play, to ensure R&D is not depleted and invest in science. I don't agree that the government has no role.'

When the country is in crisis, says Darling, it is the Government's duty to step in, not out of some ideological desire to take over but because the Government is expected to do so. If he and Brown had believed in 'big state' then, he argues, they would have acted to nationalise Northern Rock sooner. In fact, so keen were they not to own a bank that they did not act immediately. In the end, when they did, it was because common sense demanded it - not old Labour, Clause Four dogma.

On the current Coalition's planned cuts, he agrees that action had to be taken. 'Borrowing rose as a consequence of the downturn. Twenty-five per cent of our capital revenues from the banking sector were lost. Revenues dived and borrowing went up. Now we're coming through it, of course you've got to get borrowing down. But there's no way a 25% to 30% cut in education won't have a damaging effect. Or in transport, if you make cuts and don't spend on maintenance, then things will last a year or two, then fall apart.'

There's definite annoyance in his voice when he says: 'What most other countries do is plan. I am profoundly worried that we don't cut too much and risk recovery and we don't invest.'

He leans forward in his chair. 'You know, when I go to other countries they are committed capitalists too, but they don't shirk it when it comes to government spending. That's where planning makes a difference - they do it because they can see beyond the short term.'

Labour's opponents paint a picture of economic mismanagement, of an administration that threw money at the wrong things. It's a charge that rankles. 'In 1997, when we came to power, the UK had the second-highest debt in the G7. Then we brought it down so that we had the lowest apart from Canada - and we were criticised for that. We spent on school, hospitals, transport. We had to put right 20 years of underinvestment.

'Listen,' he says, 'when we entered the downturn, our structural deficit was not so high. The real problem was that we were very dependent on financial services for tax revenues and we got hit very badly. And it wasn't just us. The US and France had huge deficits. Japan's problems were astronomic. Japan is an object lesson in what happens if you don't invest - you end up with no growth for 15 years. If we're not careful, we could end up with having made great cuts but not having brought the deficit down, and that would be horrifying.'

With hindsight, he now admits, the UK was too re-liant on the City. We're now left with a weakened manufacturing sector, whereas - as he points out - Germany's is still strong. 'We lost a lot in manufacturing in the early 1980s. That said, now we employ fewer people but we're at the high end of the market. Companies like Rolls-Royce are phenomenal.'

The economy, though, needs reconfiguring, away from the City. But, he says, 'it won't be easy. It's also worth mentioning that financial services is not just about banks - we've a strong insurance sector which we must preserve. I'm from Edinburgh and I know just how strong we are in insurance. But looking at the bigger picture, we must reshape the economy.'

He can't help adding: 'Being able to reshape the economy is one of the reasons why you hold office.'

His low point, then? 'When HMRC lost 25 million child benefit records in 2007. I remember thinking, this is bad, this is very bad.'

In the end, the storm about the lost records blew over. But the episode illustrates what destabilises political careers. 'It's striking in Tony's book how much of it is about events - like Kosovo, 9/11 and Iraq.' There's a silence and he looks downward. 'I wonder how his premiership would be judged if there'd not been Iraq.'

Darling has been portrayed recently as naive, that he was taken aback when the bankers found ways of avoiding the bonus tax he imposed. 'I knew people would try and get round it - it came in at midnight after the Budget and even then in those few hours I had HMRC telling me they were noticing a lot of unusual activity by bankers to avoid being caught. I was never stupid enough to think I would change the City's culture.'

His assistant puts her head round the door. Time to wrap up. As I leave, I reflect that Powell was correct, that you seek high political office knowing his dictum. But when it's your turn to leave, that doesn't make it any easier.

FOUR CHALLENGES FACING DARLING

  • Write his memoirs with the honesty and straightforwardness he believes are his trademark
  • Continue to harry the Coalition on the economy and much else besides - few others have his knowledge
  • Find another outlet for his expertise that is just as fulfilling as frontbench politics
  • Remain available for a political comeback - the current order may yet be upset

Darling in a minute

1953: Born 28 November, his father was a civil engineer. Educated at Loretto and studied law at Aberdeen University
1984: Admitted to the Bar as an advocate. Member of Lothian Regional Council, also on Lothian and Borders Police Board
1987: Labour MP for Edinburgh Central, later MP for Edinburgh South West
1988: Shadow home affairs spokesman under Neil Kinnock
1997: Entered Cabinet as chief secretary to the Treasury
2002: Transport secretary, also became Scottish secretary
2006: Trade and industry secretary
2007: Chancellor of the Exchequer

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