That this House regrets that Her Majesty’s Government have not provided Parliament with financial details relating to the Northern Rock companies affected by the Northern Rock plc Transfer Order 2009 (SI 2009/3226) and have so arranged the restructuring that the negative procedure has been used, thereby avoiding the scrutiny of an affirmative instrument.

Relevant Document: 4th Report from the Merits Committee.

My Lords, the House is indebted to the Merits of Statutory Instruments Committee of your Lordships’ House for the sterling work that it does on the huge quantities of secondary legislation that emerge from the Government. In the case of the Northern Rock plc Transfer Order 2009, which was made by the Government on 8 December 2009, the committee reported its findings in just one week, on 15 December. It is the committee’s fourth report that provides the basis for the Motion that I have tabled. I apologise to the House in advance for the length of my remarks; the more that I looked at the order, the more I was troubled by loose ends and unanswered questions.

The split of Northern Rock into a good and a bad bank has been well flagged for some time, and there is no surprise that this has been done. In broad terms, we on these Benches support the restructuring of Northern Rock in the interests, in particular, of privatising an unwelcome addition to the stock of government assets. While we were not surprised by the fact of the order, the surprise has come in the manner of the underlying transaction and the apparent determination of the Government to keep Parliament and taxpayers almost completely in the dark about it. Indeed, it is not only Parliament and taxpayers that have been sidelined by the Government’s obsessive secrecy; creditors and other interested parties in Northern Rock have been ignored as well.

There are several issues that I wish to raise with the Minister about the order. I will start with the general issue of providing information to Parliament about the split of Northern Rock into a good and a bad bank. The Explanatory Memorandum to the order provides the bare minimum of information about how the order works. Paragraph 10.2 merely notes, as foreshadowed in the ministerial statement that was made on the day that the order was made, that:

“The Government intends to provide Parliament with details of the financial support provided to support the restructuring of Northern Rock in January 2010”.

That begs the question of why the Government could not have provided the information to Parliament at the time when the order was made. It is clear from the sentence that I have just quoted that the Government had already agreed to provide the financial support when the order was made and must have known what that entailed. Can the Minister offer any credible reason for keeping Parliament in the dark?

The Merits Committee, in its measured way, observed at paragraph 7 of its report that:

“The House may feel that it would have been better placed to consider this Order if details of the financial package had been made available at the time the Order was made”.

The House has not been given any chance at all to consider this order properly.

Two days ago the Treasury finally gave some information to Parliament by way of a Written Ministerial Statement some 25 days after the order came into effect. We learn that a further £3 billion of capital is being put into the good bank, now called Northern Rock plc, as well as £2.5 billion of loans into the bad bank, now called Northern Rock Asset Management plc. So behind the order is another £5.5 billion of taxpayers’ money going into the Northern Rock black hole, and it took until Monday of this week for that fact to emerge.

Financial support, however, is only part of the picture. There is nothing in the document laid before Parliament that shows what the transaction actually involves. In order to get an inkling of what is involved, we have to go to the Treasury’s website where various documents may be found. There is an 81-page Northern Rock plc transfer administration agreement, together with Appendix A of 21 pages and Appendix B of 96 pages. There are also two so-called “related documents”, which together amount to 380 pages. If we work through all these documents, we can finally glean from page 68 of the transfer administration agreement that the interim figures for assets and liabilities transferred from the old Northern Rock to the new one are £11.7 billion and £20.3 billion respectively. The difference between the two—some £8.6 billion—is due to be paid from the old Northern Rock to the new Northern Rock. This is the figure of £8,581 million referred to in paragraph 3. These figures may give an idea of what is in the new Northern Rock—the good bank—but they tell us absolutely nothing about what is left behind in the bad bank. This lack of information about the way in which significant assets acquired with taxpayers’ money are being scattered around is nothing short of shocking.

I now move to something equally shocking concerning the Banking (Special Provisions) Act 2008. Some noble Lords will recall that that Act was rammed through Parliament at huge speed in order to nationalise Northern Rock. This order is made under Section 8 of the Act, which allows the transfers covered by the order. That is not the issue. The issue is that, by virtue of Section 13 of the Act, orders made under Section 8 are generally to be carried out by the negative procedure unless the order makes provision for determining the amount of consideration payable by a transferee—under Section 8(6). If subsection (6) were involved then the order would be subject to the affirmative procedure. The Treasury has so constructed the transfers covered by this order that they have included no provision for determining consideration and have hence squeezed the order within the negative procedure, as was pointed out by the Merits Committee. That seems to be the Treasury at its most cynical: first, to draft the affirmative requirements of the Act in an obscure way and then to maximise its use to avoid parliamentary scrutiny.

