Under this government you don’t get much for £1 billion these days. You can soon blow a £100 million on fees for advice on a financial matter, and can get through many times that on a centralised computer contract or good pay rises all round for public sector workers. I expect the political classes will soon be looking for a new unit to make it sound more reasonable.

So I have come up with a modest proposal. Why not account in “rocks”. We can’t be quite sure how much a rock is, but it is probably around £110 billion. It breaks down into 2 Granites, a smaller unit of account which works well offshore.

Recasting public spending, the total spend comes out at around 5 rocks. The Health Service is a snip at just 1 rock, whilst you can have all the armed services for a year for well under a granite and keep them mainly working offshore.

Total stated public debt is only 5 rocks. Even adding in unfunded pension liabilities, borrowings by a nationalised bank and railway, PFI and PPP you still come up with a very easy sounding 12 rocks of total public sector liabilities.

This could well catch on, and make it easier for the government to carry on spending as if we had all the money in the world.

(Based on a speech given to a dinner in the Great Room of the Grosvenor House Hotel on Tuesday night of this week)

There is a big gap between what the public (and press) think about MPs’ pay and expenses, and what many MPs think. A lot of constituents think £60,000 is a good salary, and are concerned about some of the claims MPs have put in under the second homes allowance and travel budgets. Some in the press and public think the second home allowance is wrong in principle. A lot of MPs think they are paid relatively little compared to similar people in the public and private sectors, and point to long hours, the being constantly on call, and the strong accountability which having to argue your case to keep your job every four or five years naturally generates.

So let me tell you the trade union case for the MPs, so you can get angry and tell me how the pay and the expenses of all MPs needs to be cut down to a smaller size.

During a Parliamentary week an MP’s day might begin with a working breakfast, followed by a morning of emails and letters. The MP might attend the chamber for questions and debate in the afternoon, might attend committees and other meetings in the early evening, have a working dinner in the House, and be allowed home after 10.15 pm and a vote on a Monday and Tuesday. So the week may start with two 14 hour working days. On Wednesday the Parliamentary day usually finishes around 7.15pm, but there might be evening dinners or meetings to attend. On Thursday proceedings end at 6.000pm ,allowing many to travel back to the constituency on the Thursday evening to be in situ for morning meetings on the Friday. Any hard working MP would regard a 40 or 45 hour Parliamentary week as a rare pleasure, and some claim to work 70 hours. Sensible MPs do not regard Saturdays and Sundays as days off as a matter of course, as there are civic services, party events and community events to attend. So, some MPs say, on the basis of hours worked and commitment they deserve a decent salary.

The system both expects that in a Parliamentary week an MP will work more than the usual 40 hour week, and that it is possible for many MPs to do a second job as well. About 100 MPs have second jobs as Ministers. They are paid extra, and have to fit in Ministerial meetings, running the civil service office, Ministerial visits and the other extra features of Ministerial life. Other MPs have second jobs as Chairmen of Select Committees, or of other committees of the House, for which they are also paid an extra salary. Fitting in the Ministerial job is of course much easier during the weeks when Parliament is not in session.

MPs point out that they do have a job which requires regular attendances both in the constituency and in Westminster. For some it is simply impossible for them to travel daily to and from Westminster. For others it could be done but it would mean two to four hours travel taking away time from doing the job itself, and might become impossible on nights when the House sits later than 10 pm to do the journey by public transport.

There have been several attempts to get away from the position where MPs have to settle their own pay. External experts have decided who is most comparable to MPs, and have proposed linking MPs pay to these external references. It used to be a senior grade in the civil service. That grade then became too well paid for the political reality, so a group of comparators from public and private sectors was chosen. They too are now paid much more than MPs. Some MPs think they should be assessed like a GP, or a senior executive of a principal Council, or the Head of a large school – the sort of people they have regular dealings with. That would mean a large pay increase, which is the last thing the public thinks appropriate.

Mps also have to perform a private unpaid role as senior politicians. We cannot claim any of the allowances for our work in elections, or in support of other candidates. Anything we wish to write and send that has political content has to be paid for from party sources. Any travel we undertake in our political capacity we pay for ourselves or seek party assistance.

All MPs (including me) think it bizarre that we are said to claim a six figure sum in “expenses” when the largest item is staff salaries to pay for secretaries and case workers necessary to carry out our proper duties. I know of no other group of senior employees who are thought to benefit personally from the salaries of their staff.

Reform is in the air, but MPs are very boxed in. As one who understands only too well how the public feel about the current arrangements for pay and expenses, I realise there needs to be more accountability, and MPs have to take only those expenses which they can fully justify as essential to carrying out their functions well. Some MPs think the housing allowance should be abolished and pay increased to reflect that. There is never a good time to hike MP’s pay, but this is clearly a very bad time when everyone else is accepting low rises (as MPs have just done) and are feeling under great pressure. Some MPs think that lowering the level of expense that requires a receipt combined with more audit will be sufficient. This does not tackle the sense by many that the legal allowances are too generously defined in some cases.

I would be interested to know what you think about a) What is the correct rate of pay for an MP and b) what items should an MP be able to claim on expenses? Do you think it reasonable that MPs should be assisted with second home costs, given the two centre nature of the job?

I think there are too many MPs and there is too big a support bureaucracy. I would economise over time by dealing with that.

it was good to see so many people turn up to lobby MPs for a referendum on the Lisbon Treaty. They did so peacefully and patiently, in best UK democratic style. None of them went on to the roof. I hope all the MPs who still plan to break their word on such a referendum will now feel even guiltier about doing so.

Today we hear that Network Rail faces a large fine from the Rail Regulator for its failure to complete the engineering works to its network on time over Christmas and the New Year period. A few days ago we heard that Ofgem had fined national Grid £41.6 million for its behaviour towards pre payment meter consumers. These are presented as good news stories, designed by the government and its regulatory quangos to prove they feel our pain and are standing up for us, the overcharged and under-served long suffering public.

We should ask is this approach makes any kind of sense? Making large companies – one a monopoly and one a former nationalised monopoly – pay large fines does not help the customers for the past problems. All those who have had to pay a lot for their gas, and all those who had their travel disrupted by Network Rail a couple of months ago, will draw no immediate benefit or relief from knowing these two companies have been fined. In the case of Network Rail the position is worse. Much of the money they spend comes from the taxpayer, so ultimately any large fine imposed on them will come from the same source. It is a circular movement of cash from the taxpayer to Network Rail, and from network Rail back to the taxpayer in the form of payments to a taxpayer financed quango. The taxpayer still ends up paying for the regulator, but his or her money is routed through Network Rail so there are larger handling charges. If any money is to pass it should be from the offending company to the customer that has suffered. The problem in the rail case is anyone could claim to have wanted to use the cancelled trains.

The defence for these large fines is presumably that the senior managers of these organisations will not let them happen again. I am not so sure. If the senior managements’ own bonus payments were removed because they had made serious mistakes, that might concentrate their minds in future. The impact of a fine which causes a day or two’s embarrassment in the press for a large organisation that will be used to a mixed press may not have the same benign effect.

Is there an alternative to such an approach? I think a good referee is one who tries to keep the game flowing, not someone who takes a delight in every minor infringement so the can be the centre of attention and drive as many players off as possible. Good rugby referees these days are constantly shouting advice to the players to try to prevent them breaking the many and complex rules. Only if a player flouts the referee’s clearly stated understanding of the state of the game will there be a penalty. That makes for a more interesting spectacle for the fans.

In the National grid case the regulator found against a series of long term contracts National grid had entered with five of the six main energy suppliers in that market. Given the amount of information Regulators now expect, and given the number of people the Regulator now employs, why couldn’t the Regulator have advised them before signing that these contracts would be unacceptable? Or noticing them after signing, why couldn’t the Regulator have said then that they wanted them modified, and given the industry a little time to do so before coming in with heavy handed intervention?

In the railway case, the travelling public would prefer lower fares than an industry having to pay a heavy fine out of the money the taxpayer gives the industry. The Regulator needs to think through how much of a penalty a fine is on a wholly owned subsidiary of the taxpayer, used to seeking taxpayer money for much of its costs.

The idea of imposing heavy fines to show who is boss has spread to the EU. Their Competition Commissioner has just succeeded in a case which has led to a large fine for Microsoft. At least that is a fine on a private sector competitive business, where the pain is felt by shareholders. Clearly there was a strong difference of opinion between the company and the EU over what is an acceptable practise when selling popular and state of the art computer software.

We live in the age of the regulator. In the two UK cases the government appears pleased that unpopular outcomes – rising gas bills and a shortage of train services – have led to large fines on the offending companies. Consumers would be happier if a solution to the underlying problems could be found. Large fines are not going to make taxpayers and customers feel better off, because they are not going to be better off. It is time the government thought again about the scope and style of regulation, to see if regulators could become better referees, keeping business flowing within the rules rather than waiting for the offences and then coming down like a ton of bricks.

It’s the same thing these days in the money markets, where a movement of the Governor’s eyebrows used to ensure the old clearing banks took appropriate action to avoid stresses and strains. The modern “reformed” Bank of England no longer uses the eyebrows in the same way, so we ended up with a run on a bank for the first time in more than a century.

Yesterday in Parliament, John Redwood was quick to denounce the LibDem walk-out during the Lisbon Treaty debate. His intervention, taken from Hansard, follows.

Mr. Redwood: Does the Minister agree that it is a discourtesy to him and the House that the Liberal Democrats, after synthetic anger about their broken promise, should now have almost entirely removed themselves from the Chamber when those most important issues, in which they say that they are interested, are up for debate? We should now ask: where are they?

