Conservative & Liberal Coalition’s Emerging Nuclear Policy

Conservative & Liberal Coalition’s Emerging Nuclear Policy

Extract from The European Energy Review May 2010. Liberal Democrat Chris Huhne,(He who subsquently ended up in the nick) had been appointed to the post of Secretary of the Department of Energy and Climate Change. Huhne had made many statements against nuclear energy in the past, calling it “a tried, tested and failed technology” that he would reject. The Lib Dems repeatedly called for a pouring of public money into renewables and their supply chain in “a commitment to 100 per cent carbon free, non-nuclear electricity by 2050.” Despite the foregoing position, a coalition agreement, negotiated over a period of 5 days has brought relief to nuclear industry observers by essentially continuing the unfinished work of the Labour government.

The Statement

“Liberal Democrats have long opposed any new nuclear construction. Conservatives, in contrast, are committed to allowing the replacement of existing nuclear power stations provided they are subject to the normal planning process for major projects (under a new national planning statement) and provided also that they receive no public subsidy. We have agreed a process that will allow Liberal Democrats to maintain their opposition to nuclear power while permitting the government to bring forward the national planning statement for ratification by parliament so that new nuclear construction becomes possible. This process will involve: The government completing the drafting of a national planning statement and putting it before parliament; Specific agreement that a Liberal Democrat spokesman will speak against the planning statement, but that Liberal Democrat MPs will abstain; and Clarity that this will not be regarded as an issue of confidence.” This will allow Conservative & Labour to vote through the legislation unchallenged.

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Nuclear Plant Developments

Hinkley Point Nuclear Facility

EDF together with French & Chinese investors are to build and operate, for 35 years a new nuclear reactor at Hinkley Point in the South of England by 2023. The UK Government, as loan guarantor has accepted all risks pertaining to the build including financial liability, the UK taxpayer is, in effect funding the project. The foregoing arrangements are coupled with a fixed minimum price, (for electricity) well over twice the present unit cost. Projected equity returns on investment, for investors is expected to be, not less than 21% per annum for 35 years in total. These are profits previously unheard of in capital investments. The European Commission has with-held approval and is investigating whether State Aid Rules allow Britain’s support, such as envisaged.

The Conservative Party manifesto policy regarding Nuclear development and expansion; It will be fully supported provided that such projects receive no public subsidy”. Well!! Well!! Well!! Westminster has no place in the future of Scotland. Vote “Yes” to Independence.

Extract from – The Telegraph 24 March 2014: The European Commission is investigating whether Britain’s support for nuclear complies with European Union state aid rules. The EU’s executive arm questioned in its investigation report whether returns of 10pc on a nuclear project are justified. Britain is counting on the construction of new nuclear plants to replace ageing and polluting power stations that are closing down over the coming years. The Government’s support mechanism for nuclear power is unprecedented in Europe, which means the deal is attracting huge attention. Besides EDF, the investors in Hinkley Point include France’s Areva and Chinese state-owned companies CGN and CNNC.

Carbon Connect also said the way in which the Government and EDF struck their preliminary agreement was not competitive or transparent. “Competition is desirable both for affordability, by exerting downward pressure on bids for projects, and to a lesser extent public support, in that it can provide a more transparent guide as to how revenue support is allocated,” the report said.

The European Commission expects to make a decision on whether it will approve Britain’s state aid support for Hinkley Point by the end of the year, and EDF is unlikely to make a final investment decision on the project before then.

Two other investor groups have also unveiled plans to build new nuclear plants in Britain. Japan’s Hitachi is developing up to five reactors at two sites, and France’s GDF Suez has taken Japanese partner Toshiba on board to build three new nuclear units at a location in northern England. These projects are also expected to receive similar state guarantees.

Windfall Tax Scottish Oil

Windfall Tax Scottish Oil

Mr Osborne announced a £2 billion windfall tax, to be levied against oil & gas companies operating in the North Sea, (an increase of about 12%). The policy, which placed at risk thousands of jobs and billions of pounds of investment in the North of Scotland, was first brought forward, in committee by Scottish MP and Chief Treasury Secretary Danny Alexander. Many of Mr Alexander’s, Scottish Liberal Democratic MPs broke with protocol and voiced opposition to it. Ignoring protestation’s, at a formal business dinner, at which he was the invited speaker, attended by a large number of eminent London based business leaders, Mr Alexander triuphantly claimed ownership of the levy stating: “It was my idea, which I first proposed a few months ago.”

