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

We are debating the transfer order to take Northern Rock into temporary public ownership. I am disappointed that the hon. Member for Fareham (Mr. Hoban) and his party have chosen to pray against it. This morning, Northern Rock published its annual accounts for 2007 and a more detailed business plan. I shall refer to them in responding. We need to be clear about the purpose of the order. It will take Northern Rock into temporary public ownership in order to safeguard the financial stability of the banking system and the financial interests of the taxpayer. The Chancellor set out three objectives that have guided everything that we have done in relation to Northern Rock: maintaining financial stability; protecting consumers; and protecting the taxpayer. The decisions that we have made have shown how seriously we take the financial stability of the banking system. The Government are prepared to take strong action and make difficult decisions in order to safeguard that financial stability. Given the turbulence in the financial markets in the summer, the ongoing credit squeeze and the series of problems with Northern Rock's business model in the autumn, it is clear that without intervention Northern Rock would have gone down. That would have had serious risks not only for depositors and creditors but for the stability of the banking system. That would not have been in the public interest. That is why we took action and why it was right to do so. That is why we authorised the Bank of England to provide support and stepped in with the Government guarantee arrangements last autumn. That was supported by hon. Members from both sides of the House at the time. We have searched for alternative options, including private sector takeovers. In trying to ensure that we protect the taxpayer, we have made it clear that temporary public ownership is the best deal. That is in part because of the state of the market. The alternative deals were simply not good enough for the taxpayer.