Unfortunately, I was out of the country nursing a broken arm when the Banking (Special Provisions) Act was passed but I know that the opportunity for scrutiny of the Bill was restricted. I could find no trace of the Government explaining that the implications of Sections 8 and 13 combined meant that parliamentary scrutiny of subsequent transactions would be easily sidestepped. An ordinary expectation would have been that any significant transfer, such as the one covered by this order, would have involved consideration being determined and hence would have been subject to the affirmative procedure.

This order says that ACo—the old Northern Rock company—is to pay the £8.6 billion I referred to earlier to BCo—the new Northern Rock company. An innocent reader of the order might conclude that that was the end of the story but that is far from the truth. The legal documents on the Treasury website, to which I have referred, show that this sum is only the preliminary estimate of the difference between the book values of the assets and liabilities being transferred. There is every intention and extensive legal provision for these preliminary figures being firmed up and changed before the final figure for the transfer is arrived at. The transfers took place under this order on 1 January 2010 but the transfer administration agreement was dated 7 December 2009. Hence the figures which netted out to £8.6 billion had to be illustrative figures, extracted from a balance sheet before that, or dreamt up by the lawyers solely for the purposes of the transfer administration agreement. The final figures will be as at 1 January 2010, presumably extracted from the audited accounts of 2009.

It was fully in contemplation at the time of the order and the transfer administration agreement that adjustments to the £8.6 billion would be needed. Yet, the only reference to this is in a small-print footnote in the Explanatory Memorandum, which is at pains to say that such adjustments, which could be considerable, are not “consideration”, and the order does not say how the adjustments are to be determined. This is all convenient for avoiding the affirmative procedure. Can the Minister say how the adjustments will be effected? The order is clear as to the payment of £8.6 billion but unclear as to any adjustments. Can the Minister say whether the Treasury intends to use the power of modification in paragraph 22 of the order to achieve the final effect, as foreshadowed by the transfer administration agreement?

That brings me to the modification power in paragraph 22 of the order. This was also covered by the Merits Committee in its fourth report. Paragraph 22 allows the two Northern Rock companies to make a modification instrument. This is subject to Treasury consent. The Merits Committee said in paragraph 5 of its report that,

“as both companies are wholly owned by the Treasury, the House may have a view on how much of a safeguard this would provide”.

I suggest that the House should have a very dim view of the safeguard involved. Furthermore, the Treasury’s relentless desire to marginalise Parliament is also evidenced in paragraph 22. This provides for publication of the modification instrument in newspapers and online, but there is no mention of laying it before Parliament or any other mechanism for ensuring that Parliament is kept up to date.

I turn now to the impact of the transfer order on certain creditors of Northern Rock. I want to explore with the Minister whether the Government have behaved properly in relation to all those who were creditors of Northern Rock before the transfer order came into effect. The Merits Committee, in paragraph 6 of its report, drew the attention of the House to the lack of consultation on the order. Consultation was undertaken only with Northern Rock, the Financial Services Authority and the Bank of England, which is, I submit, so inward as to amount to no genuine attempt to carry out consultation at all. The Explanatory Memorandum notes merely:

“It was not considered appropriate”,

to consult beyond that, but no reasons were given. I hope that the Minister will be more forthcoming this evening in the light of the comments that I am about to make.

The Merits Committee said in paragraph 6 of its report that,

“the House may wish to satisfy itself that the restructuring is in the public interest”.

It pointed out that some former Northern Rock shareholders are unhappy that they have received no compensation for their shares. I do not wish to revisit the issue of compensation to shareholders, but I will concentrate on creditors, who have to be paid before there could be any question of return to shareholders. The Explanatory Memorandum to the order in paragraph 3.4(i) says that because of the way that the transfers were made,

“ACo will be no worse off than it is currently”.

That is an arguable statement but, more importantly, it does not address the question of the creditors of ACo and whether they are worse off.

Some creditors of Northern Rock did not benefit from government guarantees given to Northern Rock when it ran into difficulty. Broadly, the Government guaranteed the retail depositors of Northern Rock, but not all of its wholesale liabilities. These guarantees have been rolled over into the two new companies by guarantees issued at the same time as the transfer order. Before the transfers, the creditors were creditors of the old Northern Rock company, which was a mixture of good and bad assets. After the transfers, some creditors will be creditors only of the company now known as Northern Rock Asset Management—that is, the bad bank.

