Financial crash could have been far worse for UK were it not for Alistair Darling
Even before Northern Rock collapsed and the financial crisis exploded, Alistair Darling was already wrangling with an unenviable inheritance as chancellor of the exchequer.
Not only was he having to follow in the footsteps of the longest-serving chancellor of modern times – a man who presided over an almost unprecedentedly long period of stability and growing prosperity – he was doing so under the shadow of that same man.
After years of waiting, in June 2007 Gordon Brown had finally taken over as prime minister, and he had little intention of allowing anyone else to meddle with the economic plans he had laid out in his time at the Treasury.
Most officials would have crumpled in the face of this task, but Darling was a consummate politician – a smooth, unshowy operator who rarely ruffled feathers, despite having led some of the most challenging departments in Whitehall.
He had been work and pensions secretary, transport secretary and trade secretary too.
Competent and capable, he was also, crucially, less cursed with ego than most of his counterparts.
And when he got the job it seemed quite likely that he would spend most of his time being overshadowed by the prime minister, but then, a couple of months in, Britain’s mortgage securitisation market froze.
Within a few weeks, Northern Rock was in big trouble.
By September, the high street lender was effectively finished, seeking emergency support from the Bank of England and triggering the first bank run since Victorian times.
Darling’s time in office would be defined by the financial crisis, by the collapse not just of Northern Rock but of other British banking icons, by the nationalisation of RBS and, more importantly still, the deep recession that followed.
This was a global financial crisis, but Britain, with its global banking system and strong dependence on the sector, was worse hit than most countries.
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The slump was deep and so too was the impact on Britain’s public finances.
Moreover, having managed and steered this system for more than a decade up until recently, there was no mistaking which politician was most responsible for Britain’s part in the malaise: the new PM.
Yet for most of his time in office Darling maintained his composure and attempted to clean up the mess without briefing about his predecessor’s part in it.
A scarred relationship with Gordon Brown
Tellingly, the moment that most scarred his relationship with Gordon Brown came when Darling warned that Britain was facing “the worst downturn in 60 years”.
While Darling suggested that crisis would be “more profound and long-lasting than people thought”, Brown believed (or wanted to believe) that it would all be over in six months.
There were furious briefings from “Gordon’s attack dogs”, as Darling later put it, suggesting that the chancellor had lost the plot. It was, Darling said, like the “forces of hell” had been deployed against him.
“I won’t deny,” he wrote in his memoirs some years later, “that this episode was deeply hurtful and that it shaped a difficult relationship for the rest of our term in office”.
The gentlemanly path
It was a telling moment in other respects. For it underlined what mattered most to Darling.
While Brown was desperate to avoid having to internalise or publicise the bad news facing the country, Darling was compelled to be honest.
While Brown would routinely use his press officials to brief against his opponents, Darling preferred to take the gentlemanly path.
But the rift that grew between No 10 and No 11 would in other respects prove a blessing to Alistair Darling. In the following years he grew in stature and independence.
No-one suggested in the months that ensued, as he implemented the tax cuts and then rises in the face of recession, that he wasn’t his own man.
And while it is hard to take much that is positive from this period in British history, it would arguably have been very different (and potentially far worse) had it not been for Alistair Darling.
Perhaps the most significant moment came when he resisted the pressure (including aggressive phone calls from the US Treasury Secretary Hank Paulson) for Barclays to take over Lehman Brothers as the American investment bank careered towards collapse.
How different Britain’s fate would have been had it absorbed Lehman’s toxic waste and instruments onto its balance sheet.
An elder statesman
After leaving office, Darling did much as he had while in office.
He tried to be the statesman. He led the Better Together campaign during the Scottish independence referendum.
He sat in the House of Lords until 2020. He did not shout from the side lines but very quickly became an elder statesman, respected and admired across political divides.
Perhaps his greatest legacy is something else, something quite intangible.
It is hard to think of many politicians who will be remembered with such affection – as a good man, a kind man.
His loss, so much earlier than expected, leaves British politics a sadder, somewhat less dignified place.
The Treasury Select Committee has sent a formal notice to HM Revenue & Customs demanding answers to critical questions about how it has been enforcing trade sanctions on Russia, following a Sky News investigation into the government department.
Last month Sky News reported that while HMRC had issued six fines in relation to sanction-breaking since 2022, it would not name the firms sanctioned or provide any further detail on what they did wrong. HMRC also admitted it had no idea how many investigations it was currently carrying out into sanction-breaking.
The admissions raised questions about the robustness of Britain’s trade sanctions regime, described by government ministers as the toughest in British history.
