With permission, Mr. Speaker, I would like to make a statement on Northern Rock.

I hope that the House will understand that it was necessary for me to issue a statement yesterday, ahead of the markets opening, so that trading in Northern Rock shares could be suspended this morning. It was also essential to allow the management of Northern Rock time to tell its employees what was happening so that the bank could open as normal this morning.

As I said yesterday, the Government have decided to introduce legislation to take Northern Rock into a period of temporary public ownership. I took this decision after full consultation with the Bank of England and the Financial Services Authority. The draft Bill has been available in the Vote Office and the House of Lords since this morning to provide as much time as possible for right hon. and hon. Members, as well as the other place, to examine its provisions. If the House agrees, the Bill will begin its parliamentary passage tomorrow. I have also arranged for the principal Opposition spokesmen to be briefed by Treasury officials today.

It is important for savers and depositors to be reassured that their money remains safe and secure. Northern Rock will continue to operate as a bank on a commercial basis, and it is open for business as usual today. The Government guarantee arrangements that I announced last year remain in place and will continue to do so. Borrowers will continue to make their payments in the normal way.

I have appointed Ron Sandler as the executive chair. He is in Newcastle today and has had meetings with the company and its employees. The new board and the bank will operate at arm’s length from the Government with commercial autonomy for their decisions. I will publish shortly the framework agreement that will outline how the relationship between the Government and the Northern Rock board will work.

As I said yesterday, the board’s proposals will also cover the Northern Rock Foundation, which is very important to the north-east. The board will commit to guaranteeing a minimum income of £15 million per year in 2008, 2009 and 2010. That will be paid directly by Northern Rock, as now, and would be a condition of any sale, if it were sold in that time. The new board will be asked to identify a long-term future for the foundation.

I want to set out the reasons for the decisions that I made and to outline what the new legislation will do. Before that, let me remind the House that last September there was almost universal agreement that the Government were right to intervene to save this bank to stop its problems spreading to the wider banking system. There was also agreement that, ultimately, the long-term future of the bank must lie in the private sector. Even those who advocated nationalisation in the autumn did so on the basis that it could be only a temporary step—a stepping stone—to return the bank to the private sector when market conditions made that possible.

Throughout last autumn, and from the start of this year, the Government wanted to test all the options and to give the shareholders and the management time to find a solution that was acceptable and that met the three principles that I set out last year: to support financial stability; to protect depositors’ money; and to protect the interests of the taxpayer. I said throughout that all options, including a period of temporary public ownership, remained on the table.

As the House will know, the Government had two private sector bids to consider. Each was tested against the option of a temporary period of public ownership to see which met our objectives and principles, including best value for the taxpayer. Both proposals involved a degree of risk for taxpayers and a very significant implicit subsidy from the Treasury, involving a payment below market rate to the Government for continuation of our guarantee arrangements and for the financing that we would put in place.

Each proposal had its pros and cons. The Virgin proposal, for instance, would have brought in a new brand and management. However, the taxpayer would have received a share of the private sector return only if the business’s value to its investors reached at least £2.7 billion. The board’s proposal would have involved a similar level of subsidy, but it had other disadvantages compared with Virgin’s. It would have brought in less new capital, and the business would have depended longer on Government guarantees for new retail deposits. A subsidy on the scale required would not have provided best value for the taxpayer. The private sector rather than the taxpayer would have secured the vast majority of the value created, and that would have been a poor reflection of the balance of risk borne by the two sides. By contrast, under public ownership, the taxpayer will secure the entire benefit and proceeds from the sale of the business in return for bearing the risks during this period of market uncertainty. That is why we made the decision that we did. We made the decision to protect taxpayers having weighed up the various competing considerations. In deciding which was the best option for the taxpayer, it was clear that a temporary period of public ownership was the better option.

I will go through the contents of the Bill in more detail on Second Reading tomorrow. We have deliberately drafted it to ensure that a bank can be acquired only in certain tightly defined circumstances, and the power to do so will last for only 12 months. I have already announced a consultation that will lead to permanent legislation to deal with such situations in future. The Bill potentially applies to a range of financial institutions, but I want to make it clear that the Government have no intention at present to use it to bring any institution other than Northern Rock into temporary public ownership.

The Bill also provides for appropriate compensation to shareholders. As I explained on 21 January, those provisions are on the basis that all financial assistance provided by the Bank or the Treasury, including guarantee arrangements for depositors, had been withdrawn and that no further financial assistance, apart from ordinary market assistance from the Bank, would be provided to the deposit taker. I believe that that is fair both to shareholders and to the taxpayer. The Bill makes provision for transfer of the bank or parts of it to the private sector.

I remind the House that following the problems that started in the United States last summer, Northern Rock was unable to raise the billions of pounds that it needed to stay in business. We were right to save the bank and to do everything we possibly could to find a private sector buyer on terms acceptable to the taxpayer. Because of current market conditions, we are now right to take over the bank on a temporary basis, because that is what is in the best interest of the taxpayer. There were choices to be made. We could have let the bank go under, but the risks to the wider financial system, for savers and for the general public were not acceptable. Having made the decision to save the bank, maintain financial stability and protect savers, we are now taking this decision to protect the taxpayer. I commend this statement to the House.

Never before in the long history of his office has a Chancellor had to come to Parliament to announce the nationalisation of a high street bank. For months, the Prime Minister dithered and delayed, doing everything he could to avoid the very course of action that he now recommends to Parliament. We know why. As the Chancellor acknowledged at the Dispatch Box, nationalisation means the

“slow lingering death”

of Northern Rock

“and Britain’s reputation as a major financial services centre”,

with him

“cast in the role of undertaker”.—[Official Report, 19 November 2007; Vol. 467, c. 968.]

I have three sets of questions to ask that self-confessed undertaker. First, will he reaffirm that nationalisation means that the taxpayer is

“bearing all of the risk”?—[Official Report, 21 January 2008; Vol. 470, c. 1210.]

That was the phrase that he himself used last month in the House when he argued against nationalisation. Nationalisation means that the taxpayer’s risk has doubled to £110 billion, or £3,500 for every family in Britain. Every family in Britain will now own the high street bank that wrote more mortgages at the top of the housing market than any other. Every time a home owner fails to meet a mortgage payment, every family in the country will bear the cost. That is what this nationalisation means.

Can the Chancellor tell us about the state of the £100 billion mortgage book that he wants the taxpayer to own? How many bad loans are there? The credit rating agencies now say that the losses are rising at Northern Rock. Is that true? Before we debate the Bill tomorrow, we are entitled to a full statement of the financial position of the company that we are being asked to buy. We are entitled to see the advice from Goldman Sachs that we have all paid for.

Secondly, will the Chancellor agree that it is totally unacceptable for Northern Rock to continue with business as usual? This is now a Government bank; it can borrow and lend more cheaply than any of its high street competitors. Indeed, today it is still offering some of the best savings deals out there—it is still offering the 125 per cent. mortgages that it wrote last year. That is politically and economically unacceptable. Nationalisation can never mean business as usual. The Chancellor said in his statement that the management would be at “arm’s length”. Why is there nothing in the Bill to prevent political interference?

