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9 pm
Yvette Cooper:
Once again, I point out that the approach in the business plan will need to be compliant with the new state aid rules. The European
Commission is likely to propose particular conditions on the operating of the bank to ensure that it complies with state aid rules. We will need to have further discussions with it about what those conditions should be and what the appropriate arrangements will be. It would not be in the interests of the Government, the consumer or long-term financial stability to have a bank that abused its position in the public sector. That would not allow it to withdraw from the kind of public support that is currently there for it, and we would like to withdraw as rapidly as possible. A series of frameworks is in place.
Hon. Members are asking perfectly legitimate questions that will need to be answered. The difference between us is that I am setting out very clearly the fact that it is important for Ron Sandler and his team to do a programme of work before we fully answer all these questions. The amendment asks for them to be answered even before any transfer can be executed. Given the risks to financial stability that the Bill is designed to address, it would be irresponsible to tie Government’s hands in terms of dealing with financial stability and potential risks to the banking system as a whole by requiring a programme of work to be done that cannot properly and effectively be done until after the transfer has taken place. On that basis, I ask the hon. Member for Fareham (Mr. Hoban) to withdraw the amendment.
Mr. Hoban: It almost beggars belief that the Minister made those comments about what is going to happen to Northern Rock. In most businesses that I know—I have been involved with businesses throughout my professional career—the starting point for a business plan is the business’s objectives. What plans do the Government have for how Northern Rock should behave in future? Are they expecting it to get bigger or smaller? Those are important issues for the Treasury, as a guardian of taxpayers’ money, in giving guidance to Northern Rock’s new management. The Minister says that the business should be transferred back to the private sector at the earliest point. It would be easier for Ron Sandler to come up with his plans if the Minister were able to say that the Government would prefer it to happen in one year, three years or five years. That will affect how he runs the business—whether he shrinks it or grows it. That lack of strategic direction comes across in yesterday’s statement, today’s Second Reading debate and the Minister’s response to the amendment.
As taxpayers, we need some clarity about the Government’s objectives for Northern Rock—when they think that it should emerge from nationalisation and what shape of business they are expecting. It is ludicrous for them to have turned down two private sector offers and not to know what the outcome will be. The Minister should get a grip and demonstrate that the Government know what they expect Northern Rock to be like when it emerges from nationalisation, whether in one year, three years or five years. It is time for them to give much greater clarity about how they expect Northern Rock to develop over the next few years. That is why we tabled the amendment and, given that the Minister has not given a satisfactory response to the issues that affect not only this House but the business community and taxpayers, why we will press it to the vote.
Question put, That the amendment be made:—
The Committee divided: Ayes 222, Noes 299.
AYES
Afriyie, Adam
Ainsworth, Mr. Peter
Alexander, Danny
Amess, Mr. David
Ancram, rh Mr. Michael
Arbuthnot, rh Mr. James
Atkinson, Mr. Peter
Bacon, Mr. Richard
Baker, Norman
Baldry, Tony
Barker, Gregory
Baron, Mr. John
Barrett, John
Bellingham, Mr. Henry
Bercow, John
Beresford, Sir Paul
Bone, Mr. Peter
Boswell, Mr. Tim
Bottomley, Peter
Brady, Mr. Graham
Brake, Tom
Brazier, Mr. Julian
Breed, Mr. Colin
Brokenshire, James
Brooke, Annette
Browne, Mr. Jeremy
Browning, Angela