I wish to raise with the Minister whether the Government have disadvantaged those creditors by isolating them in a vehicle which has only undesirable assets. How can it be reasonable to isolate the creditors in this way, especially as they have not been consulted? Can the Minister explain how the Government see the end game of the bad bank? What is the prognosis for the creditors of the bad bank? Do the Government believe that the creditors of the bad bank will have any losses to bear at the end of the day? In the light of that, can the Minister explain why the transfer order makes no provision for any good-will value to be attributed to the value of the business which is transferred to the new Northern Rock company by this order?

I assume that the ongoing business which was owned by the old Northern Rock company has a value. If it had no value, there would have been no reason for the Northern Rock name to be kept in the new Northern Rock company. If the business had no value, it would have been wholly improper for the directors of the Northern Rock company to have agreed to pay £10 million to its local, but not particularly successful, football team in order to promote the Northern Rock name.

My Lords, I congratulate the noble Baroness on raising this issue and on having penetrated the depths of the Treasury website and read and understood the voluminous documents there. There is sometimes a view in Government that simply putting something on a website is informing the world about it. Unless one has the tenacity and the forensic skills of the noble Baroness, the fact that those documents are on the Treasury website is of very little relevance to most people because they simply have neither the time nor the facility to spend the effort, which she has clearly spent, in making sense of them.

Like her, we do not necessarily object to the principles under which the Government are operating. They are clearly trying to get a return from their investment in Northern Rock. Splitting it into a good bank and a bad bank is a perfectly reasonable way of doing it. However, as the noble Baroness said, it is unacceptable that the Government injected £5.5 billion, which, until 18 months ago, was a reasonable amount of money, into Northern Rock in such a way that, but for her interest, I doubt whether anyone would know that it had happened. Unless I am mistaken and I have not read every newspaper assiduously in the past 48 hours, the fact that £5.5 billion has been injected into the two Northern Rock banks has hardly been reported. Through negligence, or simply because of the methods that have been used, this huge further commitment of government funds has happened without notice or comment.

The noble Baroness reminded us of the passage in the Banking (Special Provisions) Act under which Northern Rock was nationalised. She said that there was very little time for scrutiny, and I was very surprised that the Minister shook his head slightly as she said that. My recollection is that the whole scrutiny process in Committee took place in one long and intensive parliamentary day. There certainly was not a chance to go into huge detail. There simply was not time to have thought through the issue that the noble Baroness raised. However, where I think she is wrong—although I may be underestimating them—is in the way that Sections 8 and 13 combined operate. To the extent that they were thought through by the Treasury, it almost certainly did not consider that 18 months later they could be to put together enabling something to be slipped through under the negative resolution procedure. My recollection is that that was not the air in which the Bill was brought forward and certainly was not the air in which it was considered. It was a panic measure. In our view, the Government waited far too long before nationalising Northern Rock, and when they did, they had to do it in a greater rush than would otherwise have been the case.

Somewhat typical of the way the Government are treating this business is their plan that, when the instrument is modified, it will appear on the website of the bank and in two newspapers. As we know, depending on the newspapers and when you put something in them, it creates public interest or does not. The fact that this order was laid just before Christmas, within a few days of the House rising for the Christmas Recess, is an example of how timing really matters in terms of the extent to which there is public understanding of what the Government are up to.

The Merits Committee is again to be congratulated on pointing out the issues raised by this instrument. One area where I cannot agree with the committee is in its suggestion, in raising the interests of the shareholders, that just because some shareholders are still dissatisfied, that is at all relevant. The truth is that from the moment the Bill became an Act, because of the phraseology of the Act and the subsequent secondary legislation, it was clear that the shareholders were not going to get a penny. My concern is that the procedure that was followed—having valuations theoretically done—merely gave false hope to shareholders who were never going to get a penny. I am afraid nothing can be done about that.

The issue that interests me, which is raised only obliquely by this order, is what happens next. For example, is it the case, as was reported at the weekend, that the Government intend to merge the bad bank remainder of Bradford & Bingley with the bad bank of Northern Rock to make a very bad bank? If so, what is the timetable and strategy behind that? Secondly, in terms of the new good bank, the Government say they intend to start seeking a private sector purchaser. Can the Minister say something about the timetable that he has in mind? Our concern about seeking private sector purchasers has been that, partly in order to maximise their short-term revenue, the Government would, if not effect a fire sale of that part of the bank, do it on a shorter timescale than would maximise the return to the taxpayer. We would be most grateful if the Minister could give us some indication of what the Government’s plans are for the good bank as well as the bad.

