A NAO report said the coalition government was right to sell off Northern Rock plc at the earliest opportunity to ‘best minimise’ consequences to the taxpayer. However, it added the Treasury had committed itself before looking into the possible outcomes and the decision to split the back in two was based on an overly optimistic plan.
Virgin Money bought what became known as the ‘good bank’ for just under £747m.
The government’s spending watchdog said it expected the taxpayer to lose £480m of its £1.4bn investment, but this could rise to £2bn in real terms.
Amyas Morse, head of the National Audit Office, said today: “A sale of Northern Rock plc at the earliest opportunity was the best option to minimise losses on the £1.4bn of public money invested in the bank.
“But most of the former Northern Rock’s assets will be in public ownership for many years to come and there could be a net cost for the taxpayer of some £2bn by the time these assets are finally wound down.”
