Previous Section Index Home Page

Mr. Darling: I know that many people in the north-east are concerned about the foundation, which has provided support in excess of £24 million for projects. That is important, so I hope that anyone making proposals will bear it in mind; it is one of the reasons why Northern Rock is so appreciated in the north-east. I can only repeat what I said earlier: we will
19 Nov 2007 : Column 972
do everything we can to help. There are considerable difficulties, and the period for assessing the proposals will allow us to see whether we can make progress.

John Thurso (Caithness, Sutherland and Easter Ross) (LD): In the Chancellor’s statement he said that the guarantee for depositors would not be removed without proper notice to depositors. May I invite him to be a little more specific? Surely, without a successful sale, any withdrawal of that guarantee will simply precipitate another run—a terminal run.

Mr. Darling: I was making the point that the guarantee is there and that it will not be removed without warning. I said it would continue as long as current conditions subsist. One of the things that we will consider is future legislation to put in place a long-term deposit protection scheme, as I indicated earlier. What I have tried to do right from the start is to provide stability not just for Northern Rock but for the financial system as a whole, and the guarantee is an important part of that.

Mr. George Mudie (Leeds, East) (Lab): Unlike those on the Opposition Front Benches, I remember having welcomed the Chancellor’s giving the facility to Northern Rock on the grounds that it would avoid wider financial instability. My memory is better, and I stick by it. I now welcome the spelling out of the priorities in terms of taxpayer and depositor protection, as well as wider financial stability—but has the bank made crystal clear to private shareholders, including the one or two hedge funds that have opportunistically come on board, the reality of their position, and made sure that they approach the private bids with that reality in mind?

Mr. Darling: My hon. Friend raises an important point, and I think the shareholders are aware of their position. Our responsibility in respect of the stability of the financial system is to make sure we can help depositors and maintain the interests of taxpayers as we look for a solution. Those are our objectives, and people should be in no doubt about them.

Mr. Andrew Tyrie (Chichester) (Con): On 5 November, the Chancellor appeared to make it clear that any money the Government made available to Northern Rock would be recovered against Northern Rock’s assets, but today he has studiously avoided answering that direct question, and studiously avoided providing us with a guarantee for our taxpayers that in the end we will get our money back. Will he now give taxpayers that pledge?

Mr. Darling: I said in my statement—as I have said on a number of occasions—that money lent by the Bank of England is secured against assets such as mortgages held by Northern Rock, so we fully expect to get it back.

Mr. Kevan Jones (North Durham) (Lab): Northern Rock is the only major financial institution with headquarters in the north-east, and I concur with the sentiments expressed by Members from the north-east who argue that those jobs are important to the north-east economy. Will my right hon. Friend ignore
19 Nov 2007 : Column 973
the sanguine voices of Opposition Members, including the former Economic Secretary, the hon. Member for Stratford-on-Avon (Mr. Maples), who said last week that by the end of this week we should let Northern Rock go into receivership? That would be not only disastrous for the north-east economy but bad for the negotiations.

Mr. Darling: I agree with my hon. Friend. It is important that we do everything we can to assist in this situation, and I am sorry that a number of Opposition Members take a different view.

Mr. John Redwood (Wokingham) (Con): Should the Chancellor not make clear how much money is available and for how long, to avoid a false market in the shares and allow fair evaluation of the bids?

Mr. Darling: No, I think that the approach that we are taking is right. As I said, I wanted to provide Northern Rock with the breathing space to assess the options available to it. We have to make that assessment too, because of the interests that I have outlined. It is important that we take the necessary time to do that, but I have also said that we cannot allow the situation to run indefinitely, for perfectly obvious reasons. To impose an artificial deadline or date would be unhelpful at this stage.

Mr. David Anderson (Blaydon) (Lab): It does not surprise any of us that Opposition parties do not care about 6,000 jobs in the north-east, as they have a track record of not caring about work in the north-east. What is really in the interests of the public and taxpayers is to ensure that neither Opposition party ever again gets control of the financial levers of this country.

