{"id":6816,"date":"2015-11-17T13:55:25","date_gmt":"2015-11-17T13:55:25","guid":{"rendered":"http:\/\/unitelive.org\/?p=6816"},"modified":"2015-11-17T16:59:52","modified_gmt":"2015-11-17T16:59:52","slug":"rock-bottom-deal","status":"publish","type":"post","link":"https:\/\/unitelive.test.igniteamt.com\/?p=6816","title":{"rendered":"Rock bottom deal?"},"content":{"rendered":"
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Boasts by George Osborne that the \u00c2\u014113bn sale of former Northern Rock mortgage loans have resulted in gains for the taxpayer are being questioned by industry experts with Unite calling for answers and transparency.<\/p>\n

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The mortgages were taken over by the taxpayer at the height of the global banking meltdown, and are their disposal is the biggest ever sale of financial assets by any European government.<\/p>\n

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The loans were sold to New York based Cerberus which has been buying up what it calls \u00e2\u20ac\u0098distressed\u00e2\u20ac\u2122 loans which have remained in place since the 2007 global financial crisis. Northern Rock was one of the first UK-based banks to feel the impact of problems in the US mortgage market which helped spark the global banking crisis.<\/p>\n

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UK and US taxpayers stepped in to stop the total collapse of major banks across the world. The banking crisis piled up public debt, sparked a recession and played a major role in creating the UK budget deficit.<\/p>\n

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These Northern Rock loans were taken over by the taxpayers in 2010. The risks were, in effect, nationalised. With risks hugely reduced, Osborne is now privatising it.<\/p>\n

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Cerberus has also bought the entire share capital of NRAM, the former Northern Rock mortgage business. While it must have believed it got a decent deal out of its purchase, questions are being raised as to whether the sellers \u00e2\u20ac\u201c UK taxpayers \u00e2\u20ac\u201c were also winners.<\/p>\n

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The Treasury is pitching the sale of the mortgage assets as a financial triumph for the taxpayer. But suspicions have been raised by the tortured form of words used by Osborne in a Treasury press release about the sale.<\/p>\n

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Osborne heavily implies this by saying, \u00e2\u20ac\u015bwe are now clear that taxpayers will get back more money from Northern Rock than they were forced to put in during the financial crisis.\u00e2\u20ac\u0165<\/p>\n

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But he holds back from explicitly saying that the sale of these assets made gains for the taxpayer.<\/p>\n

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Questioned by experts <\/em><\/strong><\/p>\n

The issue has been questioned by experts who suggest the taxpayer may lose out on taxes made from profits generated by the interest on \u00c2\u014113bn of loans. They quote sources which claim the interest rates on the loans are as high as 4.79 per cent.<\/p>\n

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But some of individual mortgages in \u00c2\u01411bn part of the loans held in Northern Rock \u00e2\u20ac\u0098legacy\u00e2\u20ac\u2122 mortgages charge interest in excess of 6 per cent.<\/p>\n

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The interest on the \u00c2\u014112bn of loans at 4.79 per cent, says Jolyon Maugham writing on the New Statesman website, suggests that would generate over \u00c2\u0141600m in interest, generating up to \u00c2\u0141125m in tax.<\/p>\n

But it all depends where the mortgages are now held and if they are subject to UK tax, an issue the Treasury press release remains silent on.<\/p>\n

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Maugham suggests numerous legitimate means may be used to ensure the loans are technically \u00e2\u20ac\u0098held\u00e2\u20ac\u2122 in low tax areas such as Luxembourg, thus escaping the UK tax net.<\/p>\n

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Another way of looking at it is that the taxpayer may be giving up \u00e2\u20ac\u201c potentially \u00e2\u20ac\u201c over \u00c2\u0141600m in interest payments each year. Osborne appears to want the quick hit of\u00c2\u00a0a lump sum rather than, say, \u00c2\u01416bn income to the taxpayer over 10 years.<\/p>\n

