Banking (Special Provisions) Bill

My Lords, the whole House has the greatest sympathy for the Minister for the manifest embarrassment that the shambles of this Bill has landed him in. Nevertheless, I must say at the beginning that it is deplorable that the very important issue of Granite, which is an offshore securitisation vehicle that holds the better half of the Northern Rock assets and which is not part of the nationalisation process at all, has many complicated and questionable aspects. Although this was raised in another place in yesterday’s debate, so we should have been fully informed about it this morning—well in time for this debate—we did not receive the document until the debate had already begun and I have not had the opportunity to read it and study it fully. It is not acceptable. When he winds up, I hope that the Minister will be able to give the House a fuller statement of the position. I see that the Chancellor states in his letter: "““No new mortgage assets have been transferred to Granite since the Bank of England started providing ongoing financial support to Northern Rock””." That is not enough. We need an assurance that no further mortgage assets will be transferred to Granite henceforth and that that will not cause any legal complications for the process that we are debating. The best thing I can say about the Bill is that it is only the second worst solution to the problem with which the Government have been grappling. The worst would clearly have been to have given public subsidies, however hidden, to Mr Branson or any of the other bidders with whom they were flirting and whom they desperately wished to get to the altar. At least he has not done that. I speak with some experience. I think I am the only person taking part in this debate who has had experience, as Chancellor of the Exchequer, of dealing with a bank failure. That was the case of Johnson Matthey Bankers in 1984, which, I may say, was handled slightly better. Of course it was a simpler matter but it was of sufficient gravity for the Bank of England to consider that it posed a systemic threat, which is why something had to be done. After a few days of attempting to get a private sector rescue it was clear that a genuine private sector rescue was not possible and I authorised the Bank of England—the authorities, as we used to call it in those days—to take it over there and then. The Bank of England did so to run Johnson Matthey down in an orderly manner and to clear up the mess, which was satisfactorily done. One of the curious things was that the word ““nationalisation”” was never once voiced at that time: not in the House of Commons, not here, so far as I am aware, and not in the media. There were two reasons for that: first, it was all done so swiftly, and, secondly, there is a great distinction between the act of the state taking over a failed bank in order to run it down in an orderly way and the state running a continuing business pretending that it is a commercial business, in competition with genuine commercial businesses. That is the great distinction.