Comments Subsequently Attributed to a Number of Mr Alexander’s Scottish Colleagues;

1. Liberal Democrat MP, (Gordon) Malcom Bruce; This extra tax is breaking pledges made to the industry by Mr Osborne and the Liberal Democratic leader, Deputy Prime Minister Nick Clegg. Additionally, “Mr Alexander is economically illiterate for coming up with a clearly populist move which could kill off investment in the North Sea”.

2. Liberal Democrat MP, (West Aberdeenshire and Kincardine) Sir Robert Smith; This tax raid will be “economically disastrous”.

3. Liberal Democrat MP, (Caithness and Sutherland) John Thurso raised concerns at an energy Select Committee, claiming; “Investment in new oilfields to the West of Shetland is now at risk”.

The populace of Aberdeen and the North of Scotland would be well advised to note the views of Mr Alexander’s colleagues who think his grasp of economics borders on the illiterate. The only way to protect the Scottish oil & gas industry is to vote, “yes” to independence.

Northern Rock The Building Society Gone Bad

Northern Rock The Building Society Gone Bad

A belated intervention, (authorised by the Chancellor of the Exchequer)by the Bank of England in support of Northern Rock failed to prevent a run on the bank. This has led to an embarrassing U-turn in policy by the Governor.

The handling of the liquidity crisis at Northern Rock by the UK authorities became a major embarrassment for the government and Gordon Brown in particular. The new Prime Minister had always stressed his achievements as Chancellor of the Exchequer during the period 1997 to 2007, while he was waiting in the wings for Tony Blair to retire. Yet within several days, his reputation for prudent economic management was undermined.

The problems at Northern Rock, and other financial institutions, did not appear overnight. The crisis in the USA sub-prime loans market was well documented, as was the fact that this dodgy debt had been repackaged and sold on to UK and EU banks. Major banks in Germany as well as Barclays Bank in the UK are rumoured to have had significant exposure to these dubious assets.

A Month after Northern Rock made shocking headlines around the world, the full story of Britain’s first bank run in 140 years was yet to be told. People were little the wiser, after Adam Applegarth, the mortgage bank’s chief executive, and Matt Ridley, its chairman, tried to convince a sceptical parliamentary committee investigating the fiasco that they had been struck down by a bolt from the blue. The business model of Britain’s fastest-growing mortgage bank — which funded its loan book mainly from the wholesale markets, rather than from retail deposits — had been prudence itself, they explained, derailed only by sloppy lending in America that caused those markets to seize up in August.

But their Northern Rock is now a busted flush. None of the three groups who talk of buying it at a knock-down price — a consortium led by Sir Richard Branson’s Virgin Group and two private – equity outfits, Cerberus and J.C. Flowers — wants to keep its name. The bank, kept afloat at present by £13 billion ($26 billion) of public money, does not rule out going back to the Bank of England for more. And just as Northern Rock’s bosses deny imprudence, so the central bank’s governor, the head of the Financial Services Authority and the Chancellor of the Exchequer stoutly maintain that they were not responsible for the mess either.

Yet the story needs to be pieced together, for the debacle has had three important and unpleasant consequences. A financial institution that underpinned for years the economy and self-image of one of England’s poorest regions, the north-east, has been destroyed. The reputation of a broadly good central-bank governor has been tarnished. And an admired regulatory system that helped to make London the world’s biggest international financial centre has fallen into disrepute. What went wrong? What signals were missed? And what lessons should bankers and regulators both learn?

The year that Northern Rock fell from grace could hardly have started more promisingly. In January the bank announced record pre-tax profits of £627m for 2006, 27% higher than the previous year’s. This marked a decade of success since its conversion in 1997 from a building society — a residential mortgage lender owned by its savers and borrowers — into a bank quoted on the stockmarket. Year after year its assets had grown by a fifth, even though it had few branches — 128 when it converted and 76 this year. A small local lender had become Britain’s fifth-biggest mortgage provider, ambitious to become its third-biggest before long.

