Watchdog criticises Treasury

More than £66 billion of taxpayers' cash invested in RBS and Lloyds may never be recovered, a spending watchdog warned today as it criticised the Treasury for making a series of costly mistakes in its handling of Northern Rock.

Treasury: Sale of Northern Rock was 'good value for money'

A Treasury spokesman has said that the sale of Northern Rock "represented good value for money."

He said: "We will provide a full response to this report in due course.

"The decision to nationalise Northern Rock in 2008 was taken in the interest of financial stability.

"The sale of Northern Rock plc to Virgin Money last year represented good value for money for the taxpayer, and has helped increase high-street competition."

Northern Rock rescue expected to 'cost taxpayer £2 billion'

Margaret Hodge, chair of the public accounts committee, said the sale of the bank was handled well but still led to a loss for taxpayers of nearly half a billion pounds.

Mrs Hodge said:

The rescue of Northern Rock is expected to cost the taxpayer some £2 billion.

The Treasury was unable to respond promptly when the banking crisis hit because it lacked the right skills and understanding.

It was slow to nationalise the bank and that made a loss difficult to avoid.

The Treasury had spent five months trying to find a private sector buyer before giving up.

After nationalisation, it then failed to effectively challenge the optimistic business plan put forward by the bank's management to split the bank.

– Margaret Hodge

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'Over £66 billion' of taxpayers' cash invested in RBS and Lloyds may never be recovered

A spending watchdog has criticised the Treasury for making a series of mistakes in its handling of Northern Rock
A spending watchdog has criticised the Treasury for making a series of mistakes in its handling of Northern Rock Credit: John Giles/PA Wire/Press Association Images

More than £66 billion of taxpayers' cash invested in RBS and Lloyds may never be recovered, a spending watchdog warned today.

The public accounts committee criticised the the Treasury for making a series of mistakes in its handling of Northern Rock, saying that officials were slow to react to the banking crisis because they lacked correct skills and understanding.

Margaret Hodge, chair of the committee, said the sale of the bank was handled well but still led to a loss for taxpayers of nearly half a billion pounds.