Alistair Darling: Bringing Britain Back from the Brink, EIBF 2012, Review

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Rating (out of 5)
5
Show info
Production
Edinburgh International Book Festival
Performers
Alistair Darling with James Naughtie (Chair)
Running time
60mins

James Naughtie introduced Alistair Darling for this Thomas Miller Investment Event which was held fittingly in the RBS Main Theatre.

There was unsurprisingly a full house and Alistair Darling seemed very relaxed in an open necked shirt and jacket.  This was in spite of an initial police presence; it is a pity the police did not stay on, as more than half of Alistair Darling's talk was spoiled by a group of noisy heckling protesters who disrupted this event and all the other sessions that were going on at the Book Festival at the time. One has to ask why these people were not removed by the police for causing a public disturbance? The Book Festival will doubtless experience this sort of thing again, so a better reaction plan is needed.

However, Alistair Darling was excellent in spite of the intrusive noise.  Naughtie asked him what had changed in the financial world?   Darling replied that back in 2008 people expected you to do more than you could and more quickly than you could.   But today there are still uncertainties and even now one is not confident about whether the markets will suddenly lose confidence in a country with the fall-out affecting the rest of us.

Naughtie asked if Darling recalled the statement made by a senior banker that a decision had been taken that, in the future, "they were not going to invest in anything they did not understand"!    Darling explained how bad debt had been packaged by various institutions with elements of trustworthy investments, but the bad element made the whole lot toxic.  These "instruments" as they were called were simply a banking device for off-loading bad debt which was wrapped up in some good loans to disguise it.

He was also reminded of the evening at home in Edinburgh when he went to the door and found Fred Goodwin standing there; this was unusual as Goodwin was not a very social individual.  Naughtie interjected, "to say he did not have a bank?"   Darling said that he was concerned about reports of a loss of confidence, although Goodwin tried to assure the then Chancellor that he personally was confident about the position of RBS.

Darling added that as most of us have bank accounts we need to be able to trust those who hold our money.   As this had followed hard on the heels of the Northern Rock collapse the Government at the time was very sensitive to the dangers of another major collapse.

He recalled how the panic had grown about Northern Rock which started on a Friday evening and was fuelled by twenty four hour television - just because the news was being repeated everyone assumed the problem was getting worse.

At the time of the RBS crisis it was the largest bank in the world, so it would have had immediate and wide-ranging effects.   Cash machines could have dried up, people might not be able to pay bills or wages so it would have been a time of turmoil.

Naughtie asked if things have changed?   Darling felt that the answer was mixed; the approach of Barclays over the LIBOR scandal seemed to indicate that some people failed to understand the simple question of 'what is right and what is wrong'?  

The problem of removing people from positions is that when institutional knowledge goes, then that experience - be it good or bad - is lost and the learning curve starts again.     For some thirty years all governments have set a broad economic framework then allowed the financial sector to get on with things.   He was certain that governments did have a role in seeing that the banking sector was playing its full and proper part in delivering economic policy.

Darling declined to be drawn into who the next Governor of the Bank of England should be in case this affected their chances of selection, however, he said that there were at least two strong candidates in Britain with others in various parts of the world and we should not insist on having an individual from the UK.

On the Euro-zone situation, Darling felt we were still walking along the brink of a major crisis; Greece is very vulnerable, he said, and if Greece should go then this opens up the attack on Spain and Italy.

He saw the problem that of being a lack of political union when trying to deal with a single currency.  He was very concerned about a lack of leadership in the Euro-zone and thought that possibly another major crisis was needed in order to force the Euro-zone to work together.

On the question of Scottish independence Naughtie asked how he felt the campaigns were going.    Darling said he had tried to keep a low profile on this, but had been persuaded to lead the campaign to stay in the Union. 

He advocated a single question as we really need to clear the air on this to end uncertainty and then there could be a discussion about what additional powers should be devolved, however, this should come at a later stage.   The important thing to realise was that while we were dithering the rest of the world was moving on.   His own conviction was made very clear and that was that Scotland was better off as part of the UK.

In questions from the audience he was asked why he did not stand for the leadership of the Labour Party. He answered because he did not want it! Having had thirty years in Cabinet he felt he had done enough.

The next question was if there was enough money in the Euro-zone to bail out Spain and Italy?   He stressed that the Euro-zone was far from bankrupt, although the present bail out fund was limited to four hundred billion Euros, there were other assets so it could cope with this if it happened.

Questioned about the "light touch" Darling said that we all have to appreciate that times have changed and the massive borrowing that went on has stopped.   Children will no longer be able to claim as a general rule, that they 'are richer than their parents' as things are different and we are now in an era of massive readjustment.   In the US, the middle class has seen a steady fall in their standards of living for thirty years.

To conclude Naughtie asked - "what is the one thing that you are proud you achieved?"  Alistair Darling thought for a moment then said, "really the one thing that I was most pleased I managed to stop as Transport Secretary, was the M8 extension that would have brought the motorway up to the Usher Hall."

This was greeted with warm applause - perhaps we should ask him to exercise his wisdom to stop the Edinburgh tram disaster!