Thirdly, will the Chancellor confirm that he is actually introducing unprecedented, sweeping, draconian powers that will let him nationalise any other bank or deposit-taking institution in Britain by ministerial fiat? [Interruption.] The Lord Chancellor should pay attention; he keeps talking about strengthening the powers of Parliament, but he is about to give the Chancellor of the Exchequer the power to nationalise any bank in Britain without coming to Parliament—not even Michael Foot dreamed of that. It will create further uncertainty in financial markets and do further damage to Britain’s reputation. If the Chancellor is giving himself those sweeping powers only to get round parliamentary procedures for hybrid Bills, he should give himself them for a week or a month, not for a whole year.

The Chancellor had opportunities to avoid the disaster of nationalisation last autumn, and he missed them. He has the opportunity now to avoid the disaster of nationalisation by opting instead for a reconstruction led by the Bank of England, and he will not take it. It would mean £55 billion less exposure for the taxpayer, and none of this farce of business as usual; it would be like the approach that the Chancellor himself recommends for future bank rescues. But instead, the Prime Minister and his Chancellor have dithered their way to disaster. Now what they call the “temporary nationalisation” could, in the words of Ron Sandler, “last years”.

In uncertain economic times, the British people have a right to expect decisive and strong leadership from their Government. Instead, this Chancellor has given us weakness and indecision, with humiliating reversals over capital gains tax, then non-domiciles and now Northern Rock. He has taken Britain back to the 1970s and the failed policies of Labour’s past. We can safely say that he will never recover his reputation for competence. He is now politically a dead man walking and if the Prime Minister could make a decision, he would move him. What matters to the rest of us is that the British economy and its reputation abroad recovers from the Chancellor’s disastrous time at the Treasury. Nationalising a high street bank is not the way to begin, and we will oppose it tomorrow.

The shadow Chancellor is increasingly someone who conceals cynical opportunism with a pretty thin veneer of abuse. One would have thought that he might rise to the occasion rather than playing petty politics with the serious matter of the stability of the banking system in this country. He has never had a consistent policy on what to do with Northern Rock—every day brings a new policy and a new stance. Last September, he and the Leader of the Opposition said that they wholeheartedly supported what we had done and that they recognised we were right to take the action that we did to stop the problem spreading into the wider financial system. But when things got difficult for them, they ran away from that support. They were in favour of administration, despite the fact that that could have provoked a fire sale with a huge loss to the taxpayer. They said they were against nationalisation, yet two days later the Leader of the Opposition said yes, he would have to consider all the options, including nationalisation. Their policy today appears to be nationalisation followed by some ill-designed plan to sort out the future of the bank. They have absolutely no coherent view about what to do with this problem. They also fail to recognise the problems that have caused the bank’s underlying difficulties in the first place—the problems that arose in the American housing market that have spread to the financial markets right across the world, making it necessary for us to take the action that we have.

The hon. Gentleman criticises the decision that I have taken today. He is entitled to take that view, but he might want to have a word with the shadow Chief Secretary, who said on television this morning:

“The Chancellor is quite right; if the private sector isn’t willing to pay an appropriate value for a business then it would be wrong to hand it over at an under value.”

I am deeply grateful to him for his support.

It is clear that the Conservatives have absolutely no idea how to deal with this problem—all they can do is to come up with proposition after proposition showing their cynical opportunism. Rather than dealing with a serious problem, they have absolutely no answers whatsoever.

I welcome the Chancellor’s statement on the basis that it protects the interests of taxpayers, which the Treasury Select Committee identified in its report. Given the arm’s length management that will operate under Ron Sandler, no doubt the Committee will want to receive regular updates from him and his colleagues to ensure for ourselves that accountability is the key here. Given the unique position of Northern Rock as a nationalised institution, does the Chancellor agree that accountability is extremely important in to ensure that it does not distort the financial markets at any time?

First, I thank my right hon. Friend and his colleagues on the Treasury Select Committee for the very thorough investigation and piece of work that they did in relation to Northern Rock.

It is important that the management team led by Ron Sandler has the opportunity to make its decisions, first, to come up with a business plan, which we need to submit to Europe as part of the state aid approvals process, and then to be allowed to get on with the job. Yet again, I profoundly disagree with what the shadow Chancellor said. He seems to imply that it would be better for the bank to go bust rather than to allow it to trade and get through the difficulties that it faces. We will be in some difficulty if we go down the road of holding the management team to account for every single thing that they do. I am sure that the Select Committee will want to know about the business plan and want to discuss these things, but it is important that the management team gets to operate at arm’s length from the Government and gets on with running the company, because that is the best way of ensuring that it can be restructured and refocused and can then be returned to the private sector when it is appropriate and right to do so.

After five months, the Government are now in the best position to ensure the repayment of the taxpayer’s money. They were right to decide that temporary nationalisation is a better option than a bad private sale whereby the taxpayer would have underwritten the risks and the private buyer would have acquired the profits. I am tempted to say, “I could have told you so”, but this is too important for that. I will content myself simply with making this comment: when the Chancellor receives a large multi-million-pound invoice from Goldman Sachs for its financial advice, could he perhaps return it politely with a little note saying that he received rather higher quality advice free of charge from me and the Liberal Democrats?

The Conservative spokesman talked about the dark satanic socialism of the 1970s, but will the Chancellor confirm that the last time a private bank was nationalised in Britain was in 1994, when the last Conservative Government acquired National Mortgage bank, paying its owners a total of £1? And was not the last major bank nationalisation in the western world undertaken by that loony left-wing Trotskyite President Ronald Reagan, when he acquired Continental Illinois bank, which was subsequently returned at a profit to the American taxpayer by the Clinton Administration?

Clearly, choices have to be made. The Government have made theirs and we have made ours. Until today, the Conservatives had no alternative. I think that they are now suggesting public administration under a publicly owned Bank of England. What is that but nationalisation in all but name? The hon. Member for Tatton (Mr. Osborne) is so determined to keep one foot on either side of the fence dividing the public and private sector that he is in imminent danger of being castrated by the serrated edge.

However, there are questions for the Chancellor. What sort of undertakings did he give to Sir Richard Branson and others to pay their fees for private bids? When will he commission a fully independent audit through the Bank of England to establish the quality of the assets—the loan book for which this enormous sum of public money has been advanced? When will there be democratic scrutiny of the new business model, which could involve contraction or expansion of the bank? I hope that the changes will put an end to the extreme loans to which the hon. Member for Tatton rightly referred, which lent more than the value of property.

In general, the Government have to face some difficult decisions. The bank will have to contract and there will be job losses. We all recognise that, but at least the bank and the north-east have some long-term hope. For that reason, we shall support the measures in Parliament, while giving constructive criticism. That is the right thing to do.