Mr. Darling: I have some sympathy with that proposition, too.

Mr. Andrew Mackay (Bracknell) (Con): As the Chancellor has now been forced to concede that the business editor of the BBC was right to say that the Treasury, too, is loaning money to Northern Rock, the only questions are: how much, at what rates, and when is it to be repaid?

Mr. Darling: I did not say that at all. I said that the element that was being talked about, to which the penal rate of interest has been applied and which is being treated separately, is being made available from the Bank of England—but we expect that to be repaid, too.

Mr. Andrew Love (Edmonton) (Lab/Co-op): If the board of directors rejects all the expressions of interest by hedge funds that are large shareholders in the organisation, what powers do the Treasury and the Secretary of State have to ensure that we bring the matter to a quick conclusion so that we do not end up with a liquidation, which would be to nobody’s benefit, least of all the employees of the bank?

Mr. Darling: The Northern Rock bank has to consider all the options available to it. It is perfectly well aware that the option of doing nothing is not open to it; that just cannot be the position. The Government will remain in close contact with the bank to ensure that it examines all the options. As I have made clear,
19 Nov 2007 : Column 974
we need to keep all the options on the table. It would be a big mistake to rule out any one of them.

Mr. Graham Brady (Altrincham and Sale, West) (Con): Is it still the Chancellor’s position that if any other bank were to find itself in comparable difficulties, the same sort of support would be provided?

Mr. Darling: Yes, I have made it clear that the Bank of England’s job as a central banker is to ensure the financial stability of the system, so if we were to have another situation with a bank like what happened with Northern Rock, the approach would be clear. That is the job of the central bank in this country, as it would be in any other country.

Jeremy Corbyn (Islington, North) (Lab): Following on from the previous question, does the Chancellor have any concerns that any other bank, along the lines of Northern Rock, has borrowed excessively on the inter-bank market and therefore put itself and its customers in some danger? Does he have any proposals to change legislation in that respect?

Mr. Darling: I made it clear that I think two things are necessary. One is that the FSA, as it has already said, needs to examine the way in which it regulates banks. It has said, perhaps with the benefit of hindsight, that what was happening in Northern Rock should have been looked at earlier. One thing that we should not lose sight of is the root causes of the problem: Northern Rock had a business model predicated on its being able to get very large sums of money from the financial markets, which simply dried up so that it could no longer get those sums. The FSA accepts that it should have looked at that situation. I have also said that we need to consider whether to make any further changes to the regulatory system, and that is being considered by the Treasury Committee, too.

Mr. Graham Stuart (Beverley and Holderness) (Con): For the elimination of doubt, will the Chancellor confirm that the BBC is wrong, and that no loans whatever have been made by the Treasury, as opposed to the Bank of England?

Mr. Darling: I have explained the position on that element of the loan—the penal rate of interest. I have nothing to add to what I have said in response to previous questions on that subject.

Rob Marris (Wolverhampton, South-West) (Lab): In the case of Northern Rock, there was no adverse finding by the ombudsman but a 100 per cent. bail-out of savers by Government. In the case of 125,000 pensioners, there is an adverse finding by the ombudsman but currently only an 80 per cent. bail-out. Will my right hon. Friend agree to increase the financial assistance scheme bail-out to 100 per cent., and, if he does not agree to 100 per cent. for those pensioners, can he explain the inconsistency in the Government’s position?

Mr. Darling: Financial support for pensioners is a different matter altogether. As my hon. Friend knows, the Government have been considering the position, and I expect that my right hon. Friend the Secretary of State for Work and Pensions, who was at the Dispatch Box just before me, will have something to say about it in due course.


