View more on these topics

Government forced to include Northern Rock debts in national accounts

The Office for National Statistics has told the Government it must include the £26bn the Bank of England loaned to Northern Rock in its national accounts.

It says Northern Rock will be classified as a public financial corporation from October 9, 2007 because the public sector has the power to control the collapsed bank’s general corporate policy. While the BoE’s loan is outstanding Northern Rock requires permission before undertaking most business activities.

The ONS says this move should not be confused with ‘nationalisation’ which refers to public ownership.

Shadow chancellor George Osborne says classifying Northern Rock as a public financial corporation adds more than £70bn to the national debt which breaches Gordon Brown’s sustainable investment rule by raising public debt to more than 42 per cent of GDP.

He says: “Gordon Brown has staked his reputation for competence on meeting his own fiscal rules. Today those rules have been blown to pieces as a result of his economic incompetence. Brown has effectively saddled every taxpayer with a second mortgage as a result of his mishandling of the Northern Rock crisis.”

Liberal Democrat shadow chancellor Vince Cable says the announcement means the Government will have to be honest about the huge debt that taxpayers are currently owed.

He says: “The impact on the national accounts may prove embarrassing, but at least in the short term it ensures that the Chancellor can’t use his absurd bonds proposal to hide the true impact of bailing out Northern Rock. We must now have a rational debate about who should own Northern Rock – ensuring that all taxpayer loans are repaid with interest.”

Recommended

Barnes expected buyout exodus

Bestinvest chief executive Andrew Barnes says he expected outflows of staff after the private equity takeover and believes the firm is now moving in the right direction.In his first interview since the takeover at Bestinvest, Barnes attributes most of the departures to lifestyle decisions after individuals were given significant sums as part of the deal […]

Journalist joins Hargreaves board

Hargreaves Lansdown has appointed former Times journalist Jonathan Davis as an independent non-executive director.

Darling in plan to allow secret bank rescues

Chancellor Alistair Darling has set out proposals to allow the Bank of England to offer secret help to banks suffering liquidity problems.A joint consultation document from the Treasury, Bank of England and the FSA recommends that the BoE should be allowed to delay revealing emergency help to a bank in special circumstances.It says: “The Government […]

Look beyond the borders

The specialist lending market in the Republic of Ireland has been flagged as a “growth engine” for the next three years.GE Money Home Lending head of mortgage marketing Gerry Bell urged brokers at the Mortgage Business Expo to make the most of cross-border market opportunities.He said the specialist lending market in the Republic of Ireland […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment