Northern Rock sale '˜was too cautious' says MPs

The sale of the mortgages and loans “erred on the side of caution”, MPs on the Public Accounts Committee found, creating a “risk” that they were sold too cheaply.

MPs also expressed concern that the assets were sold to a US private equity group with a “complicated” structure which may mean the UK receives lower tax revenues in future than if it had been bought by a British firm.

Their report recommended the Treasury should take future tax receipts into account in similar sales.

Northern Rock was nationalised at the height of the financial crisis in 2008 and held by a Government body known as UK Asset Resolution (UKAR).

The sale of its assets to Cerberus for £13.3bn in March last year was the biggest of its kind by the UK government.

PAC chairwoman Meg Hillier said: “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.

“We would also like to see far greater clarity around the tax implications of proposed sales and how government will address the potential impact of these on the public purse.

“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 UKAR.”