Call for Rock nationalisation

11-12-2007

Call for Rock nationalisation
Beleaguered bank Northern Rock should be nationalised in order to safeguard taxpayers' money, the Liberal Democrats have said.

Speaking on the Today programme, the party's acting leader, Vince Cable, said he had written to prime minister Gordon Brown calling for such action to be taken before parliament breaks for Christmas, stressing time was "of the essence".

Mr Cable told the Radio 4 show he believed bringing Northern Rock into temporary public ownership was "the least worst option" over the bank's future, claiming government efforts to secure a private sale of the company were not working.

Northern Rock opened up to offers after it found itself at the centre of the first run on a British bank in almost 150 years in September, when it was forced to turn to the Bank of England for an emergency loan.

The Newcastle-based lender is subsequently believed to have borrowed further cash from the central bank, having initially approached the institution because it was unable to raise sufficient funds on the wholesale money markets due to the global credit crunch.

Calling for the government to bring the company under public ownership in order to protect taxpayers' money backing the loans, Mr Cable claimed Northern Rock was "bleeding to death".

"The consortiums that are involved are struggling to raise the vast amount of money that's needed and we're talking here about raising £30 billion, roughly the size of the present defence budget, in order to repay the taxpayers' loan," the temporary Lib Dem chief stressed.

"There has to be a single-minded focus on the taxpayers' money and also on the long-term future of the bank, including the jobs of people in the north-east of England," Mr Cable added.

The Lib Dem expressed hope Conservative leader David Cameron would support his request for Northern Rock to be nationalised.

But Mr Cameron later told the same programme it would be wrong for the government to spend more taxpayers' cash nationalising the bank and said a private sale was desirable.

Meanwhile Northern Rock chairman Brian Sanderson yesterday told the BBC it was unlikely any action would be taken over the future of the bank before Christmas.

Northern Rock officials are in talks with a number of potential buyers for the bank, including a consortium led by Sir Richard Branson's Virgin Group - which has been named as the company's preferred bidder.

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