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.
Rachel Reeves will hold talks with some of Wall Street’s leading financiers in Davos this week, less than hours after Donald Trump’s second US presidency gets underway.
Sky News understands that the chancellor will attend a breakfast hosted by JP Morgan on Wednesday amid speculation about the threat of US tariffs being imposed on the UK as well as the prospects for a bilateral trade deal between the two countries.
Among those attending the meeting will be Filippo Gori, JP Morgan’s European chief; Richard Gnodde, who runs Goldman Sachs’s international operations; Sharon Yeshaya, Morgan Stanley’s chief financial officer; and Jenny Johnson, president and chief executive of Franklin Templeton.
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The talks, to be held during the annual World Economic Forum, will come amid growing concern about the impact of the chancellor’s October budget on sentiment among international investors in Britain.
Despite hailing £63bn of investment committed at a key summit, weeks before Ms Reeves’s first fiscal event, the government’s non-dom reforms have sparked fears about an exodus of wealth creators from the UK.
The chancellor will use Wednesday’s event to talk up the government’s economic agenda, even after a torrid period which saw a spike in the cost of government borrowing, sparking brief comparisons with the aftermath of the Liz Truss administration’s mini-budget in 2022.
City sources said that Alexandra Soto, Lazard’s chief operating officer; David Livingstone, Citi’s chief client officer; and Philip Freise, KKR’s co-head of European private equity would be among those also attending the meeting.
Ms Reeves will hold other meetings with bankers, foreign governments and British company chiefs during her trip to Davos.
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‘We need to grow our economy’
Earlier this month, she travelled to China for the first formal financial summit between the two countries for about six years.
The Treasury has been contacted for comment, while none of the firms represented at Wednesday’s summit who were contacted by Sky News would comment.
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TikTok starts restoring service after Donald Trump confirms he will sign order pausing US ban
TikTok has begun restoring service to the app in the US after Donald Trump said he would sign an executive order pausing its ban.
A law signed by President Joe Biden last April required ByteDance, TikTok‘s China-based parent company, to sell the app to a non-Chinese owner by Sunday or face a ban.
Some users reported that they lost access on Saturday night, and Americans opening the app on Sunday have been greeted with a message saying they “can’t use” TikTok “for now”.
But in a post on Truth Social ahead of his inauguration, Mr Trump said he would issue an executive order handing the app an extension to find a new owner.
TikTok users in the US were unable to use the app on Sunday. Pic: Kirsty Hickey
“I’m asking companies not to let TikTok stay dark,” the president-elect wrote, adding the order will allow time “so that we can make a deal to protect our national security”.
He then confirmed that “there will be no liability for any company that helped keep TikTok from going dark before my order” and said: “Americans deserve to see our exciting Inauguration on Monday, as well as other events and conversations.”
TikTok later said it had started restoring service on Sunday, thanking the president for clarifying to service providers “that they will face no penalties providing TikTok”.
It added: “It’s a strong stand for the First Amendment and against arbitrary censorship. We will work with President Trump on a long-term solution that keeps TikTok in the United States.”
Ahead of the ban coming into effect, White House press secretary Karine Jean-Pierre called TikTok’s plans to shut down the app a “stunt” and said actions enforcing the ban would “fall to the next administration”.
Mr Trump also indicated on Truth Social what a possible deal could look like, saying he would prefer the US “to have a 50% ownership position in a joint venture” with ByteDance or a new owner.
“Without US approval, there is no TikTok,” he said. “With our approval, it is worth hundreds of billions of dollars – maybe trillions.”
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Why was TikTok getting banned in the US?
On Saturday, the president-elect told NBC News‘ Meet The Press moderator Kristen Welker that TikTok would “most likely” be given a 90-day pause from the ban to find a new owner.
Under the bipartisan law on TikTok – signed by Mr Biden – the president can grant a one-time extension of 90 days under three conditions:
• There is a path to divestiture of the app
• There is “significant progress” toward executing a sale
• There are in place “the relevant binding legal agreements to enable execution of such qualified divestiture during the period of such extension”
No legal agreements on the sale of TikTok to a non-Chinese owner have been made public, and Mr Trump did not say on Saturday if he was aware of any recent progress toward a sale.
CNBC later reported Perplexity AI made a bid for the app’s parent company on Saturday to allow it to merge with TikTok US and create a new entity, which would also include New Capital Partners.
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During his first term in the White House, Mr Trump attempted to ban TikTok as well as the Chinese-owned messaging app WeChat but was blocked by the courts. It was later revoked by Mr Biden.
