Both Nick Clegg and David Cameron tackled Gordon Brown on the Northern Rock crisis at Prime Minister’s Questions.

The Tory leader got in a good line against the PM’s protestations that putting the bank into administration would lead to a fire sale of the assets: “Does he not understand that administration and liquidation are different things? Let me put it this way. Administration is what the Government are in at the moment; liquidation is what is going to happen by the British people at the next election.” But the Tories’ taunts are blunted by the fact that their policy on Northern Rock has changed almost as often as the Government’s – a point the PM plugged away at to good effect.

Nick borrowed one of Vince’s bon mots when it was his turn to put Gordon on the spot, asking why Labour was nationalising the risks and privatising the profits in its proposed rescue package. In his follow-up, Nick accused the Prime Minister of “running scared of the Conservatives” by ruling out nationalisation. He’s right, of course, but the line delighted Tories rather too much. Perhaps better to have stuck to the argument that the PM’s fear of losing his reputation for prudence is costing the taxpayer dear.

Anyway, here’s the exchange in full, as recorded by Hansard:

Mr. Nick Clegg (Sheffield, Hallam) (LD): As we have heard, the Prime Minister this week unveiled his cunning plan to nationalise all the risks of Northern Rock, but to privatise the profits. How can he justify fleecing the taxpayer by handing a blank cheque to the private sector, when he knows, unlike the Conservatives, that temporary nationalisation is the right thing to do?

The Prime Minister: In the proposals that we put forward, we share in all the benefits as the Northern Rock company, or its successor company, does better. If he looks at the small print, the hon. Gentleman will see that we are protecting the interests of the taxpayer in the best way possible. Again, I am afraid that it is very difficult to listen to the Liberal party on economic policy. Yesterday he spent another £2 billion; a few weeks before that he said that he had £1 billion of extra spending commitments, but he could not justify them or explain how the money would be spent. None of his policies add up. Is it not time that he went back to the drawing board?

Mr. Clegg: Is not the real truth that the Prime Minister will not nationalise the bank because he is running scared of the Conservative party? [Interruption.] It has no solutions—[Interruption.]

Mr. Speaker: Order. Let the hon. Gentleman speak.

Mr. Clegg: The Opposition have no solutions of their own. When will the Prime Minister stop listening to them and do what he knows to be right? Or will he continue to insist that British taxpayers pay through the nose for years to come because of his own lack of leadership?

The Prime Minister: May I just say it in this way: nationalisation is one of the options that is open to us, as the Chancellor has made clear—nationalisation, public ownership, but it would be on the road back to private ownership, as the Liberal Democrat shadow Chancellor has acknowledged. But we are right to look at every option. If commercial companies come to us and say that they have proposals to run Northern Rock in a better way in the interests of the shareholders and depositors than it is being run at present, we are right to look at those proposals. It would be a mistake for us to reject proposals coming from the private sector, as the hon. Gentleman seems to want to do. All options are on the table. We will do what is best by the shareholders and the depositors of Northern Rock, and we are determined at all times to maintain the stability of the economy. We have done that for four months after Northern Rock went into difficulties. We have maintained stability and the difficulties have not spread into other companies and other institutions. We are determined to continue to maintain stability, and all our decisions will be made on that basis.