David Gauke MP: The men who came to dither

David Gauke, MP for SW Hertfordshire, says Gordon Brown and his "Chancellor" Alistair Darling make for a dithering, directionless double-act that is damaging the country.

The point of Alistair Darling was always supposed to be that he was a ‘save pair of hands’.  He was seen as unobtrusive and inscrutable and had held a number of Cabinet positions without attracting much adverse attention.  It was not a Ministerial career with many notable achievements but there were even some who considered him quietly competent.

It was a reputation he lost in the final months of 2007.  As Chancellor of the Exchequer, he has faced three major challenges – Northern Rock, HMRC’s data loss and the capital gains tax fiasco – and the response in each case has been one of indecision and delay.

The changes to CGT are the clearest example, in part because this was a crisis entirely of his own making.  When Mr Darling announced the abolition of taper relief in the Pre-Budget Report on 7 October 2007, he united business in opposition to the plans.  Within weeks, Gordon Brown was briefing journalists that there would be a partial U-turn and on 27 November, the Chancellor told the CBI that he was ‘listening to business’ and that he would report back to Parliament before Christmas with new proposals.

As it turned out, however, Mr Darling was forced to make a statement to Parliament before Christmas at which point he declared that he was not in a position to announce any changes to CGT until the New Year.

The full story of how the Government handled the Northern Rock collapse has yet to emerge.  However, it is clear that the Chancellor made a huge mistake in rejecting the Lloyds TSB bid before the run on Northern Rock and that he should have guaranteed the Northern Rock deposits earlier.  Mr Darling has consistently failed to get a grip (and be seen to get a grip) of the situation.  Throughout, he has been reactive, uncertain and nervous.   

We have also learned from the Sunday Times that the Bank of England want to introduce fundamental reforms of the banking system in order to prevent another Northern Rock but are frustrated by a Prime Minister and Chancellor ‘unable to focus because morale throughout the government is so low’. This criticism may have stung the Chancellor into action and he set out some broad proposals in an interview with the Financial Times on 4 January. 

As far as the loss of the HMRC discs is concerned, the major scandal is that HMRC’s systems allowed a junior official, with the apparent knowledge of his superiors, to access and download the personal data of 25 million people.  Alistair Darling has kicked all the issues relating to this into the long grass by commissioning the Poynter Review which will report later in the year.   

However, what is clear is that Mr Darling’s response to learning of the loss was hesitant.  When informed of the loss on Saturday, 10 November, he did nothing but tell HMRC to search its own offices and that of the National Audit Office (in fact, HMRC did not get round to searching the NAO premises for another week).  The Chancellor did not instruct HMRC to contact the police until the following Wednesday and only told the banks of the data loss late on the Friday.  Remember, the details of 7.5 million bank accounts had been lost and the banks would have been the first to detect if these details were being misused.  But for six days the Chancellor waited and hoped that the discs would turn up before letting the banks know.  Parliament was finally told on 20 November.

Alistair Darling could be described as an unlucky Chancellor.  As a rule, Chancellors are usually in the spotlight at pre-determined times when presenting Budgets and Pre-Budget Reports.  In periods of global economic growth and stability, the Chancellor is less subject to ‘events’ than, say, the Home Secretary.  The fact that failures in our banking regulatory structure and the systems of HMRC came to light under his watch (rather than his longstanding predecessor) might be seen as being unfortunate for him.

He might also be seen as being unfortunate in that he serves a Prime Minister who is reluctant to delegate, at the best of times, and who takes his role as First Lord of the Treasury very seriously.  Gordon Brown undermined his Chancellor by briefing the press about the CGT retreat and, it is widely rumoured, blocked any announcement of changes before Christmas.  Mr Darling is less Chancellor of the Exchequer and more Second Lord of the Treasury.

Whether it is the First or Second Lord of the Treasury in charge, neither man appears capable of making decisions.  As readers of Tom Bower’s biography of Gordon Brown could have predicted, the Prime Minister has revealed himself to be someone who finds making decisions difficult and will delay doing so for as long as possible.  The General Election fiasco perfectly illustrates this flaw and the consequences that can follow.

In a sense, we have a Prime Minister and Chancellor well-matched.  A dithering double-act, uncertain, insecure and directionless.  At a time of global economic fragility, a faltering Revenue & Customs and a substantial budget deficit, the UK needs something better.