BusinessBusiness RecoveryDarling’s DTI praised ‘wise and balanced’ Northern Rock

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

DTI offered assurances on Northern Rock’s accounts during chancellor's reign as its boss

Alistair Darling, chancellor

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

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