Banking (Special Provisions) Bill

I want to make some progress, as I have only a short time in which to speak. I shall be happy to take interventions later if there is enough time. I pay tribute to my right hon. Friend the Member for West Dunbartonshire (John McFall) for his thoughtful speech, and for the work that he and his Committee have done in examining not just the position of Northern Rock but the possibility of wider reforms in the banking system. That has fed into our broader programme and our consultation on future reforms. My hon. Friends the Members for Sedgefield (Phil Wilson), for Newcastle upon Tyne, North (Mr. Henderson) and for Newcastle upon Tyne, Central (Jim Cousins) drew attention to the importance of Northern Rock in their constituencies, and also to the fact that Northern Rock would not be running now had it not been for the Government's decisions. Several Members raised concerns about the scope of the Bill, which extends beyond Northern Rock. It was suggested that we could have simply followed the model for Rolls-Royce. The Rolls-Royce (Purchase) Act 1971 is, obviously, several decades old and precedes my memory, but its purpose was to vote money to purchase a company from a liquidator. The present circumstances are completely different. Northern Rock is not in liquidation, and we do not want it to go into liquidation. That is the point of the kind of intervention that we have already put in place and will continue to put in place for the future. Some Members seemed to be calling for a hybrid Bill. I do not consider that to be the right way to deal with the time pressures that we face, and the need to secure certainty for Northern Rock. The right hon. Member for Hitchin and Harpenden (Mr. Lilley), on the other hand, seemed to criticise the Bill for not covering all the wider issues connected with banking reform. We are deliberately not doing that in this Bill. We will do it as part of a consultation, and in a Bill that will deal much more broadly with the lessons we must learn and the action we must take in order to deal better in future with the kind of problems experienced by Northern Rock, which may include wider reforms. Hon. Members raised important questions about unfair competition. My right hon. Friend the Chancellor has already addressed many of them. In particular, the right hon. Member for Charnwood (Mr. Dorrell) expressed such concerns. It is important to ensure that there is no inappropriate unfair competition as a result of the arrangements that are introduced. The bank must and will be subject to European Union state aid restrictions and also to United Kingdom competition law, and Ron Sandler has already made it clear that he has no intention of running the bank in a way that would abuse its temporary public ownership position. I do not think that Ministers should be taking decisions on individual products—something for which some Members seemed to be calling. I do not think that that approach would be appropriate, but Northern Rock's business plan will need to be agreed with the Government. The overarching plan will need to be published and agreed in terms of the strategic aims that we have set for the management. They include removing all forms of public support for the bank, including Government guarantees, as soon as possible. A business plan built on abusing temporary public support would clearly not meet that strategic aim, as it would not be sustainable.