Banking (Special Provisions) Bill

Part of the debate – in the House of Lords at 1:00 pm on 21st February 2008.

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Photo of Lord Newby Lord Newby Spokesperson in the Lords, Treasury 1:00 pm, 21st February 2008

I hope that we now move into slightly calmer water than we did in our discussion of the previous amendments. There are three amendments in the group. Two of them are Liberal Democrat amendments, and I shall confine my remarks to those.

All the amendments deal with twin issues. The first is the nature of Northern Rock; what kind of bank are we talking about? The second is the ongoing role of Parliament in scrutinising Northern Rock's activities. I think all noble Lords accept that in nationalising Northern Rock we are to a certain extent buying a pig in a poke. We are buying it because we want a live pig, whatever its exact state of health, rather than a dead one, but we would like regular reports on how its health is progressing.

Our two amendments are slightly different in substance and deal with slightly different areas. The first is very straightforward, and deals with reports being made regularly to Parliament—we suggest quarterly—on how Northern Rock's business plans are getting on and on the amount of loans and guarantees that are still outstanding, so that Parliament and the taxpayer know exactly how much they are in for. The Minister will be pleased to know that I do not intend to discuss the affairs of Granite in great detail, but the debate on Northern Rock has been conducted largely on the basis that we are talking about £100 billion of assets, which the Government were guaranteeing, whereas in fact we are not in the slightest talking about £100 billion but about only £60 billion, although that is still a large number. We therefore need to know and have regular reports on exactly how much the taxpayer is still in for. That is the very straightforward substance of Amendment No. 3.

Amendment No. 5 deals with the character of Northern Rock. As we discussed yesterday, there are a number of options. One is the "carry on as you were" option, which would involve Northern Rock offering reckless products. I think there is agreement that this is not the way forward. The second option is the administration, or Lawson, option: to wind down the bank as quickly as possible. The third option—the Sandler option, and presumably the government option—is that the bank should continue to take deposits and issue mortgages and try to trade itself out of the slough in which it finds itself.

Amendment No. 5 seeks to narrow down the options in a way that would, we hope, give maximum assurance to the country by saying that the bank should be managed prudently and in such a way as to minimise the risks to the taxpayer. I should have thought that everyone could agree with that, and I very much hope that the Minister will feel able to do so. I beg to move.