Warning bailing out Northern Rock could cost taxpayer £2 billion
Watchdog praises early sale
A PUBLIC spending watchdog has today warned the winding down of Northern Rock’s assets could cost the taxpayer £2 billion.
However, the National Audit Office (NAO) said the early sale of Northern Rock to Virgin Money was also the “best way” to protect the taxpayer from greater losses.
Northern Rock Plc was sold last November to Sir Richard Branson’s firm in a deal that is expected to rack up a £480 million loss for the taxpayer, the (NAO) said.
But the watchdog added that UK Financial Investments (UKFI) had calculated the former bank’s assets still in public ownership could lead to a net cost to the taxpayer of some £2bn, when taking risk and deferred proceeds into account.
The UKFI, the body set up by the Treasury to manage state holdings in bailed-out banks, ran the sales process well, the NAO added.
Amyas Morse, head of the NAO, said: “A sale of Northern Rock plc at the earliest opportunity was the best option to minimise losses on the £1.4bn of public money invested in the bank.
“But most of the former Northern Rock’s assets will be in public ownership for many years to come and there could be a net cost for the taxpayer of some £2bn by the time these assets are finally wound down.”
Matthew Sinclair, director of the TaxPayers’ Alliance pressure group, which campaigns for lower taxes, said: “Investors were hardly queuing up to put their own money into Northern Rock, but politicians kept telling us they knew better and we would make a profit bailing them out.
“Instead, taxpayers are left stumping up for huge losses while those responsible for ordering this bailout remain in denial.”
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