'Rock on: guarantee is good as it gets'

Sep 17 2007 by William Green, The Journal

LIBERAL Democrat leader Sir Menzies Campbell has urged Northern Rock account holders not to panic by saying he would keep his money with the bank if he were a customer.

Savers should be reassured as Bank of England support for Northern Rock was as “good as you are going to get”, but there were questions about Gordon Brown’s role in allowing UK personal debt to rise to £1.3trillion, said Sir Menzies as his party’s conference in Brighton started yesterday.

In a wide-ranging interview with The Journal, he also backed the development of high-speed rail links to boost economic growth in the North-East and fight climate change by giving motorists a real alternative to driving.

He supported widening the A1 Western bypass and fully dualling the A1 in Northumberland to improve congestion and safety, but controversially suggested road charging could pay for improvements.

A relaxed Sir Menzies also brushed aside mutterings over his leadership and expressed confidence the Lib Dems could build on regional electoral successes such as capturing Newcastle Council. “I am on very good form and I am enjoying my job. And I am looking forward to a very good week,” he said.

On Northern Rock, Sir Menzies urged customers not to panic because that only bred more panic, but added: “There is a real question about the Government’s role in this because we have now got £1.3trillion of personal debt. Vince Cable, our treasury spokesman, has been challenging the previous Chancellor and the present Prime Minister about this for some considerable time.

“All of that is built upon a continuation of the housing boom and to allow that volume of debt based on something as ephemeral as house prices has been, to say the least, injudicious on the part of the Government and the price is now beginning to be paid for that.”

But Sir Menzies stressed there was no need for people to withdraw cash from Northern Rock, hit by international money market turmoil, and said he would leave his money with the bank if he were a customer because of the Bank of England’s support. People withdrawing money could also start to affect confidence in other financial institutions.

He said he could see the benefits high-speed rail would bring to regional prosperity. And high-quality public transport could be an incentive to motorists not to drive, with disincentives in vehicle excise duty to cut reliance on cars.

But Sir Menzies backed the “entirely sensible” widening of the A1 Western bypass to three lanes to deal with congestion and fully dualling it to Scotland to improve safety. He said road charging could pay for the bypass work, but it was hard to imagine a more necessary upgrade in competition for funds.

But Blaydon MP Dave Anderson accused him of political opportunism over Northern Rock that risked making the situation worse.