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 de Mauley Lord de Mauley Shadow Minister, Cabinet Office 1:00 pm, 21st February 2008

I have listened with interest to the introduction by noble Lord, Lord Newby, of his amendments in the group, and I am pleased to note that we agree on so many of the points that I intended to make. My Amendment No. 6 seeks to ensure that what the Government have indicated is their intention will actually come to pass. We have heard from the Minister and the Chancellor in another place that directions to the management of Northern Rock will be broad brush, high level and strategic, as of course they should be. Unfortunately, good intentions are sometimes not enough to ensure good outcomes. We have already seen indications of the great pressure that will be put on the Government to use their power over Northern Rock for ends that cannot be considered acceptable for a bank that claims to be running "business as usual".

I am afraid that I am pessimistic about the Government's ability to resist a demand from, for example, UNITE—the biggest donor to the Labour Party—that there will be no compulsory redundancies among current Northern Rock employees, and about the pressures that will come in future as the Government are held responsible for the foreclosures and repossessions that are an unfortunate but unavoidable consequence of offering mortgages. The last thing any of us wants is redundancies or repossessions, but such are sometimes the inevitable result of decisions of an unfettered management doing its best for the shareholder—in this case, the taxpayer.

My amendment seeks to make more transparent exactly how the relationship between the Treasury and the board will be handled and what business strategy the bank will be expected to pursue. This would give us a clear benchmark against which we could hold the Government to account, should they be tempted to micromanage any of Northern Rock's day-to-day running in the future.