Burns, Mr. Simon
Burrowes, Mr. David
Burt, Alistair
Burt, Lorely
Butterfill, Sir John
Cable, Dr. Vincent
Cameron, rh Mr. David
Campbell, Mr. Gregory
Carmichael, Mr. Alistair
Carswell, Mr. Douglas
Chope, Mr. Christopher
Clappison, Mr. James
Clark, Greg
Clarke, rh Mr. Kenneth
Clifton-Brown, Mr. Geoffrey
Cox, Mr. Geoffrey
Curry, rh Mr. David
Davey, Mr. Edward
Davies, Mr. Dai
Davies, David T.C. (Monmouth)
Davies, Philip
Davis, rh David (Haltemprice and Howden)
Djanogly, Mr. Jonathan
Dodds, Mr. Nigel
Dorrell, rh Mr. Stephen
Duncan, Alan
Duncan Smith, rh Mr. Iain
Dunne, Mr. Philip
Ellwood, Mr. Tobias
Evennett, Mr. David
Fabricant, Michael
Fallon, Mr. Michael
Farron, Tim
Field, Mr. Mark
Foster, Mr. Don
Fox, Dr. Liam
Francois, Mr. Mark
Fraser, Mr. Christopher
Gale, Mr. Roger
Garnier, Mr. Edward
Gauke, Mr. David
George, Andrew
Gibb, Mr. Nick
Gidley, Sandra
Gillan, Mrs. Cheryl
Goldsworthy, Julia
Goodman, Mr. Paul
Goodwill, Mr. Robert
Gray, Mr. James
Grayling, Chris
Green, Damian
Greening, Justine
Greenway, Mr. John
Grieve, Mr. Dominic
Gummer, rh Mr. John
Hague, rh Mr. William
Hammond, Mr. Philip
Hammond, Stephen
Hancock, Mr. Mike
Hands, Mr. Greg
Harper, Mr. Mark
Harris, Dr. Evan
Heald, Mr. Oliver
Heath, Mr. David
Heathcoat-Amory, rh Mr. David
Hemming, John
Hendry, Charles
Herbert, Nick
Hoban, Mr. Mark
Hollobone, Mr. Philip
Holloway, Mr. Adam
Horam, Mr. John
Horwood, Martin
Hosie, Stewart
Howarth, David
Howarth, Mr. Gerald
Hunter, Mark
Hurd, Mr. Nick
Jack, rh Mr. Michael
Jackson, Mr. Stewart
Jenkin, Mr. Bernard
Jones, Mr. David
Kawczynski, Daniel
Keetch, Mr. Paul
Key, Robert
Kirkbride, Miss Julie
Knight, rh Mr. Greg
Kramer, Susan
Laing, Mrs. Eleanor
Lait, Mrs. Jacqui
Lamb, Norman
Lancaster, Mr. Mark
Laws, Mr. David
Leech, Mr. John
Leigh, Mr. Edward
Letwin, rh Mr. Oliver
Lewis, Dr. Julian
Liddell-Grainger, Mr. Ian
Lidington, Mr. David
Lilley, rh Mr. Peter
Loughton, Tim
Mackay, rh Mr. Andrew
MacNeil, Mr. Angus
Main, Anne
Malins, Mr. Humfrey
Maples, Mr. John
May, rh Mrs. Theresa
McCrea, Dr. William
McIntosh, Miss Anne
McLoughlin, rh Mr. Patrick
Mercer, Patrick
Miller, Mrs. Maria
Milton, Anne
Mitchell, Mr. Andrew
Moore, Mr. Michael
Moss, Mr. Malcolm
Mulholland, Greg
Mundell, David
Murrison, Dr. Andrew
Neill, Robert
Newmark, Mr. Brooks
O'Brien, Mr. Stephen
Öpik, Lembit
Osborne, Mr. George
Ottaway, Richard
Paice, Mr. James
Paterson, Mr. Owen
Penning, Mike
Penrose, John
Pickles, Mr. Eric
Price, Adam
Prisk, Mr. Mark
Pritchard, Mark
Pugh, Dr. John
Randall, Mr. John
Redwood, rh Mr. John
Reid, Mr. Alan
Rennie, Willie
Rifkind, rh Sir Malcolm
Robathan, Mr. Andrew
Robertson, Angus
Robertson, Hugh
Robertson, Mr. Laurence
Robinson, rh Mr. Peter
Rowen, Paul
Ruffley, Mr. David
Russell, Bob
Sanders, Mr. Adrian
Scott, Mr. Lee
Selous, Andrew
Shepherd, Mr. Richard
Simmonds, Mark
Simpson, David
Simpson, Mr. Keith
Smith, Sir Robert
Soames, Mr. Nicholas
Spelman, Mrs. Caroline
Spicer, Sir Michael
Spink, Bob
Spring, Mr. Richard
Steen, Mr. Anthony
Streeter, Mr. Gary
Stunell, Andrew
Swayne, Mr. Desmond
Swinson, Jo
Swire, Mr. Hugo
Syms, Mr. Robert
Tapsell, Sir Peter
Teather, Sarah
Thurso, John
Tredinnick, David
Turner, Mr. Andrew
Vaizey, Mr. Edward
Vara, Mr. Shailesh
Villiers, Mrs. Theresa
Walker, Mr. Charles
Wallace, Mr. Ben
Waterson, Mr. Nigel
Watkinson, Angela
Webb, Steve
Whittingdale, Mr. John
Widdecombe, rh Miss Ann
Wiggin, Bill
Willetts, Mr. David
Williams, Hywel
Williams, Mark
Williams, Mr. Roger
Williams, Stephen
Willott, Jenny
Winterton, Ann
Winterton, Sir Nicholas
Wishart, Pete
Yeo, Mr. Tim
Young, rh Sir George
Younger-Ross, Richard
Tellers for the Ayes:
James Duddridge and
Jeremy Wright
NOES
Abbott, Ms Diane
Ainger, Nick
Ainsworth, rh Mr. Bob
Alexander, rh Mr. Douglas
Anderson, Mr. David
Anderson, Janet
Atkins, Charlotte
Austin, Mr. Ian
Austin, John
Baird, Vera
Balls, rh Ed
Banks, Gordon
Barlow, Ms Celia
Barron, rh Mr. Kevin
Battle, rh John
Beckett, rh Margaret
Begg, Miss Anne
Bell, Sir Stuart
Benn, rh Hilary
Benton, Mr. Joe
Betts, Mr. Clive
Blackman, Liz
Blackman-Woods, Dr. Roberta
Blears, rh Hazel
Blizzard, Mr. Bob
Blunkett, rh Mr. David
Borrow, Mr. David S.
