Chancellor Alistair Darling has been warned any attempt to keep Northern
Rock’s £110 billion liabiities off his balance sheet to remain compliant with
economic rules set by his predecessor would be ‘outrageous’ if the Office of
National Statistics rules to the contrary.
Tory shadow chief secretary Philip Hammond said the Rock is now set to ‘blow
the fiscal rules apart’ and destroy any credibility Darling has left.
His comment followed claims – not immediately dispelled by the Treasury –
that Darling does intend to treat the effect of taking the Rock onto his books
as ‘temporary and exceptional’ and ignore them in calculatig whether he has kept
within the 40% ‘sustainable borrowing’ barrier.
The effect of the nationalisation of the Rock is likely to be exacerbated by
the possibility the ONS may rule most PFI deals on the balance sheet as well.
Some sources suggested Darling will go so far as to present his accounts
excluding the Rock and relegate the mortgage business to a note in the Red Book.
Treasury sources said the rules were ‘always designed to take account of
exceptional events’ and that its treatment in the Budget will underline
Darling’s belief that the Rock will soon be back in private hands – but left
open precisely what that treatment will be.
A Treasury spokeswoman said it had made clear in January that the fiscal
rules allowed for ‘temporary and exceptional events’. which meant they did not
have to go on the balance sheet.
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