Crunch time for Darling as credit runs out

A safe pair of hands he may be, but is the Chancellor the right man to steer us into calmer waters, asks Ross Lydall

AMID the Commons bearpit at Prime Minister's Questions, Alistair Darling strikes a contrary figure. As Labour and Tory back-benchers roar insults at each other and Gordon Brown paws the dispatch box, Mr Darling sits quietly, his expressions limited to studying his fingernails, or the odd disbelieving glance at a remark from Tory leader David Cameron.

This outward calmness has been his hallmark throughout his first year as Chancellor, a year more troubled than anyone could have imagined when he entered 11 Downing Street on 28 June last year.

Regarded as the safest pair of hands in the Cabinet, in which he has been a constant presence since Labour returned to power in 1997, Mr Darling was first drafted into the social security department after Harriet Harman's resignation, and then sent to transport after the Jo Moore "burying bad news" e-mail and the collapse of Railtrack. He was instructed by the then prime minister, Tony Blair, to get transport off the front page, and that was what he achieved.

But running the Treasury is a different matter, not least when its actions go to the heart of government policy. The Treasury is even more closely scrutinised by those searching for clues to Mr Brown's past mistakes.

Witness the endless stream of headlines: the credit crunch, Northern Rock, taxation of "non-doms", increased capital gains tax, scrapping of the 10p income tax band and increasing car tax for pre-2001 vehicles. Then yesterday morning he was warned that unless he dropped plans to tax the "passive" income of multinational firms (to prevent them declaring profits off-shore), many would leave the country.

This warning was followed by words of woe from Sir Stuart Rose, the executive chairman of Marks & Spencer, which had just announced a 5 per cent fall in sales. Noting that the economy was suffering "stormy times", Sir Stuart said: "I think it's going to be more of a two-year problem than a two-month problem."

But how much of the blame for the woes of "UK plc", as Sir Stuart termed it, should be laid at the Chancellor's door? And once the blame has been apportioned, there remains the more pertinent question: is he the right man to get us out of this mess?

One thing that quickly becomes apparent inside and outside Westminster is that Mr Darling is more popular than his predecessor. "I don't think he is particularly clubbable, but I think he is respected by Labour MPs," says one back-bencher. Opponents agree. Lord John Thurso, the Liberal Democrat MP, recalls that, during his time shadowing Mr Darling when he was Scottish Secretary and Transport Secretary, the ministerial office door remained open to all parties.

Last week Mr Darling "apologised unreservedly" to the Commons for the blunder that saw the personal data of 25 million Britons being lost in the post. The loss by Revenue and Customs came to light last November. Publishing the findings of an independent review, Mr Darling agreed that the loss was "entirely avoidable".

The other massive headache the Chancellor has faced – outside contending what to do with soaring global fuel and food prices – was the rebellion over the scrapping of the 10p income tax band. This proposal was contained within Mr Brown's final Budget and amounted to a "hospital pass" for the new Chancellor. With the Government at risk of being brought down, Mr Darling devised a £2.7 billion compensation package. Tax thresholds were raised – placating 4.2 million of the 5.3 million "10p losers".

Greg Pope, a Labour back-bencher who, with former social security minister Frank Field, led a delegation to the Chancellor on the 10p tax, said: "I thought he was very dignified to deal with, very straightforward, and exactly what you want as Chancellor. He had an excellent grasp of fiscal issues, but also a good grasp of the politics and a clear determination to get it sorted out.

"When we had the final meeting that both Frank Field and I attended, we both came away from that feeling very pleased at the way the Chancellor had handled it.

"I do think he has not been the luckiest of chancellors, particularly with things he has inherited, like the 10p tax; some things that are out of his control, like the price rises, and particular events, like the loss of the data. He must be thinking that his luck should change."

Lord Thurso, a member of the Treasury select committee, said virtually every problem thrown at the Chancellor had been the result of Mr Brown's policies in his decade in charge of the economy.

"On the first day of the debate on the Budget, I said that the new Chancellor comes to this job with a reputation as a safe pair of hands," he said. "The question is whether those hands were safe enough to take the hospital pass he had been given by his predecessor.

"Given that monetary policy is now with the Bank of England and the only levers in the government's hands are fiscal controls, and he inherited a position that deteriorated rapidly throughout the year, I would defy anybody to have done any better in the circumstances. He has been firefighting from Day One. It's therefore hard to judge him on his own qualities."

John Cridland, the CBI's deputy director-general, said: "Chancellor Darling has had a turbulent first year. The tone was set by ill-considered moves on business taxation, contained in his first pre-budget report, and exacerbated by a host of unfortunate circumstances, many outside his control."

Garry Clark, of the Scottish Chambers of Commerce, said no Chancellor since Norman Lamont in the early 1990s had faced as tough a challenge as Mr Darling. Mr Clark said it was "hard to tell" whether Mr Darling was the right man for the job.

"Having been coloured by the capital gains tax experience, with the business community not having been given the heads-up, that didn't endear him to businesses," he said.

"But one of the messages that Alistair Darling has tried to put across in the course of the year is the message of 'stability'. That is something which I suppose has become his buzz-word, just as Gordon Brown's was 'prudence'.

"Stability is something the UK needs at this stage."

Key member of 'Scottish mafia' who is actually a Londoner

ONE of the many little-known facts about Alistair Darling is that he isn't Scottish.

He may have a refined Edinburgh accent and be considered a leading member of Westminster's "Scottish mafia", but the Chancellor was in fact born in London and spent his early years at school in England.

Now 54, he is married with two children. He became an MP in 1987, first for Edinburgh Central, and then for Edinburgh South West since 2005. Before entering parliament he was a solicitor and advocate and a member of Lothian Regional Council from 1982 to 1987.

He attended seven primary schools and Loretto School, in Musselburgh – noting: "I would not inflict on my own son what was inflicted on me" – before studying law at Aberdeen University.

In opposition, he helped Gordon Brown plan Labour's economic strategy. He was opposition spokesman for the City between 1992-96, then shadow chief secretary to the Treasury until the 1997 election. He took that role in government for a year, before becoming social security secretary (renamed work and pensions secretary) from 1998 to 2002, followed by transport until 2006. He transferred to the Department of Trade and Industry for a year, before becoming Chancellor in Mr Brown's first government.

As he entered 11 Downing Street, there were fears among many English MPs – on both sides of the House – that having both a Scottish Chancellor and prime minister was not going to appeal to middle England. Concerns remain about Mr Brown's ability to connect with this key heartland, but Mr Darling's "Scottishness" is no longer said to be an issue.

However his name often features in speculative stories about expected casualties of Cabinet reshuffles. But observers say he has three things in his favour – a long-standing loyalty to the Prime Minister, the fact that many of the bear traps into which the government keeps falling were laid by Mr Brown himself and the absence of an outstanding alternative.

He is derided by critics as one of the government's "Mogadon men", and won the "award" of most boring parliamentarian three times in a row.

But one rival said: "That is an asset at the moment. He is always very calm. It is almost impossible to get under his skin, whereas with Gordon Brown, some opposition members just needed to open their mouths for his hackles to rise."