This is a simple and straightforward amendment, which calls for a take-on independent audit if I may put it that way, as at the date of Royal Assent—which I hope is today but might be tomorrow—of what the taxpayer has bought. When we buy any business, as the Labour Member Mark Todd pointed out—I heard his speech in the Commons the other night—we like to find out what we have bought. There are important reasons why there needs to be an independent audit by a firm of auditors which is not associated with the previous regime.
As I mentioned yesterday, quoting the distinguished banking analyst Sandy Chen at Panmure Gordon, there are serious concerns in the City about the last interim report—the audited report from Northern Rock as at
It would be a gross dereliction of duty if we did not insist on this because there could well be a very substantial claim for negligence against the auditors of Northern Rock, from which the taxpayer could obviously benefit substantially. That is why it is important. Perhaps the Minister could confirm that the year-end audit of Northern Rock as a public company up to
It is also important that this independent audit should look into and explain simply the position of Granite. Frankly, a lot of nonsense was spoken by the Treasury and the Minister to my noble friend Lord Newby and me last night. I want to ask a simple question. Northern Rock has something like £100 billion worth of assets, of which just under half, £45 billion, are in Granite, and we know that the assets in Granite are all high-quality secured mortgages because they have to be under the terms of the trustee. We are then left with £55 billion of which we know £8 billion is in unsecured loans, a lot of them the top slice of those pernicious "together" mortgages. If £8 billion out of the £55 billion left to the taxpayer is in unsecured loans, surely there is no way that the quality of the Granite portfolio can be similar to the quality of the rest of the Northern Rock portfolio. That is so obvious that I am surprised that the Treasury or anyone else tries to pretend otherwise.
Moreover, I remind noble Lords that £8 billion is five times the shareholders' funds in Northern Rock in the last published accounts. So we will want to see from the independent auditor a full and frank explanation of exactly how Granite works, the economic and commercial reality of the relationship, not these weasel words, this legal fiction. We need a proper setting-out of the contracts between Northern Rock and Granite, realistic scenarios on how fast the mortgage book runs down, as well as, frankly, the prospect of various rates of house prices falling, which is the realistic assessment of the City and is mine too. That should form part of an independent audit.
Those points are pretty clear and I would be amazed and surprised if the Minister could give any reason why we should not protect the taxpayer's investment in this way. I beg to move.