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How robust are UK-Russia sanctions?
While the UK has introduced rules preventing the export of certain goods to Russia, banned items are still flowing into the country via third countries in the Caucasus and Central Asia. Some suspect that part of the reason these flows continue is that HMRC is not enforcing the rules as robustly as it could be.
Following Sky News’ investigation, the chair of the Treasury Select Committee (TSC), Dame Meg Hiller, has written a letter to the chief executive of HMRC, Sir Jim Harra, with 10 questions about HMRC’s conduct in the enforcement of sanctions.
Among the questions, the TSC chair asks: “Why doesn’t HMRC publish information on breaches in sanctions in a similar way to the Office for Financial Sanctions Implementation (OFSI), which gives the details of the company, how it breached sanctions and the amount of penalty issued?”
Many other countries around the world – most notably the United States – routinely “name and shame” those who break sanctions, in part as a deterrent and in part to inform other businesses about what it takes to break the rules. But HMRC instead protects the privacy of those who break sanctions.
The TSC has been scrutinising the sanctions regime in recent months, examining loopholes in the legislation and its enforcement. HMRC has been asked to respond to the letter by 17 February.
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China hits back after new US tariffs take effect – as those against Mexico and Canada are paused
China has retaliated after the US imposed 10% tariffs on its goods.
Not long after the US taxes began at 5am British time, China said it was imposing 10% tariffs on American crude oil, agricultural machinery, large-displacement cars and pickup trucks.
There will also be 15% tariffs on coal and liquefied natural gas, as well as an investigation into Google.
China also said it is imposing export controls on rare earth metals such as tungsten, tellurium, ruthenium, molybdenum and ruthenium-related items – the country controls much of the world’s supply of such metals, which are critical for the transition to clean energy.
They will not come into effect until Monday 10 February, however.
President Trump said his actions were in response to what he described as Beijing’s failure to stop the flow of fentanyl, a synthetic opioid, into the US.
Mr Trump added that the tariffs on China could just be the start, though the White House said he was due to talk to President Xi Jinping.
“China hopefully is going to stop sending us fentanyl, and if they’re not, the tariffs are going to go substantially higher,” Mr Trump said.
China has described fentanyl as America’s problem and said it would challenge the tariffs at the World Trade Organisation, as well as taking other countermeasures.
But it also left the door open for talks.
The issue of fentanyl is only one part of Mr Trump’s issue with China. He has long railed against the trade imbalance between the first and second-largest economies in the world.
Tariffs paused
Earlier, the imposition of 25% tariffs on Mexico and Canada was paused after agreements were reached on border security.
Mexico was first to make a deal with the White House. Its president, Claudia Sheinbaum, said she was sending 10,000 National Guard troops to the US border immediately in return for a tariff delay.
Mr Trump said the Mexican soldiers would be “specifically designated” to stop the flow of fentanyl into the US, as well as illegal migrants. Further negotiations will now be carried out, he added.
Ms Sheinbaum said she had a “good conversation” with him lasting at least 30 minutes just hours before the tariffs were due to begin.
She also extracted a concession from Mr Trump – after explaining the “seriousness” of high-powered weapons coming over the border from the US and getting into the hands of criminal groups.
“It gives them firepower,” she said. “We asked that the US also help our country by helping stop this arms trafficking… he agreed.”
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Canada made similar moves. Prime Minister Justin Trudeau said almost 10,000 frontline personnel “are and will be working on protecting the border”.
He added on X that his country was appointing a “fentanyl czar”, drug cartels would be listed as terrorists, and there would be “24/7 eyes on the border”.
There will also be a Canada-US joint strike force to “combat organised crime, fentanyl and money laundering”, Mr Trudeau announced.
Both Mr Trudeau and Mr Trump will view the deal as a win – Mr Trump for seemingly forcing the US’s northern neighbour to act, and Mr Trudeau for heading off sanctions with measures that for the most part (with the exception of the fentanyl czar) had already been announced in December.
Mr Trump said he was “very pleased with this initial outcome” and work will begin to see how a “Final Economic Deal” with Canada can be structured.
What is the UK situation on tariffs?
President Trump hates trade deficits, and does not want to import more goods from another country than are sent there in return, says Sky’s economics and data editor, Ed Conway.
But Britain has bigger trade deficits than the US, Conway adds, and is one of the few countries in the world to import more goods from America than America imports from it.
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In addition, because the UK is no longer part of the European Union, any tariffs imposed on Brussels will not affect London.
When asked about the UK, Mr Trump said: “I think that one can be worked out.”
Sir Keir Starmer said it was “early days”.
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