Banking (Special Provisions) Bill

The matters that I want to cover in my remarks follow very directly from the comments made by the hon. Members for Twickenham (Dr. Cable) and for Newcastle upon Tyne, Central (Jim Cousins). However, I draw a conclusion that is almost precisely the opposite of the one drawn by the latter: my central concern about the Bill, and the reason why I believe that Opposition Front-Bench Members are right to say that it must be resisted, is that after virtually six months of indecision about Northern Rock's future we are being offered a mechanism but no clarity about the objectives that it is being put in place to achieve. We are told that nationalisation will be merely a short-term phase, but we are given no clarity at all as to the objectives that management should follow in that supposedly brief phase, nor about the shape of a business that the Government hope ultimately to be able to move back into the private sector. The hon. Member for Twickenham touched on the fact that Northern Rock's new management have two alternative ways to discharge their responsibilities as a nationalised enterprise. In crude terms, he said that they had a build-up option or a realise-the-assets option. The hon. Gentleman said that he could see arguments for both, but I find it rather more difficult than he appears to do to understand the arguments in favour of continuing to develop the business model that clearly failed very dramatically in the events of last September. Let us examine the two options that he rightly identified, starting with the build-up option, if I may use that shorthand. In effect, the build-up option would involve using state support to back a business model that caused the bank to land up in the situation that it found itself in in September. The state would be used as a sort of turn-around venture capitalist, with Ron Sandler taking a business in trouble and making a success of the problem that he inherited. I am not a banker, and I would not try to second-guess bankers' views about the realism of that option, but neither would I seek to second-guess the results of what actually happened. Moreover, I do not think that the addition of the state in the role of venture capitalist does anything to make it more likely that the option would be more successful the second time around than it was the first.