The trick Northern Rock pulled off was to rely on wholesale markets rather than on retail deposits to finance most of its lending. More than any other big British lender, it relied on “securitising” its mortgages. The bank bundled its loans together and packaged them into bonds that it sold to investors around the world. In January 2007 it raised £6.1 billion that way; a second securitisation in May brought the first-half total to £10.7 billion and made Northern Rock the top securitiser among British banks (see chart 1). With money swirling around the world’s capital markets, securitisation worked a treat. By tapping global wholesale markets, Northern Rock was able to raise money more cheaply than its home-bound rivals, price its mortgage offers more keenly and carry on its hectic expansion.

More securitisations were planned for later in the year. Northern Rock needed the money because it was growing even faster than before. In the first six months of 2007 its lending was 31% up on the same period in 2006; net of redemptions, lending soared by 47%. As HBOS, Britain’s biggest mortgage lender, put on the brakes, Northern Rock’s share of the net new-lending market jumped to 19%, an extraordinarily high share for a bank that had had just 7% of outstanding loans at the end of 2006.

Yet the bank’s share price had been sliding. As the Bank of England pushed interest rates up sharply, the City was starting to worry about the prospects for mortgage lenders. Northern Rock appeared to have a good loan book: at the end of June, repayment arrears were just half the industry average (though mortgages seldom curdle immediately, and a third of fast-growing Northern Rock’s were less than two years old). The bank suffered along with other mortgage lenders as financial folk pondered how far the fallout from America’s excessive sub-prime (ie, high-risk) lending might spread.

Worries intensified in June when Northern Rock trimmed the year’s expected profits growth from 17% to 15%. At a time when monetary policy was tightening faster than expected, the bank had agreed to issue a tranche of mortgages at interest rates that were lower than those it eventually had to pay in the markets to finance them. The episode highlighted the fact that its reliance on wholesale funding made it vulnerable.

Northern Rock’s profit warning led to a further slip in its share price. But banks do not answer to their shareholders alone. They are subject to special supervision, because a problem at one bank can undermine confidence in the whole system and do immense economic damage. The Bank of England had long been in charge of overseeing banks, and its record, though not flawless, was widely reckoned a good one. In 1997, however, when Gordon Brown, then chancellor of the exchequer, freed the central bank to set interest rates, he decided to hand bank supervision to a new Financial Services Authority. The FSA was to look after individual banks while the Bank of England remained responsible for the stability of the financial system.

A falling share price, an explosive increase in market share and a profit warning: three reasons, one might think, for a newish banking supervisor to start sweating about one of its charges. Yet the FSA remained cool. Indeed, it chilled out even more on June 29th, giving Northern Rock a stamp of approval that let the mortgage lender, under new international banking rules, set aside less capital against its loans. Northern Rock promptly announced an increased dividend (even though it expected profits to fall). At around the same time, bizarrely, the FSA was urging the lender to toughen its “stress tests”.

The FSA’s apparent insouciance was even stranger given Northern Rock’s specific history. In 2004, after short-term interest rates shot up, the bank was caught off-guard, and profits suffered. It promised investors that half its loans would be matched by retail deposits—a pledge it promptly ignored once rates moderated. By the time it hit trouble this year, just under a quarter of Northern Rock’s funding came from retail customers.

But there were good reasons to doubt the wisdom of relying so heavily on the capital markets. Though retail deposits cost a lot to acquire, many banks still prefer them, for they are generally a more steadfast source of finance than wholesale funding. A former chief risk officer at one of Britain’s biggest banks says that Northern Rock’s operating model was very risky: “To say that nobody could have envisaged what happened doesn’t wash at all.”

Yet both Northern Rock and the FSA assert that the event that felled the bank — the complete failure of the various market-based funding sources upon which it had become reliant — could not have been foreseen. Mr Applegarth has stressed the speed, duration and global nature of the liquidity freeze that started on August 9th. “I didn’t see this coming, I have yet to find someone who did,” he said. The FSA has played a similar card: in parliamentary testimony on October 9th, Sir Callum McCarthy, the regulator’s chairman, insisted that the seizing-up of the money markets was unprecedented.

