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| Version 2 | Version 3 |
|---|---|
| Northern Rock sale investigated by National Audit Office | Northern Rock sale investigated by National Audit Office |
| (40 minutes later) | |
| The £747m sale of Northern Rock to Virgin Money is to be investigated by the National Audit Office (NAO). | The £747m sale of Northern Rock to Virgin Money is to be investigated by the National Audit Office (NAO). |
| NAO head Amyas Morse confirmed the audit in a letter to shadow financial secretary Chris Leslie, but added that he had no power to intervene. | NAO head Amyas Morse confirmed the audit in a letter to shadow financial secretary Chris Leslie, but added that he had no power to intervene. |
| The sale of the state-owned bank is likely to mean a loss of between £400m and £650m and Labour is urging the government to delay the sale. | |
| However, ministers insist they got taxpayers the "best possible deal". | However, ministers insist they got taxpayers the "best possible deal". |
| Mr Leslie had asked the public spending watchdog to delay the sale so it could pre-assess the deal. | |
| However, in a letter to the Labour MP, Mr Morse said the NAO could only investigate a completed sale and could not stop the deal going through. | However, in a letter to the Labour MP, Mr Morse said the NAO could only investigate a completed sale and could not stop the deal going through. |
| "I can confirm that I have decided to conduct a value-for-money study in relation to the creation and sale of Northern Rock plc," said Mr Morse. | "I can confirm that I have decided to conduct a value-for-money study in relation to the creation and sale of Northern Rock plc," said Mr Morse. |
| 'Matter of urgency' | 'Matter of urgency' |
| "However, my role in conducting value for money studies is to act as an auditor, in this case of the completed sale transaction." | "However, my role in conducting value for money studies is to act as an auditor, in this case of the completed sale transaction." |
| He added that the probe would be carried out "as a matter of urgency". | He added that the probe would be carried out "as a matter of urgency". |
| It is thought the investigation will report back before the Commons summer recess next year. | It is thought the investigation will report back before the Commons summer recess next year. |
| Virgin Money struck a deal to buy Northern Rock for £747m in November, with the government saying it had got the "best possible deal" for taxpayers. | Virgin Money struck a deal to buy Northern Rock for £747m in November, with the government saying it had got the "best possible deal" for taxpayers. |
| It argued it was the right time to sell because Northern Rock was predicted to remain loss-making well into 2012. | It argued it was the right time to sell because Northern Rock was predicted to remain loss-making well into 2012. |
| But Labour criticised the move, saying the government should have sought an extension on an EU deadline which requires the bank to be sold by the end of 2013. | But Labour criticised the move, saying the government should have sought an extension on an EU deadline which requires the bank to be sold by the end of 2013. |
| Chancellor George Osborne has said the deadline was negotiated by his Labour predecessor, Alistair Darling. | Chancellor George Osborne has said the deadline was negotiated by his Labour predecessor, Alistair Darling. |
| Taxpayers originally injected £1.4bn into Northern Rock in 2010, meaning at face value the sale represents a loss of £650m. | Taxpayers originally injected £1.4bn into Northern Rock in 2010, meaning at face value the sale represents a loss of £650m. |
| Mr Leslie said on Saturday: "There is clearly strong evidence to suggest that this Northern Rock firesale represents poor value for money for the taxpayer. | Mr Leslie said on Saturday: "There is clearly strong evidence to suggest that this Northern Rock firesale represents poor value for money for the taxpayer. |
| 'Asset-stripping potential' | 'Asset-stripping potential' |
| "This investigation by the independent National Audit Office confirms that serious questions hang over George Osborne's deal. | "This investigation by the independent National Audit Office confirms that serious questions hang over George Osborne's deal. |
| "At present there is the possibility that those buying Northern Rock could asset-strip so much from the firm that they get back virtually every penny they invest within a matter of months. | "At present there is the possibility that those buying Northern Rock could asset-strip so much from the firm that they get back virtually every penny they invest within a matter of months. |
| "Ministers haven't thought through this deal carefully enough - they have a duty to do better than this." | "Ministers haven't thought through this deal carefully enough - they have a duty to do better than this." |
| Northern Rock was nationalised during the start of the global credit crunch in 2008. | Northern Rock was nationalised during the start of the global credit crunch in 2008. |
| In 2010, the Labour government split the bank into two - Northern Rock plc, and Northern Rock (Asset Management). | In 2010, the Labour government split the bank into two - Northern Rock plc, and Northern Rock (Asset Management). |
| The bank's bad debt was placed in the latter, which remains saddled with the cost of being bailed out. It owes the Treasury £21bn. | The bank's bad debt was placed in the latter, which remains saddled with the cost of being bailed out. It owes the Treasury £21bn. |
| The government has said it has no plans to sell Northern Rock (Asset Management). | The government has said it has no plans to sell Northern Rock (Asset Management). |