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19 Feb 2008 : Column 284

Mr. Deputy Speaker: Order. It would be unfortunate if the debate were to become ragged at this hour, bearing in mind the seriousness of the issues under discussion, both in the course of the day and at this moment. I think that the hon. Member for Twickenham (Dr. Cable) put his finger on it when he said that there will be further debate before the legislation is finally approved by Parliament. [ Interruption. ] Order. If matters are still being raised at this stage, there will be further opportunities to discuss them. This is a matter of debate.

Dr. Cable: I apologise if I have contributed to the raggedness of the discussion, but important issues have been raised. However, perhaps I should reduce the temperature by moving on to other points.

Some very important amendments were tabled that, unfortunately, were not discussed today. I hope that they will be debated tomorrow and when we come back on Thursday. One of the more important amendments related to the Bill’s implications for competition policy, and I think that hon. Members of all parties acknowledge that potentially serious difficulties could arise as a result of the nature of Northern Rock’s ability to compete for deposits and mortgages, and in wholesale markets.

Although some mechanism must be established to manage that, it is equally clear that the regulatory body, the FSA, does not have the necessary powers. It is also clear that the Office of Fair Trading—the body that deals with competition policy—should be referred to explicitly in the Bill in order to resolve those specific questions.

The other important matter that we did not get around to discussing was new clause 2, which deals with freedom of information. One of the most appalling problems so far is that we have been unable to get access to basic information about how the Government and the Bank of England have operated hitherto. Information will be even more difficult to access now, because I understand that the new public company will be excluded from the freedom of information provisions.

Along with other hon. Members from all parties, I have been trying to find out how much the Government, via the Bank of England, have lent to Northern Rock. We have had to study the Bank of England’s weekly accounts, which are not entirely clear. I once asked for a meeting with the Governor to try and find out what was going on, and I was treated rather like an armed robber who wanted to inspect the gold in the vaults. It was impossible to get anywhere near asking the questions that I wanted to ask, but the problem is that information has become even more controlled and even less accessible. That is something that must be dealt with properly.

Those of us who have been trying to follow the saga properly know that information has not been coming from the Government but from the BBC business correspondent and from leaks from the various bidders against each other. That is how we have kept abreast of developments. The Government have been a closed book. There has been no access to information. That is why we need to build into the Bill provisions to create much more transparency than has existed so far.

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11.20 pm

Rob Marris: I support the Bill. I have to say that some right hon. and hon. Members have rather overlooked the fact that it does not deal just with Northern Rock. It has been prompted by Northern Rock, but it deals with the continuity and continuation of financial stability in the United Kingdom.

The aim of the Bill is to foster and maintain confidence in the economy and the financial services sector in the United Kingdom. Other countries—Germany, the United States, France and so on—are, of course, going through banking difficulties as well. In September, the Government were faced with a difficult decision against the backdrop of financial turmoil around the world stemming primarily but not only from the sub-prime market in America.

The Government took a bold decision about Northern Rock aimed at maintaining economic stability. By and large, I think that we can say ex post facto, five months later, that that decision was not only the right one but that we have maintained economic and financial stability. The FTSE went up this week, just after nationalisation of Northern Rock was announced. We have record bank profits. We have a thriving financial services sector, which of course is under pressure; not everything in that garden is rosy. It is under some pressure, but as the premier financial services sector in the world now, thanks to this Government, it is under less pressure. Part of the reason for that is what the Government did in respect of Northern Rock.

At every opportunity the Conservative party accuses any and every Minister of dithering and, boringly, it levelled that charge again tonight. Over the past five months, the Government have explored the options. They tried to see whether Northern Rock could be sold to some management buy-out, Virgin or whoever. They found that, in terms of protecting the taxpayer, that was a non-starter. But the Government were absolutely right to explore those options.

Had the Government not done so and announced in the middle to end of September that they were nationalising Northern Rock, I can only imagine the outcry from the official Opposition. They would have said, quite properly, “You are being hasty. You have not explored the options. You have not looked at whether it can be sold to another private banking institution.” So the Opposition are trying to have it, as ever, both ways. If we explore the options, they say that we are dithering. If we do not explore the options, they say, “You are being hasty and not exploring the options.”

Mr. Maples: The Government turned down the only decent offer that they received. Lloyds bank was prepared to buy it with a Government guarantee or loan, which was a quarter of what the Government now have on the table.

Rob Marris: My recollection of the Lloyds bank indication of interest was that it asked for a considerable amount of money from the Government, and that it kept going up. That showed that it would be difficult to sell Northern Rock, and it proved to be impossible.

Most hon. Members would agree that we cannot continue with Northern Rock as it is. It clearly could
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not continue with the business model that it had because it was a bankrupt model both metaphorically and almost literally.

