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This is the right decision because it meets the principles set out by the Chancellor last year, ones

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that we have stuck to consistently ever since; namely, maintaining financial stability, protecting depositors and protecting the taxpayer. Of course we will go into detail tomorrow in Committee, but noble Lords opposite may rue the day when they were cavalier about the necessity for government action in this area and suggested that Northern Rock could readily have gone to the wall and that there would be no potential serious ramifications for the financial system.

On the other side, it is alleged that the Government were committed to this strategy because of their affection for northern England, where Northern Rock is located. Not so. Principle dictated the Government’s actions, not narrowly conceived political advantage, which has been ascribed to the Government by noble Lords opposite. In circumstances of widespread international financial turbulence, which has brought low a number of institutions elsewhere with severe losses, the danger was and to a certain extent is present that that turbulence can bring institutions great problems.

That is why the Bill deals with Northern Rock—it needs to deal with Northern Rock on the issue of principle—but it is also why the Bill is wider. It is why the Bill is required, after due consultation and the fullest possible parliamentary discussion about the legislation needed for the regulation of the banking system and the structures that we need in a rapidly changing environment. My noble friend Lord Eatwell spelt out exactly why we had to keep legislation up with the times in such rapidly changing financial and economic circumstances. It will take time to reach that position. As we have indicated, of course we are bent on legislation that will need the fullest consultation and consideration, but in the mean time we need defences against those forces that could last beyond Northern Rock and could provide real difficulties for the financial system. Other countries are facing those difficulties, which is why they are following a range of different strategies.

Lord Forsyth of Drumlean: My Lords, I apologise for interrupting the Minister, but was he implying that the powers in the Bill would be used for other institutions? I took that to be the meaning of what he said when he spoke of “forces” and “difficulties” and said that other institutions might be affected. I thought that it had been made clear that the Bill was for Northern Rock and for Northern Rock alone.

Lord Davies of Oldham: My Lords, we will act only with regard to Northern Rock under the legislation, as the noble Lord will recognise. The reason why the Bill has a sunset clause is that, although the powers need to be obtained by the Government against unforeseen eventualities, we will see those powers superseded by the proper and necessary banking regulation legislation that we intend to introduce later in the year. In the mean time, we need necessary defences against circumstances that none of us can foresee but that we all recognise as being troubled. It is merely wisdom on the part of the Government to use the occasion to take the necessary powers in the Bill, because otherwise we would be open to the charge—from the noble Lord, Lord Forsyth, primarily, and

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many of his colleagues—of allowing another eventuality to occur and we would be obliged to come to the House on the basis of rushed legislation and problems all around. In clear circumstances we should take the opportunity for the House to consider what is necessary in the relatively short term—the next 12 months—before we can get our fundamentally revised legislation in place.

Earl Ferrers: My Lords, I have been trying to follow this. I think what the Minister said in the end, in answer to my noble friend Lord Forsyth, is that the Bill is so constructed that the Government can take into public ownership other companies as well. Is that so?

Lord Davies of Oldham: My Lords, of course the clauses which are subject to the sunset provisions obtain over the next 12 months. They will not be activated because the Government do not foresee or expect that there will be any necessity for activation. Nevertheless, it is only right that the Government, in considering the problems of Northern Rock, should at the same time ensure that the legislation covers any eventuality in order that we look as judicious and as prudent as we are constantly enjoined to be from the other side.

A number of specific issues were raised in regard to the legislation, particularly by the noble Lord, Lord Goodhart, on behalf of the Delegated Powers and Regulatory Reform Committee. We take those issues seriously but, as I indicated in opening, we have not finalised our position on them at this point. But we shall be in Committee tomorrow, when we will deal with the real issues presented to us by the Delegated Powers Committee. I can assure the House that we take those matters seriously and will respond to them at the Committee stage tomorrow. Indeed, we shall be tabling amendments at that stage which address the issues.

I emphasise that at this point I am bound to be necessarily vague. If I were vague in the normal process of legislation, I would be open to being upbraided, but noble Lords will recognise that these preparations have been going on while I have been in attendance in the debate and, therefore, that I am not fully appraised of all the issues. But tomorrow we will be. I am not asking for the House to be in suspended animation for any great length of time because tomorrow we will address ourselves to the important issues raised by the Delegated Powers Committee.

The noble Lords, Lord Forsyth and Lord Naseby, raised the issue of freedom of information. It is very important that we provide Parliament with the requisite information for it to make a judgment with regard to the development of Northern Rock. In due course, the business plan for Northern Rock will be made explicit and public and there will be an opportunity for comment. But, on the question of freedom of information, I ask the House to consider

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that no other commercial bank is subject to requirements to make public sensitive information. The overall intention is to return Northern Rock to the private sector as soon as possible and it would be inappropriate to have such an entity subject to requirements to release commercially sensitive information. The Treasury is subject to the Freedom of Information Act as a government department and I have not the slightest doubt that noble Lords will ask relevant questions with regard to these issues.

There were a number of detailed questions which I know I will be obliged to respond to in Committee tomorrow, but perhaps I may address myself to one or two of them now. The noble Lord, Lord Lawson, first asked about the auditing of accounts. Ron Sandler and his team are reviewing the company’s finances. Audited accounts for the period to 31 December 2007 will be published in the next few weeks and I hope tomorrow in Committee to be able to give a specific date for that.

On the issue of instruction, the noble Lord, Lord Naseby, was certainly not alone in indicating certain practices of Northern Rock which have been, in the view of noble Lords, contributory to the troubles it is in. It is not our business to run this bank—we have put Ron Sandler in to run it at arm’s length from the Government. He is all too well aware that this is a bank in a unique circumstance and that the degree of public and parliamentary interest will be acute for the foreseeable future. He will have due responsibility in relation to such practices.

Today’s debate has been extremely useful in clearing the ground for the Committee and Report stages tomorrow. I have heard from the noble Lord, Lord De Mauley, how he intends to lead his party into tomorrow’s debate and the demands that will be made. We will seek to meet legitimate challenges as best we can and we will see if we can work towards an overall supportive position with regard to this legislation. The Government are clear that the legislation is needed in this country and that it is of the greatest significance. We wish to see it carried through with the maximum amount of consensus but we are aware of the demands that we make on the official Opposition and the Liberal Party of both Houses of Parliament—and, as far as this House is concerned, on Cross-Bench Peers—in introducing the legislation in such a short-term order. I very much appreciated the speech of the noble Lord, Lord Bilimoria, who helped to put all these issues in context. We are looking for consensus. The Liberal Party said it thought that this solution should have been arrived at some time ago and the Conservative Opposition of course have their reservations about certain parts of the legislation. However, the need for the legislation is quite explicit and recognised outside; I therefore hope that tomorrow we can discuss the detail constructively and see this Bill proceed.

On Question, Bill read a second time, and committed to a Committee of the Whole House.

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