Belfast Telegraph

We wanted to sack King, Darling reveals in memoirs

By Andy Smith

Governor of the Bank of England, Sir Mervyn King, would have been sacked three years ago if the Labour government had found another candidate.

The plan to make him the first governor in 50 years to be denied a second term in office is revealed in the forthcoming memoirs of the former chancellor Alistair Darling. Sir Mervyn ran into heavy criticism at the time of the collapse of Northern Rock, in 2007, which presaged the worldwide banking crisis the following year. He was accused of being too slow to react after being warned privately of the bank's problems a month before the news broke.

In the ex-chancellor's memoirs, according to a leak published by the Labour Uncut website, Mr Darling describes the governor as "amazingly stubborn and exasperating" and confirms that a plan to sack him in 2008 was abandoned only because they could not find a suitable alternative. He also criticises the "prickly and strained" relations between Mr King and the head of the Financial Services Authority, Adair Turner, as one of the reasons regulators failed to prevent the banking crash of 2008.

The memoirs will be a blow to Sir Mervyn's reputation as he battles to restore confidence in the economy. Earlier this month, he had to write to the present Chancellor, George Osborne, to explain why inflation is more than double the Government's target of two per cent. He has forecast it will fall later in the year, and the greater dangers are turbulence in the money markets and Europe's debt crisis, which could hit the UK's weakened economy. With these problems looming, it will not help Sir Mervyn to have the public reminded of his much criticised handling of previous crises.

Mr Darling also sheds light on the unhappy story of Gordon Brown's doomed premiership, reinforcing the image of a suspicious and driven Prime Minister who seemed unable to work harmoniously with anyone except a handful of aides or former aides who gave him total loyalty.

But potentially the most damaging comments in the leaked extracts concern Ed Balls who, unlike Gordon Brown, is still an active politician and, as shadow Chancellor, is the second most important figure on Labour's current frontbench. Mr Darling's memoirs confirm for the first time a widely rumoured story that Mr Brown tried to prise him out of the Treasury in 2009 to put Mr Balls in his place.

The memoirs claim that Mr Balls then ran a shadow Treasury operation, with another of Gordon Brown's former advisers, the newly ennobled Shriti Vadera. Mr Darling's remarks echo those made by Tony Blair in his memoirs, published last year, in which the former Prime Minister acknowledged that Mr Balls was "really able" but complained that he "behaved badly at points, and was wrong on policy".

The revelations were seized upon by the Tories, who hope to create trouble at the top of the Labour Party in the run-up to their annual conference.

Popular