George Osborne was accused of selling Northern Rock "for a song" to Virgin Money yesterday despite the ongoing global financial crisis.
The Tory Chancellor defended the sale of the bank, saying it represented the “best deal” for taxpayers.
However, the agreement, under which Sir Richard Branson’s firm will take over the bank, will see the nation’s coffers lose at least £400 million.
One of Mr Osborne’s party colleagues, Tory London MP Mark Field, claimed Mr Branson had got the bank “for a song”.
Labour warned that serious questions hung over the deal and Shadow Treasury Minister Chris Leslie described the sale as “a symbol of George Osborne’s poor judgment on the economy”.
The news came as Labour leader Ed Miliband called for a “more responsible” form of capitalism that would not see taxpayers forced to bail out bankers.
The Coalition will sell the bank to Virgin Money for £747m, a £650m loss to the taxpayer on the original £1.4 billion purchase, although a further £360m could potentially be recouped later.
It came as a shock when it was announced yesterday amid a blizzard of headlines questioning the Coalition’s economic plans.
Last night Mr Leslie wrote to the Chancellor demanding to know why the Coalition had gone ahead with the sale of the bank given the current global financial problems.
Europe’s political leaders are battling to get a grip on the growing eurozone crisis.
Three major European nations have required bailouts by the IMF, and only last week Italy’s long-term borrowing rate at unsustainable levels triggered concerns it may go the way of Greece, Ireland and Portugal.
Earlier this week the Bank of England also downgraded the outlook for the UK’s financial future, blaming the worsening European crisis.
Experts questioned whether the sale was a sign that the Chancellor did not believe that there would be significant global recovery in the short term.
Meanwhile, Mr Miliband outlined a call for a different form of capitalism that would control short-termism in the markets.
The Labour leader also demanded a staff member sit on remuneration committees deciding how much executives of big firms should receive.
Speaking to the Social Market Foundation in London, he said: “This simple reform would help forge a new compact between workers and employers, building trust that salaries at the top are deserved, that long-term decisions are being made.”
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article