BANK DISASTER LEAVES DARLING ON THE ROCKS

“The shareholders are angered by this, having been treated with utter disdain throughout this process.”

Mr Cameron’s onslaught came after it emerged that the Government is to adopt sweeping powers to seize banks and other financial institutions.

Mr Darling insisted the move was a “temporary measure” to shore up Northern Rock for a future sale once the economy improves. But critics fear the Government is taking on “Draconian” powers.

The Prime Minister gave the go-ahead for dozens of Northern Rock branches to be shut with potentially thousands of jobs axed. Even new Northern Rock chief Ron Sandler refused to deny that a massive redundancy plan is being drawn up.

On his first day in charge of the bank he said: “I’m not going to be drawn into a conversation about job losses.”

Mr Sandler admitted that Northern Rock could be remain in public ownership “for some years.” He added: “It’s unrealistic to be talking about months.”

Mr Brown and Mr Darling both faced widespread anger over the nationalisation which had been revealed in a surprise announcement on Sunday evening.

At a hastily-arranged Downing Street conference yesterday Mr Brown said: “We have and will always will put the interests of taxpayers first. It was the best decision to protect depositors, mortgages holders and employees of Northern Rock.”

Details of the nationalisation were rushed out yesterday and will be debated in the  Commons today.

The controversial move means £110billion of taxpayers’ money is being gambled, equivalent to £3,500 for every household.

Ministers insist the bank could be sold off at a profit in about three years time but critics fear billions of pounds could be lost.

Mr Darling told MPs: “There were choices to be made. We could have let the bank go under. But the risks to the wider financial system, for savers and the general public, were not acceptable.

“Having made the decision to save the bank and maintain financial stability and protect savers, we are now taking this decision to protect the taxpayer.”

The management team will be allowed to run the bank like any other business, continuing to offer mortgages and loans. But critics point out that the takeover means the state will soon effectively be repossessing the homes of mortgage defaulters.

The Tories insisted they will vote against the nationalisation which the Government plans to rush through Parliament this week.

Mr Cameron said it took the country “back to the dark days of the 1970s” and he called for the Chancellor to be sacked.

He declared: “The Prime Minister must restructure his Government. He needs to have a Chancellor with credibility and he needs to do it quickly.”

Mr Darling faced rowdy scenes in the  Commons. Shadow Chancellor George Osborne told him he had taken Britain back to the failed policies of Labour’s past.

He added: “We can safely say you will never recover your reputation for competence. You are now politically a dead man walking and if the Prime Minister could actually make a decision he would move you.” Mr Osborne savaged the extensive powers that the Government will assume to take over Northern Rock.

They which will remain in force for a full year, allowing the Government to seize any failing financial institution.

Mr Osborne told the Chancellor: “You are introducing unprecedented, sweeping, Draconian powers that will let you nationalise any other bank or deposit-taking institution in Britain by ministerial fiat.”

That was something not even former Labour leader Michael Foot “dreamt of and it will create further uncertainly in financial markets and do further damage to Britain’s reputation”.

Rattled Mr Darling hit back by accusing the Tories of “cynical opportunism.”

He added: “You have never had a consistent policy on what to do with Northern Rock. Every day brings a new policy, a new stance.”

Ministers opted for nationalisation after failing to reach a deal for a private takeover. Plans for potential sales to Sir Richard Branson’s Virgin Group or Northern Rock’s management team both collapsed.

A statement from Mr Branson said: “We believe that nationalisation is not the right answer and that a commercial solution would have been the best way forward.”

The Northern Rock board said it was “very disappointed” with the decision.

A panel of Whitehall officials will now decide on compensation for shareholders. It will be based on the market value of the firm without the Government’s financial guarantee.

But the Government could face a legal action from shareholders. Roger Lawson, chairman of the Northern Rock Shareholders’ Action Group, said: “We’ve already considered it.”