Northern Rock, the troubled highstreet Bank, is to be nationalised the Chancellor announced to the House of Commons in a statement today following months of speculation about its future after huge market falls led to massive government investment and safeguards in the firm.
In his statement the Chancellor defended the move as in his words the two other proposals from the private sector, including the Virgin Money bid, didn't offer "sufficient value for money to the taxpayer" with sums of £55 billion of tax payers money already invested by the Government to safeguard the depositors and mortgage holders in the Bank.
The decision has already proved controversial with many Labour MPs from the North East having been hostile to the very idea of nationalisation, the Conservative Party is also hostile towards the plans and has accused the Government of overseeing "months of dither and delay" which has worsened the situation and have called Nationalisation a "catastrophic decision" and have promised to oppose the emergency Bill to nationalise the Rock tomorrow alongside calling on the Chancellor to resign or be sacked from the Treasury with David Cameron saying "I don't think this chancellor has any credibility left and that's not good for the country and not good for the economy."
However, the Government will be able to rely on support from the Lib Dem benches due to their Treasury Spokesman, Vince Cable, being a long term advocate of this solution who had previously said that it was "clearly preferable to take this bank into temporary public ownership rather than have a bad private sale to somebody like Sir Richard Branson under which the taxpayer would continue to have all the risks and the liabilities and a private owner would take all the benefit."
It is expected that taxpayers investment in the Bank will rocket from around £55 Billion to around £110 Billion, a cost of £3.5 thousand per taxpayer, with the Chancellor stressing that this is very much a short term and temporary situation with the private sector as the place where "the long-term ownership of this bank must lie."
The Prime Minister has also announced the former Lloyds of London CEO, Ron Sandler, who is widely respected in the City will become the new Chief Executive of Northern Rock. Mr Sandler, who met with staff of the Bank today,promised that he will be "getting on with the job" and said that despite all the problems and challenges of the post it was an "exciting" one.
-Adam Evans, Chief Political Correspondent
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