Banking (S.I., 2008, No. 432)

I beg to move,"That an humble Address be presented to Her Majesty, praying that the Northern Rock plc Transfer Order 2008 (S.I., 2008, No. 432), dated 21st February 2008, a copy of which was laid before this House on 21st February, be annulled." The timely publication this morning of Northern Rock's business plan and accounts again calls into question the Government's decision to nationalise the bank. As one reads through the documents, the gamble that the Prime Minister and the Chancellor took by nationalising Northern Rock last month becomes clearer and clearer. Whether we get back all the money lent by the taxpayer depends on Ron Sandler's being able to turn around the business, shrink the mortgage book and rebuild the deposit base. Yet it has taken the Government since September to get us to this point and it took them five months to decide the future of Northern Rock—five months from when Northern Rock was offered emergency funding to the point of nationalisation and five months of uncertainty for its employees, customers and the business. Although the problems at Northern Rock were a consequence of the management's strategy, it is clear that the Government exacerbated the problem through their handling of the crisis. Just look at the way the Government handled the decision to provide Northern Rock with emergency funds. The announcement triggered a run on the bank, which could be stemmed only by a guarantee of retail deposits, but as the Treasury Select Committee made clear in its excellent report ““Run on the Rock””:"““The cumulative effect was... to make the run on the deposits of Northern Rock more prolonged, and more damaging to the health of the company, than might otherwise have been the case.””" It will therefore be harder for Ron Sandler and his team to rebuild the vital retail depositor base, which will play an important role in refinancing the business on more conventional lines and also in repaying the loans to the taxpayer.