Mr. Murphy: That is not an issue for the Government or for any individual Minister. All that I would say in passing is that on the issue of Europe, the Liberal Democrats, in principle, see the benefits of our continued membership and continued involvement in the European Union and support the reforms in the treaty. As to the conduct of individual Members of Parliament, that is an issue for the Speaker or the occupant of the Chair, not for Government Ministers.

Later in the debate, Mr Redwood asked the Minister to confirm the firgures on power transfers under successive Governments. The question in full, taken from Hansard, follows.

Mr. Redwood: The Minister is right that there has been a progressive surrender of powers and a progressive increase in qualified majority voting, but to ensure that the record is accurate, will he confirm that qualified majority voting has been granted in 10 times as many areas since 1997 as were granted by Baroness Thatcher?

Mr. Murphy: The fact was that—[Hon. Members: “Yes.”] No, I disagree with the right hon. Gentleman’s analysis of Europe and, looking at the figures, I disagree with his analysis of qualified majority voting. The Single European Act made 12 such moves and the Maastricht treaty, which he supported, made 32 moves. There were 26 moves under the Amsterdam treaty and 32 under the Nice treaty, while the Lisbon treaty, as we have all discussed, makes 51 extensions.

The silly stunt pulled by the LibDems in Parliament yesterday was the ultimate cynical manoeuvre. The LibDems wish to break with their election promise of a referendum on the Constitution. They think demanding a referendum on In-Out will get them off the hook. They call for it knowing that the Labour Government and most Labour MPs are against it, so they know it cannot happen. Their refusal to vote for a referendum on the constitutional treaty is born of the knowledge that with all Conservatives voting in favour and some Labour rebels there would be an outside chance of gaining one. Clearly the LibDems don’t want a referendum on the constitutional treaty because they know the public would be very likely to vote it down. As we know, Lib Dems want the EU to have more powers and are enthusiasts for the new Treaty.

The difficulty with an In-Out referendum at the current juncture would be deciding what you were voting on. Would you be voting to stay in the current arrangement or would you be thinking ahead to the rather different position if the Lisbon Treaty is implemented in every country? It makes much more sense to have a referendum now on the big changes that Europe is proposing rather than on a Europe in transition. Some voters would vote ‘Yes’ to the current European Union, but ‘No’ to Europe after Lisbon has been implemented. Some voters would vote ‘No’ to any version of the European Union. Some would vote ‘Yes’ to the original Common Market. What Briatin needs is to have a referendum on Lisbon first. Assuming the British people voted ‘No’ to Lisbon there would then need to be a renegotiation. Once all that was known, we might then need a referendum on the result, of the renegotiaiton. That would be a vote on “Do you wish to stay in the EU on the revised terms, or would you rather pull out?”

No wonder people have so little confidence in modern political parties. Both Labour and the LibDems have broken their word. The LibDems have now behaved childishly and cynically, seeking a referendum they know they will never get. The public has every right to feel cheated by all those MPs who promised a refernedum on the Constitutional treaty, and who now refuse to vote for one. I look forward to voting for a referendum, as I promsied in 2005.

I hope you all feel better about being a part owner of Northern Rock than I do. Last week we had but little time as the Government whisked through the Nationalisation Bill to take over £110 billion of liabilities and all the staff, property, and contracts of Northern Rock. This amounts to an average commitment of £2,000 for every person in the country.

I am very nervous for the North East. Northern Rock is the most important business in the area. It is a big employer in its own right and has been a generous donor to the local community during its profitable private sector days. I fear for it in public ownership, as the record of nationalised industries has not been good.

Many of you will know that I am no great fan of nationalisation. I have come to this conclusion by seeing all too often nationalised industries put up prices by more than is acceptable, slash their numbers of employees by more than is desirable, deliver a poor quality service, and cost the taxpayer a fortune. I have seen and heard nothing from current Ministers in their approach to Northern Rock that gives me confidence that it is going to be better run in the public sector than it has been by private sector shareholders.

Wokingham has its fair share of problems from our current batch of nationalised industries. One of the oldest and biggest is the Post Office. Many people have petitioned against the closure of the London Road and Barkham Road sub-Post Offices. Many people think that the stamp price has been put up too much by the current management, regret the passing of two deliveries a day, and dislike the fact that the one delivery in the day often does not turn up before they have gone to work.

I don’t think Labour Ministers arrived in office ten years ago wishing to close lots of Post Offices and looking to make the service worse. They, after all, believe in the joys of nationalisation and would have told us, in those happy days before they got into office, that under them the Post Office would go from strength to strength, improving its service and providing a good deal. So, what went wrong?

Ministers decided to cancel a lot of Government business that had been transacted across Post Office counters. The loss of this business and revenue undermined many of the smaller Post Offices around the country. The Government had to ask taxpayers to pay more tax in order to subsidise the Post Office network. The losses escalated, and the new management the Government brought in decided on a series of measures that have proved very unpopular. They have put up prices by much more than inflation. They cut back on service levels. Now they are embarking on a large closure programme in a desperate effort to balance the books.

When I have asked Ministers why it was that the nationalised Post Office had cancelled a lot of its contracts with the partially nationalised railway, and transferred letter haulage from rail to road, I have been told it was because road offered a much cheaper and more efficient answer. Ministers told me this with no sense of shame, and with no suggestion that they might do something about it. Surely a semi-nationalised railway industry should show more fight than that, and try and temp bulk freight like the post back from the roads to the tracks?

Which brings me to the railway. I have gone hoarse explaining to the nationalised Network Rail and to Ministers above it that in Wokingham the use of railway land as a development site near the station could free the money needed to improve or replace our substandard station. They listen politely. They often agree with me, but absolutely nothing ever happens. There is no spirit of enterprise, no get up and go, no sense of responsibility that makes Network Rail want to grasp the opportunity and improve that important first impression of Wokingham for the rail travelling public.

It is a great pity that our nationalised industries are not more responsive to the public good. I hope our representations to the Post Office will make them think again about the closure of sub-Post Offices in Wokingham, but I have my doubts. I wish my representations and those of the Council to Network Rail would finally result in them seeing the need to renew their station, but I am not expecting anything to happen in the foreseeable future.

That is why I am pessimistic about the future of nationalised Northern Rock. That was why I spoke against the Bill and voted against it last Tuesday. I fear taxpayers are going to suffer from taking onto the books such a large and expensive mortgage bank. The Ministers I see day-by-day in the House of Commons do not show any signs that they understand either the magnitude of what they have taken on, nor what has to be done to create a flourishing business again.

Today’s claim that some anti depressant drugs are little or no better than pretend pills for all but the most severe kinds of depression poses some interesting questions about medicine on the NHS.

The drugs bill is huge and growing. All too many patients expect a visit to the doctor to produce a prescription as a solution. Many doctors have learned that offering tablets is the best way to handle their patients, and to ensure a swift and satisfactory consultation. I can understand the pressures and why they might come to that conclusion. The last time I went to a doctor some years ago I found it quite difficult to get out without a prescription, when I had merely gone on the insistence of a family member for a check up. People are less willing to hear that changing their diet, their lifestyle and their routine might do them more good than swallowing another tablet.

Depression is all in the mind. Some depressed people come to see their MPs. They may have a genuine case for an MP, but sometimes they are externalising their unhappiness. I take the problem they tell me they have seriously, but sometimes have to explain that I do not think anything can be done about it as I do not wish to raise false expectations. It is a pattern I well remember, from years of family experience. The depressed person often thinks there is an objective external cause of the unhappiness. If they can change their job, their home, the conduct of their wife or husband, their friends or their neighbours, they believe their unhappiness will vanish. All too often they discover that having made the change they are still unhappy, so the search for another cause begins and the pressure for another change builds up to try to appease the depression gods.

Taking a pill that is nothing but well disguised sugar might well work. If the patient believes in it, it could bring some relief from the inner darkness. The problem is the NHS feels it has to prescribe the expensive real thing, and not the substitute, so the doctor-patient relationship is not based on a white lie. The placebo pill is cheaper. It might be almost as good in its effects, according to today’s study. It is guaranteed not to have side effects, but under the rules it cannot be widely used. It poses an interesting ethical dilemma. What should the doctor do? What should the NHS require?

The English question is analysed today in a Think Tank Report, who warn that if the government does nothing to tackle the injustices to England the problem will worsen.

Part of the problem is economic, and the economics of the problem are worsening by the day. Between 1998 and 2006 the UK grew by 27%. London grew by 41% and Scotland by 16%. Throughout the Labour years the richer parts of the country in London and the South East increased the gap between their incomes per head and the incomes further away from the capital. A higher proportion of the population took jobs in London and the South-east, and a higher proportion of those jobs were well paid. London and the South-east attracted in talent from around the country, and grew more of its own talent, creating a virtuous circle of the kind the government would like everywhere – better achievement at school, more university graduates, more well paid jobs, more entrepreneurs creating jobs.

During the good years for the world economy London and the South-east grew quickly enough to accept the higher taxes it was required to pay to send money to the rest of the UK to help them. The combination of easy money around the world, with the relatively low interest rates and the Basel banking regulation which encouraged it, and the price cutting activities of the emerging giants in Asia meant people felt reasonably well off. Many taxpayers did not resent the taxes creeping up to pay for the rest, so they voted Labour or abstained.