So neither the bank nor the FSA had incorporated such a scenario into stress tests of the bank’s resilience. Indeed, the simulations carried out jointly by the FSA, the Bank of England and the Treasury to gauge the financial system’s ability to withstand potential upsets (one of which, ironically, posited problems at Northern Rock) failed to involve banks themselves as players, and thus were unable to predict their likely behaviour in a crisis of this sort.

The timing of the liquidity freeze was, it is true, disastrous for Northern Rock, which was low on cash because its last securitisation had been in May and it was planning another in September. But even if the timing had been better, its strategy for dealing with a liquidity crisis proved to be little more than wishful thinking.

The bank had sought to diversify its funding sources around the world; but markets dried up globally. It had hoped for a flight to a quality loan book such as its own if investors became alarmed about sub-prime mortgages; instead, investors shunned anything to do with mortgages. Unlike Countrywide, an American mortgage lender that also got into trouble, Northern Rock had nailed down little money — only $3 billion, it emerged this week—in committed credit lines from banks that it could call upon in an emergency. And it had failed to take steps to increase its access to central-bank liquidity in a crunch. About 150 banks, some of them British, were able to tap the ECB through their branches in the euro zone. Northern Rock could perhaps have put mechanisms in place to use its outlet in Ireland. But the paperwork would have taken a few months; and by the time the bank thought of it, the moment had gone.

If Northern Rock’s excuses fail to pass muster, so do those of the FSA. Hector Sants, who took over the job of chief executive in July, admitted on October 9th that the regulator should have been more forceful in its dealings with the bank, and accepted that stress tests had not been “extreme” enough. But both he and Sir Callum continued to depict the event as an “unknown unknown”.

How not to handle a crisis. On Monday August 13th, two working days after the markets dried up, Northern Rock told the FSA it was in trouble. The message was passed on to the Bank of England and the Treasury the next day. All three institutions were supposed to deal with crises under a “memorandum of understanding” setting out their respective roles. The Treasury, which chaired the committee, was involved in these “tripartite” arrangements because helping a bank often requires a bail-out from the taxpayer.

By August 16th the possibility that the Bank of England would have to act as a “lender of last resort” to Northern Rock had already been raised. All three agreed, however, that it would be better for a stronger bank to take over the mortgage lender. Northern Rock put itself up for sale and feelers were put out in all directions. Lloyds TSB, a British bank, emerged as a serious contender, but the deal foundered on September 10th. Lloyds was prepared to step into the breach only if it was given a loan of up to £30 billion by the Bank of England; but the tripartite authorities agreed it would be “inappropriate to help finance a bid by one bank for another”.

Of the three, the Bank of England had taken the hardest line since the crisis began. Whereas the world’s two main central banks — America’s Fed and the ECB— sought at once to relieve the liquidity drought by injecting extra cash into the money markets and accepting a wider range of collateral than usual, the Bank of England did neither until September. It wanted to send a message that if bankers took excessive risks they could not look to the central bank to rescue them from the consequences. So the central bank resisted pleas — not just from private banks but also from the FSA—to copy its American and European counterparts.

A telling indication of Mr King’s priorities emerged last year, when a new version of the memorandum of understanding came out. In the original agreement, dating from October 1997, the bank was “responsible for the overall stability of the financial system”. In the new version, however, it merely “contributes to the maintenance of the stability of the financial system as a whole”.

This anemic wording contrasts with the Fed’s “key role in the prevention and mitigation of financial crises”, which Ben Bernanke, its chairman, emphasised in a speech in January. Some charge Mr King with neglecting the subject since becoming governor in 2003. An executive director for financial stability respected for his close City contacts was replaced in that role by one without them. The bank’s widely followed, half – yearly Financial Stability Report was halved in size and published erratically. Others with City connections have left the bank, reducing its “eyes and ears” in the market.

Once the deal with Lloyds TSB fell through, only the Bank of England could rescue the beleaguered mortgage lender. Mr King wanted to do this behind the scenes, as happened as recently as the early 1990s. His desire for a covert operation was, he said, thwarted by a European – inspired law, the Market Abuse Directive, which came into force in Britain in 2005.

Charlie McCreevy, the Brussels commissioner responsible for the directive, denied at once that it prevented a secret intervention in an emergency. But even if the gold – plated British version of it did make things harder, the bank should not have taken so long to figure that out. “You don’t wait for the cinema to catch fire before you check out whether the fire precautions are going to work,” says Richard Lambert, head of the Confederation of British Industry and a former member of the MPC.

