THE National Audit Office (NAO) has been asked to investigate claims that Virgin Money could effectively be getting Northern Rock for free.

Shadow Financial Secretary to the Treasury Chris Leslie claimed that the investors behind the deal, including Sir Richard Branson's Virgin group, billionaire Wall Street investor Wilbur Ross and an Abu Dhabi sovereign fund, could effectively have all the money they are paying for the Newcastle bank returned to them by using Northern Rock's cash reserves.

When the deal for the nationalised bank was announced on November 17 it was claimed that the Government will receive an initial £747m, potentially rising to about £1bn with add-ons.

Mr Leslie said that a lot of "financial jiggery pokery" meant that in effect the investors were only paying out around £350m from their own funds for the Gosforth lender, which employs 2,100.

It has already been claimed by Labour politicians that £250m of Northern Rock's own cash reserves are being used to part fund the deal, in what Mr Leslie compared to someone buying a house with fixtures and fittings and then selling them off to fund the deal, adding it was "uncannily like asset stripping."

Virgin Money has also taken a £150 million taxpayer backed loan as part of the deal.

Yesterday Mr Leslie said the £350m being put in by the investors was a sum they could get back if they cut the bank's capital ratio, in effect its back-up cash, from a promised minimum 15 per cent of its loan book value, to the average 10 per cent employed by other institutions.

He said that in effect it was "looking like" they were virtually getting the Newcastle bank for free and has written to NAO head Amyas Morse claiming there were a number concerns about the value for money the deal represented to the taxpayer.

Although Virgin Money would not make any comment on the claims while the deal is still going through it is understood the firm is frustrated by what it sees as assumptions being made.

While Mr Leslie is concerned the money could be taken out by the investors, it is understood Virgin believes he is missing key pieces of information on the deal and it intends to use the money towards a promised £45bn of loans to its customers over the next five years rather than reimbursing the investors.

In his letter Mr Leslie states: "The Financial Services Authority does not have the power to stop the Virgin Consortium stripping a further £345m from Northern Rock.

"But that is uncannily similar to the cumulative initial investmnet of the three partners to this deal: £250m from Wilber Ross, £50m from an Abu Dhabi sovereign fund and £50m from Virgin.

"In a year's time these investors could well have returned to them all the money they initially put down, owning Northern Rock outright."

The deal is expected to be completed by January 1 and Mr Leslie added: "There is still a month before this deal proceeds and I urge you to use this window of opportunity to scrutinise this proposed deal with the Public Accounts Committee."