And the winner is …
I have a little black book in which I record bets, usually for 50p or nothing, and I have just found a money-free wager dating from January 2008. I was at a Downing Street reception with fellow journalists, and we were waiting for Gordon Brown to arrive.
We talked about Brown and Alistair Darling’s decision to “spend” what was widely reported as £24bn of taxpayers’ money to save Northern Rock. I thought such numbers were ill informed, and so I asked some of my economically literate colleagues: What will be the net cost to the taxpayer of the Northern Rock rescue after five years? I wrote down the predictions of four of my eminent colleagues as follows:
William Keegan £7-8bn
Hamish McRae £100m
Robert Peston £10bn
Nick Robinson £7bn
Now, the five years is not up yet, but in May this year the National Audit Office produced a thorough estimate of the net present value of the likely cost to the taxpayer of the rescue. It concluded that “the taxpayer will recover all of the cash provided”, but that there was an opportunity cost:*
The current estimate is that there could be a net present cost for the taxpayer of some £2 billion by the time the assets are fully wound down. This net present cost should, however, be seen as part of the overall cost of securing the benefits of financial stability during the financial crisis.
Congratulations to Hamish, my colleague on the Independent and Independent on Sunday, who was closest by some margin. The prestige of his victory is worth much more than any monetary prize.
And the losers in this competition are … David Cameron and George Osborne. Cameron said at the time: ”The nationalisation of Northern Rock is a disaster for the taxpayer, a disaster for this government and a disaster for our country.” Osborne said Darling was a “dead man walking” and that nationalising the bank had taken the country “back to the 1970s and the failed policies of Labour’s past”.Tagged in: northern rock
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