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We have reached what is perhaps the most controversial part of the Bill. Against the backdrop of the current economic crisis, we may have a tendency to rush through the clauses on partial transfer. We are moving against all the rules of the market; the essence of the Bill is not to let the rules of the market apply but to intervene to stabilise the financial situation.
Many people can understand taking a whole bank and nationalising it. They can understand a whole bank being part of a fire sale to the private sector. We have seen that happen in the past and we understand the implications. A fire sale would mean that the shareholders would lose a lot of money, but the creditors would still be ranking in the business. Nationalisation would result in a huge loss to the shareholders but the liabilities would go across with the bank. Creditors who are not depositors will lose out significantly with partial transfer.
I am still struggling to understand how the Bradford & Bingley situation was managed. It would help if we hadeven if only for my benefitan idiots guide to the process that the Government went through. They did it in exceptional circumstances and seem to have pulled off something that is generally welcomed, but I am not sure what the outcome will be. In effect, we have two banks: the good bank and the bad bank. The good bank went off to Abbey Santander and the bad bank is left, but I do not know what it is worth.
Under the clauses that we have already debated the Government are allowed to send bad bits back to the rump bank. I do not know whether it is intended that in most cases the rump bank or the bad bank will then go into administration. I am not clear about whether the money from a partial sale to the private sector goes to the original shareholders or whether it is used to pay off creditors in a ranking order. I am not sure about any of these things. Because the detail is left to regulations, we are struggling.
This is probably the most important part of the whole Bill. We could proceed with the Bill and leave these clauses until a later stage when we have much more detail. The Conservatives want to get the Bill right. It is a measure that we hope no one ever has to use. We are dealing with concepts that are so strange and unusual that more time on these provisions would be most useful. We have already had to deal with default clauses, yet all the things that would normally happen under them are not in the Bill. It would help if the Minister could tell the Committee where we are with the only concrete partial sale that has occurredalbeit some time ago, in relative termsBradford & Bingley.
I am not arguing for the commercial details but for the general principlesthe way in which the sale happened, how it occurred, who will get what from where and the likely outcome. A concrete example for dealing with partial sales would help the Committee enormously. I take the point made by my hon. Friend the Member for South-West Hertfordshire: it would be hugely damaging if we got things wrong and there was a feeling in the global marketplace that it was best not to do business in Britain because if something went wrong the business would lose much more than if it were based elsewhere. We hope that the provisions are never enforcedof course, if we have a new Government they never will be enforced because everything will be milk and honey from then onbut I accept that we must look seriously at the possibility of that happening somewhere down the line, in 20 or 30 years. We do not want to lose 20 or 30 years of business because we got one part of the Bill wrong.