On September 13th Alistair Darling, the chancellor of the exchequer, had little choice but to agree that the central bank should provide emergency funding to Northern Rock. News of the impending rescue leaked out prematurely, and the government scrabbled to put out a public statement on September 14th.

To financial aficionados, the fact that Britain’s central bank now stood squarely behind Northern Rock should have brought relief. But to ordinary people it sounded alarming, especially in its leaked version. Britain’s flawed deposit – insurance scheme guaranteed fully only the first £2,000 of deposits, and then 90% of only the next £33,000 (though it has since been made more generous). Alerted to trouble, depositors raced to get their cash out before everyone else did. The bank run was stopped only on September 17th, when Mr Darling issued an unprecedented guarantee for all existing deposits at Northern Rock. Bafflingly, he extended this on October 9th to all new retail deposits as well.

No one emerges well from this tale. Northern Rock pushed an aggressive business model to the limit, crossing its fingers and hoping that liquidity would always be there. The FSA failed to spot the danger. The Bank of England worried too much about forgiving over-risky behaviour and too little about shoring up a stressed financial system. Mr Darling failed to reassure depositors when he eventually got round to it, then arguably reassured them too much when it no longer mattered.

But the biggest failure was the “tripartite” system, and its unreadiness in a crisis. Undoing the reform of 1997 that divested the central bank of supervision would be hugely disruptive; and other countries have divided central banks from banking supervision without seeing financial institutions go to the wall. But if Britain is to learn one lesson from the Northern Rock saga, it may be that a single outfit needs to be in overall charge of financial stability, the bedrock on which economies are built. Only a central bank can provide the liquidity needed in times of crisis. So whatever its failings this time, it is the Bank of England that should take responsibility and call the shots.

The Labour Party 1997-2010

The Labour Party 1997-2010

Witnessing Labour Party infighting over the direction to take, (left or right) it is opportune to look back to 1997 and Tony Blair. Tony was a considerable admirer of Margaret Thatcher. He certainly admired her absolute authority in the control of her Cabinet. That was a great pity, because what was needed in dealing with problems was a wealth of discussion and argument, whereas, on the contrary, cabinet meetings lasted around 30 minutes, having been convened to rubber stamp policies which had been decided beforehand.

This was unhealthy government since it was simply not possible for one person, even with the assistance of a few, “Nodding Dogs”, to solve all the problems single – handedly. It needed a collective effort. Under Tony Blair & then Gordon Brown, “competition” became the mantra. Their belief being that this would ensure excellence in performance by entrepreneurs and by result the Nation would benefit. In the beginning unquestioned perception was that the approach was a success, but in time, “the crows came home to roost” companies simply did not continue, “competing”. instead they instigated mergers, consolidating competing processes. Unfettered by effective Bank of England monitoring & control, Banks increased in size, ” in time taking the shape of giant squids with tentacles in many countries worldwide becoming fully international, by result, moving their activities beyond the control of the UK government.

Cash availability within these uncontrolled, “Global” markets was finite and increasing scarcity, brought about an increase in the use of credit, slowing down growth. The resultant sluggish market performance and ever increasing acquisition, by British Banks, of freshly packaged USA, “dodgy” sub-prime loans should have alerted the Bank of England that there were problems in the banking sector. It didn’t. So. There it is. It is appropriate to place fault firmly with Mr Blair & Mr Brown and of course Ally Darling, who started the run on the banks in the first place by dithering over support for, “Northern Rock” instead of allowing the Bank of England to get on with it’s remit.

1997: Gordon Brown Sets Bank of England free From Control

The Chancellor, Gordon Brown, released the Bank of England independence from political control. His surprise announcement – coming only four days after Labour’s landslide election win – is being described as the most radical shake-up in the bank’s 300-year history. Mr Brown has also announced a loan rate rise of a quarter-point to 6.25%. The increase was decided after Mr Brown’s first and last meeting with the Governor of the Bank of England, Eddie George.
The chancellor went straight from that meeting to a news conference at which he unveiled his plans to give the bank freedom to control monetary policy. He said: “I want to set in place a long term framework for economic prosperity… I want to break from the boom bust economics of previous years.”

