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Last Updated: Tuesday, 20 November 2007, 18:09 GMT
Assessing the political damage
By Nick Assinder
Political correspondent, BBC News website

The grim faces on the Labour frontbenches said it all - Chancellor Alistair Darling may be living on borrowed time.

Alistair Darling
Mr Darling was told to get a grip
Worse, after Northern Rock, the economic competence of the entire government is now under serious question.

For the time being, the opposition parties are not calling for ministerial sackings. Acting Liberal Democrat leader Vince Cable came closest by asking where the buck stopped.

At the moment, they want to know how this extraordinary crisis is being dealt with and that the 25 million individuals affected by it can be reassured their most sensitive personal family and financial details are not in the hands of fraudsters or other criminals.

But these are only the opening stages of this affair and there is every chance things will get worse for Mr Darling and the government before it gets better.

The consequences are still difficult to calculate, with opponents in Westminster already hoping that there are comparisons with John Major's Tory government - which saw its reputation for economic competence shattered by the "Black Wednesday" withdrawal from the ERM in 1992.

Mr Major and his administration never recovered from that and eventually got thumped in the 1997 election.

Little weight

It is of course much too soon to make such comparisons but there are certainly serious issues at stake.

For a start there is the sheer breathtaking size of the security breach and the fact that junior officials were able to perpetrate it - innocently or otherwise.

Investigations are under way, including by the Metropolitan police, to get to the bottom of that.

Vince Cable
Mr Cable asked where the buck stopped

If it turns out there was no criminal activity, that this was simply an extraordinary cock-up, there will still be serious questions about how procedures were so loose as to allow a "junior official" to cause it and whether it was the result of budget cuts.

As Mr Cable also said, has the Treasury taken the place of the Home Office as the department not fit for purpose. The fact the department is officially independent of the Treasury and government will carry little weight.

If, however, it emerges there was criminal activity involved, or if it appears the information has already been used for illegal activity or fraud, the pressure on Mr Darling may well prove unbearable.

Shadow chancellor George Osborne has already claimed the affair is the "final blow" to the government's controversial ID card proposals. But there are bigger issues here.

Get a grip

As Mr Osborne told the government during the emergency statement: "Never mind the lack of vision, just get a grip. Deliver a basic level of competence."

Just another example of the incompetence shown by this government
Martin, Chippenham

And it is that which the opposition believes will prove the lasting and possibly even fatal damage to the chancellor or the government.

Gordon Brown's extraordinary honeymoon came crashing to an end after the botched early general election. Since then he has struggled to regain political momentum.

The Northern Rock crisis was only postponed by the government's bail-out and Mr Darling was given a rough ride when he updated MPs on the state of play earlier in the week.

Now, exactly 24 hours later, he was back in the Commons making one of the most genuinely shocking statements from a chancellor veteran Westminster watchers can recall.

What is absolutely clear is that, while the chancellor may have acted swiftly to contain this crisis, it still has a very long way to run.

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