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Osborne says five year Rock loan exposes taxpayers to “extraordinary” risks

Shadow Chancellor George Osborne says taxpayers have been exposed to “extraordinary” long-term risk by the £50m Treasury loan given to Northern Rock which has come to light this week.

The loan, which does not have to be paid back for five years, is in addition to the Bank of England’s £24 bn loan to the lender, which Osborne says will leave taxpayers with a liability of £900 each.

Speaking in Parliament yesterday, Osborne said: “Today we are told that the Treasury has also lent so-called subordinated term debt, which does not have to be paid for five years, comes at the back of the queue and is in most danger of default if the bank is wound up.

“If that is true, taxpayers have been exposed to an extraordinary long-term risk, yet we have been told about that Treasury loan by the BBC’s business editor rather than the Chancellor of the Exchequer.”

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