19 Nov 2007 : Column 975

Point of Order

4.25 pm

Mr. Rob Wilson (Reading, East) (Con): On a point of order, Mr. Speaker. I seek guidance on an important matter of parliamentary protocol. The right hon. Member for Redditch (Jacqui Smith), who is now Home Secretary, has been made aware of my point of order in advance. In November 2004, when she was Minister with responsibility for the regions, she made a statement to the House regarding the appointment of new directors to the South West of England Development Agency. An important element of that statement was later found to be inaccurate. I seek general guidance on whether a Minister making an inaccurate statement to the House should also be the Minister who makes the required correction to that statement, and whether a Minister should correct an inaccurate or untrue statement even after some time has passed.

Mr. Speaker: I do not think that that is a matter for the Chair. The hon. Gentleman should put his questions to the Department concerned and seek the rectification that he is looking for. It is not for me to intervene in the matter.


19 Nov 2007 : Column 976

Orders of the Day

European Communities (Finance) Bill

Order for Second Reading read.

4.26 pm

The Chief Secretary to the Treasury (Andy Burnham): I beg to move, That the Bill be now read a Second time.

We have a rare treat today—a Treasury double-header, as Sky Sports might say. The Bill implements the decisions agreed at the December 2005 European Council under the UK presidency and gives effect to the new own resources decision for the financial perspective from 2007 to 2013. That agreement was in our long-term national interest. It is good for Britain and good for Europe, and today I shall explain why. It is good for Britain because it not only preserves our rebate but will see it rise in value during the next six years. It is good for Europe because it provides investment to help the emerging economies of eastern Europe prosper, which in turn and in time will benefit our own economy, as have all previous EU enlargements. The Bill will help to pay for European enlargement.

Mr. Graham Brady (Altrincham and Sale, West) (Con) rose—

Andy Burnham: So soon? I give way.

Mr. Brady: I thank the Minister. He says that under the deal, the British abatement will increase. Will he confirm, though, that Britain’s net contribution to the EU budget will increase by £2.3 billion a year?

Andy Burnham: I will come to the changes implemented by the decision, but the point that I was about to make when the hon. Gentleman intervened is that it is not enough for the Conservative party to say that it is a supporter of European enlargement; it is not enough to support the end goal without taking the sometimes difficult decisions that will allow that goal to be met. It is simply not good enough to flinch from decisions on the issues that stand in the way of making EU enlargement a success. I shall return to his precise point and make the positive case throughout my remarks.

Daniel Kawczynski (Shrewsbury and Atcham) (Con) : The Minister mentioned that the agreement will benefit eastern European states, but is he aware that some of those states are already struggling to spend the money that they have been given, and that they have a big backlog of money from the European Union that they have not been able to spend?

Andy Burnham: I respect the hon. Gentleman’s knowledge of eastern Europe, but he will understand that the rate at which countries can draw down allocations from the EU budget determines the size of the contribution that others make. He will understand that the position of the wealthier nations is protected.

Mr. John Baron (Billericay) (Con): The Minister will remember that the Government’s original position was that the rebate would be given up only if there were
19 Nov 2007 : Column 977
meaningful reform of the common agricultural policy. Given that there has been none and that, having sacrificed our rebate—or a large part of it, anyway—we will pay in 20 per cent. more than France in the coming years, but get back only half what France gets back, does he understand why British taxpayers believe that they are being short-changed by the Government?

Andy Burnham: The hon. Gentleman has raised a range of points that I will address in the substance of my remarks. As I have said, I want to make a positive case for what Britain agreed in 2005. That agreement brought Britain and France into rough parity on net contributions to the European Union. The Government made a clear request for a review of the European budget as part of that agreement, which we secured. We can address all the hon. Gentleman’s points.

Today, I expect to hear variations on the refrain that what is good for Europe cannot possibly be good for Britain and that Europe’s interests and Britain’s interests are essentially incompatible, and I intend to meet that argument head-on. The Government reject that isolationist and negative thinking, although we do not uncritically accept everything that Europe says. The deal secured by the Prime Minister and the former Prime Minister, Tony Blair, is €160 billion cheaper than the original proposals from the European Commission.

