'Rock could be sold to cut Britain's debt' But spokesman is accused of scaremongering.

Byline: William Green 

AROW erupted last night after Liberal Democrat treasury spokesman Vince Cable claimed David Cameron and Gordon Brown may consider selling Northern Rock "quickly and cheaply" to cut Britain's debts.

The Liberal Democrat Treasury spokesman said the Newcastle-based bank might have to remain in public ownership for a decade but he was accused of scaremongering after saying the Tories and Labour could quickly privatise the Rock in a desperate bid to get the country's finances back in order.

The developments come after it emerged earlier this year that Treasury officials had prepared plans to offload the nationalised bank, only for Chancellor Alistair Darling to insist he was in "no hurry" to sell Northern Rock.

But there may be fears that those plans could be dusted off as all three major parties promised major spending cuts - sparking the Unite union to warn it would "resist" any further job losses at the Rock.

In an exclusive interview, Mr Cable said: "The primary obligation of the Government is to get its money back while at the same time ensuring that Northern Rock operates in the public interest by providing fresh mortgages to good borrowers and by treating its customers fairly.

"And I get the impression that those things are now happening. There is a flow of mortgage lending and although it was initially very aggressive in its repossession policy now it has moderated it somewhat.

"There may well be a temptation for a Tory Government to sell it off quickly and cheaply or indeed by this Government."

Warning against a rushed sale, Mr Cable said: "The experience of other countries which have had nationalised banks is that it may take as much a decade to get back the taxpayers' money but that is not something you can be remotely precise about."

Regional Minister Nick Brown hit back last night, saying: "Vince Cable is scaremongering.

He doesn't know what the Government is going to do. We are not going to jeopardise the taxpayers' interest in the way he describes." Conservative treasury spokesman Mark Hoban claimed Northern Rock was more at risk from a quick sale by the Government before the general election, which must be held by next June.

"If we are elected, we will look at the stakes we hold and think about how best we use our ownership to change the banking sector.

"For example, we think one of the issues is a reduction in competition and want to see more competition," said Mr Hoban.

The Unite union said a potential early sell-off was possible but that the Government did not seem to be in hurry to do so and that there did not appear to be any appetite from a private firm to buy the Rock.

Rob MacGregor, Unite's national officer for the financial services sector, added: "Our primary concern would be the maintenance of jobs, particularly in the North East of England, because we took a big hit when the company restructured just after nationalisation. 1,300 jobs were lost. We would resist any plans to hive any more of the workforce off. It is a pretty lean organisation.

"Any further cuts would not only be frankly disastrous for the staff, but also for the operational effectiveness of the business."

For our online party conference section, go to www.journallive.co.uk/politics TEST OF LEADERSHIP LIBERAL Democrat leader Nick Clegg faced a major test of his authority last night as his own frontbenchers stepped up criticism of his plans for public spending cuts.

One senior Lib Dem MP even suggested Mr Clegg had still to prove himself as leader and needed to listen more to activists' concerns. Delegates at the party's annual conference in Bournemouth have been alarmed by his talk of "savage" cuts and the possible need to ditch the promise to abolish tuition fees. In a barely-veiled critique of Mr Clegg's strategy this week, work and pensions spokesman Steve Webb said: "I think we have overdone the despair." Lib Dem environment spokesman Martin Horwood became the latest MP to cross Mr Clegg over tuition fees, insisting the policy to scrap them should be made "stronger and clearer". His comments were loudly applauded by delegates in the conference hall. Charles Kennedy, the popular former leader, has also raised concerns about the move.

Vince Cable, the party's highly-respected Treasury spokesman, was also angrily confronted by senior colleagues about his tax reform proposals.

Frontbenchers have admitted publicly that they were not consulted about yesterday's announcement of a new "mansion tax" on properties worth more than pounds 1m.

CAPTION(S):

WARNING The Lib Dem's Vince Cable says Conservative and Labour may consider selling Northern Rock.