I agree with a lot of what the hon. Gentleman says. He is quite right to remind the House that there have been many occasions when Governments have thought it right to intervene to take action to preserve stability or, in some cases, to preserve vital industries. He will remember what happened in the 1970s because I seem to recall that he was in the Labour party then. He is also absolutely right in his description of the Conservatives’ policy. Their policy is nationalisation. It involves nationalisation, but the hon. Member for Tatton (Mr. Osborne) has the gall to say that he is going to oppose the Bill that will bring that about. The only way he could deliver his policy—in as much as it is understandable and that it will last for the next day or so—would be to nationalise, so it seems extremely odd that he intends to oppose the legislation tomorrow.

The FSA is responsible for regulating Northern Rock and it judges the mortgage book that Northern Rock holds to be of good quality. On the business model, as I said earlier, Ron Sandler and his team will introduce a model after they have had a chance to consider the options available to them. That will have to be endorsed by the Government, because it has to be cleared by the Commission under the normal state aid rules. Once we have taken that action, assuming that Parliament agrees to it in the next day or so, I believe that there is a good chance that we can help Northern Rock to get through this period, and that seems infinitely better than the Tory options of either bankrupting it or finding some other pretty ill-defined destination for it, which make no sense to me whatsoever.

Listening to media reports this morning, it seemed as though the Conservative party was dead set on destroying the great northern institution of Northern Rock, and was prepared to see its assassination in its bitter opposition to nationalisation. However, it now seems that we are hearing different things for different audiences. I can tell my right hon. Friend that people in the north-east, and particularly the bank’s staff, will welcome the announcement of the establishment of a framework agreement. He will understand the considerable anxiety among the population at large in the north-east, particularly those staff. May I press him to undertake early publication of a business plan so that stability is brought to the business at the earliest possible date?

I am grateful to my hon. Friend, who rightly sets out his concern for the future of Northern Rock and for the people who work there. I hope that the business plan can be produced as quickly as possible, but I want to give the management team time to work out a plan that actually stands up. It is better to take time to get these things right, rather than rush into something, which is what the Tories have been suggesting over the past few weeks. It is time to get a properly worked up business plan. I am grateful to my hon. Friend for his comments about the Northern Rock Foundation, which supports many organisations in the north-east. That is an important step.

rose—

I call Ken Clarke. [Interruption.]

That’s you!

The Chancellor will recall that I supported his guaranteeing deposits last autumn, although he did it three or four days too late. However, it seemed to me and most other people that the only case for nationalisation was through an orderly run-down of the bank, with the sale of the loan book, as and when the markets permitted, to get decent value for the taxpayer. If it is genuinely business as usual and if the bank is to remain open and take deposits, why should not every sane saver in this country rush to take their savings out of other banks and saving institutions to put them into the only institution that offers competitive rates of interest, fully backed up by the Bank of England? What would that do for the reputation of the financial services industry in this country? How much profit does the Chancellor expect to make eventually out of the extraordinary venture?

I knew who the right hon. and learned Gentleman was, even if he was taken aback. He appears to support precisely what I propose: that we give the bank time to reorganise and refocus. However, I do not agree with his proposition that the bank should simply be run down. The management team needs the opportunity to restructure and refocus the bank because the market conditions have changed. On its operation in the marketplace, the state aid rules exist to ensure that it cannot abuse its position, but it is in the general interest of stability and of taxpayers to have an opportunity to work things through. If we followed the course of action that the Conservative party advocates, the taxpayer would lose substantial amounts.

Is my right hon. Friend’s intention with nationalisation to grow on a successful business in the public sector or is it simply the beginning of a slow, lingering death for the business? The House is not even at the beginning of the affair. Does the statement mark a new beginning or the beginning of the end in many homes in my city of Newcastle?

Let me put it this way: we had a choice of accepting one of the two bids on the table from the Virgin consortium and from the board. However, when we examined those two bids and judged them against the option of public ownership for a temporary period, they did not stack up in value for money terms. It would have been wrong of me to make a proposal that involved significant subsidy and that, as the figures clearly showed, was not the best option. We must at all times look after three things: the financial stability of the system, security for depositors and savers, and value for taxpayers. That is why I reached the decision at the weekend that I have announced today.

I hope that Ron Sandler and the new management team can examine the bank, ascertain what needs to be done, especially given the market conditions that it now faces, and see what we can do to refocus and restructure the business. I cannot give my hon. Friend the answer today because, as I said, the management needs time to do that. However, the alternative of accepting a bid that was not good value would have been wrong, and the suggestion from the Conservative party simply to bankrupt the bank would have been a profound mistake.

I encourage the Chancellor to resist the calls from Conservative Members to run off the bank completely, and instead to keep it going as a business. I welcome his comments about the Northern Rock Foundation continuing to secure income. After all, if the north-east had been offered even a share of £50 billion in Government loans and guarantees, we could have used it to benefit the region. At least the foundation can give us some benefit.

The right hon. Gentleman is right: the Conservatives want the bank not to take any new business, which would involve it being run off. At least, that is one policy that they are advocating; it would not surprise me if they had another one by tomorrow. That sort of inconsistency would just compound the difficulties that Northern Rock faces. In relation to the action that we have taken, I am grateful for the right hon. Gentleman’s support.

The Chancellor is perfectly right to refer to the sub-prime mortgage crisis in the United States and the ongoing difficulties in the financial markets. Against that background over the past five months, has he not ensured financial stability, prevented contagion, defended the interests not only of the taxpayer but of Northern Rock’s depositors and savers, and provided guarantees that have not been called upon? Given that fact, will he ensure that temporary ownership is also prudent ownership and does not fall within the time scales of our 24-hour news media?

As I have told the House, if we had not intervened to save the bank last September and if it had gone down, there would have been a substantial risk of the problems that it had faced and the difficulties caused by its collapse affecting the rest of the banking system. We therefore intervened and we were right to do so, and as I have said, at that time we were supported in all parts of the House. I fully accept that the Conservative party moved from that position subsequently. In relation to the savers and depositors, we were right, too, to issue those guarantees, because we wanted to ensure that they would not lose their money. We have been successful in that, too. The third element is to ensure that we do the right thing by the taxpayers of this country. That is why I have made the proposals that I have made today—precisely to ensure that the taxpayer’s interests are protected.

It is a long time since we have seen so many smiling faces below the Gangway in response to an announcement by the Chancellor—he has certainly pleased one big audience down there.

May I press the Chancellor on the issue of competitiveness? As he said, the bank is going to trade through. He talked about it trading responsibly and not abusing its position under state control, but how will he guarantee that it will be unable to abuse that position or to continue as it has, which is what got it into so many problems in the first place?

At the risk of upsetting the right hon. Gentleman, I say to him that I am afraid that the best guarantee is the European Union state aid rules.

It is very important that we take notice of the work force in the business plan and ensure that their jobs in Northern Rock are assured. I can tell my right hon. Friend that they are worried about what is going to happen to their jobs. As far as the bank is concerned, tomorrow morning I will be opening an account in the people’s bank.

