By Gonzalo Vina and Robert Hutton
June 3 (Bloomberg) -- Gordon Brown risks a rift in his government like the one that brought down Margaret Thatcher 19 years ago as he considers replacing Alistair Darling as Britain’s chancellor of the exchequer.
With Home Secretary Jacqui Smith indicating yesterday she’ll quit the Cabinet and calls from the opposition for Darling to go, the reorganization Brown is considering may further rock a government roiled by plunging approval ratings and a scandal over about lawmakers’ personal spending.
Removing Darling, who manages the Treasury and is the second-most powerful Cabinet member, would mirror the shake-up that preceded Thatcher’s downfall. When Thatcher sidelined her then-deputy, Geoffrey Howe, he quit, triggering a rebellion that forced her out within a month.
“Darling’s got to be handled with real care,” said Philip Cowley, professor of politics at Nottingham University. “If it’s a messy divorce, it could be very messy indeed.”
Darling, 55, has served as a Cabinet troubleshooter since the Labour Party took office in 1997, defusing controversies over nuclear power, pensions and welfare benefits. He and Brown have held parliamentary seats near each other in Scotland since the 1980s. Darling is one of two people to have been in the Cabinet as long as Brown.
A reorganization would be a chance for Brown to revitalize his Labour government, which is trailing in the polls with less than a year to go to an election. An ICM Ltd. survey published May 31 showed Labour lagging behind both the Conservatives and Liberal Democrats for the first time in 22 years.
Blows to Brown
Brown has been hit by a series of blows over the past two months. In April, he fired his media adviser, Damian McBride, over a planned campaign to publicize the personal lives of opposition leaders. In the past three weeks, the Daily Telegraph has published details of expense claims showing lawmakers taking taxpayer cash for swimming-pool cleaning, a massage chair, and, in the case of Jacqui Smith, her husband’s adult films.
Smith asked months ago to leave the Cabinet, a person familiar with the situation said yesterday.
Darling this week apologized for expense claims and said he’d repay about 600 pounds ($1,000) he claimed in expenses relating to an apartment he had in London.
Children’s Secretary Ed Balls, an economic adviser to Brown between 1994 and 2005, is the bookmakers’ favorite to replace Darling. He’s so close to Brown that other ministers may bristle at the promotion, said Bill Jones, a professor of politics at Liverpool Hope University.
‘Very Unpopular’
“Replacing the loyalist Alistair Darling with the loyalist Ed Balls is not going to improve his standing,” Jones said.
Appointing Balls also would signal a shift away from Darling’s effort to put a lid on the deficit. While Darling set out plans in his annual budget to curtail spending growth, Balls on May 28 said he was “confident we will continue to see real increases in spending for health and education.”
Balls, 42, wants higher spending to underpin an economic recovery and draw a dividing line with the Conservatives, who say the Treasury can’t afford it. Brown adopted that line in this week’s election campaign.
A spending spree would counter calls by Standard & Poor’s and the International Monetary Fund, which have advised the U.K. to curb the deficit. S&P last month lowered its outlook for the U.K.’s top credit rating, saying a deficit above 12 percent of gross domestic product isn’t compatible with a AAA grade.
Reshuffle Required
Smith’s departure alone would require changes to Brown’s team. Children’s minister Beverley Hughes also wants to leave her job, and Sky News said Cabinet Office Minister Tom Watson will step aside. Since the expenses scandal began, eight of Labour’s 350 members of Parliament have decided not to seek re- election. Late yesterday, the party barred a ninth, Ian Gibson, from standing again as a Labour candidate, effectively ending his career.
Thatcher resigned in November 1990 after support from her own Cabinet melted away. Howe served her for 11 years, first as chancellor and then as foreign secretary and then deputy prime minister.
Unhappy with Thatcher’s increasingly autocratic style, he quit his Cabinet post and gave a speech attacking her policies and management ways. It led Michael Heseltine to challenge her for the party’s leadership, precipitating her downfall.
“Howe took it, and took it, and took it, and took it and then snapped,” said Cowley of Nottingham University. “And the attack, when it came, was more damaging because it was Howe.”
To contact the reporters on this story: Gonzalo Vina in London at gvina@bloomberg.net; Robert Hutton in London at rhutton1@bloomberg.net
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