Banking (Special Provisions) Bill

Amendment No. 3 moved by the noble Lord, Lord Newby, makes provision for there to be, "““a quarterly report setting out progress made in relation to a deposit-taker's business plan””." That is obviously a sensible proposal that I would happily support but I find it slightly difficult to understand why, given the emphasis of his remarks in moving that important amendment, he is happy to support the Bill when we have no business plan at the moment to look at. Therefore, Amendment No. 6 in the names of my noble friends Lord De Mauley and Lord Hunt is the key amendment in this group. It requires the provision of a proper business plan setting out how Northern Rock will be managed and its objectives. That is to be done before any order is made. It would have been courteous to the Committee to have had this business plan today. I understand that it will be made available to the European Union before 17 March. It would then have been much easier to form a view. On Amendment No. 5, I have my doubts. Those are not about the sentiments, for it is clearly sensible that an, "““order under this section shall … make provision for a deposit-taker to be managed by the Treasury in a prudent manner””." I would hardly expect it to be managed in an imprudent manner. Presumably, it will now, at least, be well and truly on the radar of the Financial Services Authority. I do not want to stray into Amendment No. 9, which is for a later stage of our consideration of these matters, but I wonder what Amendment No. 6 actually means if, as the management, you are told that you have to manage, "““in a prudent manner so as to minimise the risk to the taxpayer””." If I were the chief executive, I would take that provision to mean that I should go out and compete vigorously, making as much money as I possibly could, as that would, "““minimise the risk to the taxpayer””." That would also maximise the uncompetitive behaviour subsidised by the taxpayer from the point of view of Northern Rock’s competitors. With Amendment No. 5, then, we are trying to find a form of words to bridge an impossible gap. If the bank is to be run on a business as usual basis, as has been suggested by the chief executive, it will be impossible to achieve. It will not be business as usual, but a bank that is backed by a government guarantee and which has an advantaged position. In short, I support Amendment No. 3. I am not sure about Amendment No. 5, which is whistling in the dark. I am sure that Amendment No. 6, setting out the need for a proper business plan, is the most important amendment. I hope that your Lordships will have the opportunity for a proper debate, with proper time made available, when the order is made in your Lordships’ House and when we have that business plan to hand.