Former Chancellor Alistair Darling says breaking up banks is 'step backwards'

Published on Tuesday 18 May 2010 11:18

FORMER Chancellor Alistair Darling today warned the new government against breaking up the banks as he prepared to quit Labour's front bench.

The Edinburgh South West MP will remain as shadow chancellor for the next few months and lead Labour's response to the emergency Budget on 22 June.

But he plans to return to the backbenches once the party has elected a replacement for Gordon Brown.

In an exclusive interview with the Evening News, Mr Darling spoke of his fears over the new UK coalition government's plans to deal with the banks.

He said: "George Osborne and Vince Cable have been talking about breaking up the banks. RBS and Lloyds are huge employers in Edinburgh and that's something I would be very concerned about.

"I'm not sure they have thought through the consequences. It's not the size of the bank that matters, it's the relationship between banks in different parts of the world.

"Edinburgh is the headquarters of one of the biggest banks in the world. If they want to break up RBS that would have implications for Edinburgh. I believe it would be a backward step."

Mr Darling was one of only three people who served in the Cabinet throughout Labour's 13 years in office, along with Gordon Brown and Jack Straw.

But he does not intend to stand for election to the shadow cabinet when a top team is picked to take on the Tory-Lib Dem coalition.

He said: "I've been on the Labour frontbench for 22 out of my 23 years in parliament. It has been an honour and a tremendous privilege but I believe it is time for me to return to the backbenches from where I shall look after the constituents of Edinburgh South West."

"I have said I will stay on as shadow chancellor until there is a new leader.

Labour is expected to choose a replacement for Gordon Brown in July or September. Mr Darling, who was talked of as a possible successor himself, insisted he was not tempted.

Mr Brown made clear when he resigned that he was not interested in lucrative directorships or the celebrity lecture circuit. Mr Darling said he had not thought about such things. "I've got an emergency budget to deal with in six weeks time, that's what I'm concentrating on."

He said the option of a Labour-Lib Dem deal was "dead from the moment it was talked of".

"There were never the numbers. We would have been held to ransom by the Nationalists and some of the Irish parties."

He said he also felt the Lib Dems had effectively done their deal with the Tories and were "going through the motions" in talks with Labour.

Mr Darling added: "The brute fact is that while the Conservatives and Liberals didn't win the election, we did lose."