Protecting the taxpayer
- 19 Nov 07, 06:14 PM
Chancellor Alistair Darling refused repeated invitations in the Commons this afternoon to promise that the taxpayer would get back with interest all the money lent to Northern Rock. He spoke instead of doing what was "best to protect the taxpayer". When it was pointed out to a Treasury spokesman that there was a significant difference between these forms of words journalists were told that there were limits to what could be said in the middle of commercial negotiations over the possible sale of the bank.
In the Commons, shadow chancellor George Osborne suggested that Mr Darling had made an unequivocal promise to get all taxpayers money back when he appeared before the Treasury Select Committee. The record shows that, under pressure of questioning about the scale of loans to Northern Rock, the chancellor said "We fully expect to be able to get that money back" (see below) although it is far from clear whether he was referring to all the money including the interest. When a Tory backbencher pointed out that he'd studiously avoided giving clear guarantees the Chancellor repeated this form of words saying that: "The money leant by the Bank of England is secured against assets, such as mortgages, held by Northern Rock. So we fully expect to get it back."
To this non-expert observer, the gap between what some predict the taxpayer may pay and what the Treasury say is between the pessimists and the optimists. The pessimists assume we'll be lucky to get much of what's been loaned back. The optimists that we could, in theory, get it all back with interest.
Thus it is with my colleague Robert Peston's revelation this morning (which the Tories have picked up with glee and refer to as the story of the "secret Treasury loan"). Robert's calculated that if the Treasury don't get this bit of our money back (I'll leave him to explain what it is) it could cost taxpayers hundreds of millions of pounds. Whitehall sources say that, so far, this facility's only worth 拢20 to 拢30 million. There is, in fact, no contradiction between these two statements.
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Transcript of Alistair Darling before Treasury Select Committee on 25 October ()
Q822 Mr Mudie: What is the total you have agreed with them?
Mr Darling: What we have agreed - and again, Clive Maxwell will set this out in further detail - is that they have that facility but it is secured against collateral. We have also guaranteed various deposits but of course, we fully expect to be able to to get that money back"