In recent months this has all changed. As I warned in August last year in the Foreword to “Freeing Britain to compete”:

“We should not rely on these two very favourable trends (low interest rates and Asian competition) continuing to allow us an acceptable rate of growth…there is considerable uncertainty in world markets about how far the Fed, the ECB and the Bank of England may go in raising rates to squeeze inflation out of the system. They must know there are huge pyramids of debt throughout the system, and inflation will not be killed unless the appetite for more debt is blunted. They also know that if they push rates too high for too long they could bring the debt structures crashing down, as we have seen with the sub-prime mortgage collapse in the USA, leading to falling asset prices, rising unemployment and even recession. …. We should also recognise that China and India will not continue to exert strong downward pressure on prices to the extent that they have in the last ten years. Their workforces are now expecting better rewards. Raw material prices are being bid up by their large demands. The price of transport rises when capacity is stretched by their needs. “

Instead of reasonable growth, low interest rates and low inflation, we are entering a period of slow growth, relatively high interest rates in the UK and worrying inflation (the result of past monetary mistakes). In other words, people are feeling the pinch. This is exacerbated in the UK by the impact of higher taxes and more regulation, squeezing people’s income and time to earn money from serving customers and clients. Real incomes are going to fall.

The government seems to have targeted the very successful London economy to pay more tax in particular. The Non Doms (foreigners as some tax raisers see it) were a politically attractive target – a tax increase imposed on people who do not vote. The danger of the government’s approach is it might send lots of people and some businesses packing, to places with lower taxes or a less hostile Revenue service, which will take some of the gloss off London’s economic success. Council Taxes are set to go up by more than the CPI or wages, as the government heaps more public spending obligations on Councils without offering the funding to pay for them, and as some Councils join in the public sector spending spree.

Squeezing people with higher taxes, when they are already feeling the strain from higher fuel bills, high house prices, penal Stamp duties if they wish to move, congestion charges and higher Council taxes will only increase the feeling of English injustice. As people come to see they are worse off, they naturally resent waste in public spending, and look carefully to see what they are getting for the extra money they are paying tax. They ask where the money is being spent, and on what. The English see more money per head being spent in the UK outside England and ask Why? The Scots with their nationalist government claim the UK government is short changing them compared to past settlements. The worse performance of the economy, and growing imbalance between London and the rest and between England and the rest will cause more frictions.

Politically this will fuel demands for “English votes for English issues”, and for the more radical English Parliament proposal. This, however, will not tackle the underlying problem – that the UK is really three different economies. There is a successful London economy, growing quickly, open to the world, with huge talent. There is a moderately successful rest of the South-east economy – with similar performances in some other suburban areas in England – and there is a slow growth high public sector economy in Scotland, Wales, and parts of the north of England. Instead of improving the slow growth lower income areas, the Labour approach of sending more and more public money to these areas has not solved it. The gap has got bigger. All the time good world growth and easy money gave some momentum to all parts, it could work. Now there are strong headwinds from the global economy and growth will be slower, the injustices and the deep set problems will become more important to people.The Irish example (up 76% whilst the UK managed only 27% overall) shows that lower taxes provides the way to make an economy really motor.

Today for a change I want to write about something I am no expert on – binge drinking. I would like your thoughts on it.

When the government proposed relaxing the licensing hours, they argued that there would be a drop in drunkenness and rowdy behaviour. They said it would end drinking up time in pubs, and avoid too many people all being pushed out on to the streets at the same time on a Friday or Saturday night much the worse for wear. We would naturally transform from a rowdy, drunken late night town centre culture to a sophisticated well behaved European café culture, once people were trusted to drink in public places after midnight.

I did not believe them when they told us this. The latest figures for drunken behaviour – and anecdotal evidence from places I know – tells us this miraculous conversion has not taken place. Instead people seem to have taken advantage of the opportunity to drink more in pubs over longer time periods to do just that.

As always with this government I do not know whether they were incompetent or dishonest when they told us longer hours would cut down on the problems of drink in our towns. It is possible their polling told them late night opening was popular amongst groups they wanted to vote for them, so they decided to relax the laws for straightforward political reasons. They then foolishly invented a “decent” reason for wanting to do it. Alternatively, they might have thought the abolition of closing time could make a difference, as they claimed. This was a view shared with very few other people who looked at the problem.

When I looked at the issue as an MP faced with a choice to make, the freedom lover in me favoured the relaxation of hours, but the representative had to accept that many of my constituents did not want their towns and villages changed by people spilling out of pubs and clubs much later, in the early hours of the morning. There was an understandable fear that the government would be proved wrong, and the problems of rowdy behaviour could extend from the early hours of the night to the later hours of the night as well.

Now the miscalculation has come to light, the government itself is looking around for culprits to blame, and other possible solutions to the underlying problem. Their eyes naturally fasted upon the private sector – they tried to blame the supermarkets for selling alcohol too cheaply. Their surveys – no doubt at our expense – told them people often get well oiled at home on cheap booze before hitting the pubs and clubs. Why not ask the supermarkets to put their prices up?

This suggestion has been handled well by Tesco and others. It was always unfair on the many people who drink in moderation at home, and who like the lower prices the best retailers deliver. The supermarkets pointed out that they were not allowed under Competition Law to get together to put their prices up to deter drinking. If any individual supermarket did, it would simply divert business to the others. So it’s back to the drawing board for the government on that one.

When I went to university I discovered a divided world. One group of my fellow students took to soft drugs, and the rest of us enjoyed the alcohol. The treatment of the two by government was – and remains – different. Drugs were banned by law. Those who took them often enjoyed the fact that they were illegal, as well as the pleasure they thought they brought. I did not experiment with them, because I did not wish to jeopardise a place at university I valued greatly by running the risk of a criminal prosecution. There was no such restraint on alcohol. What soon put me off drinking too much was the sleepless nights, the dehydration and the hangover that followed the social occasion where we were too generous with the liquor. It was easy to resist any social pressure to take drugs, because it had to remain under the radar. It was less easy to resist pressure for heavy drinking, as that was a social activity where there was no good excuse for declining.

In more recent years the pressure to drink excessively to show yourself a good sport or to join in has been changed in one important respect by the successful campaigns to stop drinking and driving. People at dinner parties now accept you need to stay sober if you are going to leave in your car. It is one of the few examples of how legislative change and stricter enforcement of the law can lead to a change in behaviour and attitudes. Prohibition of drugs continues to work for some people and not for others. This government tried a back door way of relaxing the law for cannabis, only to find it needed to reverse its position.

As someone who likes good wine, I have long since come to the conclusion that my pleasure is increased if I drink it in sensible quantities. As I often have to drive, that rations my intake as well as it is safest in my position not to drink at all if I am about to take charge of a car. If others want to drink more in the confines of their own home, that is no business of the government, and they should not be trying to stifle it by higher prices so only the better off can do so. If people want to drink in public places, there does need to be some regulation, as we need to think of the neighbours and the town centre dwellers who will be affected if things get out of control. I don’t think putting the hours of the pubs back to what they were would abolish the problem of drunkenness in towns, but nor can we say the changes to the hours has done what it said on the tin. Controlling drunken and rowdy behaviour will take much more patient work and effort by many who care about society. It is only when many more people get pleasure from other ways of life that they might wish to curb their own drunken excess. If your sense of pleasure is to get plastered once or twice a week, only to have to suffer the after effects that night and the next day, then there is much missing in your life. It means so much of the beauty, excitement and potential in the world has passed you by. It is a mighty task for parents, teachers, friends, relatives and above all for each person themselves. There are limits to what legislators can do. Sermonising and taxing are unlikely to work. Stronger laws will only work with some, and may encourage others to misbehave the more.

I have posted the full transcript of the one hour debate we were allowed on Thursday on Northern Rock, because it illustrates just how damaged Parliament has been by the constant use of timetable motions that are unrealistic.

The Lords passed three amendments to Labour’s bank nationalisation Bill. One wanted the Freedom of Information Act to apply to Northern Rock, just as it applies to the rest of the public sector. One wanted a proper audit report on what we are buying, and a third wanted more detail on the competition arrangements. All three were perfectly reasonable requests. They did not seek to prevent the nationalisation of Northern Rock or some other bank. They were well within the spirit of the decision of the Commons to press ahead with nationalisation, taken a couple of days before.

It was clear these amendments would need a few hours of debate. Each one raised very different issues, worthy of a separate debate. Because the government decided to drive it all through in one hour, they ”grouped” all these amendments together, along with some government amendments. The Opposition offered to sit through the night, as urgency was part of the government’s agenda, even though we could not see the need for the urgency. Alternatively the House could have met on Friday again to discuss Northern Rock, and Friday’s business could have been transferred to a day next week. The government refused to co-operate.

As a result we had one hour. The Chief Secretary to the Treasury occupied half of this with her comments. She took a number of interventions. We needed to intervene for two reasons – firstly because she was not explaining her position clearly and convincingly, and secondly because we knew there would not be time for us to make speeches so several of us chose to make one of our points in this less satisfactory way. The Shadow Spokesman kept his remarks much shorter. This allowed Sir Stuart Bell to speak, and the Lib Dem Spokesman got a few minutes at the end. No Conservative backbencher could make a full speech, No Lib Dem backbencher, and only one Labour backbencher. The front benches had no time to return to the debate to deal with points raised by other MPs.

The Conservative government used timetable motions sparingly. We did so if the Opposition had spent many hours on the first clause or amendment to a Bill, and showed every sign of wishing to delay and prevaricate as much as possible. Most Bills went through with time unlimited, so the Opposition could choose what they wished to talk about, how many of them wished to speak, and for how long. It was a much more democratic way, and ensured that all important amendments and clauses were debated. The government benefited from this, because there are times when Parliament – and those who brief us – made important points that led to a modification or improvement of a measure.

