Northern Rock Must Use Money From Assets Sale To Reduce Borrowing - Cable

10.35.00am GMT Fri 11th Jan 2008

Commenting on the announcement that Northern Rock is to sell part of its mortgage assets to the investment Bank JP Morgan, Liberal Democrat Shadow Chancellor, Vince Cable said: "If the money from this sale is used to reduce further borrowing from the Government, then it is probably desirable.

"However, as we don't know what assets are being sold, it is hard to know if this is a good deal or not.

"More worrying is the news that Goldman Sachs is proposing to turn some of Northern Rock's loan from the Government into long-term bonds. While this may be one way of providing security it could mean that the Government will not be repaid for many years.

"This raises big questions about whether the Government will seek to hide this debt by taking it off its balance sheet."