All aboard the gravy train

By Adam Douglas, Wallsend

Recently, the Journal up here in Newcastle highlighted the Treasury’s mushrooming bill for consultants, which has jumped to £17m on the back of the ongoing Northern Rock debacle. The Rock, nationalised at great cost to the ordinary shareholder, seems doomed to languish under government control for the foreseeable future. Yet, for all the lack of compensation on offer to you and me, Mr Darling can somehow find the money to pay out a fair whack of cash to finance mandarins and the bank’s senior management, who (for reasons which seem pretty unfathomable) are still getting their bonuses.

Let’s crunch the numbers. Disclosure so far runs to:
- £3.6m paid to PricewaterhouseCoopers to investigate the loss of personal records
- £540,000+ for an IPCC inquiry into this little event and a police investigation
- £2.25m to send out apology letters to folks affected by aforesaid data loss
- £139,000 (at least – this figure dates from January) in fees to Slaughter and May
- £642,000 paid to Clive Briault as a golden goodbye after being shoed out of the FSA

This all out of the Treasury’s pocket, of course – the same one that was empty a few months ago. Yes, when I got into this shareholder game I accepted the line “the value of shares can go up as well as down”, but no-one mentioned the small print, “the value of shares can be wiped out because the government can’t get it’s a*** into gear when a bunch of idiots in top management land the bank in deep water”.

From Northern Rock itself, we have £2.3m in “confidential” retention payouts to 173 “key people” at the Rock. Surprisingly enough, there will almost an outright mutiny over in Gosforth when this news got out. When they were passing around the news of their latest trip on the gravy train, they even had the cheek to say that their cash, “will not be offered to the generality of staff and, as such, must remain absolutely confidential to yourself and not be discussed with others”.

Thankfully for the cause of truth and transparency, that particular information pipeline was leakier than a fifty-year-old metal bucket. However, Andrew Kirkland is now being hauled through the courts for the ‘crime’ of helping us all out on that one, with the Rock using London-based legal heavy-hitters Schillings to try to skewer the poor bloke, at a cost of at least £130,000 and counting.

There was also a question put to Parliament at the end of March by Michael Fallon, of which Angela Eagle said, “Northern Rock has indemnified the Treasury in respect of certain costs and expenses, including adviser costs.” Now, what exactly the cost of this policy has been to Northern Rock remains a bit of a mystery, but judging by the money paid to Slaughter and May outside the bounds of this agreement, it can’t be small change. In particular, Goldman Sachs is getting a big slice of the pie somewhere along the line, though what exactly it’s done to deserve its wages puzzles me (and probably lots more people too).

And I really shouldn’t mention the £750,000 pay-off that went to Applegarth, who, the broad consensus of opinion goes, really deserves to be shot at dawn.

What’s more, they can still find enough money to guarantee an annual income of £15m a year over the next three years to the Northern Rock Foundation. OK, it’s a good cause and it should be supported, but doesn’t anyone see a discrepancy here?

So, why can’t the Treasury, or the Rock, find enough money to give us all something resembling fair value?

After all, it’s not as though we’re all looking for a free upgrade to First Class. But we did pay for Standard, so we’ve got a right to demand that they don’t just pack us all into the mail wagon. Maybe the guys in the top hats are just too busy enjoying the champagne and caviar to care.


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