Northern Rock plc Transfer Order 2009

My Lords, I congratulate the noble Baroness on raising this issue and on having penetrated the depths of the Treasury website and read and understood the voluminous documents there. There is sometimes a view in Government that simply putting something on a website is informing the world about it. Unless one has the tenacity and the forensic skills of the noble Baroness, the fact that those documents are on the Treasury website is of very little relevance to most people because they simply have neither the time nor the facility to spend the effort, which she has clearly spent, in making sense of them. Like her, we do not necessarily object to the principles under which the Government are operating. They are clearly trying to get a return from their investment in Northern Rock. Splitting it into a good bank and a bad bank is a perfectly reasonable way of doing it. However, as the noble Baroness said, it is unacceptable that the Government injected £5.5 billion, which, until 18 months ago, was a reasonable amount of money, into Northern Rock in such a way that, but for her interest, I doubt whether anyone would know that it had happened. Unless I am mistaken and I have not read every newspaper assiduously in the past 48 hours, the fact that £5.5 billion has been injected into the two Northern Rock banks has hardly been reported. Through negligence, or simply because of the methods that have been used, this huge further commitment of government funds has happened without notice or comment. The noble Baroness reminded us of the passage in the Banking (Special Provisions) Act under which Northern Rock was nationalised. She said that there was very little time for scrutiny, and I was very surprised that the Minister shook his head slightly as she said that. My recollection is that the whole scrutiny process in Committee took place in one long and intensive parliamentary day. There certainly was not a chance to go into huge detail. There simply was not time to have thought through the issue that the noble Baroness raised. However, where I think she is wrong—although I may be underestimating them—is in the way that Sections 8 and 13 combined operate. To the extent that they were thought through by the Treasury, it almost certainly did not consider that 18 months later they could be to put together enabling something to be slipped through under the negative resolution procedure. My recollection is that that was not the air in which the Bill was brought forward and certainly was not the air in which it was considered. It was a panic measure. In our view, the Government waited far too long before nationalising Northern Rock, and when they did, they had to do it in a greater rush than would otherwise have been the case. Somewhat typical of the way the Government are treating this business is their plan that, when the instrument is modified, it will appear on the website of the bank and in two newspapers. As we know, depending on the newspapers and when you put something in them, it creates public interest or does not. The fact that this order was laid just before Christmas, within a few days of the House rising for the Christmas Recess, is an example of how timing really matters in terms of the extent to which there is public understanding of what the Government are up to. The Merits Committee is again to be congratulated on pointing out the issues raised by this instrument. One area where I cannot agree with the committee is in its suggestion, in raising the interests of the shareholders, that just because some shareholders are still dissatisfied, that is at all relevant. The truth is that from the moment the Bill became an Act, because of the phraseology of the Act and the subsequent secondary legislation, it was clear that the shareholders were not going to get a penny. My concern is that the procedure that was followed—having valuations theoretically done—merely gave false hope to shareholders who were never going to get a penny. I am afraid nothing can be done about that. The issue that interests me, which is raised only obliquely by this order, is what happens next. For example, is it the case, as was reported at the weekend, that the Government intend to merge the bad bank remainder of Bradford & Bingley with the bad bank of Northern Rock to make a very bad bank? If so, what is the timetable and strategy behind that? Secondly, in terms of the new good bank, the Government say they intend to start seeking a private sector purchaser. Can the Minister say something about the timetable that he has in mind? Our concern about seeking private sector purchasers has been that, partly in order to maximise their short-term revenue, the Government would, if not effect a fire sale of that part of the bank, do it on a shorter timescale than would maximise the return to the taxpayer. We would be most grateful if the Minister could give us some indication of what the Government’s plans are for the good bank as well as the bad.