Darling’s fate in the balance

It was always expected that Gordon Brown would move Alistair Darling into another Cabinet job in the looming reshuffle, his place as Chancellor to be taken by the PM’s close friend Ed Balls. And it might appear that Darling's allegedly dodgy expenses claims make the move easier. But there is a problem.

The Chancellor is indeed in trouble because he wrongly claimed for the service charge on a London flat after he had already let it out after taking up his official residence in Downing Street. He has now offered an unreserved apology and paid back the cash.

Though the revelation came on the back of claims he had "flipped" his second home to maximise profit from the expenses system and inappropriately claimed for the cost of an accountant, Darling insists he has done nothing wrong, and the service charge claim was a simple error.

The Prime Minister meanwhile has accepted that Darling's  "offence" was inadvertent. But during a series of interviews in the past couple of days he has slipped into the habit of talking about Darling and his job in the past tense. In other words, everybody seems to accept there will be a new Chancellor of the Exchequer within a week.

But - and here's the problem - it is now being pointed out in Westminster that it is no longer quite that easy. The expenses affair actually makes this reshuffle far more troublesome for the Prime Minister.

If  - or when - Darling is moved, the opposition parties will turn up the heat by suggesting it is punishment for the expenses claims. They are then planning to call for Darling’s head on the grounds that, if the expenses affair makes him unsuitable to be Chancellor, it should also bar him from holding any other cabinet post. The same will also be said of Transport Secretary Geoff Hoon, who has also been caught up in the expenses scandal.

The Prime Minister will come under sustained attack for failing to take appropriate action against the offending cabinet ministers and he will face claims that he has failed to show proper leadership.

The alternative is for the Prime Minister to simply kick Darling and Hoon out of the Cabinet altogether. Only a day or two ago that would have seemed unthinkable - it would be seen as a further sign of a government falling apart and risk creating some powerful enemies for the PM on the backbenches.

But the sheer scale of the expenses scandal, combined with Brown's disastrous poll ratings, are making the unthinkable suddenly thinkable. ·