The Labour government have stepped in to save Northern Rock, Chancellor Alistair Darling announcing yesterday that the company would be nationalised.
The man who rescued LLoyds of London in the 1990s, Ron Sandler has been given the task of rescuing the finance business. He has already warned that he expects ‘to return the bank to a sustainable size’, a sure sign that branches will close and jobs will go.
The shock announcement follows a breakdown in talks with Virgins Richard Branson, and marks the biggest nationalisation in British history, the first since Rolls Royce was rescued from bankruptcy in 1971.
The Shadow Chancellor wasted no time in heaping criticism on the his Labour counterpart, saying “This is the day when Labour’s reputation for economic competence died.”
The Shadow Chancellor added: ‘Now the taxpayer will bear the full risk of lending £100bn of mortgages in an uncertain housing market.’ The Conservatives have also suggested that the nationalisation will cost the taxpayers “a second mortgage” of £4000 each.
Experts predict that it may take years to turn the fortunes of Northern Rock around and return it to the private sector. Meantime the Government faces the prospect of being blamed for repossesion of homes from mortgage owners as well as job losses from the company restructuring.
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