Brown vows to make success of public bank
Feb 21 2008 by William Green, The Journal
NORTHERN Rock will get the chance to rebuild and not return to the private sector until it is in taxpayers’ interests, Gordon Brown promised yesterday.
The Prime Minister said the bank would not have to release confidential plans central to rebuilding the business as demanded by Conservative leader David Cameron, who asked what Mr Brown was “trying to hide”.
Mr Brown said it would be ridiculous to expect Northern Rock to publish every detail of its plans in a competitive mortgage market, after Mr Cameron said the nationalised bank would not be subject to freedom of information rules, unlike other public companies.
Mr Brown said: “It would be unfair on Northern Rock if other companies knew everything about its business plan. It is surely a matter of commercial confidentiality that Northern Rock should be able to plan its business future.
At Prime Minister’s Questions he said: “As far as the commercial future of Northern Rock is concerned, we have made it absolutely clear that the new head of Northern Rock Ron Sandler will operate in a commercial market. He will be able to decide on repossessions and all these other issues and he will put forward his plan for the restructuring of the company.”
Mr Cameron said the Government had given all the facts to Sir Richard Branson – who led the Virgin Group bid for Northern Rock – but would not share them with the public. “When it comes to this Government and freedom of information, it would make Fidel Castro proud.”
But Mr Brown countered: “We are not going to reduce the issue of Northern Rock to student politics.”
He also denied hiving off some Rock mortgage assets would affect a private sale of the bank, after coming under fire from Lib Dem leader Nick Clegg, who said the way nationalisation had been handled was jeopardising the interests of taxpayers.
Last year it emerged that Northern Rock sold £53bn of its mortgages to Jersey trust company Granite Master Issuer, which is not in the nationalisation. Northern Rock has previously played down the risk to taxpayers, saying selling on loans is common practice and its mortgage book is worth more than £100bn. Taxpayers could face liabilities topping £40bn in loans and guarantees to the bank.
Mr Brown insisted he had acted in the best interests of depositors and taxpayers and stability was the watchword.
“That’s why we will only return Northern Rock from temporary public ownership into the private sector when we can get the best deal for the taxpayer.”
