Labour slumps to poll low as 2000 bank staff face the axe

Published on Tuesday 18 March 2008 09:22

AN opinion poll today showed Labour with its lowest level of support for 24 years as more than 2000 jobs were lost at nationalised mortgage lender Northern Rock.

The ICM survey for The Guardian newspaper gave the Tories a 13-point lead, putting David Cameron's party on 42 per cent – up five points since last month – and Labour on just 29 per cent, down five points.

Liberal Democrat backing was unchanged on 21 per cent, suggesting the Conservatives are winning support from Labour.

It's Labour's lowest rating since the poll began in 1984. And the scale of Tory support was being compared to that under Margaret Thatcher at the time of her third General Election victory in 1987.

Asked which economic duo they trusted most, 40 per cent said the Tory leader and his shadow chancellor, George Osborne, while 32 per cent opted for Gordon Brown and Chancellor Alistair Darling.

The poll was taken at the weekend, just days after Mr Darling's first Budget, but could also be influenced by the general economic situation.

It suggests the Tories would more than double their number of seats to around 355, giving them a working majority and leaving Labour down more than 100 seats at 214.

Meanwhile, "around a third" of the 6500 staff employed by Northern Rock are to lose their jobs as part of restructuring plans drawn up by new chairman Ron Sandler.

The Newcastle-based bank was taken into public ownership in February after being forced to seek a Bank of England funding bail-out last year.

Mr Sandler is seeking to cut the group's balance sheet to around half the current 113 billion.

The company said: "The board will be submitting to the Treasury a plan which will set out the basis for the removal of Government support through the creation of a smaller, more focused, financially viable mortgage and savings bank which will be returned to the private sector."

Mr Darling is said to be readying a "rapid response" team in tandem with the regional development agency One NorthEast to ease the impact of the job losses.

Yesterday, Mr Darling gave formal notification to the European Commission of plans to continue with the funding support to Northern Rock, which has run to an estimated 24 billion so far.

The job cuts and the shrinking of the troubled business are necessary for the Government to comply with European rules on state aid, to prevent distorting competition in the banking sector.

The commission is expected to investigate the Government restructuring package but approve the state aid as long as Northern Rock eventually becomes less dependent on the state subsidy.

Northern Rock – whose customers are 100 per cent guaranteed by the Government since the bail-out – is looking to encourage savers to boost its deposit base, while offering high mortgage rates to deter homeowners.