Northern Rock Crisis
Rock nationalisation moves a step closer
NORTHERN Rock was poised to became Britain's first state-run high street bank last night, but only after a bitter parliamentary battle over whether its books will be kept secret from taxpayers.
The Bill to nationalise the stricken lender was expected to win approval after the Commons overturned a series of defeats in the Lords that had - at one stage - threatened to force MPs and peers to sit through the night.
In the end, Tory and Liberal Democrat peers backed down after the Government verbally agreed to an independent audit of Northern Rock's books and to oversight by the Office of Fair Trading.
The audit was demanded over fears that the bank's controversial Jersey-based trust Granite will put the taxpayer at risk by sucking out the best mortgages - a claim ministers have firmly denied.
The Government stood firm on a third Lords amendment - a demand that Northern Rock be covered by Freedom of Information laws, to ensure, the Tories claimed, that its report and accounts will be open to public scrutiny.
Ministers branded the idea "clearly bonkers", citing commercial confidentiality, but appeared likely to get their way, as the peers signalled they would no longer hold up nationalisation - or "temporary public ownership", as the Government prefers to call it.
The Bill went through the Commons in a single sitting on Tuesday, but the defeats in the Lords had threatened to thwart Gordon Brown's pledge that temporary public ownership would be achieved this week.
Last night, Shadow Chancellor George Osborne said the Tories had secured "important retreats", adding: "Nationalisation is the worst option for Northern Rock, but at least our vigorous scrutiny makes a bad Bill slightly better."
The Government accused the opposition parties of "wrecking amendments" that had threatened to prevent taxpayers getting the best return when Northern Rock is returned to the private sector.
There was further cheer for the Government last night, when a poll found the public both backed nationalisation, by 49 to 40 per cent, and supported the under-fire Alistair Darling remaining as Chancellor, by 50 to 38 per cent.
The survey, for The Times newspaper, found that more people blamed the crisis on the Bank of England and Northern Rock's management, than pointed the finger at the Prime Minister and the Chancellor.
Royal Assent for the Banking (Special Provisions) Bill will close a chapter on a saga that triggered the first run on a British bank in more than a century, after Northern Rock sought an emergency loan from the Bank of England. In scenes sent around the world, savers queued for hours to withdraw their money.
Mr Brown has declined to say how long he expects Northern Rock to remain publicly-owned, but it is likely to be significantly beyond the next General Election, which will be held next year or in 2010.
6:02am Friday 22nd February 2008
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CommentPosted by: mally, darlo on 9:36am Fri 22 Feb 08
Where did this Granite outfit suddenly emerge from? As a taxpayer one of the biggest horrors for me is that we have to pay £50m in legal fees for legal advice aand even worse, remimburse the bidders for their fees. If I want a house, bid for it, have it surveyed, arrange a mortgage and get gazumped, I dont get my money back nor does any other unsuccessful bidder in a business deal. It's part of the realities of business life. The taxapyer is now paying for things which were never mentioned in any manifesto and for which the government has been given no mandate.
Where did this Granite outfit suddenly emerge from? As a taxpayer one of the biggest horrors for me is that we have to pay £50m in legal fees for legal advice aand even worse, remimburse the bidders for their fees. If I want a house, bid for it, have it surveyed, arrange a mortgage and get gazumped, I dont get my money back nor does any other unsuccessful bidder in a business deal. It's part of the realities of business life. The taxapyer is now paying for things which were never mentioned in any manifesto and for which the government has been given no mandate.
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