Banking (Special Provisions) Bill

My Lords, that is exactly the point. I used to run around the corridors for my noble friend Lord Lawson in the 1980s, when we were dealing with banking matters. I am glad to have him putting me right on that point, but it is true that nobody had put forward a formal offer at that stage. There were strong indications of interest but no formal offers, and that of Lloyds TSB was no different. I do not know whether any of your Lordships have approached a crossroads where traffic jams are frequent and read that notice saying, ““Do not enter the box until your exit is clear””. Well, we are being asked to enter this box without an idea of where the exit is, let alone whether it is clear—or where it leads to. When I listen to Mr Sandler comment, at least as reported, that he wants Northern Rock to compete vigorously and that this is only a temporary arrangement, I wonder how that will happen if the bank is to be run in a sensible, responsible way while not falling foul of the competition restrictions. On competition, it has not been mentioned that there is now an inherent problem, because this is the one deposit taker that has a 100 per cent guarantee on its deposits. All other deposit takers—banks and building societies—are subject to the compensation scheme and its limitations. The starting point is thus unequal competition, which can only get more unequal. I have been trying to think what the new management at Northern Rock should do. The answer that I have come to is that it should do the opposite of what it has been doing for several years, because it has been wildly irresponsible on both sides of its balance sheet. In its lending, it had that frenetic binge in the first half of last year when, as has already been mentioned, it had 20 per cent of all new mortgage business in the marketplace. Such a huge increase in assets is a warning sign, which ought to have been picked up. The FSA was uncomfortable but did not reach a point much beyond that. Although I was once a board member of the FSA, I do not remember its having its eyes closed. If Northern Rock is going, in nationalised condition, to go hard at new mortgage business, it will increase the risks for the taxpayer—that is where it all comes back to. On the funding side, it is no good trying to rely on money markets and securitised debt. What is needed for a proper housing finance business is a natural pool of individual savers. My noble friend Lord Lawson will recall that, in our Building Societies Act 1986, we insisted that, in order to qualify as a building society, you had to have the bulk of your resources from individual depositors and not by running off to the money markets or by getting involved with some tortuous sorts of fancy paper. It will be very difficult to return Northern Rock to a saleable condition as a corporate entity in anything like its existing form. We will just have to see how that goes, but none of us should be under illusions that this is just a tidying-up job and then we can float it off and everyone will have forgotten about it. It will not be like that. We should avoid all the behaviour that led the company into such trouble. We really ought to have had a chance to examine these matters in much greater detail. When I listened to the noble Lord, Lord Goodhart, on the question of the negative and affirmative resolutions, I realised how little I know about all that. There are plenty of other points in the Bill with which we will have to try to deal in the very short time available. We are plunging into a risky, difficult and complex situation without knowing where we are going. That is not a course of action that I recommend to your Lordships.