Darling's DTI praised 'wise and balanced' Northern Rock

Alistair Darling offered bizarre assurances on Northern Rock’s accounts before its recent troubles, when the chancellor was the head of the Department of Trade and Industry.

The Newcastle-based bank is currently being supported by the Bank of England and a remarkable guarantee of deposits by the new chancellor, but was described by the DTI as making ‘good strategic choices’ and ‘wise and balanced investments’ earlier this year, before its problems emerged.

The previous statements on Northern Rock’s prospects are likely to hamper government attempts to deflect attention over the issue, and provoke awkward questions for the chancellor when he faces the Treasury Select Committee over the run on the bank.

The chancellor’s former department made the comments in an annual survey it conducts of the ‘value added’ by companies across the UK. In the survey from April, Northern Rock was singled out for praise.

‘Examples [of consistent performance] include Porsche in automotive, Northern Rock in banks, Johnson Matthey in chemicals and H&M in retail, but there are many more. Consistently strong companies make good strategic choices, have effective business processes, are customer aware and make wise and balanced investments to maintain their position,’ the report said.

‘Value added’ is defined as ‘sales less costs of bought-in goods and services’ and is based on audited accounts, the government website detailing the scores says.

Northern Rock itself boasted of its high performance in its annual report last year: ‘[The DTI report] highlighted that our staff and assets are used effectively and create wealth and provide a sustainable performance for our stakeholders.’

The Department for Innovation, Universities and Skills, which now puts together the research, said that: ‘What Northern Rock (or for that matter any company) writes in their annual report is a matter for the individual company.’

Speaking at the Labour Party conference in Bournemouth, Darling told Accountancy Age: ‘The questions of the solvency and otherwise of Northern Rock is a matter for the FSA.’

Northern Rock had not commented at the time of going to press.

To see the DTI's report on value added click here