Labour MPs applauded the chancellor’s announcement – but the Conservatives were divided, with former chancellor Norman Lamont congratulating Mr Brown while former home secretary Michael Howard deplored it. Business chiefs broadly welcomed Labour’s decision to give the bank its independence. Under the new regime, a monetary policy committee was set up to decide interest rates with a view to achieving an initial inflation target of 2.5% or less. The committee was made up of the Governor, his deputy, a new second deputy, two bank executive directors and four experts, appointed from outside the bank. It met monthly and each member had one vote. Previously, the Chancellor held a monthly meeting with the governor at which interest rates were agreed. It means the bank was now free to decide monetary policy without taking the short-term wishes of politicians into account.

Equally guilty was the new system put in place by Mr Brown. Fragmented among three institutions, and manned by people who were either unaware of what was going on or unable to communicate what they knew to one another, it failed its first big test. Sir John Gieve, the Bank of England’s deputy governor in charge of financial stability and also a non-executive director of the FSA, gave evidence to the parliamentary committee on September 20th along with Mervyn King, his boss at the central bank. “I was concerned in a general way about the growth of wholesale lending,” he said. “Did I know the details of Northern Rock’s position before this blew up? No, I did not.” This institutional deafness was to become an increasing problem as the government sought solutions to the bank’s worsening plight.

The problems at Northern Rock, and other financial institutions, did not appear overnight. The crisis in the USA sub-prime loans market was well documented, as was the fact that this dodgy debt had been repackaged and sold on to UK and EU banks. Major banks in Germany as well as Barclays Bank in the UK are rumoured to have significant exposure to these dubious assets.

Northern Rock’s profit warning led to a further slip in its share price. But banks do not answer to their shareholders alone. They are subject to special supervision, because a problem at one bank can undermine confidence in the whole system and do immense economic damage. The Bank of England had long been in charge of overseeing banks, and its record, though not flawless, was widely reckoned a good one. In 1997, however, when Gordon Brown, then chancellor of the exchequer, freed the central bank to set interest rates, he decided to hand bank supervision to a new Financial Services Authority. The FSA was to look after individual banks while the Bank of England remained responsible for the stability of the financial system.

It would seem that the Bank of England is independent of the UK government when it is pursuing government policy. However, if it pursues policies which it deems in the interests of the UK economy, yet are contrary to short term political expediency, then this independence is an illusion. In October 1997, the bank was “responsible for the overall stability of the financial system”. In the new version, however, it merely “contributes to the maintenance of the stability of the financial system as a whole”.

Mr King’s critics say that in his fixation on future crises he failed to deal with the one at hand. Mr Santes pointed out that logically the only replacement for private-sector liquidity, once it dries up, is central-bank liquidity. According to DeAnne Julius, a former member of the Bank of England’s monetary-policy committee, “The first duty of a central bank is to retain confidence in the banking system, especially at a time of illiquidity, and our central bank didn’t do that.”

As long as five years ago Tommaso Padoa-Schioppa, now Italy’s finance minister but then on the board of the European Central Bank (ECB), pointed out that the liquidity of financial markets had grown in importance. He gave a prescient warning: “The deepening of the markets has improved the ability of banks to access funds in normal times, but liquidity may be more prone to dry up when it is most needed.” In 2006 Moody’s, a rating agency, cautioned that some British banks were exposed to the risk of disruption in wholesale markets because they were increasing their loans faster than they could gather the deposits to back them. More recently, the Bank of England itself highlighted in April the danger of liquidity risk in its Financial Stability Report.

He is Back Again – Alistair Darling – The Bearded Trot Complicit in the Bankruptcy of Scotland Seeks to Lord it Over Scotland Yet Again

 

 

Marxist Luvvie

 

Darling: A Political Unprincipled Opportunist

Twenty-five years ago, the man they knew as a bushy-bearded ringleader of a loony left council, was a supporter of the International Marxist Group, whose key objectives included the nationalisation of the British banking system as a first step towards full-blown Communism.

 

Back to the Eighties: Alistair Darling (centre) with supporters after the 1982 Edinburgh regional elections
Loony left – Edinburgh District Council

 

 

Ah ! those days of youthful folly so embarrassing to senior politicians and, usually, best left undisturbed.

