A FORMER Labour minister yesterday accused David Cameron of selling Northern Rock on the “dirt cheap”.
Malcolm Wicks, a former energy minister, spoke out about the deal with Sir Richard Branson’s Virgin Money during Prime Minister’s Questions.
The sale is initially worth £747m – sparking warnings that taxpayers will be saddled with a potential £400m loss, although the Treasury could eventually realise more than £1bn.
The MP for Croydon North said: “Would the Prime Minister agree that the history of Northern Rock represents a kind of modern day morality tale or play?
“In that here we have a decent mutual and responsible building society, which is then privatised, it then overextends, it then goes bust. It is then bailed out by the taxpayer.
“And now sadly, instead of returning to mutuality, it is sold off dirt cheap to one of the brashest companies in England.”
Prime Minister David Cameron said: “If you look at the decision the Government has taken, first of all we are selling a business that was costing the taxpayer money and getting actually well over £700m for that business in the first instance. But the second thing we are doing, which I think is actually in the interests of every person in this House [of Commons] and everyone in this country, is to get another functioning bank and building society on our high street lending money.”
He added that many constituents complained to MPs that they could not get mortgages or loans for their businesses.
“We need a good new healthy lending institution out there. And I think honourable members should welcome that it is going to be based in the North East as Northern Rock was,” said the Prime Minister.
Last week, Sir Richard told The Journal that he was looking forward to working with the Northern Rock team in Newcastle
He said: “We decided to keep the bank in Newcastle – it is through no fault of the staff that Northern Rock got into trouble. Geordies are known for their hard work and the staff have shown incredible loyalty through adversity.
“We hope now to give them a bit of stability. In the years to come, if we are as successful as we hope, we may be able to take on more staff.”
Virgin Money has promised there will be no compulsory redundancies beyond those already announced by Northern Rock for at least three years under the deal, extending support for the Northern Rock Foundation until the end of 2013 and making Newcastle its “operational” base.
