Osborne blames Labour for Rock sale

Northern Rock branchChancellor George Osborne is to blame Labour for the quick sell-off of Northern Rock.

The Government announced last week that Virgin Money was buying the bank for £747 million, sparking questions from shadow ministers about the timing and value of the deal.However Mr Osborne will claim the previous administration entered into an agreement that meant the coalition Government was bound to dispose of at least half of the bank, which was nationalised three years ago, by the end of 2013.

The deadline was never made public, and left the new Government with a "limited window" for action.

Insisting the sell-off is "good value for the taxpayer", the Chancellor will set out details of how it was backed by independent experts, who warned that delays would means further losses to the taxpayer.

In a strongly-worded response to a letter from Labour raising concerns about the deal, Mr Osborne is expected to say: "This deadline has never been made public and I note was not referred to in your letter to me.

"That agreement left the new Government with a limited window to get Northern Rock plc back into the private sector, especially since any privatisation process takes at least several months. Given we were advised Northern Rock plc would have been likely to remain loss-making at least well into 2012, which would have depleted taxpayer resources still further, agreeing a sale now was even more imperative."

Chris Leslie, shadow Treasury minister, dismissed the claims, insisting the Government could have secured an extension on the deadline. He said: "It's time George Osborne started taking responsibility for the decisions he takes. He should be doing what's best for the British taxpayer, not hiding behind EU rules.

"Last week the Chancellor claimed he had secured a good deal by selling off Northern Rock for a substantial loss. If he is now suggesting this was a bad deal for the taxpayer and he would rather have waited why did he not ask the European Commission for an extension?

"With the British economy flatlining for over a year, bank shares in decline and a deepening crisis in the eurozone he could have made the case that circumstances had changed. The Chancellor may have chosen to make this announcement when Parliament was in recess, but there are still many questions he will have to answer in the coming days."

© 2011 Press Association
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