Thursday’s performance reminded me just how much Parliament has lost by ruthless timetabling. There were good issues to discuss. Some of us had things to say. The government had not made its case satisfactorily on why we were to be denied access to information on Northern Rock, and why we were buying it without a proper audit report on what we were buying. The lack of time to discuss it was unreasonable.

There will be a cost to the taxpayer. Rushing into this purchase without proper consideration is likely to mean bigger losses and problems for taxpayers ahead. The Lords unfortunately did not sustain their pressure on the 3 points. The Lib Dems decided they agreed sufficiently with the Bill that they did not want to prolong the dispute even for a few more hours. Once they gave in there was no point the Conservative peers continuing, as they did not have the votes.

Sensible Ministers welcome Parliamentary debate, and listen to commonsense points made by others. Ministers who rush legislation through often live to regret it. The nationalisation of Northern Rock is not the answer, but the beginning of a whole series of new and difficult questions for the government. As Parliament was not able to ask them all and have them cleared up satisfactorily, they will now be determined by events. Events can be much rougher for Ministers to handle.

One day we will find out if Northern Rock is now going to be run down, or if there is a way for a nationalised bank to compete fairly and grow its business. One day we will find out if people are going to be sacked and if so how many. One day we will find out what the true profits and losses have been in recent months. One day we will discover how much cash taxpayers have had to put in, and one day we will find out the full extent of the financial arrangements put in place for the public servants at the top of this company. As so much of this is forbidden fruit at the moment for Parliament, the media will find it so much more tempting to pick it.

7.45 pm

The Chief Secretary to the Treasury (Yvette Cooper): I beg to move, That this House disagrees with the Lords in the said amendment.

Mr. Speaker: With this it will be convenient to take Lords amendments Nos. 2 and 3, and Government motions to disagree thereto, and Lords amendments Nos. 4 to 8.

Yvette Cooper: I thank the Lords for their consideration of the Bill, which has been brought forward in exceptional circumstances. As a result of the consideration by the Delegated Powers and Regulatory Reform Committee, the Government put forward in the Lords a series of amendments to change several orders so that they will be subject to the affirmative resolution procedure. We think that that is the right approach and we therefore accept those Lords amendments.
The Lords passed three amendments with which we wish to disagree and I shall take each in turn. Lords amendment No. 3 is on competition and the role of Office of Fair Trading and—as a result of the consideration both in the Lords and this place—we have had further discussions with the OFT. It may be helpful to inform the House about those discussions.

As we made clear in earlier debates, the Government recognise that we need to ensure that Northern Rock does not enjoy inappropriate or unfair advantages in competition with other banks and building societies. We need to ensure that we are operating in the interests of the taxpayer, but also that we have appropriate competition in the markets.

At EU level, we have been clear that we will need to ensure that the business plan satisfies the EU state aid rules and support for Northern Rock needs to be fully consistent with those guidelines. As we told the House on Second Reading, we will also hold discussions with the British Bankers Association, the Building Societies Association and the Council of Mortgage Lenders before final plans are submitted to the European Commission for state aid approval.

We agreed yesterday that the OFT will publish an annual report assessing any competitive implications of the public support for Northern Rock and, of course, the OFT also has the powers to step in at any time. The OFT is an effective watchdog, overseeing competitiveness in the UK markets. It has wide powers, including powers to investigate whether any market in the UK is distorted by unfair competition. It does not need specific new powers to report on the competitiveness of the banking market.

Therefore, there is no need for Lords amendment No. 3, which would be an unnecessary duplication of the OFT’s powers under the Competition Act 1998 and the Enterprise Act 2002, and the European Commission’s powers under the EU treaties. The amendment is inappropriate and I hope that the House will disagree with it.

Mr. John Redwood (Wokingham) (Con): Does that mean that the Chief Secretary envisages limiting the attractiveness of the rates that can be offered and charged by Northern Rock by reference to the average of its competitors?

Yvette Cooper: As we have repeatedly made clear, it would not be appropriate for Ministers to take decisions about individual products offered by Northern Rock. It is right that Ron Sandler should put forward his business plan, and that will obviously need to be approved by the Government as the shareholder in Northern Rock. Equally, as part of that process, we need to ensure, as we approve that business plan and have discussions with the EU, that we do not have unfair competition. It may well be that the European Commission will set out particular conditions on Northern Rock’s operation, and, of course, we will have to ensure that Northern Rock complies with them.

Bob Spink (Castle Point) (Con): If the British Bankers Association eventually concludes that the arrangements lead to unfair competition, what redress will it have?

Yvette Cooper: Clearly, the issue will be what the OFT concludes and what the EU concludes. Obviously, we will have discussions with the British Bankers Association, but Northern Rock will need to operate in compliance with UK competition law. It will obviously also have to comply with the EU state aid rules.

We have to remember the underpinning purpose of this intervention, which was to secure the financial stability of the banking system. As we have said previously, it would obviously not be in the interests of other banks or consumers for there to be unfair competition. Equally, it would not have been in the interests of other banks or consumers if Northern Rock had gone under in the autumn and there had been a spread of instability across the banking system. Sometimes I think that hon. Members who raise concerns about this are in fact raising concerns about the fact that Government guarantees have been introduced at all.
We think that it was right to introduce those Government guarantees, because we need to safeguard the stability of the wider banking system as part of the need to promote stability across the board. Therefore, I hope that the House will agree to disagree with Lords amendment No. 3.
I turn next to Lords amendment No. 1, which concerns the independent audit. Clearly, there should be an independent audit of Northern Rock. Indeed, an independent audit is currently under way. Northern Rock’s audited annual accounts will be published, after independent audit, by the end of March. That should give the House and the public information on Northern Rock’s assets and liabilities as part of its balance sheet. Northern Rock will continue to be subject to the requirements of the Companies Act 1985 and the Companies Act 2006. That means that the annual reports and accounts must be independently audited and filed with the registrar of companies for public access. We think that that is the appropriate way to conduct the audit.

Mr. Philip Dunne (Ludlow) (Con): Is the Chief Secretary therefore telling us that the audited accounts, which will be published at the end of March, will include the consolidation of the assets and liabilities held within the series of Granite subsidiaries of Northern Rock? If that is the case, will she clarify what she was signally unable to clarify last Tuesday? Will the Government have a call on the assets in the Granite subsidiaries in the event of defaults on its liabilities?

Yvette Cooper: We have set that out repeatedly. Clearly, the accounts will need to be set out in the normal way. The accounts of Northern Rock will need to meet all the ordinary accounting practices. It is right that that should be so. We have also repeatedly made it clear that the Government guarantees apply to Northern Rock and not to Granite. Again, it is right that that should be the case and that is the arrangement that has been set in place.

It is right to think that the appropriate way to conduct the audit is the method I mentioned. To ask the Bank of England to conduct a separate audit would not be appropriate. That is not the Bank’s area of expertise; it is not a professional independent auditor but a central bank. Interestingly, the amendment would not require an independent audit of Northern Rock within three months because it applies to clause 6, whereas the draft order that we have published would be made under clause 3. The amendment would therefore not achieve the intentions of the drafters.

Mr. Alan Beith (Berwick-upon-Tweed) (LD): Does the right hon. Lady recognise that it is the very opacity of conventional accounting that worries people when they are confronted by the existence of operations such as Granite, which did not come to the notice of even quite experienced observers of Northern Rock until a relatively late stage in its life and remains the subject of considerable uncertainty? That is one of the reasons why other forms of audit are being sought.

Yvette Cooper: Many people have raised and discussed issues about Granite on many occasions. If the right hon. Gentleman is pointing to the fact that several people had clearly misunderstood the nature of Granite and changed their understanding yesterday, that is obviously a matter for them. There has been a lot of discussion about the arrangements for Granite; it is a special purpose vehicle—the kind of arrangement that many banks set up—and it is important that its accounting treatment is properly dealt with and is properly transparent in the normal way. The matter has been discussed repeatedly.

Mr. Chris Mullin (Sunderland, South) (Lab) rose—

Miss Anne McIntosh (Vale of York) (Con) rose—

Yvette Cooper: I give way to my hon. Friend the Member for Sunderland, South (Mr. Mullin).

Mr. Mullin: I have not yet changed my understanding about Granite, and I put it to my right hon. Friend that at some stage a clear explanation will be needed of the company and its accounting arrangements, and the allegation that it will apparently be allowed to go on sucking assets from Northern Rock even after it is nationalised. That will have to be explained at some point—[Hon. Members: “Now.”] I hope that my right hon. Friend will do so at some point this evening.

Yvette Cooper: Can we be clear? That is not an accurate description of the relationship between Granite and Northern Rock; it is simply not true to say that Granite has a call on the assets of Northern Rock in that way and is, as my hon. Friend put it, sucking out mortgages from the bank. That is not the structural or the contractual relationship between Granite and Northern Rock. I draw the attention of Members to the letter that has been circulated, which my right hon. Friend the Chancellor has put in the Library, and which provides greater clarity on that detail.

I am conscious of the fact that many issues need to be raised. There is an important question about freedom of information that I need to cover as part of this debate.

Adam Price (Carmarthen, East and Dinefwr) (PC): Does the Chief Secretary accept that in this case, given the amount of public money we are talking about, the ordinary requirements for reporting under company law are not sufficient, especially because, as she is aware, there are serious doubts about the robustness of the interim report produced by the company in June? Within a few weeks, the company was running to the Bank of England for a massive loan. That is why we need the extra level of independent auditing.

