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Northern Rock in government hands Northern Rock in government hands
(41 minutes later)
Northern Rock has now been nationalised, the government says.Northern Rock has now been nationalised, the government says.
The Northern Rock Transfer Order 2008 has been passed, transferring all shares in the troubled bank into government hands.The Northern Rock Transfer Order 2008 has been passed, transferring all shares in the troubled bank into government hands.
The order was made after the bill allowing it to pass into government ownership was given Royal Assent.The order was made after the bill allowing it to pass into government ownership was given Royal Assent.
The government ruled out two rescue bids put forward by Virgin and the bank's management, saying it was in the taxpayers' best interests.The government ruled out two rescue bids put forward by Virgin and the bank's management, saying it was in the taxpayers' best interests.
The Banking (Special Provisions) Bill cleared the Commons on Tuesday but ran into opposition in the Lords, where peers were demanding additional safeguards.The Banking (Special Provisions) Bill cleared the Commons on Tuesday but ran into opposition in the Lords, where peers were demanding additional safeguards.
Members of the Lords wanted the bank to be subject to the Freedom and Information Act and demanded an independent audit of the bank after three months in public ownership.Members of the Lords wanted the bank to be subject to the Freedom and Information Act and demanded an independent audit of the bank after three months in public ownership.
The bill became law late on Thursday evening, after peers agreed to drop their demands.The bill became law late on Thursday evening, after peers agreed to drop their demands.
Nationalisation has been controversial. Shadow chancellor George Osbourne said the government had taken the country "back to the 1970s and the failed policies of Labour's past".Nationalisation has been controversial. Shadow chancellor George Osbourne said the government had taken the country "back to the 1970s and the failed policies of Labour's past".
Taxpayers' liabilitiesTaxpayers' liabilities
The bank will be headed by executive chairman Ron Sandler, former boss of the Lloyd's of London insurance market. He will be paid £90,000 a month.The bank will be headed by executive chairman Ron Sandler, former boss of the Lloyd's of London insurance market. He will be paid £90,000 a month.
The transfer of ownership of Northern Rock means taxpayers' liabilities will increase to £110bn, the equivalent of £3,500 per taxpayer.The transfer of ownership of Northern Rock means taxpayers' liabilities will increase to £110bn, the equivalent of £3,500 per taxpayer.
The government has tried to reassure Northern Rock customers that it will be "open for business as usual" under public ownership.The government has tried to reassure Northern Rock customers that it will be "open for business as usual" under public ownership.
"Depositors' money remains absolutely safe and secure. The government's guarantee arrangements remain in place and will continue to do so," it said."Depositors' money remains absolutely safe and secure. The government's guarantee arrangements remain in place and will continue to do so," it said.
Private return
The government also said it was confident that in time the bank could be sold back to the private sector and "every singe penny" would be returned to the taxpayer with interest.
However, opposition critics fear it could remain in public hands for a decade or more until the market conditions are right.
In September last year, Northern Rock asked the Bank of England for emergency financial assistance, after it fell foul of the crisis in global financial markets.In September last year, Northern Rock asked the Bank of England for emergency financial assistance, after it fell foul of the crisis in global financial markets.
It is the first major nationalisation since the 1970s, when about a quarter of British industry, including coalmining, steel, British Leyland cars, British Airways and energy companies, was in public hands.
In 1984, the stricken Johnson Matthey bank was nationalised for just £1 by a Conservative government to prevent a collapse in the price of gold. It was later sold.