By nationalising Northern Rock, Gordon Brown and Alistair Darling are indirectly setting themselves up in one of the most reviled and thankless of occupations - as debt collectors.

And debt collectors, possibly, on an industrial scale, for, if the economic slowdown proves lengthy, demanding money - with or without menaces - from struggling Rock borrowers is the only way that the sums can stack up for the Exchequer and prevent taxpayers being left to pick up a hefty tab.

Even in the sunny economic conditions of a year ago, the Rock was repossessing homes at the rate of eight a day and writing off loans at the rate of £2 million a week. Assuming that it is applying the same enforcement criteria today, the seizure rate and writeoffs will be escalating in leaps and bounds as mortgage bills rise and house prices fall.

The Government should brace itself for being portrayed, on the one hand, as heartlessly throwing defaulting borrowers and their families on to the street, while, on the other, allowing some welchers to get off free at the expense of innocent taxpayers. It will be lambasted either way. To that extent, Mr Brown was right to argue that handing over the Rock to either of the private bidders would have been the softer option.

Indirectly, ministers will have to get used to the difficult business of chasing bad debtors, threatening them with legal action, taking them to court, making them bankrupt or negotiating repayment terms under individual voluntary arrangements. Every time that they forgive a debt, they lengthen the odds on taxpayers being one day repaid in full.

Of course, the business of debt collection will be done by proxy. Messrs Brown and Darling were emphasising yesterday that the Rock would be run at arm's length and on commercial grounds. But this is a fig leaf. The only shareholder is the Tripartite Authority and the Treasury ultimately calls the shots there.

Ron Sandler, chairman-elect, has already made plain that the business plan has to be approved by the Authority. Deciding how hard to chase debts ultimately comes down to ministers. So does weighing up how much to risk by writing new business or not selling off existing assets. Mr Darling's claim yesterday that the bank would have “commercial autonomy” is far from the whole truth.

Mr Brown could not even maintain the illusion of an independently managed Northern Rock for the duration of his press conference. Asked about job losses at the Rock, he said that he would do his best to keep them to a minimum. Mr Sandler's hands are tied from the start. Ministers call the shots and will be blamed for the casualties. The union Unite knows this. Its statement calling for no compulsory redundancies ended with the not-so-subtle postscript: “Unite is the largest single donor to the Labour Party.”

The problem is not so much the the mortgage book, though even here there may be bigger problems than envisaged so far. Every time that Mr Darling mentions this £87billion or so asset pile, he is careful to emphasise that, in the opinion of the Financial Services Authority, this is blue chip. If house prices continue to fall, that may be optimistic. The Rock was the most aggressive mortgage lender on the high street at the very period that house prices peaked last year. If any major lender is going to be hit by negative equity problems, it is the Rock.

The bigger problem is the Rock's collossal book of unsecured debt, which stood at £8billion in the last published figures. This is outstanding amounts of credit cards, personal loans, overdrafts and other borrowings where the Rock has very little comeback if borrowers get into difficulties. Writeoffs there would balloon if Britain entered a serious downturn.

Nationalisation raises questions about the treatment of expropriated shareholders and whether the Rock has an unfair advantage over rival banks. But these will pale into insignificance if the downturn intensifies and borrowers default in large numbers. That would really test the mettle of squeamish ministers.



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