I am surprised that my hon. Friend does not have one already, but I am sure that the bank will be pleased to hear that.

It is not just the people’s bank that people are concerned about; it is the people’s debt. We have heard the figure of £100 billion, but what is the Chancellor’s estimate of the total liability to the taxpayer, including the guarantees, the loans and any shareholder compensation? Will that amount now also include subordinated debt, which also runs to some billions? He said that the FSA regulates Northern Rock, but is he content with that? The FSA is required to produce a risk analysis of building societies every six months, but where was it? Did it tell the Treasury of its concerns about the massive over-reliance on the wholesale market? If it did not tell the Treasury, heads should roll at the FSA; if it did, perhaps Ministers should be considering their positions.

As has been well documented, the FSA accepts that it should have taken action last year when it became aware that there were problems in relation to the bank. However, I remind the House that, as the Treasury Committee found, the primary responsibility for running Northern Rock lay with the directors. They got themselves into a position from which they could carry on trading only by securing access to billions of pounds of funds from the financial markets. When that became difficult and then impossible in September, they had no alternative but to go to the Bank of England. The primary responsibility for Northern Rock, as for any other bank, must therefore lie with its directors.

On the hon. Gentleman’s earlier points, Northern Rock has a good quality mortgage book, the funds that have been advanced by the Bank of England are secured against Northern Rock’s assets, and as to the guarantees that I have given to depositors, and other guarantees, none of them has been called, so there has been no cost to the taxpayer.

Maintaining banking stability is critical to all of us in the House. Does my right hon. Friend therefore accept that it would be valuable to have an all-party solution to the problems that Northern Rock is facing? With that in mind, will he tell us whether the Treasury has received and assessed any ideas from the Conservative Opposition, or has it in fact received no ideas from them?

I have to tell the House that, if we were going to assess the Conservative party’s policies on this matter, we would have to increase hugely the number of people whom we employ, simply because its policies seem to change every day.

Will the Chancellor confirm that clause 11 of his Bill will enable the Bank of England to offer financial assistance to any building society that might be in trouble? Is not the real signal from the nationalisation that he has announced today that from now on, any bank or building society that gets into trouble through its own incompetence can expect to be bailed out by the taxpayer?

No, that is not the position. There is provision in the Bill to allow for assistance to building societies, because that power does not exist at the moment; it seems to me prudent to include it in the provisions. The tests that have to be passed before a bank can be nationalised are quite high. There will have to be a substantial, serious threat to financial stability, or funding must have been given that has been underwritten by the Treasury, as with Northern Rock. The test that will be applied to any financial institution that is getting into difficulty is simply this: does it present a systemic risk to the system as a whole? If it does, there will be a case for Bank of England intervention; if it does not, that will not be the case. The tests that we shall apply have not changed, and they will not change as a result of the legislation.

Has my right hon. Friend noticed that The Daily Telegraph says today that he is doing the right thing in bringing Northern Rock into temporary public ownership, and that his action is likely to have considerable advantages for the taxpayer? Does not the view of that Tory newspaper contrast with the vacuous blather given from the Conservative Front Bench? That is the party that rushed the nationalisation of Rolls-Royce through the House.

I remember the nationalisation of Rolls- Royce; I was not here at the time, although I am pretty sure that my right hon. Friend was. I did indeed notice the remarks in The Daily Telegraph, although I must concede that it took me some time to get to the bit that said I was doing the right thing—it was a pleasure to read it. The problem for the Tories is that they do not actually have any coherent idea of what to do in this situation. Their position changes from day to day, and from week to week. Therefore, all that we see is cynical opportunism, because they have nothing else to offer.

A recent study shows that Northern Rock is already repossessing more homes than any other major bank. Does the Chancellor still stand by the assurance that he gave me and the House that Northern Rock has a high-quality loan book? If he does, and if he believes that it has a lower proportion of bad debts but is repossessing more of them, will he, as its owner, tell its managers to pursue a less aggressive repossession policy, or does he intend to wash his hands of what the managers do and be the Pontius Pilate of the repossession business?

This is an example of the Tories trying to have it both ways at once. Half of them say that we should not be interfering in the running of the bank, while the other half say that we should interest ourselves in every single transaction. I have made it very clear that the operational decisions and the day-to-day management of Northern Rock have to be a matter for its management. That is absolutely right. I would just say to the right hon. Gentleman, as he was a member of the last Conservative Government, that there are repossessions today, and that is extremely unfortunate, but they are at a fraction of the level they were when he was a Minister.

My right hon. Friend should know that his statement will be widely welcomed, even though we are all aware that difficult decisions lie ahead. He was right to stress a few moments ago that the primary responsibility for this debacle lies with the former managers of Northern Rock. Given that that is so, does he consider it remarkable that the hon. Member for Tatton (Mr. Osborne) has uttered not one word of criticism of the previous management—they were Tories to a man, incidentally—but has instead reserved his indignation entirely for those who are trying to clear up the mess?

Order. I ask the House to remember that we are supposed to be putting questions to the Chancellor of the Exchequer about his stewardship of these matters.

You are, of course, right, Mr. Speaker. So, too, is my hon. Friend in his observation that the primary responsibility for Northern Rock’s difficulties has to rest with those on the Northern Rock board: they were responsible for the business model and had no fall-back position once it became clear that they could not secure the funding that was needed.

The Chancellor does not really believe all this stuff about restructuring Northern Rock, returning it to the market and giving money to the Northern Rock Foundation. His responsibility is to get the taxpayer off the £100 billion hook that that they are on, so that should be first, second, third and fourth on his list. To that end—this is a genuinely honest inquiry—will he explain something that I do not understand? Why has he chosen nationalisation rather than administration? He said again today that administration would result in a fire sale, but that is not necessarily so; he could quite easily have appointed Mr. Sandler as the administrator to proceed with the policies that he wanted him to pursue. That would have given the Chancellor far greater flexibility. He would not have acquired all the other liabilities of nationalisation that he is now taking on or have had the problem of compensating shareholders. In an administration, they would simply have taken what was left, which would probably have been nothing, whereas he is now going to face endless litigation from what looks like a group of very aggressive hedge funds that are latecomers to this party.

I know that the hon. Gentleman was trying to be helpful to his party, but I have to remind him of what the shadow Chancellor said in November last year—[Interruption.] I am quite sure that Conservative Members do not want to hear this, Mr. Speaker. When administration was being discussed, the shadow Chancellor said:

“The winding up of the bank would pose a significant risk to taxpayers’ money…and, of course, significant risks to the jobs of those people who work for Northern Rock”.

I could not have put it better myself.

Is my right hon. Friend aware that if the Opposition do not like hearing the good and sound words of The Daily Telegraph, they might care to read the leading article in today’s Financial Times, which described his decision as “sensible” and “non-ideological”, and likely to be very successful in achieving the purposes that were set out at the beginning? Is he aware that we wish the new management well in the job that it is about take on—ensuring that it will be a success for the taxpayer and others who have a stake in this business?

