Treasury quizzed over Northern Rock assets sale

Andrew Tyrie Tory conf 2013.jpg

Treasury economic secretary Harriet Baldwin is facing questions from an influential committee of MPs over the sale of former Northern Rock assets.

The Treasury announced a £13bn deal to offload a book of mortgages from the collapsed building society to US-based Cerberus Capital Management in mid-November.

However, Treasury committee chairman Andrew Tyrie has now written to Baldwin to question whether the assets were sold at the best price.

He says: “The sale price was above a recent calculation of the book value, but various commentators have suggestions that it was cheap- largely because the loans are not as precarious as they were in 2008 as the value of the properties used as security is likely to have grown since then.

“I would be grateful for as detailed an explanation as possible about how you obtained assurances that the best possible price was obtained for the taxpayer on these assets, and that the combination of the sale and the spate contract for [UK Asset Resolution] to manage the loans on Cerberus’ behalf represents the best possible deal for the tax payer.”

In the letter, which is also copied to Meg Hiller, chair of Parliament’s public spending watchdog the Public Accounts Committee, Tyrie also demands information on what assurances the Government has received on the long-term treatment of the loans.

At the time of the deal, the Government said borrowers would see no changes to the terms and conditions of their mortgages, with management of the assets remaining within the mortgage servicing arm of UKAR.

However, Tyrie cites a November report from Moneysavingexpert, in which the consumer champion was told only that there would be “no imminent change”.

Tyrie says: “Are you satisfied that no customers will be adversely affected by the sale, even in the longer term?

“Was consideration given to the treatment of customers, and whether this might alter as a result of the sale? If so, what evidence can you provide for this? What, if any, impact will UKAR’s enduring role in servicing the loans have on the customers’ terms and conditions?”