The Chancellor came under fire yesterday over plans to exclude Northern Rock from the public finance figures in his first Budget next week.

Alistair Darling plans to exclude the bank’s estimated £100 billion liabilities from the headline figures, both next week and in future. Instead, the figures will be treated as a special item.

Adding the bank’s liabilities to the net debt figure would break the Government’s own sustainable investment rule that debt should not exceed 40 per cent of gross domestic product. Including Northern Rock would push that to between 43 and 45 per cent.

The Chancellor will use the latest Office for National Statistics (ONS) borrowing figures in his Budget on Wednesday, as usual. These were compiled before the bank’s nationalisation and do not refer to those liabilities.

The Conservatives claimed that Mr Darling was “cooking the books” to avoid his rules being broken in his first Budget. Ministers have emphasised that the intention is to keep Northern Rock in public ownership only for a limited period and that it would be wrong to distort the overall figures by such an unusual circumstance.

Questioned by the Treasury Select Committee yesterday, ONS officials said that the Treasury had approached them about the possibility of producing two sets of data, one including Northern Rock and another excluding it. They said that the Treasury’s decision on how to present the data next week was a “policy decision”.

Michael Fallon, Conservative MP for Sevenoaks and a member of the Treasury Committee, said that excluding Northern Rock would be “a completely unacceptable fiddle. The purpose of rules is to keep to them.”

Legal & General, one of the UK’s biggest institutional investors, entered the fray surrounding Northern Rock last night by warning the Government that it should not value the bank as if it was bust. L&G, which is Northern Rock’s third-largest shareholder, is considering whether to take legal action against the Government over its decision to nationalise the bank.

Mr Darling is also understood to be pushing ahead with plans to grade mortgages, with the least risky given a “gold standard” kitemark in time for the Budget. If successful, the plan would revitalise the market for mortgage securitisations – the process by which mortgage assets are “sold” in bulk to investors rather than remaining on the original lender’s balance sheet – which has been hit because of fears they contain sub-prime mortgages.

The proposed kitemark and the escalating row over Northern Rock came as figures showed deepening economic gloom ahead of the Budget. The number of permanent staff recruited by UK companies fell for the first time in nearly five years last month, while temporary staff numbers are increasing, according to figures from the Recruitment and Employment Confederation and KPMG, the accountant.

Alan Nolan, a director at KPMG, said: “Unsurprisingly, perhaps, employers are dealing with the uncertainty in the economy by moving towards a more flexible labour force.”

This will pile more pressure on the Chancellor, but there was a sliver of good news in figures showing that wage growth was starting to slow. The permanent salary index was 56.8 last month, down from 57.1 in January.

A report by the CBI and the accountant Grant Thornton provides evidence of the steepest fall in optimism by consumer services companies, such as hotels, bars and restaurants, since November 2001.

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