Banking (Special Provisions) Bill

My Lords, I declare an interest as a financial backer of the management team bid, which I do not disagree with the noble Lord, Lord Lawson, is the worst option. Prior to supporting the management team, I explored whether I, with a bunch of partners, would make an offer for Northern Rock, but it was apparent that the narrow timetable that the Government established would make that impossible, and the provision of information was so inadequate that many months of due diligence would be required. In supporting the management team—modestly, I would suggest—it was also apparent that it did not have access to the full extent of information required. Indeed, we had to pledge on the following basis. I quote from that pledge: "““We are willing to subscribe for units under the offering up to an aggregate value subject to our diligence of the stand-alone plan in due course””." In other words we were not going to get the plan until after we had committed. Lack of clarity on Granite also aptly demonstrates our problems in evaluating the plan. I am sure noble Lords will agree that any Government who are genuinely trying to sell something should adopt a different course of action and it is my view that nationalisation was the Government’s intention from the outset, but the combination of dither and spin were the feeble methods they used to draw out their decision. Further evidence of this is confirmed by the Government’s refusal to accept an offer of £2 a share plus a £10 billion government line of credit guarantee from Lloyds TSB. The Government told Lloyds TSB that they did not have the funds to guarantee support of a £10 billion line of credit. Noble Lords should please not get their noughts in the wrong place, because I estimate that the Government are now providing a £100 billion guarantee compared with the £10 billion they were initially asked to guarantee. How good does this Lloyds TSB offer look now as the Government are about to be on the receiving end of years of litigation from Northern Rock shareholders and even the European Commission? We are addressing a Bill to shut the gate after the horse has bolted. This Bill does not address the two major levels of regulation imposed by this Government on the finance industry that have been referred to: namely, the so-called Financial Services Authority—the thorn in the side of most businesses—which has failed, despite its endless imposition of form filling and so-called regulation, to see this £100 billion disaster coming, and the directors who, despite endless directives on the code of conduct of the role of directors, failed also to control or envisage this shambles. And, to boot, the so-called ““independent”” Bank of England decision-making was hijacked by the Chancellor and became neutered in this whole mess. This Bill predicts that this event will happen all over again. It permits the Government to act like this in the next 12 months because that is the latitude we are planning to give them. It takes building societies virtually outside the scope of parliamentary accountability or day-to-day running. And—surprise, surprise—the Government do not have to return to Parliament to use powers to resolve another event of this nature. Several questions remain unanswered. We need to know what steps have been taken by the FSA and the Treasury to investigate the books of similar companies and protect the taxpayer from a further event. We also need to know why this business was not put into administration and an orderly run-down implemented and why is it still allowed to provide finance against a flawed business model. For example, it remains the only bank prepared to offer 125 per cent mortgages. Incredible. Why is the bank run by a board whose members apparently have limited knowledge of the industry, but do have the significance of being trusted allies of the Prime Minister? What steps are being taken by the Government to re-establish our reputation as a competent and decisive financial industry?