Treasury rocked to the tune of £15m

Fallout from the lost data discs and the collapse of Northern Rock have cost the Treasury £15m

Written by David Jetuah

In its Spring Supply Estimate, the Treasury disclosed that it would need £14.7m of extra funds to cover the ‘costs of work on Northern Rock and the Poynter Review,’ but stopped short of providing detailed breakdowns.

The figure is the first general estimate of what those who worked on both issues may have earnt, with PricewaterhouseCoopers chief Kieran Poynter leading the HM Revenue & Customs review and investment bankers Goldman Sachs providing extensive advice over Northern Rock.

The extra cash had to be drawn from the government’s general bank account at the Bank of England and it appears that the figure came to light because of statutory disclosure requirements. The number was buried in a 28-page document which requested more cash for the year ending 31 March 2008.

The costs are likely to have included fees paid to bidders as part of the collapsed sale of Northern Rock.

The government has so far given no indication of the costs it has shouldered as a result of the Poynter review of the loss of child benefit data discs. But the fees are likely to be significant, given the profile of the review’s author, and the fact that it has been going on for several months.

As well as being involved in the Poynter review, PwC will have earnt fees from the sale of the bank, which it was also working on, it has admitted.

Investment bank Goldman Sachs was brought in as the lead adviser for the sale of the bank. Other firms apart from PwC were involved in advising bidders, according to Treasury insiders, making up part of the costs of the affair.

Auditors have already faced accusations of conflicts of interest in relation to Northern Rock.

MPs were up in arms to discover that PwC earnt £70,000 a time for signing off Northern Rock’s securitisations.

A Treasury source said: ‘The adviser fees for Northern Rock have since been repaid to the Treasury by [the bank] and figures relating to fees on the Poynter Review have been paid by HMRC.’

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