Rock debts threaten borrowing rules

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The Office for National Statistics (ONS) said the move could add at least £90.7 billion to public sector debt, based on Northern Rock's 2006 accounts.

This would put the Treasury in breach of its sustainable investment rule - which dictates that debt should not be more than 40% of GDP.

While the ONS said the exact impact could not be stated, it indicated Northern Rock could add 6.7% to the key measure, which stood at 37.7% in December - leaving the benchmark well above the Government target at 44.4%.

Northern Rock's estimated £24 billion funding bail-out from the Bank of England is not expected to be on the debt figures as it will appear on the Bank's books as an asset.

Liberal Democrat Treasury spokesman Vince Cable said: "This announcement means the Government will have to be honest about the huge debt that taxpayers are currently owed.

"This move shows the benefits of increased independence for the ONS. (This) decision will help us make an informed judgment about the future of Northern Rock.

"The impact on the national accounts may prove embarrassing, but at least in the short term it ensures that the Chancellor can't use his absurd bonds proposal to hide the true impact of bailing out Northern Rock. We must now have a rational debate about who should own Northern Rock - ensuring that all taxpayer loans are repaid with interest."

Northern Rock suffered the first bank run in more than 140 years last September after the company's borrowing costs soared in the credit crunch.

The ONS said the Newcastle-based lender would be classified as a "public financial corporation" from October 2007 - although it stressed that this should not be confused with nationalisation. It said: "The decision is based on a judgment that the public sector has the power to control Northern Rock's general corporate policy."