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\u00e2\u20ac\u0098Serious questions\u00e2\u20ac\u2122<\/em><\/strong><\/p>\n

Unite assistant general secretary Steve Turner is concerned at what the deal will mean for the taxpayer. He said, \u00e2\u20ac\u015bThere are serious questions to answer about the deal and we know we cannot take George Osborne\u00e2\u20ac\u2122s claims at face value.<\/p>\n

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\u00e2\u20ac\u015bThe taxpayer took over these mortgage loans \u00e2\u20ac\u201c which are secured against the value of the property \u00e2\u20ac\u201c when house prices were dropping rapidly and the banking system was in meltdown.<\/p>\n

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\u00e2\u20ac\u015bThe value of the properties are likely to have grown and the banking system has been stabilised by huge injections of public money.<\/p>\n

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\u00e2\u20ac\u015bParliamentary watchdogs need to confirm these income generating assets have not been sold off at a knockdown rate considering the loans are not as precarious as they were in 2007.<\/p>\n

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\u00e2\u20ac\u015bTo suggest this must be a good deal for the taxpayer \u00e2\u20ac\u201c as Osborne suggests \u00e2\u20ac\u201c because the sale was above marginally above \u00e2\u20ac\u0098book value\u00e2\u20ac\u2122 is nonsense.<\/p>\n

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\u00e2\u20ac\u015bThe risks linked to the loans are nowhere near as high, the income generated by them is healthy. We need to know if, by this deal, we have now given up on taxing the potentially \u00c2\u0141600m income from the interest on the loans.<\/p>\n

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\u00e2\u20ac\u015bWe need full transparency to ensure that having taken on eight years of huge financial risk on the loans that the private sector is now jumping on the profits when the risk is far lower.<\/p>\n

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\u00e2\u20ac\u015bI\u00e2\u20ac\u2122d like to see a\u00c2\u00a0proper Parliamentary investigation with full transparency. Osborne is at pains to imply this is a good deal which in my view, suggests the opposite may be the case.\u00e2\u20ac\u0165<\/p>\n

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Alarming <\/em><\/strong><\/p>\n

Unite also has concerns for the workforce.\u00c2\u00a0Unite regional officer Brian Cole commented, \u00e2\u20ac\u015bThe sale of\u00c2\u00a0mortgage\u00c2\u00a0debt for astronomical figures was one of the main causes of the financial crisis, so it\u00e2\u20ac\u2122s alarming to see the mortgages of so many home\u00c2\u00a0owners\u00c2\u00a0being sold-off to an equity firm whose only interest is short-term profit.<\/p>\n

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\u00e2\u20ac\u015bThe finance industry doesn\u00e2\u20ac\u2122t need another \u00e2\u20ac\u0098get rich quick\u00e2\u20ac\u2122 scheme.\u00c2\u00a0Our members and the thousands of home owners who rely on us deserve long-term security, yet once again their futures are being placed on the roulette wheel.<\/p>\n

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\u00e2\u20ac\u015bThe union will continue to consult our financial workers members and seek assurances from Cerberus\u00c2\u00a0over both the long-term future of staff and the\u00c2\u00a0mortgage\u00c2\u00a0book.\u00e2\u20ac\u0165<\/p>\n","protected":false},"excerpt":{"rendered":"

Boasts by George Osborne that the \u00c2\u014113bn sale of former Northern Rock mortgage loans have resulted in gains for the taxpayer are being questioned by industry experts with Unite calling for answers and transparency.   The mortgages were taken over by the taxpayer at the height of the global banking meltdown, and are their disposal […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[17],"tags":[32,440],"wps_subtitle":"Will taxpayers gain from Osborne\u00e2\u20ac\u2122s sell off?","_links":{"self":[{"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/posts\/6816"}],"collection":[{"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6816"}],"version-history":[{"count":1,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/posts\/6816\/revisions"}],"predecessor-version":[{"id":6817,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/posts\/6816\/revisions\/6817"}],"wp:attachment":[{"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6816"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6816"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6816"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}