Join the Socialist Party Join us today!

Printable version Printable version

Facebook   Twitter

Link to this page: http://www.socialistparty.org.uk/issue/511/3421

From The Socialist newspaper, 22 November 2007

Nationalise Northern Rock permanently to safeguard workers' interests

Editorial

WHEN THE Northern Rock bank went into crisis in September, the socialist unequivocally called for its nationalisation. Now, as the bank's problems continue, there is a chorus for nationalisation from a number of staunch defenders of the capitalist system, but for temporary nationalisation, after which the bank would be handed back to the private sector. The socialist demands permanent nationalisation, to safeguard the 6,000 jobs of Northern Rock's staff, the public money loaned and savers' deposits.

Former treasury minister Geoffrey Robinson said Northern Rock should be brought into public ownership if a sale cannot be agreed; leading Liberal Democrats called for its nationalisation, as did journalist Will Hutton. A Financial Times editorial said that nationalisation would be better than "lending to a rump Northern Rock against bad collateral, financing a rescue without charging a penalty interest rate, or subsidising a bidder".

These reactions stem from shock at the bank's recent actions and fear of what is to come and the outrage it will create. Northern Rock borrowed 22 billion of public money in the last two months only to now attempt to sell off the profitable parts of the company and leave its debts to the public purse in an unprofitable "zombie fund". The directors' sales memorandum was so blatant in raising this strategy that the directors went to the courts to have it kept secret.

24 billion of public money will have been loaned by the end of this year equivalent to around 900 for every UK tax payer, or double the annual primary school budget, or 30 millennium domes. But the total risk to public money is around 40 billion more than the UK annual defence budget, because the government guaranteed savers' deposits as well as making massive loans.

Now that Northern Rock has asked for bids from prospective buyers, private equity firms have been weighing up what rich pickings they can take. However, none of them want to buy without a commitment from the government to continue to loan public money beyond next February, and at non-penal interest rates. They have also been waiting to see if the government will even waive the 2 billion interest now owed to the government treasury by the bank! Disgracefully, Gordon Brown refused to comment in parliament on whether some of this debt would be waived, citing "commercial confidentiality".

New Labour ministers are doing all they can to resist nationalisation. On TV programme Newsnight, chairman of the treasury select committee, Labour's John McFall, argued: "London is a financial centre that rivals New York. I don't think it would be good if we nationalised a bank. It would send out the wrong signals".

Super-rich profit

THE AIM of the hovering fat-cat vultures is to get most of the debts and potential losses written off by public money or hived off into a "zombie fund", and then make massive profits out of the remainder of the bank in coming years. Some private equity chiefs even started buying Rock shares soon after the crisis first hit, in order to milk the situation later.

As understated by Will Hutton in the Observer when he called for nationalisation: "The right deal for one of the ragbag of private equity companies and opportunistic second-rate banks which have lined up for Northern Rock will be the wrong one for the government and taxpayer" and: "No private deal can safeguard taxpayers' interests".

A layer of super-rich individuals have already benefited massively from Northern Rock. For example, although the resignation of chief executive Adam Applegarth has finally been announced (along with seven other directors), he will leave with a 2 million pension, which will give him over 300,000 a year from the age of 55. He also may get a pay-off of 800,000 after receiving a salary-plus-bonus package of 1.3 million over the last year.

It has recently been revealed that he made 2.6 million more for himself over the last two years through selling his own shares in Northern Rock when the price was high, while at the same time telling employees and small investors to put their money into the company.

Other directors have enriched themselves too; accountancy firm PricewaterhouseCoopers is said to have 'earned' up to 1 million in fees from Northern Rock just since August, and the list goes on. The company (or part of it) could now eventually be sold to the likes of Richard Branson's Virgin Money, or Goldman Sachs executive Christopher Flowers, to be fleeced further. The latter has a reputation in the financial world for "cleaning up" Long Term Credit Bank of Japan making himself an estimated $2.3 billion in the process.

The government claims that the public money ploughed into Northern Rock is safe, because the bank has 50 billion of mortgage assets. But these 'assets' depend on the mortgage holders being able to repay their mortgages and on the value of their properties holding up. They will not turn out to be worth the balance sheet figure. Why else is it that present purchase bids are only around 5 billion, and with strings attached?

Nationalisation is the only way to safeguard the public money put in and to guarantee the jobs of Northern Rock's employees.

As the capitalist economy heads towards a deeper general crisis, the particular crisis of Northern Rock could hit any of the other major financial institutions, or indeed any of the major companies that ordinary people rely on for goods, services and jobs. The socialist not only calls for permanent nationalisation of Northern Rock, but of all the major banks and other major companies, and for them to be run under workers' control and management.