After all, surely a politician, no less than anyone else, is entitled to grow out of their immature ravings?

True enough, but at the peak of his madcap Leftie days, Darling was hardly a youth  –  he was a qualified solicitor approaching his mid-30s and was just being admitted to the Scottish bar.

 

Where's the beard gone: Alistair Darling as he is today

 

Darling was a classic family rebel, a product of Scotland’s oldest boarding school, Loretto (other old boys include the broadcaster Andrew Marr and former Tory Chancellor Norman Lamont), whose family were staunch Conservatives.

His Tory-voting father was a civil engineer and his great-uncle Sir William Darling was the MP for Edinburgh South for 12 years after World War II.

In 1982, Alistair, aged 29, was elected as a Labour councillor to Lothian Regional Council in Edinburgh, and escalated a war against capitalism that had begun with his feverish distribution of far-Left literature while reading law at Aberdeen University.

It was when the politically ambitious Darling became a councillor that Bob Thompson, another former chairman of the Scottish Labour Party, met him.

“He was a Trotskyist and played the part with his backside sticking out of his jeans and sandals on bare feet, long hair and a beard,” says Thompson, a lifelong trades unionist.

Thus dressed for battle, Darling and his Labour colleagues dug in to take on the biggest capitalist of all  –  Margaret Thatcher.

These were the Loony Leftism years of ‘Red Ken’ Livingstone in London and Derek Hatton, of Militant Tendency fame, in Liverpool.

According to party figures of the time, left-wing councils across the country ‘liaised’ on a range of issues.

In Edinburgh, Darling was a ringleader of the revolt against the Thatcher government’s spending cuts.

Then, as now, he was no firebrand.

He had little charisma and was no orator. But he was a clever fixer, a plotter, a manipulator rather than a motivator.

He was in the thick of it and certainly caught the eye of Labour’s then leader Neil Kinnock, who visited the council when it was threatening to defy the Tory government’s spending cuts by refusing to set a local rate.

Kinnock’s visit helped ‘calm down’ the loonies.

But as he was leaving Scotland he remarked about Darling:

“That bearded trot must never become an MP.”

 

No longer a Trotskyist: Alistair Darling during Prime Minister's Questions in the House of Commons

reformed Trotskyist Darling at Prime Minister’s Questions in Westminster
The irony is that Darling’s public school upbringing was anything but an advantage among his Labour colleagues.
Bob Thompson, former chairman of the labour party in Scotland assessed Darling:
“His posh background came out in his voice and mannerisms, but it was also apparent in his naivete about working people.”
“He lived in cloud cuckoo land, always talking about the kind of industrial action people should be taking.”
“He didn’t seem to realise that people had to pay their rent and buy food, and that a week without a wage would put them in Queer Street.”
‘He saw himself as the working class’s champion and simply didn’t understand that for trades unions, negotiation is the art of compromise.”
“He was always looking for revolution rather than compromise, always wanting us to push harder and be much more radical.”
“He didn’t really understand the issues facing working people nor the fact that they weren’t always ready to man the barricades.”

According to George Galloway, another contemporary who became a Labour MP Glasgow before founding the Left-wing party Respect, it was Darling who came up with the idea of opposing the government’s spending cuts by refusing to set a rate or even agree a budget, thus plunging the local authority into illegality.

It was left to him and Bill Speirs to “talk Alistair Darling down from the ledge of this kamikaze strategy.”

But Darling’s ideology was far deeper than merely battling with Margaret Thatcher.

It covered a range of other areas of life.  A contemporary recalls he also had an ideological hatred of cars that cost Edinburgh millions of pounds’ (an ideology not apparent as he steps into his ministerial limousine).

As convener of his council’s transport committee, Darling is said to have blocked plans to create car-parking spaces in Edinburgh, as he wanted people to leave their vehicles at home.

In the event, all that happened was more traffic congestion.

Dogmatic in his beliefs, his most controversial act as Edinburgh City Council Transport Convener was to scrap a four-lane western approach road to the Scottish capital after contracts had been signed by the previous Tory administration.

A decision  that cost ratepayers £2 million in cancellation fees.

