Question again proposed, That the original words stand part of the Question .

I was talking about the impact on taxpayers of the Government loan of some £30 billion. That equates to a loan from every taxpayer in the country of £820. Again, that is only an assumption, which we can make because the Bank of England publishes its balance sheet. We have not had explicit information from the Treasury on the terms of the loan or the amount of money that it expects to loan—either up until now or in the future.

People have a right to know the extended terms of the loan. I ask the Minister to state explicitly the security. Is it based on the fixed or floating assets? If she can give a clearer answer than she did earlier, I shall be grateful. What can she do to ensure that people are reassured that the Government will seek full repayment of the loan as soon as possible and that a clear time frame will be set out? That information has been far from forthcoming and needs to be provided. Ultimately, if taxpayers are providing this money, they have a right to know that information.

Of course, it has been a tough time for shareholders, too. Many small shareholders benefited by becoming shareholders when Northern Rock demutualised in 1997, as has been mentioned, and they own about 25 per cent. of Northern Rock's shares. As always, there is a risk in trading stocks and shares. Financially, it is more— [ Interruption. ]

Order. Will hon. Members who have just come into the House please keep the conversation low?

The shareholders are also taxpayers. If the average shareholding for a small shareholder is about £600 and the average tax contribution is £800, they are still net out of pocket. Their anger should be directed at those people who were delivering the business model.

It is worth pointing out that the majority of shareholders are hedge fund traders, who do not invest in the long-term security. They invest in the short term, which does nothing to benefit the long-term viability of the bank. For many people, and potentially for the wider economy, there have already been significant consequences of the run on the bank. That raises two fundamental questions. Have lessons been learned, and could the Government have done anything better? There has been some acceptance of failure in the tripartite arrangements and in the regulatory framework. The Government sought to address some of that in the Queen's Speech.

However, there are key issues where the Government still deny that there has ever been a problem. We just need to look at the loan. The Government are not following the principles laid out in their legislation on credit and savings that mean that the terms of the loan need to be laid out clearly. There has been no public debate on the interest rate, on how punitive it is, on how it has changed and on how it compares with the inter-bank lending rate. There has been nothing on the security of the loan.

Another key area of failure has been the Government's delay in reaching an agreement on a private sale. The longer the debate goes on, the more public money is invested in Northern Rock and the less likely it becomes that there will be a viable takeover by a private organisation at the end of the process. Will the Government accept that they are undermining the viability of a private sale? Will they accept that they are in an incredibly weak negotiating position? Essentially, they are taking part in a poker game where they are showing their opponent the cards and playing with an unlimited number of chips provided by the taxpayer.

Every week that goes by, the crisis is costing the taxpayer more money, there is less chance of a proper recovery, and it becomes more probable that the bank will have to end up in public ownership. The position is unsustainable, and that is why we say that the Government must bite the bullet. The least worst option is to take Northern Rock into temporary public ownership, with a view to selling it off later. That would surely be better than the proposition—which the Conservatives seem to support—that the Government would write unlimited blank cheques merely to avoid the dogma involved in taking the bank into public ownership. In fact, the tales of Rolls-Royce or the public mortgage bank that was referred to earlier show that the Conservatives have a record on these matters.

Finally, why is the problem so urgent? All the options are on the table, but the Government must act quickly. If the bank has to be taken into public ownership, that has to happen quickly, perhaps over the recess, and that is why we suggest that enabling legislation should be brought forward now. Will the Minister who winds up the debate confirm that her officials have drafted that legislation, on the assumption that it will be needed sooner rather than later?

As my hon. Friend the Economic Secretary made clear at the start of the debate, Northern Rock faced specific difficulties earlier this year because of its reliance on securitisation and money markets for substantial amounts of funding. That funding then became more expensive and therefore more difficult to obtain.

In September, it became clear that Northern Rock was having severe difficulty, and it was left with no option but to turn to the Bank of England. The Chancellor, on the advice of the Governor of the Bank of England and the chairman of the Financial Services Authority, authorised the Bank of England to provide special liquidity support.

At the time, both the Leader of the Opposition and the shadow Chancellor supported the decision. Mr. Cameron was quoted by The Daily Telegraph on 16 September as saying:

"We support wholeheartedly the action that the Bank of England and the Financial Services Authority are taking to provide liquidity to Northern Rock."

On 20 September, Mr. Osborne told Channel 4:

"The guarantee put in place on Monday night was necessary, given the position we found ourselves in then."

It was the right decision to offer support to Northern Rock, but that support must be seen through. It cannot be right to support the action taken by the Government "wholeheartedly" because it is "necessary", but then run away from the consequences as soon as the going gets tough. That is what the Conservatives did, and it shows that they are not fit to form a Government.

Mr. Hoban opened for the Opposition in the debate, but he was very touchy about his proposal for mortgage regulation. As those of us who read its report will remember, the economic competitiveness policy group had just advocated the total deregulation of mortgages, which the Leader of the Opposition welcomed as "impressive", "successful" and "fantastic". However, that no longer appears to be Conservative policy.

