Leading article: A little rough justice will help ministers to get a grip

We quoted yesterday an ally of the Chancellor as saying that "in six months, we hope people will look back and think that no one lost a penny over Northern Rock or HMRC". That optimism is almost admirable in the circumstances, but it is not a reliable guide to the future. Even if it turns out that the taxpayers' losses at Northern Rock are limited, and that the data on the computer discs are never mis-used, the damage to the reputation of this Government is likely to be serious.

That may not be fair – a question to which we shall return in a moment – but it is undeniable. The telling comparison is drawn with Britain's ejection from the European exchange rate mechanism in 1992. In fact, the withdrawal of the pound ended a period of unnecessary stringency and provided the foundation for the longest period of stable economic growth in modern British history. The policy of ERM membership was pursued by Margaret Thatcher and then John Major, and supported by the shadow Chancellor, Gordon Brown, and most newspapers, including this one. Yet the ending of that policy was a disaster for the Conservative Party's reputation, from which it has only recently recovered.

The parallel is imperfect, of course, but there is one word which applies to the ejection from the ERM and the present Government's travails, and it is the dread word "incompetence". It is a word which can colour the way a government is regarded, and which can be more powerful even than "sleaze" or "spin". The present series of unfortunate events threatens to undermine – if not so suddenly as ejection from the ERM – the Labour Party's reputation for competent public administration.

To recite the list of recent incidents which, as Home Office officials predicted in respect of one of them, the media did not present in a positive light, is to expose the unfairness of the overall charge of incompetence. In the case of Northern Rock, as the Prime Minister pointed out yesterday, the Tories supported the Government's decisions at the time. The real questions about the handling of that affair should be about the response of the regulatory authorities, rather than ministers, before the crisis broke. In the revelation that thousands of illegal immigrants had been cleared to work as security guards, on the other hand, ministers seem to have been more culpable. Yet they cannot be blamed for the revision of figures for the numbers of foreigners taking the new jobs created over the past decade. The cumulative effect of all these, however, has been of a Government that lacks grip.

Lack of grip and incompetence are words that will resonate even though we all know similar administrative howlers would have come to pass if David Cameron had been prime minister or Vince Cable the acting chairman of a Government of National Unity. Yesterday, Mr Cameron and Mr Cable failed conspicuously to score points of substance against the Prime Minister in the Commons – Mr Cable for the Liberal Democrats did not even bother to ask about the missing discs at all. Yet the damage has been done. Useful lessons have been learned: you can get an awful lot of data on to two CDs; the current rules for setting up direct debits from bank accounts are lax; governments cannot be trusted with large databases (which has implications for the proposed national child register as well as for identity cards); and running efficient public services is fiendishly difficult.

But the learning process is crude and unfair: it involves punishing Mr Brown and his ministers for failings mostly not their own. Unfortunately, there is no other way in which our system can put a high reputational price on competence. It is rough justice, but it is a sort of justice.