Banking (Special Provisions) Bill

My Lords, I am glad to see that the noble Lord is not taking us that far back, but he did emphasise that the Government are bent on nationalisation without the obvious caveat that this is a position we have reached after making every effort to find a solution in the private sector. This is the right decision because it meets the principles set out by the Chancellor last year, ones that we have stuck to consistently ever since; namely, maintaining financial stability, protecting depositors and protecting the taxpayer. Of course we will go into detail tomorrow in Committee, but noble Lords opposite may rue the day when they were cavalier about the necessity for government action in this area and suggested that Northern Rock could readily have gone to the wall and that there would be no potential serious ramifications for the financial system. On the other side, it is alleged that the Government were committed to this strategy because of their affection for northern England, where Northern Rock is located. Not so. Principle dictated the Government’s actions, not narrowly conceived political advantage, which has been ascribed to the Government by noble Lords opposite. In circumstances of widespread international financial turbulence, which has brought low a number of institutions elsewhere with severe losses, the danger was and to a certain extent is present that that turbulence can bring institutions great problems. That is why the Bill deals with Northern Rock—it needs to deal with Northern Rock on the issue of principle—but it is also why the Bill is wider. It is why the Bill is required, after due consultation and the fullest possible parliamentary discussion about the legislation needed for the regulation of the banking system and the structures that we need in a rapidly changing environment. My noble friend Lord Eatwell spelt out exactly why we had to keep legislation up with the times in such rapidly changing financial and economic circumstances. It will take time to reach that position. As we have indicated, of course we are bent on legislation that will need the fullest consultation and consideration, but in the mean time we need defences against those forces that could last beyond Northern Rock and could provide real difficulties for the financial system. Other countries are facing those difficulties, which is why they are following a range of different strategies.