Harriet Harman can’t answer the Northern Rock questions

I asked the Leader of the House today the simple question:

When will the government seek Parliamentary approval for the ??25 billion they have spent so far on Northern Rock, and the ??25 billion they have guaranteed and where did the Treasury and the Bank find the ??25 billion?

This should not be a difficult questions to answer. The Leader of the House is meant to know Parliamentary procedure. Every item opf public spending has to be approved by the House under a vote for an estimate. There was no estimate for Northern Rock when Parliament approved this year’s budget. Clearly the government is either going to have to put through a supplementary estimate for the money, or to seek to argue that it does not have to bother, on the spurious grounds that it hopes to get the spending back.

Clearly also, as the govrnment is already borrowing heavily this year, the money for Northern Rock was either borrowed or came from selling other Bank of England assets.I suspect it was mixture of the two. I suspect there is also a Treasury guarantee to the Bank of England.

It is high time Ministers worked out how they are going to report and control this massive spending, to look as if they know what they are doing. Miss Harman told us that the ledning to Northern Rock was made available, amongst other reasons, to ensure shareholders did not lose money. Has she looked at the share price recently? Wouild she like to apologise for getting that wrong?


  1. Nick
    November 22, 2007

    They haven't had to borrow it. They have effectively printed it.

    The money that people and banks pulled from NR is now floating round the system.

    ie. They have increased the money supply by 25 billion, with another 25 in the pipeline.

    That's inflationary, and one reason why a result of NR will be that rates remain higher than they should have been

  2. Brian Tomkinson
    November 22, 2007

    Do ministers ever answer questions? Whenever I watch parliamentary questions they always seem to avoid answering. They clearly take their lead from the Prime Minister who only ever answers questions obviously planted and asked by nauseatingly grovelling Labour backbenchers.

  3. schober
    November 22, 2007

    hmm, i'm inclined to agree nick; m3 is growing at ~13% pa so it could well be down to the printing presses; just look at hhow the price of gold is rocketing away or if you like the

  4. Derek
    November 22, 2007

    Based on what an aggrieved (soon to lose their job) and garrulous HMRC employee alleged to me, it would appear the government has done a big version of hunting down the back of the sofas in order to find the NR money. The HMRC employee was a tax inspector, I've had a poor trading year, as a result of bad decisions made last year. How fair that the government chooses to harass me for more money, my ailing business can ill afford, only to pump it into keeping afloat another more politically expedient business, that also made bad decisions.

    Whether the NR loans will improve money supply would depend on whether its creditors are onshore, I'd have thought.

    Interesting that given the government has already given a virtual idemnity on all savings and may well have to offer the same to any idendity fraud victims it might have ineptly created, it seems very rash that Miss Harman appears to now be operating a shareholders benevolent fund. I've had a spot of recent bad luck with some housebuilder's shares, I wonder if she'd be good enough to forward me a cheque for the losses – please don't use TNT though.

    Reply: I don't think she meant what she said! We can't get the staff these days to be competent government Ministers!

  5. David Burch
    November 23, 2007

    A very good point John and one I trust you will persue in the public interest.

    They must be accountable for where the money has come from and where it has been diverted from?. Maybe this is the time to invest in 10 year gilts!

    As oppose to any bank guarantees thats an easy one – its either yes or no and how much if yes. That is public domain information as they are commiting our taxation monies.

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