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Responding to the Chancellor’s announcement that Northern Rock bank is to
be temporarily nationalised, Liberal Democrat Shadow Chancellor, Vince
Cable said:
“Belatedly the Government has made the right decision.
“This is the option the Liberal Democrats have argued for from the outset,
unlike the Tories who have no alternative to offer.
“In an issue of such major national interest the focus must now be on the
next steps.
“The first priority must be to work out the seriousness of the problems at
the bank with an independent audit of its loan book. This must be
conducted under the auspices of the Bank of England, not the FSA.
“Secondly, the bank must stop irresponsible lending at more than the value
of property, and aggressive deposit-taking.
“Thirdly, there will be difficult times ahead, especially for the
employees, as the bank is downsized. However, there is now hope for the
long-term future of the bank when it is eventually sold in more
satisfactory conditions.
“There are a lot of unanswered questions, about who for example is paying
the expenses for the long detour exploring the Branson bid, but at least
the Government has now made the first move towards tackling this mountain
of a problem.”
Frank Little adds: “George Osborne's knee-jerk reaction is evidence that the Conservatives are still dominated by Thatcherite thinking. He should realise that Brown & Darling's decision, late though it is, is a pragmatic one on a par with Edward Heath's action to keep Rolls-Royce Engines viable.
“These decisions were taken in the long-term interests of the country, can only be taken by government, and cannot be left to the short-term mechanism of the market. RR's position, having been returned to private ownership, as one of the two top aero-engine manufacturers in the world, vindicates Heath's action. One anticipates that Northern Rock will return as one of the top five mortgage lenders in the UK, in rather less time than the sixteen years it took Rolls-Royce”.
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There are worrying signs that the nationalisation is being botched. Vince Cable met Alistair Darling on Wednesday to get some answers. He later issued this statement:
“It is clear that many of Northern Rock’s best assets have already been hived off to Granite.
“It is now critical that there is a full independent audit of the quality of Northern Rock’s remaining assets to determine how many of these are dodgy unsecured loans.
“Despite some reassurances from the Chancellor, the Government has still failed to make clear what the relationship between Northern Rock and Granite will be in the future.
“We cannot have a situation whereby Northern Rock continues to push high quality mortgages into Granite while taxpayers are left with a far less reliable group of assets in return for their money.
“Confidence in the nationalisation of Northern Rock is dependent on the Government being able to demonstrate that the best interests of taxpayers is being served.”
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