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

I am very grateful to my right hon. Friend for reminding me of that. Indeed, the unsecured lending book is of the order of £7.7 billion as at the end of 2007 and the impairment charge was in excess of £200 million, much of which was secured against that portfolio. Hometrack, which provides one of the widest analyses of the housing market, published some statistics today confirming that we have entered the sixth month in a row of declining house prices. The increase in high-risk residential mortgages places a sharper focus on the Chancellor's confidence that the book will be good and that taxpayers' money will be secure. I wish I could share his confidence. In an earlier discussion of the possible consequences of administration, the Chief Secretary referred to its leading to fire sales of assets. Of course, we have been in a state of uncertainty over this company since mid-September, and the company has successfully sold a portfolio of assets—its commercial loans—for a premium over the book value at a time of considerable uncertainty for the company as a whole. That firmly demolishes the argument that an administration would have somehow made it more likely that losses would have been incurred on the sale of the loan portfolios. Good assets will sell for a good price in these circumstances irrespective, as has just been proven, of whether the company is in distress. That brings me on to my main point, which also comes out of a reading of the accounts. Much was made in earlier debates about Granite of whether or not the business plan will feed the beast. Enough has already been said about that this evening. However, Northern Rock established another financial vehicle, which has not been referred to in previous debates. I refer to the Saphir Finance vehicle, a special purpose vehicle, which issued £400 million in tier 1 notes; they were issued against the £400 million of preference shares issued by Northern Rock. The preference shares were provided as collateral to the holders of the notes issued by Saphir Finance. The preference shares in Northern Rock, given that they are preference shares, rank ahead of all the ordinary shares, including the ordinary shares to which the foundation trust shares will be converted through the transfer order. Oblique reference is made in the order to the preference shares, but I would ask the Chief Secretary, even in the few minutes remaining in our debate, to help us to determine whether in the compensation payments made to shareholders of Northern Rock, if there are any, the Government will observe the traditional capital ranking rights of securities and ensure that preference shareholders are paid out in preference to ordinary shareholders. I am not sure whether she is able to give us that assurance now. I am more than willing to give way to her—[Interruption.] She indicates that she is not in a position to do so, so perhaps she will be kind enough to write to me—[Interruption.] Once again, she is not indicating either way.