BRITISH PRIME minister Gordon Brown should have closed Northern Rock, which has about 25,000 customers in Ireland, to new business when it nationalised the troubled bank recently, according to former UK chancellor Nigel Lawson.
Speaking to The Irish Timesin Dublin yesterday, Lord Lawson said: "It's ridiculous that Northern Rock is still in business competing with the certainty of backing from the Treasury . . . There's no shortage of mortgage providers."
He said depositors' funds would continue to be protected and that the government could probably sell the loan book to a rival when the current global credit turmoil eases in a couple of years.
Mortgage player Northern Rock was a victim of the global credit squeeze last year, with depositors queuing to withdraw funds. Irish depositors withdrew €1.3 billion between them.
Attempts by the Labour government to sell the bank proved fruitless and it was nationalised.
Lord Lawson (76) also said Ireland and Britain should resist attempts to harmonise corporate tax rates in the European Union. "In all fields there are benefits from competition, and there are certainly great benefits from competition in tax systems," he said.
"It's a good thing that every country feels that if they tax too harshly that businesses will move. It is very healthy that [ governments] are afraid of that. I hope that Britain and Ireland will be able to resist that successfully."
Lord Lawson was in Dublin to address the annual dinner of the Chartered Institute of Management Accountants, where he touched on the issues of global climate change and the credit crunch. Lord Lawson, a former chancellor of the exchequer in a Margaret Thatcher administration, recently published a book An Appeal to Reason, challenging some of the theories concerning climate change.
"It [biofuels production] uses up about the same amount of CO2 to make the biofuel as you get out of it," he said. "It also takes five gallons of water to make one gallon of biofuel, so that's not very clever."
He added that rising food prices were a consequence of land being assigned to biofuel crops. "It's crazy and people are now waking up to the fact that it's a nonsense and a scam."
He is also sceptical about the value of carbon trading and carbon offsetting schemes.
"Carbon offsetting is a complete scam," he said. "You haven't a clue whether you are offsetting your carbon footprint or not . . . but it makes the customer feel better."
On the global credit crunch, he said: "You have a period of such optimism that too many people borrow too much and you have banks doing too much bad lending."
He predicted that the effect of the credit squeeze will be felt until 2010. "It's going to be quite a long time before this is fully worked through . . . I think we'll have two bad years."