Compensation should only be paid on the basis of proven need. Why compensate super-rich directors and shareholders for their greed, exploitation and failure? Only workers' pension funds should be safeguarded and small investors who depend on their share income. In fact without nationalisation, small investors could end up with nothing.

A nationalised banking system could not only guarantee savers' deposits and bank workers' jobs, but could also offer very low interest rates to mortgage holders and small businesses, especially in the context of a socialist planned economy.

Why not click here to join the Socialist Party, or click here to donate to the Socialist Party.


In The Socialist 22 November 2007:

Profit system wrecks climate


Socialist Party NHS campaign

Defend Karen Reissman: Defend free speech and trade union rights


Banking Crisis

Nationalise Northern Rock permanently to safeguard workers' interests


International socialist news and analysis

SOLIDARITY APPEAL: Defend Tukwila Teachers Threatened with Termination for Antiwar Student Walkout

France: massive public sector workers' strike


Socialist Party news and analysis

SNP budget will not satisfy expectations

Detention without trial: Defend civil rights

New attacks on incapacity benefits

'Cheap and nasty' Camden council to shut deaf school

News in brief


Socialism 2007

Socialism 2007: Inspired by past victories, preparing for future struggles


Education

Support the Northern Ireland classroom assistants

Cardiff schools: Parents march against closure threats


Socialist Party features

Rail transport: Overpriced, overcrowded, underinvested

Train drivers strike in Germany

Labour's pensions - a social time-bomb


International socialist news and analysis

Denmark general election: Socialist People's Party doubles its MPs

2008 US presidential election

GM, Chrysler, and Ford's 'race to the bottom'


Workplace news and analysis

Postal workers campaign against "MacMail"

Doncaster Hospital workers on strike for 9,000 back pay

National Union of Journalists: Standing up against the robber barons


 

Home   |   The Socialist 22 November 2007   |   Join the Socialist Party

Subscribe   |   Donate  




Related links:

Northern Rock:

triangleTories flog bank assets to hellhound US profiteers

triangleThem & Us

triangleNationalise the banks

triangleTories and Labour fail to give 'Any Answers'

triangleThem & Us

Banking crisis:

triangleBarclays finally charged for having hands in till

triangleLessons of the 'N30' 2011 pension strike

triangleWaltham Forest Socialist Party: The banking crisis

Nationalisation:

triangleRetail sector crunch: nationalise to save jobs

triangleObituary: Derek Robinson, car workers' leader, 1927-2017

trianglePowerful picture of the Port Talbot steel workers' struggle

News and socialist analysis

News and socialist analysis

13/12/17

Labour

Labour 'purge' furore really just democracy

13/12/17

Brexit

Brexit deal no solution to Tory rifts

13/12/17

Housing

Two in five 'right to buy' homes now for let

13/12/17

NHS

Save our NHS

13/12/17

Them & Us

Them & Us

13/12/17

Fees

Uni market 'failure', two-year degrees - end cuts, scrap fees!

13/12/17

Retail

Retail sector crunch: nationalise to save jobs

8/12/17

Government

Local government pay: fight for the 5% claim, fully funded

6/12/17

Labour

Corbyn's Labour can defeat Tories with socialist programme

6/12/17

NHS

Branson sues NHS: kick out the profiteers

6/12/17

Immigration

Royal wedding exposes them-and-us visa system

6/12/17

Banks

RBS to sack 1,000: nationalise the banks

6/12/17

Homelessness

Rough sleeping crisis: make homes, not arrests

6/12/17

Poverty

End Tory war on poor

6/12/17

Rail

Nationalise rail now

triangleMore News and socialist analysis articles...


Join the Socialist Party
Subscribe to Socialist Party publications
Donate to the Socialist Party

triangle16 Dec Blairite council 'all ears' to rich property developers

triangle16 Dec Arriva bus drivers' action wins pay rise

triangle14 Dec Stop the rotten redevelopment plan, demand residents

triangle13 Dec Six months on - still no justice for Grenfell

triangle13 Dec Movement growing against fracking giant Ineos

triangle13 Dec Totnes MP uses coffin controversy to distract from brutal NHS cuts

triangle13 Dec Trump's incendiary Jerusalem statement reignites Israeli-Palestinian...

More ...

triangle18 Dec Leeds Socialist Party: Religion and Socialism

triangle19 Dec Bristol North Socialist Party: Christmas social

triangle21 Dec Wakefield Socialist Party: Socialists and the National Question

triangle6 Jan Socialist Party national women's meeting

More ...

Socialist Party Facebook page
Socialist Party on Twitter
Visit us on Youtube

Archive

Archives:

December 2017

November 2017

October 2017

September 2017

August 2017

July 2017

June 2017

May 2017

April 2017

March 2017

February 2017

January 2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

Legal

SP RSS feed RSS

Platform setting: = No platform choice

V2