Treasury slammed for secrecy on bail-out

In order to reduce the risk of leaks, the Treasury, which authorised the £18bn in emergency assistance and indemnity to HBOS and RBS in October 2008, did not inform Parliament of this support until November 2009.

A report from the Committee explained: “In future, and only in very exceptional circumstances, when highly sensitive matters need to be disclosed, as a minimum we expect departments to provide the Chairman of this Committee with a full oral briefing.”

Committee member, Sir Nicholas Macpherson, also re­iterated that the Treasury would ensure greater competition in the banking market by taking a hard line on state-aided banks such as Northern Rock.

His comments led to speculation that the 100% deposit savings guarantee for Northern Rock customers would be removed in March when the bank announces its results.

Linda Will, intermediary sales manager at In The Loop Mortgages, said a cut to the Northern Rock deposit savings account in March would be welcome news for the market.

She added: “Northern Rock has been competing on an uneven playing field for too long and there is no rationale for preserving it any longer. However, I believe that the criticism about RBS and HBOS is harsh, because there may have been a run on those banks and the consequences would have been far worse.”