Bradshaw, Mr. Ben
Brennan, Kevin
Brown, Lyn
Brown, rh Mr. Nicholas
Brown, Mr. Russell
Browne, rh Des
Bryant, Chris
Burden, Richard
Burgon, Colin
Burnham, rh Andy
Caborn, rh Mr. Richard
Cairns, David
Campbell, Mr. Alan
Campbell, Mr. Ronnie
Caton, Mr. Martin
Cawsey, Mr. Ian
Challen, Colin
Chapman, Ben
Clapham, Mr. Michael
Clark, Ms Katy
Clark, Paul
Clarke, rh Mr. Charles
Clarke, rh Mr. Tom
Clelland, Mr. David
Clwyd, rh Ann
Coaker, Mr. Vernon
Coffey, Ann
Cohen, Harry
Connarty, Michael
Cooper, Rosie
Cooper, rh Yvette
Corbyn, Jeremy
Cousins, Jim
Crausby, Mr. David
Cruddas, Jon
Cryer, Mrs. Ann
Cummings, John
Cunningham, Mr. Jim
Cunningham, Tony
Curtis-Thomas, Mrs. Claire
Darling, rh Mr. Alistair
David, Mr. Wayne
Davidson, Mr. Ian
Davies, Mr. Quentin
Dean, Mrs. Janet
Denham, rh Mr. John
Dhanda, Mr. Parmjit
Dobbin, Jim
Dobson, rh Frank
Donohoe, Mr. Brian H.
Doran, Mr. Frank
Dowd, Jim
Drew, Mr. David
Durkan, Mark
Eagle, Angela
Eagle, Maria
Ellman, Mrs. Louise
Etherington, Bill
Field, rh Mr. Frank
Fisher, Mark
Flello, Mr. Robert
Flint, rh Caroline
Flynn, Paul
Follett, Barbara
Foster, Mr. Michael (Worcester)
Foster, Michael Jabez (Hastings and Rye)
Francis, Dr. Hywel
Gapes, Mike
George, rh Mr. Bruce
Gibson, Dr. Ian
Gilroy, Linda
Goodman, Helen
Griffith, Nia
Grogan, Mr. John
Gwynne, Andrew
Hain, rh Mr. Peter
Hall, Mr. Mike
Hall, Patrick
Hamilton, Mr. David
Hamilton, Mr. Fabian
Harman, rh Ms Harriet
Harris, Mr. Tom
Havard, Mr. Dai
Healey, John
Henderson, Mr. Doug
Hepburn, Mr. Stephen
Heppell, Mr. John
Hesford, Stephen
Heyes, David
Hill, rh Keith
Hillier, Meg
Hodgson, Mrs. Sharon
Hoon, rh Mr. Geoffrey
Hope, Phil
Hopkins, Kelvin
Howarth, rh Mr. George
Howells, Dr. Kim
Hoyle, Mr. Lindsay
Hughes, rh Beverley
Humble, Mrs. Joan
Hutton, rh Mr. John
Iddon, Dr. Brian
Illsley, Mr. Eric
Ingram, rh Mr. Adam
Irranca-Davies, Huw
James, Mrs. Siân C.
