The Government is considering injecting as much as £10bn into Northern Rock and may start hiring new employees in order to use the Newcastle-based lender to ramp up new mortgage lending.

The Treasury has yet to make a final decision on its plan for Northern Rock, but there are growing expectations in the City that the Government is planning a more radical capital injection than previously thought.

The move would represent a reversal on the policy of shrinking the nationalised lender as quickly as possible so that it could repay the Government’s £27bn loan. As part of the repayment efforts, the bank is currently making 2,000 employees redundant.

Daily Telegraph