Banking (Special Provisions) Bill

My Lords, I am taking steps to remedy the position with regard to the letter, I hope in very good time. I hope that the noble Earl will recognise that we have a fairly lengthy debate ahead of us. I am giving assurances that this debate and this Bill revolve around the institution, as far as the immediate issues are concerned, of Northern Rock, and Granite has no claim on its assets. We are dealing with Northern Rock and its assets—that is the issue of exposure to the taxpayer. Everything that we debate on this Bill will revolve around those issues. Other issues have been raised. Concern has been expressed that the Bill provides powers to deal not just with Northern Rock but with building societies, which, as noble Lords know, are subject to a very different legislative regime from that for banks. We are seeking powers in the Bill to modify building societies legislation to facilitate the giving of certain financial assistance by the Bank of England to building societies, just as the Government can for banks. Those provisions are in Clause 11. The Chancellor has been clear throughout that although we have no current plans to apply the Bill to other institutions, at present we lack the powers to act effectively if a building society were to run into difficulties. This clause represents sensible contingency planning. Another feature, which I indicated a few moments ago, is the report from the Delegated Powers Committee, whose reports are taken with justifiable seriousness by the House and the Government. It was only a short while before I came into the Chamber that I was able to read the report. It is an important committee; the House respects its work and its report is a serious one. It is critical in ensuring that powers to introduce laws through delegated powers, which generally do not get as much scrutiny in this House as other legislation, are appropriate. That is the work of the committee. I want to inform the House that I have read the report and that we believe that there is a case for being able to move quickly by making orders and regulations using the negative procedure—which is what we propose in the legislation. But we have just received the report and I give this undertaking—that we will consider the recommendations very carefully and, of course, act accordingly. A fourth issue about which concern has been expressed is that Northern Rock will be able to compete unfairly with other banks in the retail savings and banking market. Let me assure the House that this will not be so: we will not approve a business plan that would provide for unfair competition. The bank is, of course, in receipt of public support. As the House knows, that aid is subject to EU state aid restrictions. Clearly, interpretation of these laws is a matter for the European Commission, but I would be surprised if the Commission interpreted these rules in such a way as to allow a bank to expand its business aggressively on the back of public support. That is a clear, important and reasonable constraint on the business plan that Northern Rock will develop. As I have explained, we intend to submit a restructuring aid plan to the Commission shortly, which will need to reassure it that Northern Rock does not abuse its position.