Last year, he briefly met with the app’s chief executive Shou Zi Chew, who will attend the inauguration on Monday.
He’s expected to sit with fellow tech executives Elon Musk, Mark Zuckerberg and Jeff Bezos, a Trump transition official told NBC.
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Government ‘doesn’t think’ Donald Trump will impose trade tariffs on UK – but is ‘prepared for all scenarios’
The government doesn’t think Donald Trump will impose trade tariffs on the UK, but is “prepared for all scenarios”, a cabinet minister has said.
Darren Jones, the chief secretary to the Treasury, told Sky News’ Sunday Morning with Trevor Phillips that the former president’s return to the White House “could be an enormously positive thing with lots of opportunities”.
Mr Trump has threatened to impose tariffs on all imports into the United States, singling out Canada, Mexico, and China as countries that could face steeper measures within hours of his inauguration on Monday.
Asked what the government will do if that happens to the UK, Mr Jones said that was a “hypothetical” question and to wait and see “what actually happens”.
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“If that were to happen, I will come back and lay out the details for you. But the point is, is that I don’t think we’re going to be in that scenario,” Mr Jones said.
Darren Jones
He said there is a narrative in the UK that Mr Trump’s presidency poses “a big risk for Britain”, when this isn’t the case.
“Britain is a brilliant country with huge capabilities and assets which are valued not just to the British people, but to the American economy and other parts of the world,” he said.
“I have no doubt whatsoever that under the Trump administration there are going to be plenty of opportunities that we can seize, and we should be positive about that and be strong about securing this deal.”
Mr Jones confirmed there is ultimately a plan if tariffs are imposed, but said it isn’t for him “to lay out the details in advance of something actually happening on TV”.
“It’s not breaking news that the government prepares for all scenarios,” he added.
“My broader point is that we shouldn’t be looking at president-elect Trump’s inauguration as a risk, or a bad thing for the UK. It could be an enormously positive thing with lots of opportunities.”
President-elect Trump will be sworn in to a second term in office on Monday, following his election victory in November, and there have been concerns over what his pledged tariffs could mean for economies around the globe.
The former businessman has been clear he plans to pick up where he left off in 2021 by taxing goods coming into the country, making them more expensive, in a bid to protect US industry and jobs.
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Shadow foreign secretary Dame Priti Patel, who is in Washington DC for the inauguration, said Mr Trump is “within his rights to make the statements that he wants around tariffs… but as ever this is a discussion and a negotiation”.
Priti Patel in Washington DC
She said the Labour government should resume her party’s talks over a post-Brexit free trade deal with the US and “not even enter into these discussions around tariffs”.
A trade deal with the US had been set as a priority in the Conservative’s 2019 manifesto but was not achieved by the time of the general election in July last year, which they lost.
Ms Patel went on to call Reform UK leader Nigel Farage a “pop-up act” and “not relevant” when asked if her party should make peace with him to get on well with Mr Trump, given the close relationship of the pair.
She said the Conservatives and Republicans are “sister parties” with “enduring, long-standing ties”.
“We’re not a pop-up act in the way in which they [Reform UK] are… so I don’t think that’s particularly relevant,” she said.
However, the Lib Dems accused the former home secretary of “competing with Reform to be most submissive toward Trump”.
Confidence in Mandelson’s appointment
Mr Trump’s inauguration has also caused a stir after reports in the Sunday papers suggested he could reject Lord Peter Mandelson as Sir Keir Starmer’s nomination for the UK’s ambassador to the US.
The Labour grandee has been critical of Mr Trump in the past, and was last month branded an “absolute moron” by a Trump campaigner.
Lord Mandelson. Pic: PA
However Mr Jones signalled he was confident that the Blair-era minister would take up his position, telling Sky News he “doubts very much” the media reports are true.
“It’s probably being propagated by some politicians that would like to cause a bit of a nuisance. I doubt that will be the case.”
Govt ‘doesn’t agree’ with Khan’s Trump comments
Mr Jones was also forced to distance himself from comments made by Labour’s Mayor of London Sadiq Khan.
Mr Khan has warned of a century-defining battle against “resurgent fascism”, writing in The Observer that “these are deeply worrying times, especially if you’re a member of a minority community”.
Mr Jones said he does not associate with that language and questions about it “are for Sadiq to answer.”
He later told the BBC: “I speak on behalf of the government and we don’t agree with it.”
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