Darling accused of incompetence over Northern Rock loan

Chancellor, Alistair Darling, found himself the recipient of a vicious verbal attack by the shadow chancellor George Osborne earlier this week, when he was challenged in the Commons over the loan that was granted to Northern Rock by the Bank of England.

The chancellor has been accused of exercising secrecy in authorising the loan to ailing bank Northern Rock, and the attack came on a day that saw the Rock’s shares plummet again, falling by over 20% in the light of no successful sale to rescue the bank.

Osborne accused Darling of misleading the public by not making the loan public, but Darling stated that the way the Northern Rock loan was handled was normal operating procedure for the Bank of England, and that making the public aware of every move could have adverse effects, which indeed it did when the public did finally learn about the loan. He added that the loan was secured against Northern Rock’s assets after being accused of putting taxpayers’ money at risk.

Mr Osborne stated: ‘Can the Chancellor tell us that all the money lent by the taxpayer will be repaid? Yes or no.’

He also said: ‘This is a tale of incompetence and weak leadership from a government that now reels from one disaster to another. We have a Chancellor who made loans he kept secret from Parliament. We have a Chancellor who has made guarantees to the taxpayer he cannot be sure of honouring. And we have a Chancellor whose weakness is contributing to the instability of the financial system. That is why we have a Chancellor whose job is on the line.’

Darling has been accused by the shadow chancellor of withholding information from the public as well as from parliament, but Darling insists that he did the right thing in authorising the loan for Northern Rock, and said that there was no secrecy involved.

Tom Smith
30th November 2007

Tags: Loans, darling, england, chancellor, bank, rock