Mortgages  

MPs raise concerns about Northern Rock sale

MPs raise concerns about Northern Rock sale

HM Treasury should learn lessons from the sale of former Northern Rock assets and make sure they are shared across government, a committee of MPs has said.

A report by the Public Accounts Committee said there were “many positives” from the sale but identified areas for improvement.

The committee recommended that the Treasury should conduct a post-sale review for this, and all other major sales.

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Among the committee’s concerns was the lack of formal business case for the sale and that alternative sale options were not valued “until very late in the sale process”.

The committee also found the valuations of the assets “erred on the side of caution” and the assumptions on which they were based “were not well evidenced”.

Labour MP Meg Hillier, chairman of the PAC, said: “Achieving value for money for taxpayers must be the driving ambition of all public asset sales.

“There are valuable lessons the whole of government can take from the strengths and weaknesses of the sale process examined in our report and the Treasury must ensure these are shared.

“In particular, government must put more work into establishing and maintaining solid foundations for asset sales.”

She added: “There were also consequences for individuals from this sale. Former Northern Rock customers whose mortgages were sold to Cerberus are paying more for these than those whose mortgages are still with UK Asset Resolution.

“In future sales I would like to see stronger steps taken to protect affected mortgage-holders from the impact of subsequent changes to the Bank of England base rate – in whatever direction these may be.”

Northern Rock was nationalised during the 2008 financial crisis and, in March 2015, UKAR publicly launched a sale of £13bn of former Northern Rock assets.

The process was completed in May 2016 and represents the UK government’s largest ever financial asset sale.