SHAREHOLDERS left out of pocket when Northern Rock was taken into public ownership following its collapse have called on Ed Miliband to back demands for a public inquiry.

About 150,000 private shareholders, many from the North-East, were refused compensation following a court ruling the bank was insolvent by the time it was taken into public ownership.

At the time of the nationalisation, campaigners representing small shareholders, led by Dennis Grainger, from Sunderland, argued that the move was unjust, and that Northern Rock was a solvent bank.

Mr Grainger took his case to the European Court of Human Rights which in 2012 upheld claims that had the Labour Government agreed to compensation, it could have harmed the British economy.

However, the Bank of England recently released previously secret minutes of their meetings during the financial crisis, showing that the Bank, the regulators and the Treasury disagreed about the handling of Northern Rock’s move into public ownership, months after a run on the bank by depositors.

Mr Grainger has continued his campaign by this week sending a letter to the Labour leader in which he asserts shareholders were "robbed" by the government as it exaggerated the Rock's woes when it seized the company.

In the letter Mr Grainger, chairman of Northern Rock Small Shareholders Action Group, wrote: "On behalf of those who suffered when the Rock was nationalised without any compensation, we believe only a full public inquiry will get to the bottom of what really happened.

"The truth needs to be found as to what took place when its assets were seized and whether it is fair that none of the huge riches now being made will be returned to its rightful owners?"

However, in response, a Labour Party spokesperson said the bank's management, coupled with the economic downturn, were the main areas of blame.

He added: “The global financial downturn was a major crisis in our banking system and Northern Rock was part of that.

“The last Labour government had no choice but to step in to protect hundreds of thousands of savers and mortgage holders whose livelihoods were at risk, ensure the cash machines kept working, and to save as many jobs in the North-East as possible. 

“As a result of this action, thousands of people still work for the successor bank here in the North-East today.

“Shareholders did lose out and that is unfair, but the blame for that lies with the old management of the bank and with the global financial crisis.”