Jenkins, Mr. Brian
Johnson, rh Alan
Jones, Helen
Jones, Mr. Kevan
Jones, Lynne
Jones, Mr. Martyn
Jowell, rh Tessa
Kaufman, rh Sir Gerald
Keeble, Ms Sally
Keeley, Barbara
Keen, Alan
Keen, Ann
Kelly, rh Ruth
Kemp, Mr. Fraser
Kennedy, rh Jane
Khan, Mr. Sadiq
Kidney, Mr. David
Kilfoyle, Mr. Peter
Knight, Jim
Kumar, Dr. Ashok
Ladyman, Dr. Stephen
Lammy, Mr. David
Laxton, Mr. Bob
Lazarowicz, Mark
Lepper, David
Levitt, Tom
Lewis, Mr. Ivan
Linton, Martin
Lloyd, Tony
Love, Mr. Andrew
Lucas, Ian
Mackinlay, Andrew
MacShane, rh Mr. Denis
Mactaggart, Fiona
Mahmood, Mr. Khalid
Malik, Mr. Shahid
Mallaber, Judy
Mann, John
Marris, Rob
Marsden, Mr. Gordon
Marshall, Mr. David
Marshall-Andrews, Mr. Robert
Martlew, Mr. Eric
McAvoy, rh Mr. Thomas
McCabe, Steve
McCafferty, Chris
McCarthy, Kerry
McCarthy-Fry, Sarah
McCartney, rh Mr. Ian
McDonagh, Siobhain
McDonnell, John
McFadden, Mr. Pat
McFall, rh John
McGovern, Mr. Jim
McGrady, Mr. Eddie
McGuire, Mrs. Anne
McIsaac, Shona
McKechin, Ann
McKenna, Rosemary
McNulty, rh Mr. Tony
Meacher, rh Mr. Michael
Meale, Mr. Alan
Michael, rh Alun
Miliband, rh David
Miliband, rh Edward
Miller, Andrew
Mitchell, Mr. Austin
Moffat, Anne
Moffatt, Laura
Mole, Chris
Moon, Mrs. Madeleine
Moran, Margaret
Morden, Jessica
Morgan, Julie
Mountford, Kali
Mudie, Mr. George
Mullin, Mr. Chris
Munn, Meg
Murphy, Mr. Denis
Murphy, Mr. Jim
Murphy, rh Mr. Paul
Naysmith, Dr. Doug
Norris, Dan
O'Brien, Mr. Mike
O'Hara, Mr. Edward
Olner, Mr. Bill
Osborne, Sandra
Owen, Albert
Palmer, Dr. Nick
Pearson, Ian
Plaskitt, Mr. James
Pound, Stephen
Prentice, Bridget
Prentice, Mr. Gordon
Primarolo, rh Dawn
Prosser, Gwyn
Purchase, Mr. Ken
Purnell, rh James
Rammell, Bill
Raynsford, rh Mr. Nick
Reed, Mr. Andy
Reed, Mr. Jamie
Reid, rh John
Riordan, Mrs. Linda
Robertson, John
Robinson, Mr. Geoffrey
Rooney, Mr. Terry
Roy, Mr. Frank
Ruane, Chris
Ruddock, Joan
Russell, Christine
Ryan, rh Joan
Salter, Martin
Sharma, Mr. Virendra
Shaw, Jonathan
Sheerman, Mr. Barry
Sheridan, Jim
Simon, Mr. Siôn
Skinner, Mr. Dennis
Slaughter, Mr. Andy
Smith, rh Mr. Andrew
Smith, Ms Angela C. (Sheffield, Hillsborough)
Smith, Angela E. (Basildon)
Smith, Geraldine
Smith, rh Jacqui
Smith, John
Snelgrove, Anne
Soulsby, Sir Peter
Southworth, Helen
Spellar, rh Mr. John
Starkey, Dr. Phyllis
Stewart, Ian
Stoate, Dr. Howard
Strang, rh Dr. Gavin
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Mr. Gerry
Taylor, Ms Dari
Taylor, David
Thomas, Mr. Gareth
Timms, rh Mr. Stephen
Tipping, Paddy
Todd, Mr. Mark
Trickett, Jon
Truswell, Mr. Paul
Turner, Dr. Desmond
Turner, Mr. Neil
Twigg, Derek
Vis, Dr. Rudi
Walley, Joan
Waltho, Lynda
Watson, Mr. Tom
Watts, Mr. Dave
Whitehead, Dr. Alan
Wicks, Malcolm
Williams, rh Mr. Alan
Williams, Mrs. Betty
Wills, Mr. Michael
Wilson, Phil
Winnick, Mr. David
Winterton, rh Ms Rosie
Woodward, rh Mr. Shaun
Woolas, Mr. Phil
Wright, David
Wright, Mr. Iain
Wyatt, Derek
Tellers for the Noes:
Ms Diana R. Johnson and
Alison Seabeck
Question accordingly negatived.
Mr. Michael Fallon (Sevenoaks): I beg to move amendment No. 1, in page 2, line 2, leave out “Treasury consider” and insert “Bank of England considers”.
