Banking (Special Provisions) Bill

At the end of this debate, perhaps we could take a few moments to remind ourselves why we are here. We are here because of a failure of the banking regulation system that the Prime Minister introduced in 1997 to notice a bank with what the Chancellor has subsequently described as a ““fundamentally unsound”” business model expanding its market share to become the provider of one in five of Britain's new mortgages; because of a dithering by the Government when they were presented with an opportunity to explore a private sector solution before the crisis broke in September; because of incompetence in handling the crisis between Thursday 13 September and Monday 17 September 2007, when the Government finally put guarantees in place, which stopped the run on the bank; and because of the rejection of what we now know was very expensive advice, telling the Government to act quickly and decisively in the days and weeks after 17 September. At the end of that catalogue of mishandling, we have finally arrived at a Government decision—nationalisation, the solution that they have sought to avoid for five months, and with good reason. Nationalisation does not achieve anything that could not be achieved outside public ownership. It does not in itself provide a solution to the problems of Northern Rock's flawed business model, as my right hon. Friend the Member for Charnwood (Mr. Dorrell) pointed out in his contribution. Nationalisation also comes with clear downside risks—risk to the reputation of the UK's already battered reputation as an international financial centre; risk in extending the taxpayer's liability to include instantly full responsibility for every penny of Northern Rock's balance sheet; and the risk of political interference. We have heard plenty of warm words from the Chancellor about the arm's length management that Northern Rock will have. Forgive me for being a little cynical, Madam Deputy Speaker, but Conservative Members have seen nothing in our Prime Minister to lead us to believe he does ““arm's length””. I would have said that he was more a ““fingertip”” man, myself, and we have already seen the evidence with the appointment of his former chief of staff to the board of Northern Rock. I think that the hon. Member for Newcastle upon Tyne, Central (Jim Cousins) tonight unwittingly provided in the starkest possible terms a perspective on the kind of political pressure that the Chancellor will be under with regard to Northern Rock; he has conceded that the period of public ownership will not be temporary at all, but may last for many, many years. As my hon. Friend the shadow Chancellor has pointed out, we are being asked to buy a pig in a poke. That was a new phrase when I wrote it down, but two people have used it in the last 10 minutes. We do not know the price that we, the taxpayers, will pay for this business. We do not know exactly what the assets and liabilities of the business are and we do not know how long the commitment will be made for, although we note the discrepancy between the Chancellor's ““temporary”” period and Ron Sandler's ““some years””. We do not know what they plan to do with the business—not even whether the plan is to double or halve it in size. We are being asked to buy an unqualified liability for an unspecified price over an as yet undefined time period and for a completely undetermined purpose—and we will not find answers by looking in the Bill, because none of those issues is addressed by it and none of the Chancellor's warm reassurances is enshrined in it. The meat is in the order, and the order is unamendable, so let me try one more time to tempt the Chief Secretary to give us a commitment when she replies to provide at least one full day's debate on the Floor of the House to debate those orders when they are laid. None of the assurances on arm's length control or on competition are meaningful when even today 125 per cent. mortgages and best-in-class deposit rates are still available from Northern Rock. What little we do know is not very promising. We know that we are buying a bank that wrote more mortgages at the top of the market than any other and that it is now repossessing more homes than any other. We know that the Prime Minister appointed his former chief of staff to the board and we know that the Government have spent nearly £100 million on advice, most of which they have clearly ignored. We know that the Government have appointed an executive chairman and a chief financial officer, both of whom, according to the BBC's website this afternoon, are non-domiciled for tax purposes and will between them be paid £160,000 a month. I wonder how the champions of the people's bank below the Gangway feel about that. This afternoon, Downing street could not even confirm that those payments would be made onshore in the UK—and that, Madam Deputy Speaker, is just week one of the Northern Rock in public ownership saga. We will now have to try to amend this flawed Bill to give legislative muscle to the commitments that we heard the Chancellor give yesterday and today, but the situation is worse than that. Looking at the draft order, it is clear that the Government want to exempt Northern Rock from the freedom of information obligations of a publicly owned company. They want to allow Ministers and civil servants to act as shadow directors, but not to be liable to the risks and penalties that shadow directors face. Indeed, they want to exempt all directors of Northern Rock from any legal action whatsoever, putting them in a unique position. So we will have to seek not only to enshrine the shadow Chancellor's warm words in primary legislation, but to amend the primary legislation to prevent these extraordinary measures from being slipped through in unamendable orders.