Yvette Cooper: Let us be clear about the events, including the credit crunch in the summer, which triggered Northern Rock’s particular difficulties. I agree that there is a wider question about the sustainability of the approach that Northern Rock took and its aggressive strategy. As part of our consultation paper about wider reforms to the banking system, we have also discussed the need to look more widely at issues around liquidity, not simply solvency, as part of the regulatory structure. There is obviously a wide series of issues.

The Government have already stepped in to intervene with regard to Northern Rock. The Bank of England has already stepped in to intervene by providing additional loans to Northern Rock at an appropriate point and the Government have provided guarantees. It was right that the Government should do so; it was about protecting the financial stability of the banking system as a whole, as well as dealing with depositors’ interests in Northern Rock. Of course, assessments and analysis have been carried out as part of the lending and guarantees, but the exposure remains the same, as a result of taking Northern Rock into temporary public ownership. The intention at all stages is to be able to try to return the company to the private sector as rapidly as possible. We are talking simply about a temporary arrangement, and that bears on the third amendment.

Mr. George Osborne (Tatton) (Con): Before the right hon. Lady moves off that point, I point out that it has emerged that Northern Rock has a subsidiary based in the Channel Islands that takes offshore deposits. Are we to own a nationalised bank that operates in the Channel Islands and takes offshore deposits?

Yvette Cooper: As we have repeatedly made clear to the hon. Gentleman, we are not taking ownership of Granite. Throughout the process—

Mr. Osborne rose—

Yvette Cooper: Let me finish this point. The hon. Gentleman has repeatedly made completely inaccurate, nonsense points, not simply about Granite but about the overall relationship to Northern Rock, so much so that today’s Financial Times said:

“The argument…put forward by the Conservatives” on Granite“was roundly dismissed on Wednesday by City experts…Analysts said this showed a basic misunderstanding of how securitisations worked.”

The hon. Gentleman has today made a series of completely incorrect claims about the legal status of Northern Rock, which suggests a misunderstanding not simply of securitisations but of UK law.

Mr. Osborne: I would be happy to read out a year’s worth of Financial Times articles about the performance of the Chancellor of the Exchequer, but I want to press the right hon. Lady on the point about the subsidiary of Northern Rock that operates and takes offshore deposits in the Channel Islands; it is not Granite but a subsidiary of the bank. If we nationalise the bank this evening, will the Northern Rock subsidiary in the Channel Islands operate as a Government-owned nationalised bank? After all, I remember that when the Prime Minister was the shadow Chancellor, he made a great point of noting the offshore tax evasion that took place in some parts of the world.

Yvette Cooper: We are clear that we are taking over the legal entity that is Northern Rock—the totality of Northern Rock—and it will pass into the hands of the new board. Ron Sandler will now draw up the business plan and arrangements for the new bank. It is right that he should do so and that it should operate on a commercial basis. Let us be clear about why we have done what we have done: it is in order to save—

[Interruption.]

Mr. Speaker: Order. The right hon. Lady must be allowed to speak.

Yvette Cooper: Thank you, Mr. Speaker. The implication of all the points that Opposition Members have raised is that fundamentally they do not like the fact that Government guarantees were provided for an organisation that continues to operate. They simply want to make opportunist points, providing no serious alternative for the future of Northern Rock or the future of the banking system.

Mr. William Cash (Stone) (Con): Will the Minister give way?

Yvette Cooper: I need to get on to the next amendment.

Mr. Cash: The Minister has an obligation to answer the questions.
Mr. Speaker: Order. The Minister does not have an obligation to answer the hon. Gentleman. She has an obligation to speak to the House, and that is what she is doing.

Yvette Cooper: Thank you, Mr. Speaker. I need to get on to Lords amendment No. 2, which is about the Freedom of Information Act 2000. Again, we do not believe that the amendment would be appropriate. It is important that the public and the House have information about Northern Rock, and as I have made clear, the full, audited annual accounts will be published by the end of March.

Mr. Richard Shepherd (Aldridge-Brownhills) (Con): Will the right hon. Lady give way?

Yvette Cooper: I shall make some progress and set out the points first, if I may, and then I will give way.

Mr. Shepherd rose—

Yvette Cooper: If the hon. Gentleman will take his seat, I will make a little progress with the arguments about freedom of information, and if I have time, I will give way to him later.

Mr. Mark Harper (Forest of Dean) (Con): On a point of order, Mr. Speaker.

Mr. Speaker: I am sure that it is not a point of order, but I will hear it.

Mr. Harper: I have heard the Minister make lots of references to how little time we have. Surely that is governed by the Minister’s business motion, so it is rather pointless for her to complain.

Mr. Speaker: I knew that the hon. Gentleman’s comment would not be a point of order. I call Yvette Cooper.

Yvette Cooper: I appreciate that Opposition Members do not want to hear the points that we are making; they simply want to play games with what we should all recognise is an extremely serious issue concerning the future stability of the banking system and the future of Northern Rock.

In addition to the full, audited annual accounts and the annual report, other information about Northern Rock will be provided. In addition, we have said that we will shortly publish the framework document, which will set out the appropriate operating arrangements between Northern Rock and the Government. We will also—

Mr. Shepherd: Will the Minister give way?

Yvette Cooper: No, I will not until I have made some progress. [Interruption.] The hon. Gentleman will let me make some progress on the points about freedom of information— [Interruption.]

Mr. Speaker: Order. The hon. Member for Aldridge-Brownhills (Mr. Shepherd) is usually a very calm individual. I plead with him to calm himself.

Yvette Cooper: I worry about the hon. Gentleman’s blood pressure. He is getting himself into such an agitated state.

In due course, Ron Sandler will publish his strategic business plan, which will include the overarching strategic aims for Northern Rock. The House will recognise that it would not be appropriate to publish detailed commercially sensitive information and it is right—

Mr. Cash: On a point of order, Mr. Speaker. The Minister has just said that it would not be appropriate for information to be made available that was commercially sensitive. I was in the other House earlier this afternoon where I heard the Minister saying that that was not a matter that he would follow through—

Mr. Speaker: Order. The hon. Gentleman must know that I have enough to do dealing with what is said in this House, without worrying about what is said down the Corridor.

Mr. John Grogan (Selby) (Lab): Will my right hon. Friend give way?

Yvette Cooper: I will give way to my hon. Friend in a moment, but as I have said repeatedly to hon. Members on both sides of the House, I am keen to make a couple of points about freedom of information before taking interventions on it. I hope hon. Members will let me make a little progress.

We believe that it would not be appropriate, however, to apply the provisions of the Freedom of Information Act 2000 to the institution. The bank will not be performing a public function that would make it appropriate to apply the Freedom of Information Act to it.

Mr. Gerald Howarth (Aldershot) (Con): Will the right hon. Lady give way?

Yvette Cooper: In a moment.

We have been clear that we are taking the bank into public ownership not because we believe there is a public function that we need it to fulfil, but in order to safeguard the stability of the financial system and the interests of the taxpayer. I should inform the House that the Bank of England also has an exemption from the Act on the information that it holds in relation to the provision of private banking services and relations services. That is included in schedule 1 in part VI of the Freedom of Information Act, so it is written into the Act. That is important.

Mr. Shepherd: On a point of order, Mr. Speaker. I am sure you will make a judgment on this. It is absurd that a Minister declaims an interpretation of an Act of Parliament that the Government introduced and denies the very content of it.

Mr. Speaker: Order. We must be careful not to abuse the system of points of order. The right hon. Lady is perfectly in order. If she were out of order, I would say so. Believe me, I would be the first to say so. She is in order.

Yvette Cooper: Thank you, Mr. Speaker.

I shall make one more point about the importance of the freedom of information issue, then I shall be happy to take interventions from hon. Members. Let us be clear. We do not want Northern Rock to have to reveal commercially sensitive information that might undermine its position with regard to its competitors. [Interruption.] We do not want it to be in a situation where there is uncertainty about whether particular pieces of information will be protected by commercial confidentiality, or will alternatively be judged to be in the public interest—

Several hon. Members rose —

Yvette Cooper: The lack of certainty could undermine the bank’s position when it is operating against competitors—

Mr. Cash: Will the Minister give way?

Yvette Cooper: —and would not put the taxpayer in a sensible position when it comes to dealing with the need to sell the institution on to the private sector at an appropriate moment.

Several hon. Members rose —

Yvette Cooper: If hon. Members will just calm down and stop—

Mr. Speaker: Order. Two hon. Gentlemen are getting to the stage of beginning to defy the Chair. Once they do that, there will be problems. The hon. Member for Stone (Mr. Cash) has had a good innings this week; he has spoken more than the Minister. He should calm down and listen to the Minister. That will give the official Opposition spokesman the opportunity to speak.

Yvette Cooper: I am happy to give way to hon. Members capable of asking a calm question.

Mr. Tim Boswell (Daventry) (Con): I have not been a regular follower of this issue. Can the Minister explain to me how she can possibly justify saying that the bank is not performing a public function when the whole point of the state intervention that we are sanctioning tonight is—allegedly, and on her own account—to safeguard the stability of the banking system?

Yvette Cooper: We are taking the bank into public ownership for a reason that is in the public interest—that is rather different from the ongoing function that the bank performs. That is a different, private banking function, and we want to get the bank into the private sector as rapidly as possible.

Mr. Grogan: May I tempt my right hon. Friend to see some possible advantages of applying freedom of information to Northern Rock in respect of increasing public confidence in the process? Is it not a fact that section 43 of the Freedom of Information Act specifically exempts commercially sensitive information from the need for disclosure? Does that not deal with the point that worries her?

