Former Chancellor reveals Labour crisis row

The last Labour government failed to “come through” the financial crisis politically because of profound disagreements at “the very top”, according to former chancellor Alistair Darling.

He and then Prime Minister Gordon Brown were so clearly at odds over economic policy that it damaged the party going into the 2010 general election, Mr Darling said.

In an interview with BBC1’s Andrew Marr Show, he acknowledged that “perhaps” senior Labour politicians should have “done something” about Mr Brown’s leadership.

But Mr Darling said that he had a personal loyalty to the Prime Minister, going back many years, which stopped him from acting.

He said the Labour Administration could have “charted a political way through” the problems that were thrown up by the banking meltdown and subsequent recession.

“We could have come through this. We didn’t because there was a disagreement at the very top,” he said.

The two men’s views diverged in 2008 when they disagreed fundamentally on the scale of the crisis.

Mr Brown felt the economy would recover within six months and that Mr Darling’s gloomier expectations were “too cautious” and an exaggeration based on misleading advice.

“You need to be united at the top but you also need a credible economic policy,” Mr Darling said.

“If you don’t have a credible economic policy you are simply not at the races, and our problem was it was so blindingly obvious to the outside world that the two of us – Gordon and myself – were at odds that it really hampered us when it came to the election in 2010.”

Mr Darling said it was “very unpleasant” for him because of his long-standing friendship with Mr Brown.

“If you want to criticise us collectively perhaps we should have done something but... I’m afraid, for me, despite everything and if Gordon’s listening to this he may find it difficult to believe, but I had a residual loyalty which I found it difficult to overcome.

“We go back a long, long way. This whole thing was very unpleasant.”

Mr Darling, who was appointed chancellor when Mr Brown became Prime Minister in 2007, said that an anonymous briefing against him by Brownites had “left a mark” on him.

His interview came as he promoted his forthcoming memoir, serialised in The Sunday Times, in which he hits out at the “fairly brutal regime” under Mr Brown, whose behaviour was “sometimes appalling”.

He writes that, in 2008, Mr Brown was intent on an economic strategy predicated on a recovery within six months.

“No-one wanted to acknowledge that we were heading for an extremely serious downturn... I was condemned for having said no more than was true,” Mr Darling added.

He wrote that he was forced to present a Budget that “simply lacked credibility”.

Shadow Education Secretary Andy Burnham told Sky News that Labour believed the government was “going too far and too fast” while Mr Darling had a “much more measured plan” to ensure the economy grew in this difficult period.

Mr Burnham added it was “no secret” that life gets tough towards the end of a government but said: “I believe then and do now that Gordon Brown together with Alistair Darling showed great leadership in taking us through those events.

Mr Burnham said he had “huge respect” for Mr Brown, adding: “I believe he dealt with some of the most difficult issues that this country, indeed the world economy, has ever faced, and faced them with great insight and leadership.”

Conservative Party deputy chairman Michael Fallon said: “Alistair Darling has now admitted that Labour did not have a credible economic policy last year because they refused to say what spending they would cut. “Yet Gordon Brown’s protege Ed Balls is still in denial by sticking to the same course of more spending and more borrowing.

“This shows why Labour should never trusted with the keys to our economy ever again.”