Belated Northern Rock nationalisation the right decision - Cable

5.00.00pm UTC (GMT +0000) Sun 17th Feb 2008

Northern Rock

The Government has announced that it is to temporarily nationalise the stricken Northern Rock bank. Emergency legislation will be taken through the House of Commons tomorrow. Northern Rock shareholders will be offered compensation for their holding at a level set by a government-appointed panel. UK taxpayers are now subsidising the bank in loans and guarantees to other lenders to the tune of about £55bn. After nationalisation this will jump to £110bn, a cost of £3,500 per taxpayer. Ron Sandler, the former boss of the Lloyd's of London insurance market, will lead Northern Rock. The Tories today said that Alistair Darling has "no credibility" as Chancellor and should be sacked by Gordon Brown.

Dr Vince Cable, Liberal Democrat Shadow Chancellor "The Government has finally realised that the temporary nationalisation of Northern Rock is the only way to safeguard taxpayers' money. It is frankly ridiculous that this decision has taken so long. Months of delay have meant that the Government now owes hefty bills to both Goldman Sachs and its original preferred bidder, Virgin. It is critical that we now look ahead to how this nationalisation can work best for taxpayers. The actual quality of Northern Rock's assets must be assessed so we can decide whether it will be practical to continue to run the bank as a going concern."