The Treasury’s most senior official yesterday sought to spread the blame for the poor handling of the Northern Rock crisis, claiming the Bank of England failed to react to warnings about the regulatory system.

Under intense questioning from MPs, Sir Nick Macpherson, permanent secretary at the Treasury, said that shortcomings identified in handling insolvent financial institutions should have been addressed with 'more urgency' when Gordon Brown was chancellor.

But Sir Nick blamed a range of institutions for the failure to act on the warnings – which were first identified in 2004 – telling the Commons public accounts committee that it was 'not just the Treasury dragging its heels'.

Financial Times