A series of senior Tories, including Baroness Shephard and former Chancellor Norman Lamont, challenged Mr King about the soaring level of personal debt.
They argued that many families owed vast sums and that the authorities had a
responsibility to take action before the problem became worse. Mr King said the situation was being monitored by the Bank of England and was under control. "The vast majority of the debt is secured against a property and it would be of concern only if that was not the case," he argued. After the meeting, Baroness Shephard, who was then a director of Coventry Building Society, pursued Mr King to raise the question of Northern Rock. She told him: "I am a director of a building society and we turn ourselves inside and out to make sure that nothing can go wrong with our finances. "We simply cannot understand how building societies that become banks, like Northern Rock, can undercut us with their borrowing rates all the time. What is happening? Where are they getting the money from?" Mr King dismissed Baroness Shephard, who was a Treasury Minister in Margaret Thatcher's government and Education Secretary under John Major, telling her: "Northern Rock operates under different rules because it is a bank." Baroness Shephard retorted: "I hope there is not going to be a day of reckoning." Baroness Shephard, who is chairman of the Association of Conservative Peers, said last night: "People did raise concerns about Northern Rock long before it hit trouble this year, but no one took any notice." A Bank of England spokesman said: "We have no comment."
Well they're taking notice now, as are all of us who are effectively two grand the poorer. Or at least, we could be.