The third option that the Government explored was that of trying to sell the bank. They found that they could not sell it, other than at a ridiculously low price. The option before us, which is enabled but not carried out by the Bill, is to nationalise Northern Rock. That seems the sensible option, because the only other one that is talked about—it is discussed in rather woolly, vague terms by the official Opposition—is putting Northern Rock into administration and winding it up.

In administration, the administrator tries to sell the business as a going concern, either wholly or in part. We know that the business cannot realistically be sold as a whole as a going concern, because the Government tried to do that for five months and could not. The alternative way of proceeding in administration, which the official Opposition are suggesting, is to wind down the business to shut it down. When they talk glibly about administration, they are not open about the fact that that, realistically, is the route that they would take. They say, “The administrator will carry on and do what he or she can.” He or she cannot sell it, ergo they will wind it down and eventually close it. Nationalisation, which is foreshadowed in the Bill, is a much better option.

Mr. Philip Hammond: I should like to challenge the hon. Gentleman’s logic. He says that, in administration, the administrator would not be able to sell the business, ergo he would have to wind it down. In nationalisation, when the Government cannot sell it, the Government will have to wind it down. Is that not the case?

Rob Marris: No, of course it is not the case. As ever, the hon. Gentleman is trying to have it both ways. People say that the process might take one, two or three years, but as the hon. Gentleman knows well, an administrator cannot take that length of time. Under nationalisation, there is more time.

On freedom of information, again the Opposition try to have it both ways. On the one hand, they propose amendment No. 14 on arm’s length management. On the other hand, when it comes to the arm’s length management provisions in the draft order that relate to the freedom of information powers, which of course do not apply to the private sector, they say, “Well, the bank is nationalised; it’s public sector, so the freedom of information powers should apply.” That contradicts what they have argued for in terms of arm’s length management; they are trying to have it both ways.

I understand the criticisms that have been made on the subject of the cost, but my understanding of the Bill as enabling legislation, and Northern Rock’s concrete situation, is that one cannot value Northern Rock until a valuation tribunal procedure is completed, pursuant to the powers in the Bill. Even the shadow Chancellor, the hon. Member for Tatton (Mr. Osborne), more or less conceded on Second Reading that the likely valuation of Northern Rock is nil. Of course taxpayers should know what the cost is, but it flies in the face of reality to demand that the Government today reveal the cost of the procedure and of buying out Northern Rock, as though they were sitting on a figure. The reality is that it
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is likely that the valuation will be close to nil, as the hon. Member for Tatton said, but we cannot tell until the valuation tribunal decides.

I say to my right hon. and hon. Friends on the Front Bench that the business framework agreement should be drawn up and revealed as soon as possible, not only because that is right for taxpayers, but to reassure staff and depositors—and, potentially, pensioners, who are the subject of an amendment of mine that was selected but that we did not discuss. Paragraph 6(3) of schedule 1 says:

I would like reassurance from the Government that there is no intention to modify the Northern Rock pension scheme in a way that adversely affects Northern Rock pensioners and prospective pensioners.

I conclude by urging the Government to hurry up with the consultation on tightening the regulation of banking in the United Kingdom, so far as they can. However, I do not want them to make haste, as some seem to want them to do, for the reasons that I gave. Those reasons relate to the Government taking time to explore what could be done with Northern Rock, after that decision was made to support it in September. The uncertainty about UK banking regulation changes, which is recognised by Members on both sides of the House, should not continue longer than is absolutely necessary. The need for changes to banking regulation was revealed by what happened with Northern Rock. I hope that proposals for such changes can be brought before Parliament, if not in the form of primary legislation, then in the form of an indication that the next Queen’s Speech will provide for legislation that will change the regulation of banking in the UK to make it even tighter and even more stable, and to prevent another Northern Rock.

Mr. Hammond: On a point of order, Mr. Deputy Speaker. It is clear from the debate that has taken place over the past 10 or 15 minutes that there are some important questions outstanding that have been put to the Chief Secretary. Can you confirm that it would be possible, with the leave of the House, for the Chief Secretary to speak again in the debate in order to clarify those points? If you so rule, I hope that those on the Treasury Bench will make that known to the Chief Secretary so that she can return to the Chamber.

Mr. Deputy Speaker: I have no power to compel the appearance of a Minister at the Dispatch Box, but it is always possible in the course of debate for a Front Bencher or a Back Bencher to seek to intervene in the proceedings. That opportunity is available and it may or may not arise, but I cannot predict whether it will.

11.30 pm

Mr. John Greenway (Ryedale) (Con): I am grateful for the opportunity to contribute to the Third Reading debate. I had hoped to say something on Second Reading, but Pensions Bill Standing Committee duties took precedence.

It is clear from much of the debate that I have heard that the Government’s case for the nationalisation of Northern Rock and for the Bill lies in tatters. It has been
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cruelly exposed, not least by the exchange about the assets in Granite. We can win debates and arguments in the House and lose votes. I shall concentrate on the prospect that despite the shortcomings of the Government’s position, by Friday Northern Rock will be in public ownership. What does that mean?

