GORDON Brown was today blasted by influential MPs for his “flat-footed” handling of Northern Rock.

The Commons public accounts committee (PAC) said the Treasury was aware of “shortcomings” in dealing with a bank in trouble since 2004 – when Mr Brown was Chancellor and three years before the Rock nearly collapsed as the credit crunch took hold.

And the Treasury was “leisurely” in dealing with these issues, according to MPs who were responding to damning findings by the National Audit Office (NAO) watchdog in March.

PAC chairman Edward Leigh said: “It is not surprising therefore that, in September 2007, when there was the run on deposits at Northern Rock, the Treasury was caught flat-footed.”

Northern Rock was propped up by almost £27bn in emergency loans from the Bank of England and nationalised in February 2008.

MPs accused the Treasury of failing to protect taxpayers by allowing the Rock to make £750m of the “riskiest” loans as the bank received emergency financial support.

The “together mortgage” provided consumers with up to 125% of the value of the property – but are now a “significant” source of arrears and debt being written off, according to the committee.

And the Treasury did “not know enough” about Northern Rock when it was nationalised despite the enormous risks for taxpayers.

“Yet the Treasury did not commission its own due diligence on the quality of the company’s loan book, preferring instead to place reliance on the work undertaken by advisers to the Bank and the Financial Services Authority.

“That work had been done for different purposes and the Treasury undertook no formal assessment to ascertain whether it could or should place reliance on it,” said the report.

It highlighted how “very few” Treasury officials had the skills to deal with the crisis and made “extensive” use of external advisers.