 

Labour conference: Chancellor of the Exchequer Alistair Darling, right, gestures to the audience to stop applauding him as Gordon Brown looks on
soaking up the applause of the Labour Party conference in England

 

 

Darling was aware that among many of his colleagues there was irritation and even contempt for his “posh” public school background.

Some thought he was a “public schoolboy just playing at it”.

But others believe it was his privileged background that drove him to be so politically extreme.

He was so eager to be seen as a hard socialist that the joke was that he would carry a blank banner around with him so he could fill in the cause as required.

Naturally, he was in favour of scrapping missiles.

This deep sensitivity about his image did not diminish over the years during his political rise in which he was one of only three ministers to serve for the entire period since New Labour swept to power in 1997  –  the others being Gordon Brown and Jack Straw.

 

 

he never entered the year’s he boarded at Loretto in his Who’s Who entry.

So was Darling a genuine member of the Loony Left or was he merely playing a role in order to gain Left- wing support and political lift-off?

Former Scottish Labour Party boss Bob Thompson again:

“He actually believed in what he was doing. Having come from public school and university, he saw this as the proper way to help the working man. He was just too naive to realise it was the wrong way.”

 

 

So, what happened to Alistair the sandal-wearing, car-hating Loony Leftie, just when did he undergo his political metamorphosis emerging as the bland, smooth, fastidiously attired government minister, a man who could easily be mistaken for a bank manager?

Contemporaries are agreed it was in 1985 when he was 32 and, while still serving on the council, was making his move for a parliamentary seat.

That year, a quietly dressed Darling, beard neatly trimmed, so impressed the selection committee at Edinburgh Central, that he was chosen from 48 applicants.

Two years later, he defeated the sitting Tory MP.

Bob Thompson again:

“He is an opportunist who, when he got into Parliament, refrained from saying anything particularly radical and went along with the party agenda.”

 

 

 

Some time later, at a Burns Night supper in his constituency, Darling introduced the gathering to a rising star of the party  –  Tony Blair, the Shadow Employment Secretary.  Bob Thompson again:

“They were obviously close. What I remember most is that Blair stood and spoke for 20 minutes without mentioning Burns once.”

“So far as I was concerned, Alistair Darling had gone from Trotskyist to New Labour overnight.”

 

 

After the 1997 New Labour triumph, Darling shaved off his beard and presented himself, in accordance with party instructions, as a clean-shaven man of the people. Bob Thompson again:

“Alistair’s problem is that he takes his opinion from whoever’s his boss.”

“In the early Eighties, it was John Mulvey (his Lothian council boss), then it was Tony Blair and then it was Gordon Brown. He’s a man with no opinion of his own.”

 

 

 

 

Other reading:

https://caltonjock.com/2015/05/05/blair-brown-balls-miliband-darling-the-real-story-of-the-new-labour-finance-team-that-brought-the-uk-to-its-knees/

https://caltonjock.com/2015/03/08/blair-brown-darling-were-warned-in-2004-that-the-british-economy-was-about-to-go-bust-they-did-nothing-to-avert-the-crisis-then-had-the-audacity-to-blame-the-royal-bank-of-scotland/

https://caltonjock.com/2014/09/10/gordon-brown-and-alistair-darling-architects-of-the-uk-financial-crisis-of-2007/

https://caltonjock.com/2014/08/31/flipper-darling-a-disaster/

https://caltonjock.com/2014/08/31/darling-private-lectures/

https://caltonjock.com/2014/08/31/the-salmond-darling-debate/

https://caltonjock.com/2014/08/30/mervyn-king-farting-against-the-sound-of-thunder-brown-darling-and-balls-had-cloth-ears-in-the-face-of-adversity/

https://caltonjock.com/2014/08/30/the-basket-case-economy-the-uk-or-panama-darling-hopelessly-wrong-again/

 

 

 

 

The Queen elevated Darling to the House of Lords in 2014 awarding him a life peerage in recognition for his long service and good conduct in the service of her Unionist governments of every political persuasion.

The man who sold out his nation then gained another reward for his incompetance.

A job with Morgan Stanley attracting a salary of around £230,000 plus bonuses.

A pointer, the chairman was paid £11.8million in 2013. (Daily Mail)