THE Government has come under fire for refusing to release details of the sale of Northern Rock to Virgin Money.
Labour Shadow Treasury Minister Chris Leslie accused the Government of hiding behind “commercial sensitivities” after it refused to release more information about the deal to The Journal under the Freedom of Information Act.
The sale of the Newcastle-based bank to Sir Richard Branson’s Virgin Money was completed on New Year’s Day.
Under an initial £747m deal – although the total amount could rise to more than £1bn – taxpayers could face a potential £400m loss.
The Journal requested details of any reports and briefings to Chancellor George Osborne and any other minister, including on remutualising the Rock. We also asked to see any recent correspondence between Sir Richard and Virgin Money and the Treasury under freedom of information rules. The Treasury confirmed it held information and recognised there was a public interest in releasing it because of the Government’s ownership of Northern Rock.
But it also said there were “powerful” public interest arguments against publishing the information – warning commercially-sensitive material would damage the interests of the involved parties.
But in its formal response, the Whitehall department said it would consider what information regarding the Northern Rock sale process can be disclosed following the completion of the sale to Virgin Money.
Mr Leslie said: “Hiding behind ‘commercial sensitivities’ is a poor excuse for keeping the true details of this appalling deal from the public.
“Now that the National Audit Office (NAO) has launched their investigation into the questionable value-for-money of this sale, hopefully some of the negotiation details will eventually emerge, albeit too late to ensure that the taxpayer doesn’t lose out.”
He added: “The Treasury are getting so little out of this fire sale that you have to wonder about the competence of those involved in the selling process. When the details finally become public, we will be able to see more clearly how the buyers have run rings around ministers on this.
“In the meantime, the purchasers look set to obtain 100% of Northern Rock – and be able to potentially get back all their initial investment within a matter of months – with no guarantees for jobs or head office location set as covenants to the sale.”
Virgin Money and Northern Rock declined to comment on Mr Leslie’s comments and the Government’s refusal to release more information about the sale of the Rock.
Both sides have also insisted the deal is a positive outcome, delivering value for taxpayers as well as good news for colleagues, customers, jobs in the North East and the charitable Northern Rock Foundation.
Prime Minister David Cameron has also defended the sale, saying: “We are selling a business that was costing the taxpayer money and getting actually well over £700m for that business.”
Speaking in the Commons in November, he also said that a “good, new healthy” lending institution would help businesses and families – and urged MPs to welcome the fact it would be based in the North East.