I am grateful to my hon. Friend. I think that most people recognise that the action we have taken is right in the interests of wider stability and of the taxpayers of this country.

May I return the Chancellor to the questions put to him by my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) and my right hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith)? It is no good just saying that the state aid rules will deal with the issue of competition—they will not. The hon. Member for Blyth Valley (Mr. Campbell) has already named Northern Rock the people’s bank, so why should anybody retain support and deposits in building societies and other banks when this bank now has a Government guarantee? Will the Chancellor tell us what advice he has had from the Financial Services Authority about how to avoid any depositor thinking that all his deposit is guaranteed by the bank and not subject to the same financial services compensation scheme rules that apply to all other institutions?

Once again, half the Conservatives seem to want the bank to fail, while the other half are worried about its being too successful. I said in reply to the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) that whatever business plan is approved has to meet the European state aid rules, which are there to ensure that there is not unfair competition when an institution has a degree of support from a Government. It is important for Northern Rock to have the opportunity to continue to trade in order to get through this difficult period—and I am sure that it will be painful for the company. However, if we take the opposite view of removing the guarantees and stopping it trading or offering products—I am not sure that the hon. Member for Ryedale (Mr. Greenway) was advocating that—we might as well put Northern Rock into administration, which would result in a significant loss to taxpayers. I cannot believe that that is his position.

Having many constituents who work for Northern Rock, I warmly welcome my right hon. Friend’s announcement. May I also add my welcome to that of the right hon. Member for Berwick-upon-Tweed (Mr. Beith) for the underwriting of the commitment to the foundation? Does my right hon. Friend agree, however, that the worst possible outcome for the work force, the shareholders, the Northern Rock Foundation and, more importantly, the north-east economy would be the nonsense proposed by the Conservatives of putting the bank into administration and having an asset sale?

My hon. Friend is right. Along with other hon. Members who represent north-eastern constituents, he rightly expresses concern about the bank and its employees. I very much hope that in the next few weeks, Ron Sandler and his team will continue to have the discussions that they started today with management and employees to see what can be done in restructuring the business to ensure that it has a future. It will be difficult because the market conditions are difficult, but what we have done gives the bank the opportunity to do that and at the same time ensures that we safeguard the interests of the taxpayer. To put it into administration—to run it down, which has appeared over the past half hour or so to be the developing policy among the Conservatives, would not be the right thing to do for anyone.

Following the Chancellor’s response to my right hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith), and following the Chancellor’s edict that it will business as usual at Northern Rock, how can he justify that Northern Rock’s special position in giving a better deal to depositors is within European Union rules? Is it or is it not?

As I said in reply to the hon. Member for Ryedale (Mr. Greenway), it would be a profound mistake to remove the guarantees that we have put in place. Those guarantees ensure the stability of the bank. They also protect individual savers. Removing them is not the right thing to do. I fully understand the concern that the bank should be allowed to continue to trade, but that it should not do so unfairly. The whole point of state aid rules is to ensure that that does not happen. That is certainly our intention, as much as, I am sure, it will be the intention of the Commission.

First, may I say to the Chancellor that he has been wise to take his time before arriving at this momentous decision? That is absolutely right. People will see it as a common-sense response to a difficult position. However, does he recall, in the days before demutualisation, that the bank was a sound building society, operating a good business model with significant reserves that were squandered on a pay-out at demutualisation? Does he accept that rather than rushing into another decision, which the Conservatives would like, to return it immediately to the market, further consideration should be given to the company’s mutualisation so that we return to the sanity of the days when building societies gave proper mortgages to people who required them for good purposes?

I am not sure that I can make a promise on the last point, but my hon. Friend is right that it was correct to give the management and shareholders time to come up with options and alternatives. We gave them that time. We had two bids. Unfortunately, when matched against the option of a temporary period of public ownership—I made the point many times that that had to remain on the table—it was not possible to proceed with those bids. He is right that it is important to get the correct decision.

The Chancellor is right to say that the Northern Rock Foundation is a crucial charitable institution in the north-east, but before he paints too rosy a picture of its prospects, can he confirm that the £15 million funding is less than half the £31 million that it received in 2006? Can he say what will happen to the foundation’s 15 per cent. stake in the bank, and whether any purchasers of Northern Rock’s assets will acquire an obligation to pay funds into it as the bank has done?

I do not think anyone would maintain that the foundation’s prospects have been affected by the difficulties in Northern Rock, which funded all its activities. On any view, the amount that Northern Rock was able to pay into it was going to decrease. We all recognise that it supports a great many activities in the north-east; I wanted to ensure that it had a considerable income, and although the £15 million is less than it was receiving, it is a substantial annual contribution. I did what I could to deal with that particular problem. As for the hon. Gentleman’s other question about the foundation, the legislation will make the necessary provision.

This morning I received an e-mail from a constituent who is a shareholder in Northern Rock. He said that he was a Labour supporter who would never vote Labour again because of what the Government had done. I have not yet had a chance to reply to my constituent, but should he vote for the Liberal Democrats, who would have nationalised the bank five months ago without seeking any of the private sector solutions that the shareholders required? Should he vote for the Conservatives, who would have let the bank sink with all the consequences for shareholders and employees alike? Or should he, on reflection, continue to support the Labour Government, who offer the best solution for the bank and the long-term future of the north-east’s economy?

Probably, the correct answer is the last one. Naturally we are all concerned about all those who experience a fall in the value of shares they have bought, but there is no getting away from the basic problem: these were shares in a bank whose business model was entirely dependent on the ability to raise large sums of money. Last summer, when the problem began in the international financial markets, the company had no fallback position, and it would have gone bust at that time if we had not intervened. That, I am afraid, is the stark reality, as I know my hon. Friend recognises. Today we are trying to ensure that we do the right thing by the taxpayers, while also helping the company to restructure and refocus its activities.

In his hat trick of humiliating statements, the Chancellor has told us that he is accepting the proposal in order to protect taxpayers. If that is the case, what independent assessment has the Treasury undertaken of the quality of the loan book? A year ago Northern Rock was writing mortgage business at two and a half times its market share, at a time of unprecedented house price inflation. It is highly likely that a large proportion of those mortgages will turn sour. Is the Chancellor relying entirely on the FSA’s assurances that the bank is solvent, or has he bothered to do a bit of independent checking himself?

The FSA is responsible for regulating Northern Rock. Ron Sandler and his new management team will want to make their assessment relating to the revised business plan on the basis of what they know about the bank, and they will make it their business to find out all that they need to know about it.

It was imperative for the Chancellor to intervene last year. He made the right decision, because in that very week Alliance and Leicester shares fell by a third, which signalled to anyone with any sense or political acumen that something had to be done. Now he has made the right decision again.

