Northern Rock plc Transfer Order 2009

My Lords, I want to emphasise that the Government have acted entirely properly in regard to this order; they are giving the facts and making the sum involved clear as soon as they are able to do so. The problem with regard to the position before 1 January was obvious enough; namely, that it is not clear what the total figures will be on the commitment in these terms. After all, it will be recognised that there is a constant flow of assets both ways as regards the company. Consequently, the Government have to be in a position where they can give quite definitive figures. That could not be done in December. The noble Baroness will recognise the reasons for that. The Government have acted entirely properly and have made clear what the figures involve. The suggestion has also been made that the issue has been wrongly presented as far as being an order is concerned. I am of course aware of the Merits Committee’s anxieties—the noble Baroness identified some of them—and its concerns about the procedure adopted for the order. I want to address that point. The Banking (Special Provisions) Act 2008, in whose passage the noble Baroness participated and where we had rather more time for debate than we did on Northern Rock, provides that where a transfer order of this kind includes provision for determining the amount of any consideration payable by the transferee for the transferred property, the affirmative procedure applies. If that situation had obtained with Northern Rock, the Government would certainly have followed the normal form with an affirmative order. If part of the business of Northern Rock was being transferred to a third party purchaser who was paying the purchase price of that transfer, and it was necessary to provide a process by which that price was to be determined, which would of course have involved a valuer, the affirmative procedure would have applied. However, that was not the case here. The value of the assets and liabilities being transferred to the new company is matched. The new company is not paying any consideration or price for the assets and liabilities being transferred to it, which is why it was entirely proper to consider this under the negative procedure. I also highlight the obvious fact that the Joint Committee on Statutory Instruments has now considered the transfer order and did not consider it appropriate to draw it to the attention of the House, so I reject this issue of the procedures that the Treasury has been involved in and that the Treasury somehow had something to hide. It is clear that the Treasury has acted entirely appropriately, and we have the negative procedure because that was appropriate. However, there is the opportunity for a prayer to be heard against it, and we have the advantage of that in the noble Baroness’s prayer this evening. The noble Lord, Lord Newby, asked several important questions. I cannot at this stage give a timescale for when Northern Rock will emerge from its position into a situation where it can be ready for the market, but that is the Government’s objective. As the noble Lord, Lord Bates, indicated, we have trust in the management making good progress with putting the bank on a very secure basis. The noble Lord, Lord Newby, was anxious also about the order, and mentioned that it might have been laid just before the Recess to avoid parliamentary scrutiny. I hasten to tell him that the order was laid well within time—21 days elapsed before it came into force—so it was entirely proper in this instance; I hope that he will accept that. The noble Lord also asked whether there was any question of Bradford & Bingley and Northern Rock merging. That is certainly an option; the noble Lord would not have raised it if he did not think it a possibility. However, no decision has been taken either that it should happen, or regarding any possible timetable if the decision were that that was in the nation’s interest. The noble Baroness, Lady Noakes, asked about the creditors in the Northern Rock (Asset Management) position. Northern Rock (Asset Management) is going through an orderly wind-down, just like Bradford & Bingley, and all creditors will indeed be paid in full as and when liabilities mature. There is no question of creditors being sold short in those terms; nor would the Government be party to any position where that could possibly be so. I am conscious that I have spoken for a considerable period and that, given the plethora of questions that I have been asked, I have not answered every single one. However, I hope that the noble Baroness will give me credit in two respects. Process was one dimension of the Motion. The Government are confident that they have addressed process and information entirely appropriately. We are conducting with Northern Rock a restructuring which honours our initial undertakings when it was nationalised; namely, that we act properly and in the nation’s interest so far as the bank, its creditors, its depositors and those who hope in due course to borrow from it are concerned. We are acting entirely appropriately, as we were two years ago. We shall take the slings and arrows of somewhat outrageous criticism that come from opposition Benches, knowing full well that, when the two years have elapsed, following the degree of success which has attended the nationalising of Northern Rock, we shall see the prosperity also of the institutions.