Northern Rock nationalisation ‘an option’
The government is prepared to nationalise Northern Rock with a decision possible within days, it was reported last night.
Both the prime minister and chancellor confirmed nationalisation is “an option”, reinforcing the widely-held believe that the troubled lender will be forced into a temporary period of state ownership.
Nevertheless the government continues to state that it is seeking a private sector buyer for the bank.
Gordon Brown has asked Goldman Sachs to investigate the options available to the lender, including the feasibility of a private sector buyer. He reportedly wants an overview of its findings by the end of the week.
Speaking to ITV1’s News at Ten last night, Mr Brown said: “There are a number of companies in the financial private sector that have expressed an interest but public ownership – later to move it back into the private sector – is one of the options.
“The reason we’ve got to look at everything … is that the stability of the British economy is the issue.”
Earlier Alistair Darling confirmed all options are now under consideration, although the government continues to prefer a private sector solution.
Mr Darling said: “As both the prime minister and I have made clear, all options are being considered as it would be irresponsible to do otherwise.
“I’ll take whatever action is necessary, however difficult, to take the right decisions for the long-term interests of the country.”
Vince Cable, the former economist and Lib Dem economic affairs spokesman, has long supported temporary nationalisation as the least-worst option for the bank.
It is understood the government will take over Northern Rock through emergency legislation if it pursues nationalisation.
The Conservatives have said they will oppose any attempts in parliament to take the lender under state control.
George Osborne, the shadow chancellor, said: “The Labour government’s dithering for months over Northern Rock has been deeply irresponsible and has now exposed the taxpayer to a £55 billion liability, more than the schools budget.”
As an early victim of the global credit crunch, Northern Rock was forced to borrow around £26 billion from the Bank of England, while the chancellor has guaranteed savers’ deposits, potentially doubling taxpayers’ exposure.
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