Cable quizzes Darling on Northern Rock (Twickenham & Richmond Liberal Democrats)

Cable quizzes Darling on Northern Rock

November 6, 2009 6:30 PM

cable • [Nov 3] Vincent Cable: CAN the Chancellor explain what process is being put in place to ensure that Northern Rock's good assets, of which there are undoubtedly many, are not sold off cheaply to the private sector while its bad, toxic debts-including those that resulted from 125 % mortgages-are left with the taxpayer?

Alistair Darling (Chancellor of the Exchequer, HM Treasury; Edinburgh South West, Labour): Again, it might be helpful if I make the point that the mortgages that will be held by the Northern Rock mortgage asset company are not all what we might characterise as bad assets. There will be some-there is no doubt about that, given what happened at Northern Rock, especially towards the end-from which the company will not get its money back. However, the majority of the assets in that company are performing-that is, the people who have them are meeting their loans. In other words, they are perfectly good loans. The reason that we have divided Northern Rock up is that, otherwise, we would have had to put even more capital into it. What I am proposing means that we can sell off the Northern Rock bank-in the not-too-distant future, I hope, when it is right to do so-and get it back into the private sector. The other assets will need to be managed over a longer period of time. As conditions improve, however, I hope that many of those loans will come good again and we will be able to get our money back.

• Vincent Cable: But what is the hurry? As I understand it, the European Commission has set no timeline for this process-unlike with the Royal Bank of Scotland. Our experience of other countries, such as Sweden, is that this problem could take 10 years to sort out, so why are the Government putting forward this proposal now? They run the risk of getting very bad value for money for the taxpayer in a premature sale.

Alistair Darling: I have said on many occasions in this Chamber and elsewhere that we are in no hurry to sell at all. Indeed, we will not sell these assets in relation to Northern Rock until the price that is offered is right and we can get our money back. It is also worth bearing in mind that, of the original £29 billion that was lent to Northern Rock, the amount outstanding is now £14 billion, so we are on the right track. We are in no hurry to sell at all. I recall having said that to the hon. Gentleman on at least two occasions at previous Question Times, and it is not entirely clear why he seems so reluctant to accept that assurance.

Richmond upon Thames Liberal Democrats: