MP Responses

We have seen positive messages from MPs to some former shareholders, but we have also seen a lot of generic responses from many MPs. We believe these responses are a feeble attempt to sweep our case under the carpet.

While they acknowledge that a significant gain has been accrued, they do not address the main parts of our argument.

We encourage everyone to continue to respond to their MPs and challenge them on what they have said and what they have not said. The generic response wrongly focuses on the Northern Rock Compensation Order, which is the root cause of the injustice, unjust enrichment and unintended consequences.

It was said that shareholders would receive appropriate compensation based on an "independent" valuation. However, the independent valuer was severely restricted by the requirement to return the Lender of Last Resort (LOLR) immediately, a significant restriction that had never been applied to any other UK bank before. In fact, such an assumption defeats the purpose of LOLR.

The valuer tasked with determining the level of compensation to be paid to shareholders, Andrew Caldwell himself, noted in his valuation report that the assumptions were “unreal”

All of the supporting evidence is available on this website. 

The text from the generic response is below:

Thank you for contacting me about Northern Rock.

The collapse of Northern Rock was a historic moment during the 2007-08 financial crisis which demanded significant intervention by the Government to protect consumers and the British economy as a whole.

After more than a decade, I welcome that UK Asset Resolution (UKAR) has successfully been able to complete the final sale of taxpayer holdings in what was formerly Northern Rock, as well as Bradford & Bingley plc. I know that a great deal of work has been carried out to ensure that these institutions have been managed and now returned to the private sector in a way which has protected the interests of customers and the taxpayer.

According to the OBR’s Economic and Fiscal Outlook, Bradford & Bingley and Northern Rock together received £44.1bn of taxpayer support and as of 31 January 2021, Bradford & Bingley and Northern Rock Asset Management (NRAM) have returned £51.4bn to taxpayers in the form of principal repayments and fees.

I understand the frustration which former shareholders must feel regarding the collapse of Northern Rock. However, when taking Northern Rock into public ownership, the Government of the day provided that former shareholders of Northern Rock should receive compensation for their shares in line with the value of those shares had the government not stepped in. This was set out in the Northern Rock Compensation Order. A copy of the Order can be found here:

http://www.legislation.gov.uk/uksi/2008/718/contents/made

Thank you again for taking the time to contact me.

Yours sincerely,

This is our response to the above:

Thank you for replying to my request.

I am extremely disappointed in your response for the following reasons.

NRSAG are fully aware of the legislation that was passed, the Government of the day rigged the so-called “Independent" Valuation over 16 years ago when they added unfair and inaccurate terms in the compensation order that you referenced in your response. They set the terms of reference for the valuation by specifying that the following assumptions should apply (a) that the company was unable to continue as a going concern, and (b) that the company was in administration.

These “assumptions” clearly did not apply when the nationalisation took place. The company was not in administration and was trading normally and as a going concern (as Ministers repeatedly said in Parliament and elsewhere). Such terms of reference for the valuation of any company were likely to result in a negligible valuation, and were not applied by the Government to Bradford & Bingley, Royal Bank of Scotland, Lloyds, etc.

The valuer tasked with determining the level of compensation to be paid to shareholders, Andrew Caldwell himself, noted in his valuation report that the assumptions were “unreal”

Whilst you acknowledge the massive profits the Government have made through the years following nationalisation and the fact that Northern Rock repaid in full all the monies advanced including punitive interest and fees you fail to acknowledge that many thousands of ordinary people lost money through the erroneous acts of the Government of the time.

You also fail to acknowledge that it would have been impossible for the Compensation Order to provide an accurate value of Northern Rock shares as all contributing factors were not known at the time.

We strongly believe that this piece of legislation is the root cause of the injustice, unjust enrichment and unintended consequences. 

Also the numbers you have quoted are for Northern Rock and Bradford & Bingley combined. We believe that Northern Rock, not Bradford and Bingley, made almost all of the profits generated by UK Asset Resolution. In fact, we strongly believe that the latter contributed an overall loss. 

It is the passage of time that now shows how badly the NR shareholders were treated - the Government actions were unjust, unequitable, and downright unfair. It is time the Government were held accountable for effectively stealing mine and many thousands of other hard working people’s future pensions and nest eggs.

We must concentrate on the facts as they are today, which determine that shareholders were unfairly treated, and the Government profited at our expense. It was the embedded value in the company’s balance sheet which generated such a huge surplus.

It appears you are not willing to accept my argument and that of the Action Group that I am a member of. I ask that you reconsider this position and recognise the arguments the NRSAG have made so eloquently.

Kind regards

We have also seen responses that state:

"All the share holders many of them ordinary working people should be compensated based on their share holding. (MP name) would like to see a fair compensation for the estimated 150,000 small share holders and will support this in any way he can."

This is a great response but we encourage all those who have received a similar response to thank the MP and ask them to confirm that they will be writing to Harriett Baldwin, Chair of the Treasury Select Committee, requesting approval of the NRSAG review request. We're not sure how they plan to support us in obtaining fair compensation right now. Also, request public support from them for our campaign.

Another MP said:

"Select Committees prize their independence and MPs do not lobby them about what they should or shouldn’t be looking into - they are perfectly capable of making those decisions for themselves." 

Later in their response, this MP states they will take this up with the Minister and get back to them. It's worth reminding that we have only asked MPs to ask the TSC for an independent assessment of the situation. We are not asking them to lobby the TSC to reach any sort of conclusion. The MP seems to be sitting on the fence so not sure how they will handle this with the Minister in question. As well as stating these points, we need to be asking direct questions of such MPs - do you think former Northern Rock shareholders were mistreated by the Government in 2008 and are you in favour of us receiving compensation?

We ask that you all continue to work with your MP to ensure they clarify their position, and if they support our claim for compensation, they must let us know what steps they will take so that we can have an independent assessment of our case for compensation. We should not be fobbed off, we have waited too long for justice and fairness. The fight must continue and we must never give up. 

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