James Forsyth

Sifting through the Northern Wreckage

Sifting through the Northern Wreckage
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Perhaps, the greatest political danger for the government from yesterday’s nationalisation of Northern Rock is that it fits so neatly into the narrative of a government that is incapable of making a decision. On The Today Programme this morning, Alistair Darling was repeatedly pressed on the question of why this step was not taken earlier and had no adequate answer.

Darling’s performance this morning revealed just how vulnerable the government is over Northern Rock. The Chancellor could not parry the charge that allowing then bank to continue doing business even now it is nationalised is unfair competition. Anatole Kaletsky rips into this decision in The Times today:

To use nationalisation to keep the bank in business and its staff in state-subsidised employment would be a travesty of all the economic principles that “new” Labour has claimed to believe in. It would represent a grossly unfair distortion of Britain's banking business and would make a mockery of all the arguments Mr Brown has vociferously advanced in Brussels against state subsidies and protectionism elsewhere in Europe. Worst of all, the provision of £100 billion of state guarantees to a grossly mismanaged and insolvent mortgage bank would be a gross insult to the hundreds of thousands of workers in businesses from coal, steel and textiles to performance cars and advanced electronics whose jobs could have been saved with Government guarantees or “temporary” nationalisations costing one-tenth or even one-hundredth of the £100 billion that the Government is now devoting to just 6,000 jobs at Northern Rock..”

It is hard not to agree with Kaletsky’s conclusion that “what Mr Darling announced yesterday was a financial and political disaster of almost unimaginable proportions. The Northern Rock saga did not end yesterday; the fiasco has only just started, with the Government now officially in charge.”

Written byJames Forsyth

James Forsyth is Political Editor of the Spectator. He is also a columnist in The Sun.

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