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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.
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 Rocks 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: 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 todays Financial Times said:
The argument...put forward by the Conservatives
was roundly dismissed on Wednesday by City experts...Analysts said this showed a basic misunderstanding of how securitisations worked.
Mr. Osborne: I would be happy to read out a years 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 Rockthe totality of Northern Rockand 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.]
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.
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.
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
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
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.
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 related 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.
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
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.
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 isallegedly, and on her own accountto 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 interestthat 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 Actand 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. Friends 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 taxpayers 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.
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