Tories to oppose Darling strategy
Feb 18 2008 by Adrian Pearson, The Journal
THE Government’s plan to push through the nationalisation of Northern Rock will be opposed by the Conservatives, with shadow chancellor George Osborne branding the situation “catastrophic”.
Chancellor Alistair Darling has promised to rush through the legislation needed to nationalise the bank when Parliament returns today.
But Conservative MPs will oppose the move as they try to distance themselves from what they see as a Government failure.
The Tory’s Tyneside spokesman Alan Duncan said: “We have been left with the worst possible outcome for jobs in the North East. We will not back nationalisation, nor will we allow a great clunking fist to drag us back to the 1970s.”
He was speaking after Michael Bates, deputy chairman of the Conservative Party and a former Treasury minister, said the in-house management-led bid had “had the rug pulled from under their feet”.
Liberal Democrat Treasury spokesman Vince Cable said the Lib Dems would support the bill now that the right decision had finally been made. He said: “This is the option the Liberal Democrats have argued for from the outset, unlike the Tories who have no alternative to offer.
“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.”
Robin Ashby, founder of the Northern Rock Small Shareholders’ Group, said the news of nationalisation had left him “shocked and appalled”.
He said: “Just last Friday the Government received a new offer from Northern Rock raising the amount raised from shareholders. They seem to have brushed it aside very quickly.
“Nationalisation is not good for anyone. We have seen what happens to other nationalised industries in the North East, the ship builders and the miners are almost all gone now. We as shareholders may get as much as £4 a share, at best, which is less than they were valued at before the run on the bank started.
“If the Government is sensible it will make a decent offer and avoid the drawn-out legal battle which the larger shareholders may mount.”
Chancellor Alistair Darling said yesterday an independent valuer will determine the level of compensation due to shareholders.
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Branson begs to differ on decision
NATIONALISATION is “not the right answer” for Northern Rock, Sir Richard Branson said last night.
The head of the failed bid by Virgin for the beleaguered bank said the group had tried its best to save “Northern Rock and the jobs of the staff”.
But the Treasury’s announcement of a temporary public ownership of the bank marked Virgin’s failure to win over ministers to its bid.
In a statement released last night, Sir Richard said: “All of us in the Virgin consortium are very disappointed that the Government has chosen to opt for nationalisation.
“We were very clear the business plan we put forward was robust, conservative but ultimately capable of rescuing the interests of all stakeholders.
“However, we must accept the decision with good grace and hope that the Rock will somehow find better fortune in the future.”
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Foundation safe for three years
THE Northern Rock Foundation has had its future safeguarded after the Chancellor promised to pay out £15m a year to the charity.
The Foundation will play a continued part in the Government’s plans for Northern Rock, Alistair Darling said yesterday, and will be included in any eventual sale.
Speaking to
When Mr Darling announced plans to nationalise the bank he also committed the Government to supporting the Foundation for at least three years.
New executive chairman Ron Sandler would “commit to guaranteeing a minimum income of £15m per year in 2008, 2009 and 2010. This will be paid directly by Northern Rock, and would be a condition of any sale if it were sold in this time”, Mr Darling said.
Last night, the charity’s spokesman Rob Williamson said: “It has obviously happened very fast.
“Our trustees haven’t had a chance to digest the news but we are very pleased that the work of the Foundation will be able to continue over the next three years.
“There is a lot to do and plan and we won’t be making any announcements about specifics until the trustees have had the chance to meet, but our immediate reaction is that it’s very good news.”
The foundation was set up when the bank converted from a building society and in the 10 years since has given away £175m to good causes across the region.
The Government’s commitment to the Foundation was last night welcomed by One NorthEast chief executive Alan Clarke, who said nationalising the bank would bring the region some stability.
He said: “This decision by Government brings welcome clarity regarding the immediate future of Northern Rock.
“I will be seeking the earliest possible meeting with the new executive chairman Ron Sandler to learn more about his plans for the bank.
“It is welcome news that income for the Northern Rock Foundation has been guaranteed for the three years given the outstanding contribution it makes to the North East.”
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