Dr. Cable has shown that leadership appears to have gone to his head. He had a wonderful time with his speech: he described one of the private sector consortiums seeking to buy Northern Rock as "vulture investors", called the Governor of the Bank of England impertinent and said that Richard Branson was engaging but had a criminal record. He added that Northern Rock was bleeding to death, in a bid to frighten anyone interested in keeping their money in the bank or in helping us to provide a solution to what is an extremely difficult problem. I shall restrict myself to observing that, by saying as much, he is not helping.

The hon. Member for Twickenham said that there was a great deal of urgency about the need to tackle the problem, but then spent 40 minutes saying how urgent we had to be. We look forward to the new leader of the Liberal Democrats taking over next week, when we will be able to describe the hon. Gentleman as "Mr. Has-Bean".

I want to spend a bit of time explaining the principles behind our support for Northern Rock, which has given the bank the opportunity to consider its strategic options for the future. First, the Chancellor has made it clear that the interests of the taxpayer must be protected. I know that it is a matter of concern for hon. Members that substantial sums of money have been lent that must be repaid at an appropriate time and rate. The Government will consider all options with a view to reaching the best outcome for the taxpayer. Other things being equal, we shall view favourably proposals that minimise any residual Government involvement or funding from the public sector.

Secondly, we want to protect depositors. It is essential that we do everything we can both to safeguard their interests and to maintain the service provided to them. We shall view favourably any proposal that minimises disruption to the service provided to Northern Rock's customers. We expect proposals to include plans for communication with customers.

Thirdly, any proposal must maintain wider financial stability. We shall, therefore, assess proposals to ensure that they will result in a substantial long-term capital structure that meets the tripartite authority's stability and policy objectives, and that there is a viable medium-term business plan. As my hon. Friend the Economic Secretary said earlier, the Chancellor has told the House several times that any outcome must meet European Union state aid rules. Any proposal for Northern Rock's future must meet the principles I have just set out, and it would have to be approved by the Government.

I turn to the process of identifying a buyer— [ Interruption. ]

Order. There are far too many conversations in the Chamber. Members who have been here throughout the debate want to hear the Minister's response.

Thank you, Madam Deputy Speaker.

As Members know, Northern Rock has asked for expressions of interest in purchasing the business, and has announced that it is taking forward discussions with the Virgin consortium on an accelerated basis. Let me be clear, however: no options are being ruled in or out at this stage.

Mr. Dunne made great play of the supposed proposal to buy Northern Rock that was rejected in August. In fact, there was no firm proposal on the table but, as the chairman of the FSA said, there was an exploratory inquiry whether the Bank of England would be prepared lend an institution about £30 billion at commercial rates. Referring to the so-called offer, Sir Callum McCarthy told the Treasury Committee:

"I think it would be incorrect to regard the private sector solution as being a firm, cut and dried offer, it was still at an exploratory stage and there were a number of other issues which would have to be dealt with."

There was no offer for the bank in August.

Neither the Government nor the Bank would normally provide commercial lending of up to £30 billion for a going concern. Such a loan would be subject to approval by the European Commission.

The Liberal Democrats have suggested that we should nationalise the bank. As Treasury Ministers have made clear on a number of occasions, no option is being ruled in or out at this stage. However, I think all Members agree that a proposal from a private buyer that meets the principles we have set out would be the best option, and our preference is for the company to find a private buyer. When the hon. Member for Twickenham talks about nationalisation as a temporary solution, he must mean that we should try to find a private buyer. That is exactly what we are attempting to do.

I conclude by returning to the central issues of the debate: whether the Government should have provided support to Northern Rock, and how we should move forward from the current position. The alternative to the Government's authorising the Bank to provide support to Northern Rock was to allow the company to fail. I do not recall any Member of the House arguing for that option at the time, although now that the going has got tough some of them appear to be running away from the consequences of the guarantee they supported. The House should be assured that the Bank of England's lending is secured against assets held by Northern Rock, and that the FSA continues to say that Northern Rock's main asset base—its mortgage book—remains strong and secure.

It is of course in everyone's interests that the situation with regard to Northern Rock is resolved as soon as possible, but it is also essential that the public interest is protected and that any proposals for Northern Rock's future meet the principles that the Chancellor has set out: protecting the taxpayer, protecting depositors and maintaining wider financial stability.

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the original words stand part of the Question:—

The House divided: Ayes 60, Noes 304.

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—

The House divided: Ayes 290, Noes 222.

Question accordingly agreed to.

Mr. Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.

Resolved,

That this House endorses the approach taken by the Government to Northern Rock to maintain financial stability, protect the interests of taxpayers and safeguard the position of depositors; welcomes the publication of a statement of principles underpinning the Government's response to proposals received by Northern Rock with regard to its future; acknowledges that Northern Rock has announced that it is continuing to explore a range of options as part of its strategic review; recognises that the Government continues to keep all options open in relation to the future of Northern Rock; and notes the Chancellor's assurance that he will keep the House fully informed of further developments with regard to Northern Rock.