There are differences of principle across the Chamber among the region’s MPs, who include some of my best friends in this place. We have a difference of principle, but an agreement that Northern Rock is an extremely important financial institution in our region. We are all concerned about the jobs of the people who work for Northern Rock, particularly in the north-east. The fact that the Government have been unable to produce any kind of business plan at this point in the proceedings, after all this time, suggests that there may be some false hope about how many jobs may in the end be protected.

In her Second Reading speech, the Chief Secretary said that Northern Rock would grant mortgages in future under public ownership with less virility than it did under the previous board. One hopes that that is true, but it suggests that Northern Rock will be open for business for mortgages. The majority of jobs in Newcastle and Sunderland are in the processing of mortgage applications, so unless Northern Rock is open for business for new mortgages, there will be massive redundancies. That is a fact of life.

In addition, we are not clear where the money will come from to lend to new borrowers. Will it come from new deposits? If it does, what impact will that have on the deposit-taking market which, as I pointed out to the Chancellor in an intervention earlier, includes the sale of Government gilts? If that went on for any length of time, it could undermine the deposit-taking market as we know it in this country. I do not know whether that will be the case or not.

Without a business plan or any strategic idea about the direction in which Ron Sandler will take a publicly owned Northern Rock, we can have no view on the prospects for jobs of Northern Rock employees or the likely impact of the new publicly owned bank on competition in the banking sector, both in deposit-taking and in lending. The House ought to have been given a much clearer indication about those matters before we were asked to give the Bill a Third Reading tonight. It is disgraceful that that was not done. The lack of preparation has become clear even in the exchanges across the Chamber in this Third Reading debate. One suspects that in the two days during which the Bill will be debated in the other place, those positions will become even more cruelly exposed.

The one ray of hope concerns the people whom the Government have appointed to run the business. I know Mr. Ron Sandler very well; he headed up the Lloyd’s reconstruction and renewal project, which was supported by the all-party group on insurance and financial services. I chair that group, and the hon. Member for Newcastle upon Tyne, Central (Jim Cousins) is one of my officers. We supported the project in the teeth of opposition from some of my hon. Friends, who had lost money at Lloyd’s. Lloyd’s was a basket case at that time; the proceedings that Mr. Sandler instituted not only saved it, but recreated it as one of the greatest insurance institutions in the world. It remains so today.

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Mr. Dunne: I should like to endorse what my hon. Friend has said about Ron Sandler, whom I also know of old. As my hon. Friend has just outlined, Mr. Sandler’s experience is in wholesale money markets—not retail financial markets, which are precisely the business of Northern Rock.

Mr. Greenway: That is true, but one of the reasons why Mr. Sandler was successful in the Lloyd’s reconstruction and renewal project was that he had good people around him; I hope that he will have them in this case, too.

We can have an argument on a difference of principle, but whatever happens at the end of this week has to be a success. If it is not, taxpayers will lose and jobs will be lost. We can have our different views, but in the end we have to come together, in a sense, to ensure that the banking institutions and banking market remain stable, jobs are protected and there is no adverse effect on competition.

I end with one other point. Mrs. Ann Godbehere, the lady whom Mr. Sandler has appointed his chief executive, comes from Swiss Re, another insurance institution. I understand that her name is Dutch and means “God protect you”. I hope that that is true as far as the employees of Northern Rock are concerned, but it is the last thing that the Government and Ministers deserve, given the shambles that they have created and the shambles of the Bill that we are being asked to approve tonight.

11.37 pm

Mr. William Cash (Stone) (Con): My problem with the Bill is simple: it is a disgraceful, shambolic exercise that has been brought through all its stages in one afternoon and runs completely counter to a whole raft of principles by which we normally legislate in the House. I am thinking not only of the truncation of time, but of the principles that underpin any proper legislation.

In the first place, it is perfectly clear that the real reason for this so-called emergency legislation is, in part, to avoid the possibility of the Bill being declared hybrid. We will discover that in due course when the draft orders are examined. If any of them turn out to affect particular private interests in a way that designates classes and treats people within those classes differently, the Bill will be declared a hybrid instrument. We will then know that the Bill is nothing more or less than a con trick pushed through the House at short notice for the purpose of avoiding the difficulty that the Government would have in giving a fair hearing to the shareholders, who, under the hybrid procedure, would have the opportunity to have their case heard before a Committee of the House.

Connected with that first principle is the fact that, as part of the avoidance of the hybrid procedure, the one thing not mentioned in the Bill is Northern Rock, which has been mentioned only in the debates. The Bill itself does not mention Northern Rock at all, yet that is what we have spent the entire afternoon discussing. That is part of the con trick that is being perpetrated on the House by this deceitful legislation.

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