Yvette Cooper: My hon. Friend makes an important point, but he will recognise that there is a public interest test at the heart of the Freedom of Information Act—and it is right that there should be. It is important that an organisation that needs to function in the commercial markets has some certainty about what the status of different pieces of information will be.

We see the bank as something that is staying in the public sector only on a temporary basis. This is not about a long-term public institution; if it were about such an institution with a long-term history in the public sector and if our intention were to keep it indefinitely in the public sector, that would be a completely different matter and my hon. Friend’s point would be exactly right. However, this is about an institution that we want to get out of the public sector and into the private sector as rapidly as possible. We want to be able to sell it on; we do not want the taxpayer’s interest to be undermined by the fact that the bank might have had to reveal commercially sensitive information or information that could weaken its position when it comes to getting the sale deal agreed.

This is a temporary arrangement, therefore there is a temporary position with regard to the Freedom of Information Act. When the original discussions about the 2000 Act took place, and given all the deep principles rightly embedded in the Act by this Government, we provided for an exemption for the Bank of England precisely around the provision of private banking and related services. The legislation is in the spirit of the Freedom of Information Act; it is not about changing the approach to it. There are the additional interests of taxpayers, so it is right that we do this now to get the operation working effectively and to get the bank back into the private sector.

Mr. Gerald Howarth: I am extremely grateful to the Minister for giving way. I quite understand what she is saying, but it is extremely important that the public should understand one aspect of this issue. In the technical note that the Chancellor of the Exchequer sent to the hon. Member for Twickenham (Dr. Cable), it is mentioned that Northern Rock sold about half of its mortgage assets to Granite between 1999 and 2007. The note explains that Northern Rock will have an obligation to top up in the event that some of those assets are redeemed. Are the public not entitled to know whether some of the best assets of Northern Rock can be siphoned out of the company into Granite, thereby diminishing the value of the taxpayer’s investment?

Yvette Cooper: The hon. Gentleman cites the technical note, but has not read the subsequent sentence, which clearly states:

“There remain high quality assets on Northern Rock’s balance sheet, as well as Granite’s.”

It also states:

“It is a commercial decision for Northern Rock whether to provide new mortgage assets to the Granite financing vehicle or whether to allow the vehicle to run-off in an orderly way.”

Rob Marris (Wolverhampton, South-West) (Lab): Lords amendment No. 2 is basically the same as new clause 2, which was put forward but not reached when the Commons last debated this legislation. Amendment No. 14 was also put forward by the Opposition at that time, and that was discussed. That amendment mentioned provisions to ensure the independent day-to-day management of the business.

Does my right hon. Friend agree that it appears that, first, some right hon. and hon. Members do not realise that the Freedom of Information Act does not cover the private sector and that, secondly, to put forward an amendment asking for independent day-to-day business and then say that freedom of information should cover the bank is a contradictory and silly position?

Yvette Cooper: My hon. Friend makes an important point. There is also, as I understand it, a curious consequence of the way in which the amendment has been drafted. Under the amendment, even after Northern Rock was sent back into the private sector and sold, it would still be subject to the Freedom of Information Act. That is clearly bonkers and shows that it is simply a wrecking amendment designed to prevent it being viable to operate Northern Rock effectively in the public sector in order to be able then to sell it on to the private sector to get the best possible return for the taxpayer.

In the end, this is all about us getting the best return for the taxpayer and getting a proper arrangement that supports the stability of the financial services and banking system. We think that those are important objectives. Opposition Members are simply playing opportunistic games. They are making nonsense claims about Northern Rock, about how the securitisation system works, and about how the legal system works. It is right that we should have a proper debate about this, but it is also right that we should come up with a proper solution to the problems of Northern Rock, which Opposition Members have continually and singularly failed to do.

Mr. Philip Hammond (Runnymede and Weybridge) (Con): We have listened to 30 minutes of rubbish and waffle from the Minister, and we now have precisely 29 minutes left to scrutinise the House of Lords amendments and to consider the very significant points that were raised in the other place. There is clearly no prospect of this measure receiving proper scrutiny in this House. Indeed, the one part of the Bill that has been properly scrutinised is the bit that the Delegated Powers and Regulatory Reform Committee looked at in the House of Lords. The Government have tabled five amendments of their own in recognition of the weakness of the original drafting—testimony to the value of proper scrutiny.

There was no reason at all to impose the farcical timetable that we have had for this Bill. We could have sat through the night tonight; we could have sat tomorrow. The only possible reason was to prevent proper debate and to obscure the extraordinary powers that the Government are taking, not only for Northern Rock but on a wider basis. We are witnessing a shocking abuse of this House’s willingness to expedite legislation in an emergency, with many of the powers in the Bill simply not necessary to resolve the situation of Northern Rock.

The amendments that have come back to us from the Lords fall into three groups: those dealing with transparency, the one dealing with fairness, and those dealing with procedure. Amendments Nos. 1 and 2 deal, respectively, with audit and freedom of information. There is a clear need for an audit of the situation in Northern Rock, including an analysis of the quality of the loan book, which would not necessarily be undertaken in depth in the course of the ordinary statutory audit that the Minister talked about. The public are being asked to buy a pig in a poke. No one is sure what we are getting, how much we are paying, or what we are buying it for.

An additional complication has come to light—that of Granite—and I want to take a minute to touch on that. We are all agreed that some of the best of Northern Rock’s assets are included in Granite, but Granite also includes a Northern Rock seller’s share worth about £5 billion to Northern Rock, which would be an early casualty of a default on the covenants in the Granite documentation, quickly undermining the solvency of Northern Rock. One of the requirements of an auditor would be to look at any impairment to the value of that seller’s share as a result of the change in Northern Rock’s situation. Specifically, Northern Rock must feed Granite with new mortgages; if it fails to do so, the Granite entities will collapse and go into wind-up with all the cash flows diverted to the bondholders, putting the seller’s share, which belongs to Northern Rock, at risk. To try to avoid that, Northern Rock may be forced, if it is not originating new business, to take the good-quality assets that it has within its own portfolio and feed them into Granite. That is the way in which Granite can become a sponge sucking the high-quality assets out of Northern Rock. That is why an audit is so important, and that is why we have consistently argued for an alternative method of dealing with Northern Rock that puts the taxpayer at the top of the pecking order, not at the bottom, which the Chief Secretary’s solution would do.

Lords amendment No. 2 would be unremarkable anywhere but in the wonderland that this Government inhabit. It says that what is a publicly owned company shall be deemed to be a publicly owned company for the purposes of freedom of information. But we know from the draft order that the Government intend to ordain by statute that this particular publicly owned company is not a publicly owned company. We have heard a new definition from the Chief Secretary this evening; she says that it is not a “public purpose company”. The order talks about a “publicly owned company”. At this rate, next week we can anticipate a piece of legislation allowing the Government to designate by order that black is white.
If Granite’s loan book is as good as the Chancellor and the Prime Minister claim, and if, as the Prime Minister said at his press conference on Monday, they have “made at all times the right decisions”, what do they have to fear from an audit? What do they have to fear from a freedom of information request?

Frank Dobson (Holborn and St. Pancras) (Lab): Would the hon. Gentleman accept that the freedom of information request would not be made of Ministers, but of people who, in a competitive market, are trying to run Northern Rock to the advantage of the taxpayer? It might well be to the disadvantage of the taxpayer for information to be disclosed. I suggest that the Tories could come up with a compromise in this case. If this House and the House of Lords insist on freedom of information applying to Northern Rock for the sake of protecting taxpayers, will they agree to apply freedom of information to all the institutions with which Northern Rock would have to compete?
Mr. Hammond: I say to the right hon. Gentleman that there are other companies in the public sector that are subject to the Freedom of Information Act. The concern that he has will not arise because there is an exclusion from freedom of information provisions for commercially sensitive information. Let us be clear: what the Government are seeking to protect is not the commercial secrets of Northern Rock, but the cock-up that they have made of this whole fiasco since last September, which would be in danger of coming out if we got access to Northern Rock’s information through the Freedom of Information Act.

Mr. Cash: Will my hon. Friend give way?

Mr. Hammond: I am going to make some progress because I do not want to do what the Chief Secretary did and take up all the remaining time.

Lords amendment No. 3 would include in the Bill a statutory role for the Office of Fair Trading, which would address a key concern in the City of London and the financial services industry about fairness and competition. The state aid rules are a constraint, but the Government have acknowledged that they are not in themselves a significant constraint. We have had a significant concession from the Government on that issue in the House of Lords, and I am grateful to the Chief Secretary for that. The Government made it clear during the debate in the House of Lords that Northern Rock will not be allowed to abuse its privileged position to act anti-competitively in the marketplace. That is a great victory for us, and for common sense. We would have preferred to see that clarification in the Bill, because when the chips are down and Granite needs topping up, there will be a great temptation to interpret this self-made and self-policed regime flexibly, but it is, none the less, something that we are pleased to acknowledge, and I thank the Chief Secretary for that.
Finally, the Government amendments to clause 13 represent a partial response to the concerns expressed by the Delegated Powers and Regulatory Reform Committee in the House of Lords, but they do not go nearly far enough. The negative resolution procedure is simply not satisfactory for the approval of orders made under this Bill. Where the purpose of the order is to transfer assets, it is no good us coming back to the order and negating it 30 or 40 days after it has come into effect and the damage has been done. The effect of using the negative procedure would be, in practice, to remove all effective parliamentary scrutiny from the process. It would allow the Government to make a transfer of assets by order that Parliament can do nothing about.