The Tories were not always where they are today. In 1971 Ted Heath did not run away from taking over Rolls-Royce, and it was saved. In 1975 Harold Wilson decided to save Burmah Oil, and as a result it too was saved. That is unlike the Notting Hill finance group, who run away at every single opportunity.

My hon. Friend makes a good point. It is a pity that the Conservative party, which initially supported the action we took, subsequently decided to run away from its consequences.

The European Commission has indicated that while the emergency loans made at commercial rates do not fall under state aid rules, the guaranteeing of deposits does, and it has given the Government six months for emergency restructuring. That six months runs out in March. For how long does the Chancellor think that the EC will condone this continuing situation before it bows to pressure from other banks and financial institutions to implement those rules?

We do have to submit a restructuring plan by March; that has been the case since last year. The hon. Gentleman touches on another important point by emphasising the problems that are faced. There have been similar difficulties in Europe—in Germany, the German Government and other authorities have had to take action to support their banks—because of issues that all stem from the same source: the problems that started in America last year and have spread throughout the world.

The Government have an enviable record in the last 11 years for economic stability and confidence in the economy. They took a decision last September on Northern Rock to preserve stability in the economy. What assessment has my right hon. Friend made of the stability of the UK economy? Is he aware, for example, of there having been a run on any other major bank or financial institution in the United Kingdom since last September?

My hon. Friend makes the point that this country has a very strong and stable economy. We have had more than 10 years of growth and we have very low unemployment and historically low interest and mortgage rates, which is in complete contrast to what we had in the early 1990s when the then Government lurched from one problem to another because they could not keep inflation down, they could not get interest rates down and they had unemployment of almost 3 million. No wonder they got into the difficulties that they faced then.

With permission, I should like to make a short business statement following on from the announcement that my right hon. Friend the Chancellor of the Exchequer has just made.

The business for the remainder of this week will now be as follows:

Tuesday 19 February—Consideration of a Business of the House motion, followed by all stages of the Banking (Special Provisions) Bill, followed by motion to approve a local government restructuring order relating to Shropshire.

Wednesday 20 February—Continuation of consideration in Committee of the European Union (Amendment) Bill [5th allotted day]. Any selected amendments to clause 2 relating to foreign, security and defence policy.

Thursday 21 February—Motion to approve the draft Prevention of Terrorism Act 2005 (Continuance in force of sections 1 to 9) Order 2008, followed by motion to approve the draft Social Security Benefits Up-rating Order 2008 and the draft Guaranteed Minimum Pensions Increase Order 2008, followed by, if necessary, consideration of any Lords Amendments that may be received.

The House will not adjourn until the Speaker has signified Royal Assent.

I shall make a further business statement as usual on Thursday.

I thank the Leader of the House for making that business statement, but I have a number of questions about the handling of this week’s business.

As the Leader of the House announced, there will be a business motion tomorrow to programme the Banking (Special Provisions) Bill. We have already said that we will not hold up the Bill, but given that it has 24 pages, 17 clauses and two schedules, we need to ensure that it receives proper and full consideration. Will she guarantee that business will go beyond the 10 pm moment of interruption tomorrow, to ensure that debate on the Bill is not cut short unnecessarily—particularly as while this elected House has one day to debate the Bill, I understand that the unelected other place will have two days of debate on it? Given that the Committee stage of the Bill will come immediately after Second Reading, what will be the timetable for the tabling of amendments?

Despite the length of the Bill, a lot of detail will still be dealt with by order under the negative procedure. Members need to be able to see that order before they debate the Bill, so will the Leader of the House ensure that the draft order or orders are available to Members in the Vote Office tomorrow morning? Given the importance of the legislation to so many people, and to the reputation of London as a financial centre, can we have a commitment that the order will be subject to a full debate on the Floor of this House, rather than that taking place in Committee with a limited number of Members being able to take part? When will that debate on the orders take place? Will she consider changing the business for this Friday, so that we can debate the orders then? Failing that, will she commit to holding that debate on the Floor of the House next week?

Following the change to tomorrow’s business, when will the sixth allotted day of debate on the European Union (Amendment) Bill take place? Will the Leader of the House guarantee that the House will still have the same amount of time—the same number of days’ debate on the Floor of the House—on that Bill as had previously been set aside?

Over the past months, the Government have dithered and delayed on Northern Rock, but the House needs proper time to consider the Banking (Special Provisions) Bill. Will the Leader of the House guarantee that the House will be given that time to consider it, and the orders pertaining to it, in full?

Draft orders will be laid in the usual way by the Chancellor of the Exchequer before the House rises today. I shall give the House next week’s business in the usual way in the business statement on Thursday, but I can say that there will be no less debate on the European Union (Amendment) Bill than was originally anticipated. As the right hon. Lady will understand, it will be moved back by a day, but we do not expect to curtail the debate that we had scheduled on that important Bill.

As far as consideration in this House and the other House is concerned, the right hon. Lady will know that the procedures of the other House are a matter for it. I know that she will understand that, the decision having been made by the Government on Northern Rock, it is important that we act expeditiously in order that we can have certainty and business as usual, at no loss of confidence to customers and staff. The decision having been made, it is important that this House turn its attention to scrutinising the Bill on the matter and to making its decision as quickly as possible.

We welcome the statement by the Leader of the House and the intention that this important Bill should receive Royal Assent by the end of this working week. That seems absolutely the right objective. It is a substantial Bill and potentially deals with any bank, and building societies as well.

In addition to the questions asked by the right hon. Member for Maidenhead (Mrs. May), may I ask the Leader of the House for a couple of other assurances relating to the handling of the Bill in this House? There is usually a difficulty with amendments if we go straight from Second Reading into Committee on the Floor of the House. Can she assure me that there will be an opportunity for Members of the House to take advice on amendments from Clerks from now until then, so that they can be cleared as being in order, and that there will be short interruptions between Second Reading and Committee stage, between Committee stage and Report and between Report and Third Reading, so that people can be fully aware of exactly what the state of the Bill is and what has happened?

Will the Leader of the House be clear that if colleagues around the House, particularly but not only from the north-east, are willing, able and concerned to debate the matter way beyond 10 o’clock, we absolutely should not impose any artificial restrictions? We should be willing and able, as we have regularly been in the past on far less important legislation, to go through the night if that is required, and to have until 11.30 on Wednesday morning to deal with the Bill at its first time before us.

On Thursday’s business, I welcome the fact that the Leader of the House expects the Bill to come back to us, if there are any Lords amendments, on Thursday. Because we have two other important pieces of business, on terrorism matters and social security uprating, which by tradition and by arrangement are fixed in their time, may I suggest that, with the consent of both Opposition parties, she might agree that we take the Bill first on Thursday, if it is ready and if there are amendments from the Lords? I am aware that a second day of debate may be provided for there, but it is important that if there are amendments, we have the time to examine them and deal with them properly. The Leader of the House knows that we support the Bill and will not obstruct it at all, but it has to be properly debated. It is hugely important not just for Northern Rock but for the whole banking and building society industry.

