Alistair Darling, who died of cancer aged 70, was the former Labour Chancellor of the Exchequer under Gordon Brown during the most significant global financial crisis since the Great Depression. Darling's response to 2008 left an indelible mark on the United Kingdom's economic landscape as a tenure defined by impossible choices and controversial decisions.
Darling was appointed just weeks before a devastating credit crisis at the bank Northern Rock, which led to the first run on a British bank since Overend, Gurney & Co. collapsed in 1866. The run on Northern Rock would serve as the harbinger for the subsequent global recession. He guaranteed the deposits at the bank and later ordered a £45.5bn rescue for the Royal Bank of Scotland after late-night negotiations with the bank's bosses in which he was told they had only hours until they were out of money. Darling's colossal bailout of the banks in 2008 remains the most significant and contentious part of his legacy.
With the global financial system teetering on the brink, Darling opted to use vast sums of taxpayer money to prop up the failing banks. This move, whilst staving off immediate disaster, has been widely condemned for its long-term implications. Darling effectively socialised the losses of private institutions, burdening the taxpayer with the cost, and set a precedent of government intervention and support of the financial sector.
Furthermore, Darling's response to the crisis has been criticised for lacking foresight. At a time when bold, transformative economic policies were needed, Darling's approach was deemed unimaginative, overly reliant on traditional stimulus and supported failing institutions. It was, perhaps, a missed opportunity to reform the financial sector and address the systemic issues that led to the crisis.
The aftermath of Darling's management has been equally contentious. The increase in national debt due to the bailouts led to years of austerity measures under subsequent governments. These policies, which led to significant cuts in public spending, have been linked to enormous rises in poverty, social inequality, and homelessness across the UK. However, the financial crash of 2008 was principally marked by a failure to regulate the financial industry adequately before the crisis, an issue of governance that came before Darling's tenure.
In assessing his legacy, one must recognise the broader economic context; although the choices made in response to the crisis were his own, ultimately, it is the decisions of others that have defined his legacy and his response that cemented it. Darling's approach, marked by a conservative adherence to established norms and a reluctance to challenge the status quo, resulted in a squandered opportunity for meaningful economic reform in the face of systemic failure.
His tenure as Chancellor was arguably a period of lost potential and misdirected policies. Darling has cast a long shadow over the UK's economic and social landscape, a testament to the enduring impact of political choices which benefit not the people but the polity.
However, outside of the 2008 financial crisis, Darling was considered a moderniser, who for many, was a man who could work across party lines to achieve his goals. For a short time, Darling helped foster a more collaborative and less partisan parliament, which was particularly useful during such extreme economic difficulty.
One of Darling's key accomplishments was advancing social welfare policies. His commitment to maintaining and improving public service funding was notable. In 2009, he also increased the benefit rate to support those most affected by the recession. These efforts helped to safeguard essential services and safety nets for the public. However, austerity was not far behind.
Moreover, Darling's tenure showed what some have described as a balanced approach to taxation, aiming to ensure fairness and efficiency in the tax system. He introduced measures to streamline tax collection and combat tax evasion, vital in maintaining the integrity and sustainability of the UK's fiscal policy post-2008.
Darling is thought of for his pragmatism in dealing with the most significant economic distress for, at the time, nearly one hundred years. However, who is the one calling it pragmatic and who does that pragmatism benefit?
Alistair Darling is overshadowed by his handling of the 2008 financial crisis; nothing much peaks from behind that economic curtain. Yet, looking beyond the shadow, Darling's contributions to modernising the UK's infrastructure, advancing social welfare policies, and his balanced approach to taxation should not be disregarded. His ability to work across party lines during extreme economic difficulty highlighted a less partisan, more collaborative approach to governance and provided greater stability during the crisis.
But the question remains: who benefitted from Darling's pragmatism, his choices, his bailout? While some argue that the decisions made during the crisis were necessary to avert greater economic disaster, they paved the way for years of austerity, poverty and hardship that disproportionately affected the less privileged and benefited the economic elite. His response in 2008, while pragmatic for those in power, ignored an opportunity for economic reform that would have benefited the wider society for years to come. It is the memory of a transformative politician whose transformative politics was agreed upon in private rooms with bankers far away from the public.
Image: Financial Times
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