Just 1% of the cash Northern Rock is using to repay the government comes from repossessions Ron Sandler, the nationalised lender�s chairman said yesterday, but acknowledged it is revising its controversial business plan.

Just 1% of the cash Northern Rock is using to repay the government comes from repossessions Ron Sandler, the nationalised lender's chairman said yesterday, but acknowledged it is revising its controversial business plan.

Northern Rock denies that it has managed to repay £15.4bn in state loans since the start of the year because it is getting tough with people struggling with repayments.

Sandler said: "Approxi-mately 1% of the cash generated this year to repay the government has come from repossessions. It is a minuscule proportion of the cash generation (of) the business."

The bank had taken possession of 4201 homes by the end of September, up from 3710 at the end of June.

The bank's repossession rate of 0.56% of all loans is three times the industry average. Its controversial Together loans, of mortgages bundled with unsecured loans of up to 125% of the home value, are just 30% of its loan book but make up 75% of repossessions.

The dramatic rate at which the business has been scaling back its balance sheet by encouraging borrowers to move elsewhere has also been criticised for soaking up the dwindling supply of mortgage finance.

Sandler told MPs yesterday the lender was revisiting its business plan, an indication it might respond to these complaints.

"I hope we are only a matter of weeks from concluding where these take us. We are certainly reviewing the fundamental elements of the business plan so we and the government are satisfied it is the right one."

Northern Rock has £11.5bn in outstanding loans from the government.

Sandler also conceded that market conditions make it unlikely the bank will return to the private sector soon.

Bradford & Bingley, the buy-to-let lender that was nationalised in September, said yesterday it expects to boost its arrears department from 200 staff last summer to 400 by the middle of next year to cope with rising defaults, which it said have risen to 3% of its £40bn loan book.