My last point is on the knock-on effects of the Bill. I completely understand that the topical debate on Thursday will be lost, as that is a reasonable conclusion. However, because the timetable for the European Union (Amendment) Bill has been knocked back one day, will the Leader of the House give Opposition parties a half-way assessment of the timetabling of the second half of the Bill in Committee, to see whether we can reach a more satisfactory agreement about the timing for the rest—and most controversial bits—of that Bill? That might mean fewer complaints that the Government are steamrollering that Bill through the House.

I have announced that we will have a Business of the House motion, which will be debatable and which will be tabled before the House rises so that hon. Members have a chance to consider it. There will be a debate on that motion tomorrow.

I thank the hon. Gentleman for his support for the Bill and I agree that it has to be properly debated, but it also has to be brought in expeditiously to achieve the desired effect. As for the question of when on Thursday we should consider any Lords amendments, we have scheduled that as the last business, because if it were the first business we might not know whether the Lords have concluded their consideration and agreed any amendments. It is therefore important for us to deal with the other issues first and then come to the question of any Lords amendments later.

On the issue of tabling of amendments, I do not accept the argument for a gap after Second Reading. My right hon. Friend the Chancellor placed a draft Bill in the Table Office this morning, so that hon. Members could consider its terms. I am sure that they will be able to obtain the advice of the ever helpful Clerks on what amendments will be in order. Hon. Members will be able to table amendments tomorrow.

I welcome the business statement and I also welcome the fact that the draft orders will be available tonight. When I checked with the Public Bill Office and the Table Office an hour and a half ago, the explanatory notes were not available. This is a 24-page Bill and it is quite technical, so while I congratulate the Treasury team and the draftspeople on what they have done with the draft orders, can my right hon. and learned Friend say when the explanatory notes will be available for Members?

The explanatory notes will be available right away, if not sooner. They are very important and I will ensure that they are available as soon as possible today.

Why does the Leader of the House not take the House properly into account? Why not let us have the Second Reading of the Bill tomorrow and the remaining stages the day after? We cannot table amendments until after Second Reading. It is important that the Bill is properly considered—I speak as one who is not fundamentally opposed to it—and therefore all that the Leader of the House has to do is have a slightly more radical reshaping of the next few parliamentary days, perhaps into the beginning of next week. We could have the Second Reading tomorrow, with a vote at 10 o’clock, and the remaining stages the day after. I commend that proposition to the Leader of the House.

The House will understand that the Bill needs to be considered in this House and in the House of Lords. We have to be sure that we do not prolong any uncertainty and that we come to a swift conclusion. Of course, I have taken into account how the Bill should be dealt with in the House. We want proper scrutiny as well as an outcome that takes place as expeditiously as possible. However, the hon. Gentleman will know that it is not unprecedented in such situations for a Bill to be dealt with in this way. I have a list of Bills—it is far to long for me to read out to the House—that the House was asked to consider in one day because of the circumstances that arose. The hon. Gentleman will be aware that that is the case. The way in which we are proceeding is necessary and it is not unprecedented.

The Leader of the House has made it quite clear that she will allow debate only tomorrow and she has refused to answer the question of whether the debate will go beyond 10 o’clock. Her manner, supported by the Chief Whip’s body language, makes it quite clear that debate will not be allowed to go beyond 10 o’clock—only, as far as I can see, because the Chief Whip wants to allow the Labour party to go home at 10 o’clock tomorrow evening.

The Leader of the House was present for the statement a few moments ago and she saw that the Chancellor of the Exchequer was quite unable to answer a number of questions about how the bank will maintain business as usual. Most of the replies were party political hits at what the Conservative party was supposed to be doing or not doing. There was no explanation of what business as usual will mean for the bank. If every stage of the Bill will be taken in six hours tomorrow—with full parliamentary scrutiny—that surely reduces the handling of the decision to a parliamentary farce after it has taken so long to come to the rather startling decision to nationalise a bank for an indefinite period, putting huge sums of taxpayers’ money at risk.

The right hon. and learned Gentleman has been in this House long enough to know that on occasions the Government can ask the House to act decisively when action is needed in respect of a certain situation once we decide that we want to ensure that the uncertainty is as short as possible and that we will bring in a Bill that will give the Government powers to act. He will know that tomorrow will involve the Bill’s Second Reading and its consideration in Committee. We will discuss the powers that will be taken by the Government. There will be further debate on the exercise of those powers, no doubt, as the situation unfolds.

On a point of order, Madam Deputy Speaker. May I seek your guidance on a point of clarification about the exchange that just took place on the tabling of amendments to the Bill? The Leader of the House did not answer the question about when it would be possible to table amendments to the Bill. Normally, amendments can be tabled only after Second Reading has been completed. Tomorrow, we will consider a business motion and then Second Reading. At what time will it be possible for hon. Members to table amendments to the Bill for consideration in Committee?

Further to that point of order, Madam Deputy Speaker. May we also have some guidance on the precise times that are being proposed, first, for Second Reading and, secondly, for Committee?

Further to that point of order, Madam Deputy Speaker. If I understand the position, amendments cannot be tabled formally until after Second Reading. Will you give us guidance and advice on how long the House authorities will need to supply them to us in a printed form so that colleagues have a chance to look at them and so that you, your colleagues and Mr. Speaker can order them and decide which are selectable and which should be selected? Would it therefore be possible, from your point of view as Chair, to allow the House to be suspended for half an hour or however long it takes—as has happened on many occasions in the past—while we get our acts together and know what we are about to do to this important Bill?

First, I shall deal with the two points of order about the tabling of amendments. I am advised that the Public Bill Office will be able to receive and advise Members about the tabling of amendments with effect from this afternoon and this evening. I hope that that addresses the concerns raised by the two hon. Members.

Sir Patrick, there was quite a lot of noise. Would you mind repeating for me your point of order?

Thank you, Madam Deputy Speaker. I asked whether the House could have some indication today about how much time we will have for the debates on Second Reading and in Committee.

I must advise the hon. Gentleman that the issue that he raises is a matter for the Government; it is for them to table a motion. I am sorry that I cannot be more helpful than that.

On a point of order, Madam Deputy Speaker. During the previous statement, the Chancellor quoted me as having said something on the television this morning. He quoted, quite rightly, me saying that it would be wrong to hand over Northern Rock at an undervalue to a private sector organisation. He implied that I thus approved of his policy. Just for the record, may I read a previous sentence that I had said—[Interruption.]

Order. I need to hear the point of order.

I want to make it clear that the Chancellor was taking my words out of context. I said:

“We think that the better solution would have been to allow the Bank of England to take control of Northern Rock, to effectively lead a protective administration of Northern Rock, without taking it into public ownership.”

That is not a point of order for the Chair, but the hon. Gentleman has placed on the record the point that he wanted to make, and the comments have been heard by those on the Treasury Bench.

I beg to move, That the clause be read a Second time.

