Between a rock and Gordon Brown?

As you may have read elsewhere on the tutor2u site, the government have nationalised Northern Rock.

What are the politics of this decision?

I see all of my AS students on Monday and we use some of the time to review the big story or stories of the past week (hence the label ‘Media Monday’ for these lessons).

This hopefully helps in two ways. First it reinforces the need to keep up with recent developments in order to maintain a good level of knowledge about topics already covered (especially since it is nearly 6 months since we covered topics like PM/Cabinet). Second it should illustrate how study of A level Politics gives us a deeper understanding of the context and significance of political events.

Today we have used a couple of articles from the Guardian.

The first reports that:

“The chancellor, Alistair Darling, moved to end six months of turmoil over the fate of Northern Rock yesterday when he admitted his efforts to find a buyer for the stricken bank had failed and he was forced into the first nationalisation of a British company since the 1970s.

With Labour desperate to minimise the political fallout from the decision, government sources insisted that a “temporary” period of public ownership did not represent its “Black Wednesday moment” but was the best outcome for the taxpayer.

Opposition parties were, however, quick to exploit the chancellor’s embarrassment after he used a press conference at the Treasury to admit that the failure of talks with Sir Richard Branson’s Virgin Group - the preferred private bidder - had left the government with no alternative.
Darling and the prime minister, Gordon Brown, had previously described this as the “least favourable option”. Since it emerged five months ago that Northern Rock had sought help from the Bank of England, it has relied on £55bn of taxpayers’ guarantees to stay in business.”

Source: http://www.guardian.co.uk/business/2008/feb/18/northernrock.banking3

The second states:

“Why was the government so slow to accept the obvious? It was frightened of embracing a policy apparently redolent of Labour’s past. But there is nothing socialist about this plan, backed by the Liberal Democrat’s Vincent Cable and even by the Economist newspaper. The fact that the Conservative party has opposed nationalisation should not have scared Mr Darling. Hesitation over Northern Rock, and his confusion over capital gains and non-domiciled taxpayers have combined to make him the weakest chancellor since Norman Lamont.”

Source: http://www.guardian.co.uk/commentisfree/2008/feb/18/northernrock.alistairdarling1

Questions we discussed:

(1) Should Darling resign?
(2) What is meant by the term ‘Black Wednesday moment’ and how does the Northern Rock issue compare?
(3) What does the nationalisation say in terms of the old Labour versus new Labour debate?

Ground covered:

(1) Here there are obviously two sides. In his favour we decided that he could not have foreseen the bank’s meltdown, but then he has botched the job by taking too long to decide. And there is a further question about whether Darling had a free hand here, since the fiasco bears the hallmarks of a typically indecisive Brown. So if the decision is not his to make, then why is he Chancellor?
(2) Parties always seek the holy grail of economic competence and Black Wednesday handed a huge advantage to Labour. Only time will tell of voters blame the government for this.
(3) This nationalisation obviously carries echoes of pre mid-90s Labour, but Darling said it was ‘not the preferred option’ so perhaps we should not get too carried away.