Bail-out risks 'must be public'

The full scale of the risk to the taxpayer from multibillion-pound bank nationalisations and bail-outs must be made public, MPs have demanded.

A critical Commons committee report said the Treasury had failed to reveal the "significant liabilities" it took on by stepping in to rescue ailing financial institutions.

"In order for public scrutiny to be effectively performed, the magnitude and nature of these liabilities must be comprehensively disclosed," the Treasury sub-committee concluded.

The accounts, for both fully and part-nationalised banks, should be "at least as comprehensive as those made by major banks" and go beyond minimum accounting standards, it suggested.

Key performance indicators for state-owned Northern Rock and Bradford and Bingley should also be included in Treasury accounts, it continued, as well as twice-yearly assessments of the work of UK Financial Investments - the arms-length body set up to manage the public cash pumped into banks.

Sub-committee chairman, Tory MP Michael Fallon, said this week's latest multibillion-pound taxpayer-funded bail-out made such openness about the public's exposure still more urgent.

"Public companies are required to publish quarterly data on their accounts and, given the scale of public investment, the taxpayer deserves no less information from the Treasury," he said.

The committee also called for a halt to job cuts at the Treasury and its agencies, warning it risked being overstretched by the massive workload resulting from the present economic crisis.

Sir Nicholas Macpherson, the Treasury's most senior civil servant, admitted to the MPs that it did "overshoot a bit" on targets to reduce staff numbers - removing more than twice the 150 desired.

"We are concerned that continued headcount reductions in the Treasury Group may now leave its constituent organisations unable to provide the required economic support and management during the economic downturn," the MPs said. "We recommend that the Government reconsider any planned further headcount reductions in the Treasury Group in the light of the demands on the Group of the economic downturn."