Congratulations to BBC business editor Robert Peston, who this morning broke the story that has dominated today's news agenda, namely that the government has made a deferred "secret" loan to the Northern Rock that may never be repaid.
The loans paid by the Bank of England to the Rock currently amount to £24 billion. This is repayable at the rate of 5.75 per cent. However, Peston has revealed that there is a further “premium” loan at a rate of 1.25 per cent payable by the Rock to the Treasury, and not to the Bank. This loan has a minimum term to maturity of five years. Peston calculates that interest on the premium loan could amount to £500 million over two years.
Today, in the House, George Osborne accused Alistair Darling of “misleading the public” by failing to disclose the deal. Darling, however, defended his decision not to provide a “running commentary” on the loans to the Rock and said that the sums due to the Treasury were “nothing like” Peston's estimate.
The fact remains that the Rock affair is causing considerable damage to the government, with Darling, previously regarded as a relatively safe pair of hands, looking vulnerable. Crucially, he did not deny that taxpayers may not get all their money back.
Gordon Brown has spent the last ten years trumpeting that the finances of the nation are safe in Labour's hands – a claim no previous Labour chancellor was able to make. The Rock fiasco looks set to put paid to that boast, and maybe also to the career of Alistair Darling.
The loans paid by the Bank of England to the Rock currently amount to £24 billion. This is repayable at the rate of 5.75 per cent. However, Peston has revealed that there is a further “premium” loan at a rate of 1.25 per cent payable by the Rock to the Treasury, and not to the Bank. This loan has a minimum term to maturity of five years. Peston calculates that interest on the premium loan could amount to £500 million over two years.
Today, in the House, George Osborne accused Alistair Darling of “misleading the public” by failing to disclose the deal. Darling, however, defended his decision not to provide a “running commentary” on the loans to the Rock and said that the sums due to the Treasury were “nothing like” Peston's estimate.
The fact remains that the Rock affair is causing considerable damage to the government, with Darling, previously regarded as a relatively safe pair of hands, looking vulnerable. Crucially, he did not deny that taxpayers may not get all their money back.
Gordon Brown has spent the last ten years trumpeting that the finances of the nation are safe in Labour's hands – a claim no previous Labour chancellor was able to make. The Rock fiasco looks set to put paid to that boast, and maybe also to the career of Alistair Darling.
1 comments:
Talking of Rock bottom, have you seen reports about the Chief Constable of North wales and his recommendation to reinstate a "Bent Copper" in the Mersey side force?
The high court ended up intervening and backing the Mersey side Chief Constable.
It seriously brings into question Richard Brunstroms leadership and ethics yet again.
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