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A week ago, in the context of a general discussion about Alistair Darling’s performance as Chancellor, I said that the jury was still out on his handling of Northern Rock.
“I’ll be generous to Mr Darling and say that, thus far, the Rock crisis represents a no-score draw for the government,” were my exact words.
Well, a week is a long time in politics. Since those words appeared, a Bill taking the Rock into public ownership has become law, amid Tory cries of “Back to the 70s” and “Labour’s Black Wednesday.”
But for all the sound and fury of the past seven days, my essential verdict remains unchanged. This is a crisis that, in terms of its impact on domestic politics, could still go either way.
What is already clear from the public reaction that this is not, at the present time, being viewed as anything like “Labour’s Black Wednesday” by the wider electorate.
Sure, it has the capacity to become that if things don’t go to plan, but the Brown government has not yet been forced to rip up the central plank of its economic policy as John Major’s was in 1992.
Hence when the BBC’s Question Time came to Newcastle on Thursday evening, there was no great wave of hostility towards Labour, no baying for Chancellor Alistair Darling’s blood.
Perhaps significantly, the biggest cheer of the evening came when the union boss Derek Simpson said he “has trouble understanding Conservative policies.” He is not alone.
There was a similar reaction at Westminster. The prevailing view there was that Tory leader David Cameron and Shadow Chancellor George Osborne had missed an opportunity.
Wrote one senior political commentator: “The consensus was that Dave’s call to sack Darling was misjudged, and that Osborne over-egged things by claiming we’ve gone back to the 70s.”
The Tories’ big problem since the start of this whole affair has been their apparent inability to arrive at a settled policy. At the last count, they have had six.
As a result, they have been unable to construct a clear alternative narrative to Labour’s, leaving the public with the impression that no such alternative actually exists.
As it is, my view for what it’s worth is that Mr Darling is almost certainly telling the truth when he says that nationalisation represents the best deal for the taxpayer.
Why? Because if that were not the case, I don’t believe anything else would have persuaded a New Labour government in the year 2008 to take a bank into public ownership.
The truth of the matter is that Messrs Brown and Darling were desperate to avoid this moment, desperate to find a viable private sector solution to the whole problem.
Only when it became clear that the private sector proposals on offer would result in a multi-billion pound loss to the taxpayer did they manage to overcome their irrational dread of the n-word.
They need not have worried. Unlike New Labour, and for that matter the Tories, the British public are not still caught up in the ideological battles of the 1970s and 80s.
What Mr Brown should have realised is that the nationalisation of Northern Rock was actually an application of the New Labour mantra “traditional values in a modern setting.”
While wholesale nationalisation has been rejected as a means of economic management, there are occasionally circumstances in which nationalising individual companies is the right thing to do.
If New Labour is essentially the politics of pragmatism, unbound by ideology, then nationalising Northern Rock was actually the correct New Labour option all along.
Furthermore, if it was the right option for the taxpayer, so it also appears to have been the least worst option in terms of protecting the jobs of the Rock’s 6,000 employees in Newcastle.
No-one is under any illusions that all of those jobs can be saved. As the Liberal Democrats’ Vince Cable said on Question Time: “It is very clear that the bank has to be shrunk.”
The fact is, though, it would have had to be shrunk a good deal further had the bank been allowed to go into administration, as the Tories appeared to be advocating at one time.
Neither would the two private sector bidders have been able to maintain anything like the current level of operations had they been successful.
Labour is not out of the woods yet. As I said at the outset, it could still go either way.
The most obvious thing could go wrong is that a sizeable chunk of the taxpayer’s £110bn exposure to Northern Rock is not recouped, although this is unlikely to happen so long as the housing market recovers.
The other major area of uncertainty concerns the still-privately-owned offshore vehicle Granite into which Northern Rock has transferred some of its assets.
Some claim that the relationship between the two is such that if Northern Rock stops taking on new business, Granite itself will collapse.
But the deeper ramifications of the Northern Rock affair may not in fact lie in its impact on narrow party politics, but on the wider political consensus surrounding the role of the state.
For the past two decades, we have been in thrall to the view that the economy performs best when financial institutions are allowed to operate in lightly-regulated markets.
What the Northern Rock crisis and the wider credit crunch have demonstrated, though, is the limits of this approach when the free market is allowed to run out of control.
This week’s decision to nationalise may not be Labour’s Black Wednesday. But it may nevertheless still come to be seen as a watershed in 21st century political history.
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