This amendment is simple and does not require a lengthy explanation, but it is important and I alluded to it on Second Reading. The amendment proposes that the Bank of England rather than the Treasury should advise on whether there is a serious threat to the
stability of the UK financial system. The Bank has a detailed knowledge of that system and can better judge it from inside than some civil servants at one end of Whitehall.
By replacing the Treasury with the Bank of England in that key role, we would also remove the Chancellor and his Ministers from any perception that they were making a political judgment when they decided to intervene. There have been scurrilous accusations that Ministers’ intervention last September was perhaps designed to assist their friends in the north, or, indeed, to prepare the ground for a general election, which appeared imminent. It is essential to remove, as far as possible, any perception that the decision on whether systemic risk is present and how it is defined is being taken by Ministers.
The Treasury Committee gave this matter a lot of thought while looking into a special resolution procedure, and we recommended that the Bank’s deputy governor for financial stability should become the Chancellor’s principal adviser. Of course, the Chancellor has to take the final decision. He is the guardian of the taxpayer’s interests, and the amendment is not attempting to evade that fact, but we need to put that position at one remove from any suspicion of political judgment. The best people to advise on whether there is a serious, systemic threat to the stability of the UK financial system are those in the Bank of England.
Yvette Cooper: The powers in the Bill to transfer the shares or business of a deposit-taker are exercisable only for the purposes set out in the clause. The first of these purposes is to maintain the stability of the UK financial system in circumstances in which the Treasury considers that there would be a serious threat to its stability if the order were not made. It is right that the decision should be taken by Treasury Ministers, just as the decision to authorise exceptional financial support is a decision for the Chancellor, under the memorandum of understanding. Ministers are accountable for the exercise of these powers, so it is right that such a decision should be based on their assessment of the threat. They are accountable to the House for that decision. It would, of course, be based on the advice of the Bank of England and the FSA, as required by the memorandum of understanding. The memorandum of understanding is clear about that. That is what has happened for Northern Rock and it is what would happen in the future, should the powers in the Bill ever need to be exercised again. Given that, the amendment is unnecessary and inappropriate.
The Government are consulting on providing the Bank of England with a statutory basis for its role in financial stability under the banking reform Bill, which will be introduced later in the Session. That would be the appropriate vehicle for formalising the Bank of England’s role. We have made it clear that we think that there is a stronger role for the Bank of England to play, but it would be more appropriate to provide for that in the banking reform Bill, rather than in the Banking (Special Provisions) Bill, as the hon. Member for Sevenoaks (Mr. Fallon) has suggested. His amendment would result in our not being clear about the accountability for decision making and assessment, or about accountability to the House. On that basis, I ask the hon. Gentleman to withdraw his amendment.
Mr. Fallon: I am grateful to the Minister for the consideration that she has given to the amendment. I accept her point about accountability. Of course it is the Chancellor who is in charge and he must account to the House for his decisions to put taxpayers’ money at risk—or not, as the case may be. I am not quite clear about the Minister’s answer. First, she said that the amendment was unnecessary, then she said that under the new banking reform Bill she proposes to put the Bank of England’s role as the Chancellor’s principal adviser on a more statutory basis, so there might not be as much between us as I originally thought. I will certainly reflect on what she has said and, in the meantime, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr. Philip Hammond (Runnymede and Weybridge): I beg to move amendment No. 10, in page 2, line 40, leave out ‘year’ and insert ‘month’.
The amendment seeks to replace the provision in clause 2(8), which gives a limited period of one year for making an order under sections 3 and 6 of the legislation, with a provision for a limit of one month. I should say at the outset that this is not intended to be a wrecking amendment—far from it. We have already debated the overall principle of the Bill and we are now looking at its working realities.
The Bill was presented to the House as emergency legislation, designed specifically to deal with the problems of Northern Rock, and on that basis we are asked to expedite its passage. Whatever else we do, Sir Michael, I suggest that we cannot concede to this Government or to any Government—the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) made this point earlier—a standing power to nationalise banks and building societies. There are huge issues pertaining to our international reputation and about the propriety of a Bill going through the House according to a time scale that might be appropriate for dealing with an immediate—or what the Americans would call a “clear and present”—danger that needs to be addressed, but is certainly not appropriate for Bills with a longer period of application that might be used to deal with circumstances unforeseen and, perhaps at the present time, even unforeseeable.
Conservative Members feel strongly that if the Government find they have a need for such a Bill, as they have for Northern Rock, to deal with a specific problem in the immediate future, they should justify their need for further expedited legislation. In the fullness of time, we will have a properly debated, properly scrutinised and properly considered series of measures to reform the banking regulatory regime that the Prime Minister introduced in 1997, the failure of which is at the root of current problems that have given rise to the Bill that we are debating today.
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