Gordon Brown And Alistair Darling 'Were At Odds From The Start'

Former chancellor faced interference from the then PM, who wished to play down the economic risk from the banking crisis.












Alistair Darling faced interference from the prime minister.

Gordon Brown repeatedly pressured Alistair Darling to change his economic forecasts almost from the outset of his premiership, it has emerged.

As the former chancellor prepared to publish his memoir, Back from the Brink, former government insiders revealed the full extent of the split between the two men at the top of the Labour administration.

From the autumn of 2007, as Brown agonised over whether to call a snap general election, Darling faced interference from Number 10 as he drew up his first pre-budget report, with the prime minister's allies urging him to play down the risks of an economic slowdown in the wake of the collapse of Northern Rock.

Northern Rock's bosses blamed "extreme conditions" in the markets for the bank's collapse, but Brown and Darling clashed over how hard the turmoil would hit the wider economy. Darling feared the impact would be severe, but Brown was determined to stick to the line that the "fundamentals" remained sound.

Former insiders say Brown, who had kept Treasury officials on a tight rein during his tenure as chancellor, wanted Darling to overrule his cautious civil servants. "Gordon never understood why Alistair didn't have the authority over his civil servants that he had," one source told the Observer. The pre-budget report of October 2007 predicted that GDP would expand by 2% to 2.5% in 2008 as the UK shrugged off the effects of the credit crunch. In the event, it contracted by 0.1%.

The relationship continued to deteriorate as the economy slid into recession. Darling was attacked by Brown's spin doctors in the summer of 2008 after saying the world was facing the deepest economic crisis in 60 years. He later said it felt as though the "forces of hell" had been unleashed against him.

By the spring the two were still at loggerheads as they struggled to formulate a response to the crisis. Darling wanted the forecasts in the 2008 budget to show the full extent of the damage to public finances of a prolonged economic slowdown, while the prime minister, who had promised to abolish boom and bust, still hoped the downturn would prove short-lived.

The relationship between the two men had soured so much by the time Labour lost power that they now see little of each other. One Brown ally predicted that the former prime minister would "go berserk" over the revelations. "I'm just glad I'm not the one reading out the extracts," he said.

Leaks of Darling's book, published on the website Labour Uncut last week, also showed the bitter relationship between the chancellor and Sir Mervyn King, governor of the Bank of England, who said he believed the chancellor was "not his intellectual equal".

MPs Lash Out After Council Tries To Scrap The Chequebook

MPs are looking to curb the influence of the Payments Council following the recent dispute over the replacement of cheques.












A Treasury select committee report out today called for the "unfettered power" of the banking industry body to be cut back and safeguards to be put in place to ensure banks could not abandon cheques by "stealth".

Andrew Tyrie, chairman of the committee, branded the organisation lacking in "effective public accountability" and called for greater consumer representation.

"Cheques have been saved, for the moment, but we need to remain vigilant. The incentives for the industry to get rid of cheques has not gone away. Neither have we," he said.

"That is why we are making far–reaching recommendations about the future of the Payments Council as well as to secure the future of cheques."

The Payments Council had planned to replace cheques by 2018, however it had to backtrack on the plans following a surge of public pressure amidst fears of the effect on the elderly and vulnerable for whom cheques are a preferred method of payment.

Under the recommendations of the Treasury committee the Payments Council could be brought formally within the system of financial regulation.

They could also be required to obtain a commitment from banks to give them advance sight of any material related to the future availability of cheques.

Banks themselves could be obligated to write to customers stating that cheques will continue to be in use for the foreseeable future in an attempt to allay customers' fears.

Mr Tyrie said: "Banks have given many customers the impression that the abolition of cheques was a foregone conclusion. This type of behaviour is unacceptable and cannot be allowed to continue."

The committee has also suggested that banks consider the reintroduction of the cheque guarantee card.

Michelle Mitchell, Age UK's charity director, welcomed the potential return of the cheque guarantee card and called it an opportunity for banks and building societies to "live up to their word" and prove the future of cheques is safe.

She added: "Whatever happens, the banking industry must be clear about what it is going to do to ensure that cheques remain a widely accepted, safe and accessible option for those who rely on them.

"Cheques and other payment systems are essential services upon which the public relies – just like the provision of water and electricity.

"Their future must not be left solely to the banking industry and its representative bodies to determine."

Chris Leslie, Labour's shadow Treasury minister, welcomed the "very sensible" report from the committee.

He continued: "If the government don’t act I will be seeking amendments to the forthcoming Financial Services Regulation Bill to make sure that the needs of consumers - for instance, retaining the convenience of the cheque - are strengthened."