21 Feb, 2008
Helen Pow - 20-Feb-2008
Treasury is planning to exclude Northern Rock's Granite fund
from nationalisation which has seen the Liberal Democrats threaten
to withdraw their support for the bill.
The Treasury's plans were hotly debated in the third reading
of the bill in the House of Commons last night.
Lib Dem Shadow Chancellor Vince Cable believes the exclusion of the
fund, which holds 40 per cent of the bank's best assets, is
designed to protect bond holders and leave taxpayers with the poor
quality assets - unsecured loans and high risk mortgages.
In a letter to Alistair Darling today Cable said: "The
confusion last night surrounding the Granite issue was such that I
and my front bench colleagues did not support the Government on the
third reading and I believe that my Lords colleagues will equally
be unable to give support unless the Granite issue is
He said he appreciated the "legal complexity" and
questions about Granite's offshore tax status and charitable
activities. But he claimed that unless the Treasury U-turns to
include Granite in the nationalisation or convincingly explains why
the fund has been excluded he cannot support the bill.
Conservative Shadow Chancellor George Osborne said: "Now everyone
knows that the way Northern Rock and Granite will operate under
nationalisation leaves the taxpayers saddled with all the bad
debts, with Granite taking the best mortgages. This is further
proof that under the Government's plans, the taxpayer comes last.
That is why in the House of Commons yesterday and in the House of
Lords today we are opposing the nationalisation of Northern