Darling accused of having “selective amnesia” over his role in capital spending cuts


By Martin Kelly

Former Chancellor of the Exchequer, Alistair Darling, has been accused of utter hypocrisy after calling for greater capital investment, despite having personally cut Scotland’s capital budget by 36% when he was chancellor.

The Labour MP, who is to head the No campaign, was being interviewed on BBC Radio Scotland when he conceded that more capital investment was required in order to stimulate the economy.

Mr Darling said: “it would be far better, if you’re going to borrow, to borrow to stimulate the economy” and that increasing capital investment is “precisely what you ought to be doing at a time like this”.

As well as conceding that the lack of growth in the UK economy was leading to higher levels of borrowing, Mr Darling also accepted that “you either have massive borrowing and growing debts because of recession or you use that money actually to get growth going again, you generate the revenues and you know that is how you get out of this”.

However the former Chancellor has now been accused of “utter hypocrisy of the worst kind” after opponents pointed to his own pledge to inflict cuts that were “tougher and deeper” than those of Margaret Thatcher.

Commenting on Mr Darling’s interview, SNP MSP Gordon MacDonald – a member of the Infrastructure Committee and whose Edinburgh Pentlands constituency matches Alistair Darling’s Westminster constituency, said:

“Alistair Darling has either had a ‘road to Damascus’ moment – and now accepts that the SNP were right all along – or he is guilty of utter hypocrisy of the worst kind.

“If he believes that infrastructure spending is the best way to get the economy growing, why on earth did he cut capital funding when he was Chancellor?”

“This is the man who planned cuts that were, in his own words, ‘deeper and tougher’ than those of Margaret Thatcher.  For Alistair Darling to now back borrowing to fund greater capital spending totally undermines his credibility on the economy.

“This is exactly the sort of dither and delay that Mervyn King was referring to, when he said that failure to act quicker on the banks greatly exacerbated the financial crisis and cost over a million jobs in Britain.

“Alistair Darling is supposed to be heading up the anti-independence campaign, but he has far more questions to answer about his own track record on the economy than that of anyone else.”

When Chancellor in 2009, Mr Darling snubbed a request for £350 million of capital spending to be accelerated in order to provide a much needed boost to Scotland’s economy.  The Labour MP blocked the request from the Scottish Government despite it being backed by former Scottish Labour leader Iain Gray.

Mr MacDonald added:

“There is quite clearly a severe issue of trust here. Alistair Darling not only savaged Scotland’s capital budget but also snubbed a request for funding to get our economy moving again that had been backed by his party colleague Iain Gray.

“Actions speak louder than words, and whether it is Alistair Darling or George Osborne, it is clear the interests of Scotland’s economy are far better represented by Scotland’s Parliament.”

In a lecture earlier this year, Governor of the Bank of England, Mervyn King accused Mr Darling of failing to take prompt action when he was Chancellor, as the banking crisis emerged.

Speaking in May, the Bank governor described the internal wranglings that took place over the Labour Government’s response to crisis.

He said:

“From the beginning of 2008, we at the Bank of England began to argue that UK banks needed extra capital – a lot of extra capital, possibly £100 billion or more. It wasn’t a popular message.”

Sir Mervyn said that despite warnings, the “bold action” to largely nationalise RBS and Lloyds Banking Group took the Labour administration another nine months.

“That bold action in October 2008 could have happened sooner,” he said. “Bailing out the banks came too late to prevent the financial crisis from spilling over into the world economy. The realisation of the true state of the banking system led to a collapse of confidence around the world and a deep global recession. Over 25 million jobs disappeared worldwide. And unemployment in Britain rose by over a million.”