Northern Rock Sale 'Poor Judgement' – Labour

Labour's Shadow Minister for the Treasury has said the sale of Northern Rock on Thursday by the Government was a 'poor judgement'.

Richard Branson's Virgin investment company announced it was to purchase the almost disastrous Northern Rock bank on Thursday, while it has since emerged the sale will be at a loss for the taxpayer.

Responding to the news, Labour’s Chris Leslie said there had to be questions for the Chancellor as to whether selling later would have led to a smaller loss or even a profit.

“The Chancellor’s reckless decision to cut spending and raise taxes too far and too fast has choked off the recovery and means the Government is likely to borrow billions more than planned.

"For this sale and for future sales of Lloyds and RBS we have said that if the Government makes a profit or gets money coming into the Treasury they should use that to repay the national debt."

The bank was one of the first to be bailed out by a western Government in 2008, being nationalised by former Prime Minister Gordon Brown before imminent collapse at the beginning of the global credit crisis.

The government said the bank is being sold to Virgin Money for £747m. The bank is split into two; the Northern Rock plc, and Northern Rock (Asset Management). The latter half was used to take on the bank's bad debt, while Richard Branson's company is purchasing the former.

Virgin said there would be no additional compulsory redundancies for at least three years.

The decision to proceed with a sale was based on advice from UK Financial Investments (UKFI) and their independent advisers.

HM Treasury said the sale would not affect current customers of Northern Rock, who will carry on their banking as usual. They do not need to take any action and can continue to operate their accounts and contact Northern Rock as they do now. There are no changes to their terms and conditions either.

(DW)