Back in February the prime minister said in his monthly press conference that it was “entirely possible” the government could sell Northern Rock at a profit. Eventually.
But now we know that Goldman Sachs was – in the same month – advising the Treasury in private that taxpayers would lose at least £450m from the nationalisation, even under a best-case scenario.
The US investment bank believed that a £1.28bn subsidy was the “base case scenario”. It’s not yet clear what the worst-case scenario would look like.
In one sense this is now historic. Earlier this month we saw the Treasury potentially write off up to £3bn of loans to Northern Rock by swapping them for equity. (Bad for taxpayers because creditors come ahead of shareholders in the queue if the business is wound up or sold at a loss).
The question is: Did Brown make his comments about a possible profit before or after he received the Goldman advice?
The Treasury have just come back to me. The Goldman advice was made between February 4 and February 17 (the day of nationalisation).
Therefore Mr Brown already knew that a profit was phenomenally unlikely.