There is absolutely no need for the measure. The Government argued in the House of Lords that they may, in an emergency, need to transfer an asset urgently, but they do not need to act immediately in the case of Northern Rock. The shares are suspended and depositors still have access to their accounts. Life goes on. Mortgage holders are paying off their monthly payments and there is no risk to the system. We on the Conservative Benches maintain that this emergency legislation must relate precisely to the emergency situation—if we can call it that—of Northern Rock, not a wider, general purpose that the Government are seeking.
To fail fully to accept the DPRRC recommendations is, I understand, unprecedented without cross-party support. The DPRRC is not some partisan sniping party; it is a highly respected procedural Committee of the House of Lords. The Government’s behaviour on the matter shows up as cynical, hollow rhetoric the Prime Minister’s words back in June about respect for Parliament and the returning of powers to it.

The Government’s rejection of proper scrutiny not only of the Bill, through their timetabling motion, but of Northern Rock, the company that we are buying, through their refusal to accept the amendments, and their steamrollering of order-making powers in the face of the recommendations of a respected independent Committee of the House of Lords speak volumes about this rotten, incompetent and arrogant Government. I urge my hon. Friends to vote against the Government motions in respect of Lords amendments Nos. 1 and 2, and to support the Lords in their decision.
Sir Stuart Bell (Middlesbrough) (Lab): We have had one blessing in disguise, which is that the hon. Member for Runnymede and Weybridge (Mr. Hammond) did not pray in aid the copy of the Financial Times that is on the Dispatch Box before him. I was waiting for him to tell us that he would quote from the Financial Times; indeed, one Opposition Member—I think it may even have been one on the Front Bench—quoted many Financial Times articles. It is a great pity that the Opposition spend so much time reading the Financial Times, but learning so little from it. I am reminded of a saying that Winston Churchill used during the second world war. He quoted Dean Inge, who said, “I’ve had a great many worries; most of them never happened.” The hon. Gentleman’s doomsday scenario bears no relationship to reality.

I followed the Third Reading debate on the Bill, when the House was seriously misled by the hon. Member for Twickenham (Dr. Cable), whose comments on Granite come from another world. The Chief Secretary to the Treasury—

Mr. Deputy Speaker (Sir Michael Lord): Order. The House is very particular about the words that we should not use and “misleading” is one of them, so perhaps the hon. Gentleman would care to withdraw that remark.

Sir Stuart Bell: I am not entirely sure what I am supposed to withdraw. I am not entirely sure what I said— [ Laughter. ]

Mr. Deputy Speaker: Order. It is helpful to the House if hon. Members can remember what they have just said. There was some suggestion of misleading the House and I am sure that that is not what the hon. Gentleman meant.

Sir Stuart Bell: I am grateful, Mr. Deputy Speaker. If I may quote Winston Churchill again, he said, “The best speeches come from the heart.” But if I have unintentionally misled the House, I am happy to—

Mr. Deputy Speaker: Order. It is obviously taking me some time to explain this. Perhaps the hon. Gentleman would like to withdraw the word “misleading”.

Sir Stuart Bell: I am very sorry if I used the word “misleading” in relation to the speech by the hon. Member for Twickenham and of course I withdraw the remark.

I have followed the Opposition most of the evening. They have consistently refused to look any of the arguments in the face when responding to the Chief Secretary. What they are showing is a total misunderstanding of any kind of use of special purpose vehicles in the City of London and any concept of global securitisation. They read the Financial Times, and I can tell them that the City of London will be very disconcerted by their lack of knowledge about what actually happens in the City.

Mr. Dunne: It is revealing to learn that the hon. Gentleman is an expert not only on matters of faith but on global securitisation. As he has criticised the hon. Member for Twickenham (Dr. Cable) for raising the subject of Granite, perhaps he will expand on the final sentence of the technical note from the Treasury which states:
“Northern Rock is not liable for the Granite bonds and bondholders have no access to Northern Rock’s assets.”

If that is the case, why is it that Northern Rock not only controls all the cash flowing into Granite, but has an obligation to top up assets and the seller’s share that it holds in Granite?

Hon. Members: Answer!

Sir Stuart Bell: I am very happy to answer, because the hon. Gentleman has shown his total ignorance of economics as they apply to securitisation. [Interruption.] Yes, he has. That is the nature of a securitisation, and that is the nature of a bond. The hon. Gentleman’s failure to understand that demonstrates the Opposition’s failure to understand anything about the taking of Northern Rock into public ownership, the reasons why it is happening, and the reasons why it is temporary. The hon. Gentleman must understand—although he seems not to wish to understand—that Granite is an independent legal entity. That is a fact from Northern Rock. Granite is owned by its shareholders; Northern Rock owns no shares in Granite. This is a normal procedure.

Angela Browning (Tiverton and Honiton) (Con): I too was present for the Third Reading debate. Can the hon. Gentleman explain this? The technical note states, under the heading “Control of Granite”:
“The contractual structure of Granite is such that it is effectively controlled by Northern Rock as it continues to service the mortgages in Granite and to provide cash management and other administrative services.”

Hon. Members: Answer!

Sir Stuart Bell: That is the principle of securitisation. Securitisation has been here for 20 years. If the House wants a lesson on the concept, let me explain that it began with General Motors. Opposition Members have no understanding of what securitisation means, but everything that the hon. Lady has said is right: that is what securitisation is about. The Opposition’s inability to understand securitisation reveals that they do not understand the City of London, do not understand the financial markets, and do not understand why we are in this position.
Mr. Philip Hammond: Can the hon. Gentleman explain why the Granite entities are consolidated in Northern Rock’s accounts?

Sir Stuart Bell: I understand that at least 40 per cent. of Northern Rock’s mortgages are going across to Granite. Again, we are talking about a concept: the concept of balance sheets and accountability. I must tell Opposition Members that each time they open their mouths they show that they do not understand the City of London, they do not understand accountancy— [Interruption.]

Mr. Deputy Speaker: Order. This is an important matter. The House must listen. [Interruption.] Order. The House must listen to the hon. Member who is addressing it.

Mr. Redwood rose—

Rob Marris (Wolverhampton, South-West) (Lab) rose—

Sir Stuart Bell: I give way to my hon. Friend the Member for Wolverhampton, South-West (Rob Marris).

Rob Marris: I am sure that my hon. Friend will move away from the Granite topic shortly because of the time constraint. I wonder whether he will let us know his opinion of the freedom of information aspect of all this. [Laughter.]

Mr. Deputy Speaker: Order.

Sir Stuart Bell: I am not an expert on witches’ brew. If I were an expert on witches’ brew, I would be an expert on the Freedom of Information Act.

The point is—and the Financial Secretary has already made it—that Northern Rock will not be a public body. Freedom of information legislation requires that sensitive information be defended. The Bank of England has an exemption from the Freedom of Information Act in regard to the provision of private banking and related services. There is no reason why Northern Rock should fall within the purview of the Freedom of Information Act.

Mr. Redwood: The hon. Gentleman is right to say that some securitisation schemes get the obligation off the balance sheet of the company engineering it and into other hands. His problem is that, in this case, that is not what Northern Rock happens to have done. Will he answer the question about the contractual relationship between Northern Rock and Granite which requires the supply of good-quality mortgages where others are paid off, or else become bad-quality mortgages?

Sir Stuart Bell: Again, the right hon. Gentleman does not understand what the Chief Secretary said. Of course there is a top-up principle in the securitisation, because the securitisation is backed by a bond, the bond is bought by the investor, and the bond has an interest—a coupon; of course, it has to be topped up. What the Chief Secretary clearly said is that there are other prime assets within Northern Rock that are not required to be used as that top-up.

I am grateful to my hon. Friend the Member for Wolverhampton, South-West for his comments, because I shall now move on from the Freedom of Information Act 2000 to the question of competition. The Conservatives are not helped by the fact that they have an anti-European attitude and yet they have to fall back on the EU to defend the competition policies that will be enacted in respect of Northern Rock. The point has been made many times—

Mr. Cash: On a point of order, Mr. Deputy Speaker. Does this debate not provide a good illustration of the fact that the entire Bill has been constructed in order to avoid hybrid instruments and the Hybrid Instruments Committee procedure, under which all these matters could be discussed in the proper manner? Is this not the true problem, and it will come out in the hybrid instruments—

Mr. Deputy Speaker: Order. That is not a matter for the Chair.

Sir Stuart Bell: A robust statutory framework is in place at European level to prevent the unfair distortion of competition through Government subsidies, and the Government support of Northern Rock will need to be fully consistent with those guidelines. That should be sufficient assurance for anyone in the City of London to understand that Northern Rock will not have a competitive advantage over other organisations in the banking sector.

Mr. Iain Duncan Smith (Chingford and Woodford Green) (Con): The hon. Gentleman has been a Member of this House for a long time and he has argued endlessly that there should be freedom of information and that we should be open. Does he not feel even the slightest bit ashamed of his Government, as they have driven through this Bill when it is clearly not an emergency? With all his Back-Bench experience and given all the Governments he has seen, does he not feel even a little bit ashamed? Can I tempt him to give his personal opinion of the procedures that his Government have embarked on? Are they not disgraceful?

Sir Stuart Bell: The right hon. Gentleman puts temptation in the way of an hon. Member. It is not for me to yield to the forbidden fruit of Parliament and to be contrary to my Whips Office and my business managers. I would like to say a few additional words, however.

