All Quiet on the Northern Front – by Greg Hands MP

portrait-greghands1.jpgNorthern Rock was nationalised at 00.01 on Friday, and already the troubled bank has disappeared from the news agenda, replaced by yet more rows on MPs’ expenses and peripheral issues.

Yet now is the time for all of us to be taking an interest in the new £110 billion business we all own. The size of this business is three times our defence budget and twelve times the budget for the 2012 Olympics.

But today there was not a single media mention of Northern Rock, not even in the Financial Times.

The Government has made some outrageous claims in the last week over our new company. In the House of Commons, Yvette Cooper claimed it was a good time to nationalise a £50 billion plus mortgage portfolio, as it was “the bottom of the market” for house prices. I am a former trader, and woe betide anyone who calls the bottom (or top) of the market, let alone a minister with no business or financial experience, who has been in the job a matter of a couple of weeks. These words will likely come back to haunt her.

Meanwhile, just what horrors are to be found in this business we now own? Yesterday, I believe for the first time, I highlighted on the CentreRight blog the reckless activities of Northern Rock’s Danish subsidiary (http://conservativehome.blogs.com/centreright/2008/02/business-as-usu.html ), paying very generous interest rates to more than 10,000 savers in Denmark – all guaranteed and subsidised by the UK taxpayer. I will be taking a look at the Bank’s Guernsey offshore banking outfit shortly.

The initial signs are not good. The Government has proclaimed “business as usual” at Northern Rock, at the same time as saying that the Rock had a unique and flawed business model. This is a model that so far at least, has been inherited unchanged by the taxpayer.

The Government’s attitude has been to nationalise first, ask questions later. I hope they are at least going to ask the right questions. At the moment, the signs aren’t good.

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