Newspaper article Evening Chronicle (Newcastle, England)

Sale of Rock Rumbles on; the Controversial Sale of Northern Rock to Virgin Money Is to Be Probed by the Public Spending Watchdog. Reporter STEPHEN CAPE Looks at the Issues

Newspaper article Evening Chronicle (Newcastle, England)

Sale of Rock Rumbles on; the Controversial Sale of Northern Rock to Virgin Money Is to Be Probed by the Public Spending Watchdog. Reporter STEPHEN CAPE Looks at the Issues

Article excerpt

THE continuing saga over the future of Northern Rock is set to rumble on well into the new year.

The bank is set to be sold to Richard Branson's Virgin Money empire, with the deal due to be completed in January.

Now the National Audit Office has said it will investigate the pounds 747m deal.

The NAO said it will look into how the Government reached its decision on the sell-off, and sources have warned that will take months to complete.

And even before it can come to a decision, the timescale and scope of the inquiry has still to be decided.

Auditors will have to follow a paper trail to discover how ministers reached a decision on the price tag, which leaves taxpayers facing a potential pounds 400m-plus loss.

At the time of the announcement Chancellor George Osbourne declared the sell-off "represented good value for money" and blamed Labour for pushing him into a rapid disposal of the institution.

He complained that an unpublished agreement with the European Union meant the Government was bound to sell at least half of the bank by the end of 2013.

But Labour and Northern Rock shareholders said they questioned the timing and value of the agreement, and shadow financial secretary Chris Leslie called for the deal to be delayed while an investigation was carried out.

Now Amyas Morse, the head of the NAO, has confirmed in a letter to the MP that he will examine the sale to Virgin Money.

He wrote: "I can confirm that I have decided to conduct a value for money study in relation to the creation and sale of Northern Rock PLC.

"My team will certainly consider the points which you raise when conducting the study".

However the NAO also said that its role confined it to auditing, and could not intervene in the sale process.

Bishop Auckland MP Helen Goodman, who worked for the Treasury during Labour's period in power, said: "I think it is a good thing the NAO is now investigating the sale of Northern Rock. …

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