Northern Rock crisis bottled by PM, says Richard Branson

Sep 14 2008 by Rob Pattinson, Sunday Sun

VIRGIN chief Richard Branson has accused Gordon Brown of “bottling out” of the Northern Rock crisis, claiming the failure will haunt the PM.

The entrepreneur wanted to take over the stricken bank but the Government nationalised it instead due to a “lack of courage”, according to Branson.

And he warned that the “tragic error” would cast a shadow over the Government for years to come.

Northern Rock collapsed one year ago yesterday and the repercussions are still being felt, with 1300 of its staff being made redundant — 800 compulsory and 500 voluntary — and the economy nose-diving since then.

The Virgin Group was behind one of two private takeover bids which Chancellor Alistair Darling rejected, saying they would not give taxpayers value for money as he confirmed the temporary nationalisation in February.

Branson claimed: “Brown was more concerned with tomorrow’s news than jobs. He didn’t care about saving a great British institution. Brown bottled out.

“He was scared of the prospect of me, a capitalist, turning the bank around. Darling didn’t even have the courtesy to ring and tell me of their decision!

“I expected the courtesy of a call, especially as they promised me that if they decided to nationalise they would let me know first. Then I heard rumours that the BBC was about to break the news.

“So I rang Darling. It was tense. As we were talking, the news broke on the TV. Unbelievable! Then I got a call from Gordon Brown telling me to move on and not to make a nuisance of myself about the decision.

“It was a tragic error. I would have created thousands of new jobs, but instead it has been made to disappear. It will haunt this Government and those who follow it.”

Branson said he handled the setback by getting “very drunk”.

He said: “I think it was 10 tequila slammers. I had the most terrible hangover.”

The global credit crunch, which resulted from the collapse of the US sub-prime home loans sector, forced Northern Rock to request emergency funding from the Bank of England.

The mortgage lender could not raise funds on credit markets to cover its liabilities and depositors began queuing round the block to withdraw their savings, which hit consumer confidence in the banking sector as a whole.

It was the first run on a British bank in more than a century and led the Government to nationalise Northern Rock. It has also given financial support to other banks.

Go to page 2 to find out how Richard Branson has helped stranded tourists