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Making a drama out of a crisis

A week is a long time in politics and even longer when there’s a credit crunch on.

Prime Minister Gordon Brown realised this to his advantage during the 2008 party conference season. In the week before the Labour conference, polls were positioning him as the least popular prime minister since Neville Chamberlain. He then regained some ground by helping to steer Britain’s biggest mortgage lender, HBOS, to saf- ety via a takeover by Lloyds TSB.

For once, Brown’s dour tone seemed to hit the right note when he took to the lectern for his conference speech and told Britain it needed a serious man to be running the country. It was certainly “no time for a novice”.

In his speech, Brown was at pains to link the financial turmoil to global roots and global solutions wherever possible. Brown referred to “challenging economic circumstances” while Conservative leader David Cameron repeatedly used the word “crisis” in his own party conference speech and was keen to highlight the domestic fallout from the credit crunch and failures of UK regulation that left us open to problems.

The Tories made much of Brown’s broken promise to have abolished the extremes of the economic cycle, telling him “you have had your boom and your reputation is now bust”. They pledged to create an Office of Budget Responsibility to bring Government spending in check.

Brown attacked the Conservatives’ policy to let Northern Rock fail and accused them of having being against the short-selling ban – something that the Opposition later denied.

He proposed “rebuilding the world financial system around clear principles”. He promised that himself and Chancellor Alistair Darling would travel to New York to call for transpar-ency in financial transactions, sound risk management, the responsibility and accountability of management and bonu-ses based on hard work rather than short-term speculation.

It was the Conservatives who really sought to distance themselves from City fat cats when Shadow Chancellor George Osborne spoke of the “casino capitalism” rife in Brown’s “era of irresponsibility”.

The Tories also made a stand against the bonus culture, suggesting regulators be allowed to increase capital requirements for firms that reward risk-taking with big bonuses.

The issue of failing banks created the biggest divergence between the two parties, with the Conservatives favouring stronger powers for the Bank of England to “call time” on excessive lending and to have the power to trigger the special resolution regime. They attac- ked the Government for not having the regime in place one year on from Northern Rock in order to save Bradford & Bingley from being bailed out by taxpayers.

But when news broke of the US House of Representatives defeating the bailout plan, the Tories realised it was time to put aside political differences. Many argued that Cameron’s unscheduled and sober speech to the conference on the morning after this news broke was more crucial in convincing people of his economic credentials than his closing speech to the conference the following day.

Cameron said we should not allow “political wrangling” as seen in the US to jeopardise financial stability and said he would drop opposition to the FSA being given the trigger to the special resolution regime to allow the reforms to pass.

Delegates leaving the hall described his performance as “statesmanlike” and he seemed to have tested the “stickability” of the “novice” tag by trying to prove he was grown up enough to rise above party politics.Gareth EvansHead of corporate affairs, Royal London

“Cameron’s impromptu speech on the Tuesday was very well received. His main conference speech the following day was a little more partisan. There is hedge fund money on both sides of the political divide but the Conservatives still have a lot of friends in the City and that is an image that is hard to shake.

“The decision to drop the objection to the FSA holding the trigger for the special resolution regime will be seen as a pragmatic approach.”Ian Morleychairman, Corazon Capital

“Cameron did the only thing he could as he criticised political crowd-playing between the Democrats and Republicans in the US and said he would not do the same. He had to tone down his speech and say this was a time to bury political differences. He struck just about the right balance and gave himself a certain amount of gravitas. He also had to juggle his relationship with the City by saying we should not react in haste but look seriously at anything that is damaging to the financial system. Neither party is going to give a wholesale denouncement of the City. Brown came across as boring and heavyweight in a way Cameron did not quite manage.”



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