Steve Richards: Chancellor has lost control, but it is the Tories who are isolated

The inevitability of the decision to nationalise Northern Rock does not detract from its political significance. Gordon Brown and Alistair Darling tried for too long to avoid the unavoidable, only to be forced to announce the state ownership of a bank in the end. Once more the Government does not appear to be master of events, but one that tip-toes around them with a neurotic nervousness.

The symbolism of Mr Darling's statement yesterday afternoon was also bleak. When things are going smoothly Chancellors do not make statements at the dead end of an icy weekend. The timing of his statement added to the sense of wild turbulence that has whirled around Mr Brown and Mr Darling since the summer.

For Mr Brown the nationalisation of a bank was one scenario he had not envisaged as he planned, plotted and reflected over the decades. As a chancellor he defined himself against Labour's troubles during the 1970s. Once Labour intervened to save ailing industries, often making matters worse. Mr Brown would be different. This was New Labour. He would help people who lost their jobs by providing them with the opportunities to acquire new skills. He would never intervene to save their jobs. Several car plants have closed under Labour, some of them in marginal seats. Mr Brown did not prop them up. Now he has invested billions of pounds to buy a bank.

In opposition Mr Brown fretted about the prospects of a currency crisis if Labour returned to power. He chewed his nails at the prospect of union militancy over public sector pay. He had plans for both potential crises. At no point did he contemplate a scenario where he nationalised a bank. State ownership of the banks was a policy put forward by Tony Benn in the early 1980s. It terrified Mr Brown. He did everything to avoid yesterday's move, including putting forward a convoluted proposal a few weeks ago that was widely condemned as a soft option for potential buyers.

But the fact that many have been urging the course announced yesterday means the political fallout for the Government will be limited. Better to take the sensible route in the end rather than to opt for a costly alternative. The Economist magazine, the Financial Times and several senior business leaders have been arguing for state ownership. None of them are well known socialists. For the Liberal Democrats, Vince Cable has been making the case for months, the only senior national politician who can claim vindication. The range of advocates means that Mr Brown and Mr Darling are not leading us back to the 1970s cheered on in vote-losing isolation by a few members of their party.

Instead, in an important break with British orthodoxy, it is the Conservatives who are isolated politically in their opposition to state ownership. This is an odd political moment for them. On one level it is a crisis that an opposition can only dream about, a government forced to nationalise a bank against its instincts. Yet the Conservatives' credibility is being tested too. They began by supporting the Government. Subsequently they condemned Mr Brown and Mr Darling and warned against nationalisation without coming up with a clear alternative. Yesterday the shadow Chancellor, George Osborne, attacked the Government for not taking the decision to nationalise earlier while making clear he still opposed this particular course. Mr Osborne is getting good at having his cake and eating it, but this is not a sequence that suggests the Conservatives value consistency and coherence over opportunism.

In fairness to Mr Darling, he has been making clear privately for some time that the chances of a private sale were only 50/50. Mr Darling is also right to point out that the differences between the Government and other parties were small. Mr Cable made clear that state ownership should be temporary while a private buyer was sought. Mr Osborne supported the pursuit of a private buyer. Mr Darling looked first, nationalised yesterday and then will start looking again for a sale. If he gets one over time in which the taxpayer makes a profit the crisis will pass.

The immediate political consequences are far less palatable for the Government. Today Mr Brown will host his monthly press conference with a sense of drama in the air once more. He needs a break from dramas if he is to make any headway. Mr Darling will make a statement in the Commons in which he will be dancing once more to events rather than appearing to be fully in control.

But at least they have acted and in doing so something big has happened. In the 1980s a simplistic consensus formed in which the state was always a menace. Now there have been cries across the political spectrum for the state to intervene and widespread condemnation at the light-touch regulation of the past. Suddenly the state has a role again. But the Labour Government is at least as terrified of the implications as the Conservatives.