With this it will be convenient to discuss the following: New clause 2—Human rights framework for Commission—

‘The protection and promotion of human rights shall be central to the performance of the functions of the Commission.’.

New clause 4—Health and social care standards: content—

‘(1) Standards set by the Secretary of State under section 41 shall—

(a) expressly state that all persons for whom health or social care services are provided are entitled to respect for their rights and that service providers (registered in accordance with Chapter 2) have a responsibility to respect such rights;

(b) require that service providers respect the rights of persons for whom health and social care services are provided;

(c) require that service providers provide their staff, whether employed directly or indirectly, with appropriate education and training in relation to respecting the rights of service users;

(d) require service providers to specify and publish the procedures for making a complaint by any person about a regulated activity;

(e) require service providers to put in place appropriate procedures for ensuring that any person who is aware of any failure to respect any other person’s rights in relation to a regulated activity being conducted by that service provider to report such a failure to a designated person;

(f) require service providers to ensure that, where any person is being discharged from a health care service to a social care service regulated under this Part, the rights of such persons are fully respected; and

(g) require service providers to disseminate the standards set under this Part which are applicable to them to users of their services.

(2) The Secretary of State may prepare and publish statements of standards in relation to the provision of health care and social care dealing with matters other than those listed in subsection (1).

(3) In this section, a “designated person” is a person designated by a provider of health or social care services to receive and resolve complaints.’.

Amendment No. 11, in clause 2, page 2, line 13, at end insert—

‘(bb) the availability and adequacy of advocacy services relating to the bodies it regulates,’.

Amendment No. 8, page 2, line 18, at end insert—

‘(da) the need to improve the range and quality of information provided by health care and social care services to users of those services about their rights;’.

Amendment No. 5, page 2, line 28, after second ‘the’, insert ‘rights and’.

Amendment No. 3, in clause 16, page 7, line 28, leave out ‘may’ and insert ‘shall’.

Amendment No. 4, page 7, line 32, after ‘safety’, insert ‘, rights’.

Amendment No. 6, in clause 42, page 21, line 2, after ‘quality’, insert

‘including, without limitation, respect for the rights of any person’.

Amendment No. 7, in clause 92, page 46, line 12, at end insert—

‘“rights” includes human rights under the Human Rights Act 1998 (c. 42).’.

Amendment No. 14, in clause 108, page 54, line 3, after ‘safety’, insert ‘rights’.

Amendment No. 15, in clause 120, page 65, line 25, at end insert—

‘(1A) The appropriate Minister shall by regulations make provision in relation to awareness of, and training in, human rights in accordance with this section.’.

Amendment No. 16, in clause 122, page 66, line 16, at end insert—

‘“rights” include human rights under the Human Rights Act 1998;’.

Amendment No. 17, in schedule 6, page 138, line 29, at end insert—

‘(3A) The OHPA shall have regard to the desirability of improving the awareness of, and training in, human rights of its members.’.

Amendment No. 18, in schedule 9, page 165, line 27, at end insert—

‘(ea) awareness of, and training in, human rights;’.

I also wish to speak in support of new clauses 2 to 4 and amendments Nos. 3 to 18. These new clauses and amendments have been tabled in my name and that of the hon. Member for Oxford, West and Abingdon (Dr. Harris), who cannot be here because he is away on Select Committee business, on behalf of the Joint Committee on Human Rights, which I chair and of which he is a member. As hon. Members will know, we scrutinise all Government Bills for their compatibility with the Human Rights Act 1998 and the UK’s international human rights obligations. We report on the most significant human rights issues, and we have now begun to publish amendments to give effect to our recommendations. Our new clauses and amendments deal with omissions from the Bill. We expect to publish another report on the Bill shortly, commenting on some of the proposals in the Bill, particularly those to do with public health.

New clause 1 deals with the scope of the Human Rights Act—in particular, the meaning of the term “public authority”, which has become somewhat restricted, far more so than originally intended, and is consequently an extremely important issue. My Committee has published two reports in recent years on the meaning of the term “public authority” in section 6 of the Human Rights Act. That section requires public authorities to act in a way that is compatible with the convention rights set out in the schedule to the Act. The definition of the term “public authority” includes

“any person certain of whose functions are functions of a public nature.”

What constitutes a function of a public nature is not further defined in the Human Rights Act. When the issue was discussed during the passage through Parliament of the then Human Rights Bill, it was clearly understood that that provision was intended to cover private sector providers of publicly funded services—public services that had been contracted out to the private sector or wholly privatised, for example.

A series of court cases, starting with the so-called Leonard Cheshire case and culminating in the judgment by the Law Lords in the YL case in June 2007, has narrowed the scope of the Human Rights Act as originally intended, particularly in relation to care homes. The YL case concerned the eviction from a private sector care home of an elderly and frail old lady whose care was paid for by Birmingham city council. By a majority of three to two, the Law Lords ruled that the person concerned could not bring an action against the care home under the Human Rights Act, over the infringement of her rights under article 8 of the convention—the right to respect for her private life and home. They said that her claim lay solely against the local authority that had funded her care. The 1998 Act therefore does not apply to private bodies, and the Law Lords found that that included private care homes, even for publicly funded residents.

In our March 2007 report on this subject, we concluded that there was a strong case for a separate interpretative Act that would clarify the meaning of the phrase “functions of a public nature” in the Human Rights Act. The outcome of the YL judgment has served only to reinforce our concerns and emphasise the need for the Government to act urgently, to reinstate the originally intended scope of the Human Rights Act. That is especially the case given that the Government’s strategy of seeking a positive judgment in a higher court has manifestly failed to deliver the desired outcome.

Since the YL judgment, Ministers have expressed agreement in principle with our position that the current state of the law is unsatisfactory, especially for elderly care home residents, who are an especially vulnerable group that the Human Rights Act should protect. For example, the Minister of State, Department of Health, my hon. Friend the Member for Exeter (Mr. Bradshaw), said in Committee that the Government were

“committed to amending the Human Rights Act to ensure that all independent providers of publicly funded care homes are covered by it.”––[Official Report, Health and Social Care Public Bill Committee, 15 January 2008; c. 200.]

I introduced a private Member’s Bill in the last Session that would have clarified the scope of the Human Rights Act. During its Second Reading debate in June 2007, the then Minister, who is now the Solicitor-General, said that the Government were “committed to taking action” that year. Unfortunately, they have not moved quickly to clarify the scope of the Human Rights Act. Instead, they propose to bring forward a consultation on the issue as part of the Green Paper on a possible British Bill of Rights and responsibilities. We have been told that the Green Paper will be published in the first half of this year, so it seems pretty clear that concrete proposals will not emerge from the consultation exercise before the next general election—no matter when that happens to be.

I want to reinforce my hon. Friend’s point, with which I totally agree. It is almost 10 years to the day since the then Home Secretary, my right hon. Friend the Member for Blackburn (Mr. Straw), said that “public authorities” should extend to private providers fulfilling public functions. Some 10 years on from that commitment, it is time for us to act accordingly.