Mr. Beith: Does not what the hon. Gentleman is doing run the risk of ensuring that a party that supports this Bill and that moved the amendment will not contribute to the debate?

Sir Stuart Bell: I have noticed over the years that interventions can take up an enormous amount of time and that many Members make their comments through interventions. As I have been interrupted and I shall continue to be so, I hope that I may make the points that I wish to make before the debate comes to an end.
Miss McIntosh: Perhaps I should draw the House’s attention to my diminishing interest in Northern Rock as a former shareholder. Will the hon. Gentleman answer one question? He is much better versed in the procedures of this House than many Members. Why on this occasion does he choose to rule out the use of a hybrid instrument, which I think would be particularly appropriate to apply?

Sir Stuart Bell: It is not for me to rule that in or out; that is a question for our Front Bench. I have, however, been quietly asked to allow the Liberal spokesman to make an intervention, and I will be happy to do so. Let me simply say that if the Lords spend so much time—two days—on producing amendments such as those we are discussing in this House now, then us having more time would have made very little difference.

Mr. Patrick McLoughlin (West Derbyshire) (Con): On a point of order, Mr. Deputy Speaker. The hon. Gentleman has just informed the House that he has been asked to allow the Liberal Democrats to intervene in this debate, which is very good of the Government. Bearing in mind that it was the Deputy Leader of the House who did that, can you, Mr. Deputy Speaker, enable us to have extra time so these matters can be discussed properly?

Mr. Deputy Speaker: Unfortunately, the answer is no. I am bound by the rules of the House, and interventions such as this simply take up more time.

Mr. Jeremy Browne (Taunton) (LD): What a build up to what will be a great six-minute speech!

The Chief Secretary to the Treasury accused the Liberal Democrats of playing opportunistic games with this Bill. That was a mistake, because if anything we have given the Government guidance throughout on the course of action that they should take. If only they had listened to us a bit earlier, the public purse would be in a lot better condition. As for the hon. Member for Middlesbrough (Sir Stuart Bell), he will have to learn to stand on his own two feet without the guidance of my hon. Friend the Member for Twickenham (Dr. Cable).

Mr. Redwood: What is the Liberal Democrats’ forecast of the first year total cost to the taxpayer of the nationalisation that the hon. Member for Taunton (Mr. Browne) envisages?

Mr. Browne: Let me see whether I can get to that once I have concluded the two substantive points that I wish to discuss, the first of which is on the independent audit and the second of which is on freedom of information.

The Liberal Democrat position is that an independent audit is appropriate, and it is strengthened by the arguments that we have heard about Granite in this House and in the other place. There has been an extremely worrying development, because there still is no feasible alternative to nationalisation, but that does not mean that the Government can sweep the Granite issue under the carpet. Some £8 billion of unsecured loans are on Northern Rock’s balance sheet, but none is on Granite’s, so there is an imbalance that is potentially highly damaging to the taxpayer. We need a new valuation that gives taxpayers confidence that when we undertake to buy this company, we are buying a proposition that offers us a reasonable deal.

Commercial confidentiality is specifically excluded from the freedom of information provisions. The suspicion must be that the Government think that there is something to hide and that they would rather not be exposed by freedom of information. Northern Rock would have benefited from more rather than less scrutiny over the past few years. Some companies in the public sector that have commercial rivals are subject to freedom of information provisions. The Royal Mail is a case in point—it competes with independent, private courier companies—and National Savings and Investments is another example of the phenomenon.
Northern Rock is looking to engage very expensive consultants and it might well pay bonuses to staff, so it seems only reasonable that we are in a position to know the scale of the undertaking being made by its management. The Minister says that the problem is that as this is only a transitory condition and the company will be sold back to the private sector—she was not specific on the precise time scale—it would not be appropriate to subject these measures to freedom of information. Of course there is nothing to prevent the Government from reintroducing provisions to exclude Northern Rock from freedom of information measures when it is sold back into the private sector. We have no assurance of when that will be, and it is surely much better to act on the precautionary principle and for the Government to support the relevant amendment.

In conclusion, the Government are taking an extremely high-handed approach on this matter. The Liberal Democrats have sought to be a wise counsel and good friend to the Government throughout their difficulties over the past five months. That is entirely the spirit in which, in the other place, we supported the amendments before us this evening. We are not seeking to play opportunistic games. We seek to make the legislation, which is being introduced in short order, better than it would otherwise be. Rather than setting their face against good advice from my party and the Conservative party, the Government would do well to be less stubborn and to heed the warnings that we have given them in the past and are putting before the House this evening.

Mr. Duncan Smith: Very little time is left, so I just want to make one particular point. We ought to put the amendments in context. They probe the reality of what the Government are doing. This is not aimed simply at safeguarding commercial interests or the interests of the taxpayer. The main priority of all this secrecy and all this rush is to safeguard the political interests of this Government. They know very well that if freedom of information was allowed, we would find out exactly what had gone on over the past few months. We would know how incompetent and disgraceful their behaviour has been. We would learn something else over the next few months. The Government have set this so that it will go—

It being one hour after the commencement of proceedings on the Lords amendments, Mr. Deputy Speaker put forthwith the Question, pursuant to Order [19 February].

In Northern Rock’s 2006 Accounts they reported how well they were doing. They commented “ The low risk nature of Northern Rock’s balance sheet is reflected in the mix of assets…These assets are well funded through a well diversified range of assets.” They looked forward to further low risk growth, and told their shareholders that the new regulations under Basle II would mean they could reduce the amount of money they needed in their business to support the then level of activity. What a difference a year makes.

Last year they put aside £126 million for possible losses on their lending, most of it for the unsecured loans they had offered people on top of their mortgages. This represented just 0.15% of the amounts they had lent. This year I am sure the new management will want to look at this and step it up considerably. They may also wish to record losses on many other features of the Northern Rock business, as prudence would dictate lower values for some of the assets on the balance sheet, and putting money aside for redundancies and future re-financing costs. There is likely to be a lot of red ink spilled as Auditors and new management try to agree what is fair. The taxpayer will take the hit.

The media and political classes have suddenly alighted on the issue of Granite, the offshore financing company that has issued substantial amounts of paper to its investors, and which holds a lot of Northern Rock’s mortgages. In order to understand what is going on , we need to look at how a mortgage bank can raise money to finance its business.

Northern Rock prided itself on using four principal methods to raise money to lend to people, claiming this showed it was prudent and not too dependent on any one method.

The first is to collect money from savers, through so called retail deposits. If you or I put our few hundred pounds into a bank or building society we are letting them use our money to lend to people on mortgage. Some MPs now seem to think this is the right way to finance a mortgage business, and think it is the prudent way. 22% of Northern’s business was paid for by these deposits at end 2006. Paradoxically, it was this method of finance which led Northern Rock to borrow so much money from the taxpayer, because once the small savers lost confidence in the Bank they wanted their money back, leaving Northern short of funds. It is the ultimate example of borrowing short to lend long – many of the small savers place their money with banks like Northern in deposits where they can get their money out in a day, or with a month’s notice. Mortgage banks lend this money on for much longer time periods, usually safe in the knowledge that their depositors will not all want their money back on the same day, and confident that others will come along to deposit.

The second is to borrow from the money markets – so-called wholesale funds. 24% of Northern’s money came from this source at end 2006. Much of this borrowing is also short term, but banks can usually rely on being able to borrow it over and over again, so again it is usually safe to lend it out for much longer periods. This source of funding dried up in the Credit Crunch of September 2006.

The third is securitisation. 43% of Northern’s money came from this source by end 2006. The bank packaged up groups of mortgages, and sold them to a Granite offshore company. The buyers hold a piece of paper in a Granite company, and receive interest payments based on the mortgages within their company. This financing can be arranged for longer time periods, like the mortgages themselves.

The fourth comes from issuing bonds, where the bondholder lends money to the company for a fixed period. These too can be for longer periods than 1 and 2 above. Northern raised £6.2 billion in bonds, offering mortgages as security for those as well so the bondholders would get their money back if anything happened to Northern Rock itself.

Northern’s critics now tell us this was a risky business model, because it entailed borrowing short and lending long. All banking involves an element of that – that is how banks make their money because they can charge more for the longer term loans they make than they have to pay for the short term money they borrow. They can also, of course, charge more for the loans they make to reflect the greater risks of those loans. Northern’s collapse resulted from the sudden drying up of the money markets, followed by the swift withdrawal of too many retail deposits. Two of its four funding methods went wrong.

The sudden fascination with Granite is probably overdone. Northern took the prudent line on reporting Granite. It kept all the loans and all the borrowings on its own balance sheet. It did so because it manages the mortgages in Granite, and because it has to replace any mortgages that fail to meet the standards required, and because it has to top up the Granite companies with new mortgages if the mortgages are repaid too quickly. Northern also has securitisation arrangements through Dolerite Funding and Whinstone, on a more modest scale than Granite. These are also clearly shown in the last Accounts on the balance sheet.

The argument over Granite revolves around the government saying they are not nationalising the Granite companies and the Opposition pointing out that Granite is part of Northern Rock’s balance sheet with obligations from Northern Rock to Granite that will continue. In addition Northern has an £8.4 billion investment in Granite.

The bigger argument will become how much value can taxpayers put on all of this? The 2007 Accounts are likely to look very different from the 2006. I expect to see some hefty write downs in Northern Rock’s asset base. Valuing their share in Granite is just one part of a much more complex and difficult picture. The valuers also have to take into account the interests of all those who have made money available through securitisation to the Northern Rock business.

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