Mr. William Cash (Stone) (Con): Will the Chief Secretary indicate in straightforward and simple language how much less will be made available to the regions of the United Kingdom from funds such as the structural funds?

Andy Burnham: I will come on to that point in my remarks, if the hon. Gentleman will hold his horses. I ask him head-on whether, if he supports the EU, he supports enlargement. If so, will he accept that a contribution should be made by this country to the cost of enlargement? As English regions improve their competitiveness, as I am pleased to say Merseyside has recently done, is it not right that the available funds should go to support the regions of Europe that most need that extra investment?

Julia Goldsworthy (Falmouth and Camborne) (LD): The Chief Secretary is right that it is important that the parts of Europe that need structural funds receive them. Cornwall, in which my constituency is situated, will continue to receive those funds. Does he agree that the funding available is also based on the amount of match funding available from the Government? It is unfortunate that the Government are not match funding at similar levels to those achieved on objective 1 funding.

Andy Burnham: The hon. Lady is right on that strict technical point. I hope that she accepts that Cornwall will continue to benefit from structural and cohesion funding. To pick up the point made by the hon. Member for Stone (Mr. Cash), funds will continue to be available to the less well-developed regions of Britain. Merseyside has recently improved its competitiveness, but challenges remain in Cornwall and, I believe, the western highlands. Parts of this country will still benefit substantially from funding to improve their competitiveness.


19 Nov 2007 : Column 978

Mr. Ian Davidson (Glasgow, South-West) (Lab/Co-op): Many of us are and always have been in favour of expansion and of contributing money to the new accession countries, but why is France the biggest recipient of funding from the EU budget? The Chief Secretary, the present Chancellor and the present Prime Minister should not get the blame for this appalling document, because we can all agree that a bad boy did it and ran away.

Andy Burnham: My hon. Friend knows my background, and I do not agree with him at all. Indeed, it is possible to argue that in this financial perspective we make ground on the traditional complaint aired by many Eurosceptics over the years. I am comfortable with the deal. I come back to where I started: the deal is good for Britain and shows that Britain is a middle-ranking net contributor among the wealthier nations.

Mr. Denis MacShane (Rotherham) (Lab): If the Minister cares to read page 32 of the excellent paper prepared by the Library for this debate, he will see in the final column on net contributions for 2006, which is before the next budgetary round kicks in, that France made a net contribution of €3,140 million and the UK made one of €4,086 million. France is therefore up with the UK and Germany as a major net contributor. I am afraid that the notion that France is a net recipient is 20th century truth, but 21st century mythology.

Andy Burnham: My right hon. Friend is absolutely correct: France is a net contributor, as is this country. As I have just said, France’s contributions will grow twice as fast in this financial perspective—as, incidentally, will Italy’s. That is why I come back to the point that the agreement is good for this country.

Let me give an indication of the net contributions that we will make. Table B11 of the pre-Budget report document shows that the estimates for the net expenditure transfers to EC institutions are £5.6 billion for 2007-08, £5.5 billion for 2008-09 and £5.7 billion for 2009-10.

Mr. Philip Hammond (Runnymede and Weybridge) (Con): The Minister has mentioned France’s and Italy’s net contributions. In the interests of transparency, will he give a commitment to the House to publish official Treasury estimates of the net contributions of all member states? My understanding is that, to date, the Treasury has officially published only an estimate of the French net contribution.

Andy Burnham: I should say to the hon. Gentleman— [Interruption.] If he holds his horses, I shall give him his answer. It is not common practice for one EU state to publish details about others in a haphazard and cherry-picking way; the Commission makes those figures available. I have said clearly this afternoon that, on the basis of figures in the public domain, Britain’s net contributions will be in rough parity with those of the French. I hope that he is satisfied with that answer.

Philip Davies (Shipley) (Con) rose—

Mr. John Redwood (Wokingham) (Con) rose—


Next Section Index Home Page