Banking (Special Provisions) Bill

No, I will not; I must complete my remarks. So is it inevitable? No, it is not. There is a better way. Indeed, the Government have hinted at it in their own consultation document on the future of the banking regulatory system. They call it a special resolution regime. However, Conservative Members, contrary to the Chancellor's repeated assertions, have been entirely consistent in our opposition to nationalisation and in our support for a private sector solution, if it were possible to find one—although it is increasingly obvious that the Government should have concluded some time ago that it would not be. Before the Chancellor came out with his consultation document, we had proposed a regime of Bank of England-led protective administration—this was not dissimilar to the proposals in his consultation paper—to allow the resolution of a major business failure in a single banking institution. I ask the Chief Secretary this question: if the Chancellor's plans and proposals are good enough for a future failed bank, why are they not good enough for Northern Rock today? We could have used this legislative opportunity to pass an emergency amendment to the Enterprise Act 2002 to create a special protective administration regime for banks in difficulty—a regime that would allow the Bank of England to oversee a reconstruction of a bank first and foremost in the interests of maintaining the stability of the UK financial system, and then in accordance with the priorities laid down in the Insolvency Act 1986. The Chancellor and the Prime Minister have been fond of repeating that any kind of administration or bank-led reconstruction would amount to a fire sale of assets, but the website of the Government Insolvency Service makes it absolutely clear that the first duty of an administrator is to try to salvage the business as a going concern and rescue it so that it can emerge from administration. If that is not possible, getting the best possible deal for creditors is important. In the case of Northern Rock, although the Chancellor, with his facile ““business as usual”” slogan, cannot bear to bring himself to say it, that almost certainly means a reduction in the size and scale of the business and an orderly realisation of some of the mortgage book in order to deliver a business based on a different and sounder business model—a financeable business model which may be capable of being made viable for the future and, ultimately, saleable back to the private sector. Despite the five months that the Government have had to prepare for this moment, they have no answers to any of the important questions. Nationalisation is a mechanism—the wrong one, in our view—not a solution. This kind of non-specific and enduring nationalisation power is the worst of all outcomes, tarnishing Britain's reputation as a financial centre for the year of its lifetime. Perhaps this debate is best ended with the words of the hon. Member for Newcastle upon Tyne, Central, who may well be vindicated by history in his prediction a few days ago that nationalisation would deliver"““a slow lingering death for the jobs of the Northern Rock workers, its assets and Britain's reputation as a major financial services centre””.—[Official Report, 19 November 2007; Vol. 467, c. 968.]" I urge my right hon. and hon. Friends to deny the Bill a Second Reading.