Banking (Special Provisions) Bill

I support my noble friend Lord Trimble. I say at this early stage in our proceedings that it is important to get the information that is required about Granite. I want to make two points on that. First, we have not yet had a reply from the Minister giving the assurance that I asked him for yesterday that no further assets would be transferred from Northern Rock to Granite. We need that assurance. The second point involves the nature of Granite. It is all very well to say that it is much bigger in relation to Northern Rock as a whole than are the similar vehicles for other lending institutions. However, that is not the only point. The Minister is to be taken to say, and government Ministers generally say, that these offshore structured investment vehicles happen all the time, but the precise contractual relations between the offshore vehicle and the lending institution vary in each case and they have a considerable bearing on the matter. We need to know, before we agree this Bill, precisely what the contractual relationship is in this case between Northern Rock and Granite. On the question of the month and the year, which ostensibly we are debating now, the noble Lord, Lord Eatwell, is quite right to say that the financial markets have changed both in character and in quantum but he is profoundly in error in saying that the problem now is that the scale is so large that the Bank of England does not have the resources. The Bank of England did not have the resources in my time. When an operation required greater funds than its resources permitted, it asked for a Treasury indemnity. So that argument does not hold water. As for the question about a year, I say to the noble Lord, Lord Desai, that we certainly want to put better arrangements in place because the present arrangements have failed, but even when better arrangements are in place there will still be the possibility of a bank collapse. You can try to make it less likely to occur by having better banking supervision. You can have a better deposit protection system in place—to some extent that need has been achieved—but there will always be the possibility of a bank collapse. That suggests that this Bill would have to be in perpetuity, not just for a year, so it really has no bearing on the year/month argument at all. I suspect that the real argument is that there is a fear that, if the period of time were too short, it would be so clear that the Bill was dealing only with Northern Rock that it would be hybrid—some people consider that this Bill is hybrid anyway. We need the Minister to give us a precise account of what advice the Government have received on the hybridity question.