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Tuesday 7 October 2008

Black Tuesday

Gordon Brown's premiership has produced nothing but errors, evasions and excuses.

The division of banking regulatory power between the Bank of England, the Financial Services Authority and the Treasury — devised by Brown with Darling as his junior in 1997 — proved inadequate to the task of averting a crisis. Argument rages as to which of the three was least effective, but according to the Governor of the Bank, it was the Chancellor who ultimately blocked a tentative approach from Lloyds TSB to buy Northern Rock as a going concern before the depositors started to panic. The political horror of televised pictures of that panic then bounced Darling into offering an apparently unlimited guarantee, the fiscal implications of which are only now fully apparent: we the taxpayers have so far lent Northern Rock, via the Bank, £24 billion, with no indication as to whether or when we will be repaid. Meanwhile, the Treasury’s uncertain handling of the ‘auction’ process for Northern Rock has so far produced only one bid — led by JC Flowers, a little-known US private equity group — that offers timely repayment of part of the Bank’s emergency loan; and it has produced no bids at all that offer comfort to Northern Rock shareholders, who may well lose every penny.

Gordon Brown’s administration was supposed to be so very different from what went before, and for a brief few weeks it looked as if it might be. Tony Blair’s was long on aspiration but so short on delivery that the nation gradually lowered its expectations and just waited for him to go. Brown promised to match vision with hands-on managerial competence — but has produced nothing but errors, evasions and excuses. If Black Wednesday in September 1992 was the day the public lost trust in Conservative government for a generation, Black Tuesday in November 2007 — the day the government admitted it had mislaid 25 million of our personal files, only 24 hours after it revealed it had exposed us to £24 billion of unnecessary debt — may turn out to be the day Britain lost faith with Gordon Brown.

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