Wansbeck MP warns chancellor over Northern Rock

CHANCELLOR George Osborne has been warned Northern Rock must remain a North East-based financial institution, amid mounting speculation the process of selling the bank could begin soon.

CHANCELLOR George Osborne has been warned Northern Rock must remain a North East-based financial institution, amid mounting speculation the process of selling the bank could begin soon.

The message from Wansbeck MP Ian Lavery came as 108 MPs have signed a Commons motion urging the Government to give “equal and due consideration” to returning the Rock to its building society roots.

But UK Financial Investments, the body which oversees and advises ministers on the Government’s stakes in rescued banks, has been told by experts at Deutsche Bank that a straight sale would be the most cost-effective option.

Some 18 Liberal Democrats, including Berwick’s Sir Alan Beith, and Redcar MP Ian Swales, have also signed the early day motion – nearly a third of their party’s entire representation in the House of Commons.

Mr Lavery, who signed the Commons motion on re-mutualising the Rock, said: “Northern Rock is a North East financial institution and I would like to see it remain as such.

“And I think selling it off would be a great mistake, and I would urge Osborne to reconsider that.”

Berwick MP Sir Alan Beith said: “I will be calling for the publication of this report so that the people of the North can be involved in the Government’s decision about the future of Northern Rock.

“The big advantage of making it a mutual again would be a return to the traditional approach of looking after savings and helping home buyers which were Northern Rock’s hallmarks before it became a bank.” The senior Lib Dem added: “If the bank is sold, then free shares should be given to the UK taxpayers who paid for the bailout, and Liberal Democrats have put forward a scheme for doing that.”

Fellow motion signatory Tom Blenkinsop, Labour MP for Middlesbrough South and East Cleveland, warned the profitable part of the Rock could be privatised while the debt was nationalised.

“This sell off helps Osborne, but does nothing to help small businesses in the North East, nor does it establish localised cooperative model saving and lending,” said Mr Blenkinsop.

The Treasury has said the Chancellor will take a decision in due course.

 

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