I support my colleague on the Front Bench, my noble friend Lady Noakes, who has done the House a great service by tabling this Motion and moving it so ably and in such forensic detail. However, the events to which the order refers have already occurred on 1 January for the reasons that the noble Lord, Lord Newby, referred to. The Government should have learnt their lesson about acting in haste and avoiding consultation on this issue. The telephone numbers dealt with in this banking rescue package behove a greater level of parliamentary scrutiny. I associate myself with the concerns of my noble friend Lady Noakes about the treatment of creditors and the concerns of members of the pension scheme—both current and future beneficiaries. There will be quite a bit of anxiety about where this fund will end up. There will also be a great deal of concern among shareholders who are currently undergoing the independent assessment for compensation.

I am torn between two distinct emotions when I see this order before us this evening. The first is real excitement and enthusiasm. The prospect of a phoenix of a great north-eastern institution rising from the ashes of the great recession enthuses me greatly. One of the reasons why I believe we can have a degree of confidence in the new venture is that it has some outstanding leaders. There is a lot of talk, often ill informed, about bankers being the villains of the piece and about there being no such thing as a good banker. I want to inform the House that there is. One of them, Gary Hoffman, happens to be running both parts of Northern Rock—the plc and the asset management. He, his senior management team and the entire 4,500 strong workforce have done an outstanding job over the past 12 months in incredibly difficult circumstances to turn the bank around, to identify the true level of risk and to start rebuilding a tarnished reputation. During that time we have seen some of the original loan repaid to the Government at a faster rate than was anticipated. We have seen depositors returning to Northern Rock, with deposits doubling. We have also seen the very welcome prospect of Northern Rock re-entering the mortgage market at a time when that was greatly needed, doubling the amount made available for lending.

At the other end of the spectrum, I am reminded of my deep sense of anger and injustice at the way Northern Rock was handled in the period between August 2007 and September 2007. Indeed, it continued through the period while the Government dithered over whether to nationalise the bank, which led right up to February. Between Friday 14 September and Monday 17 September 2007, we saw the first run on the deposits of a UK bank for 140 years. Centre stage, we now know, were three elements which conspired to create a perfect storm and signal the onset of the recession for the UK economy. These failures were highlighted in the Treasury Select Committee report in another place which found that the directors of the Northern Rock, especially senior management, were the principal authors of the difficulties that the company faced. It went on to say that the failure of Northern Rock, while being a failure of the board was also a failure of the regulator. In the case of Northern Rock, the FSA appears to have systematically failed in its duty as regulator. However, it was not just the FSA that failed; according the Select Committee, the entire tripartite arrangements seemed to have failed between the FSA, the Bank of England and the Treasury for the financial supervision of the City, which had been put in place with considerable hubris by Gordon Brown as his first act in government. The Select Committee said that,

“for a run on a bank to have occurred in the United Kingdom is unacceptable, and represents a significant failure of the Tripartite system”.

Then there was the publicising—the leak, by accident or design, of 13 September that Northern Rock had been granted emergency financial support, which led directly to the queues of investors around Northern Rock branches on the morning of 14 September. Those pictures were sent around the world in a matter of seconds and did immense damage to the reputation of UK financial services and of north-east England, with which Northern Rock is so closely associated. Just to be clear, it was this Government who set the regulatory environment; it was the regulatory environment, along with management, which failed; and the disclosure of sensitive market operations between the Bank of England which destroyed depositor confidence and shareholder value. We now know that there were potential buyers for Northern Rock in July and August 2007, but mixed signals, founded on a fear of competition rules set out by the Government, discouraged people from taking part and pursuing those interests further. We also know that emergency funds from the Government were considered, but it was felt that this too might have fallen foul of EU rules concerning state aid. Mervyn King, governor of the Bank of England, told the Treasury Select Committee investigation that:

“I had still hoped and indeed pressed strongly for the ability to conduct a covert operation, but in the end strong legal advice amongst the tripartite authorities was that this could not be done”.

That was September 2007; but one year later, in September 2008, of course they discovered that it could be done, and when HBOS got into difficulties, an emergency acquisition by Lloyds TSB was allowed. Bradford & Bingley had its retail operations sold to Grupo Santander, and the remaining part of the business was nationalised. The Government took a controlling stake in Royal Bank of Scotland and it was only a year later that they revealed that the Bank of England had made loans of £61.5 billion to these institutions. They had delayed that information from coming out for a year; if only they had done that with Northern Rock, there would have been a very different picture. The pain that was felt by the 2,000 employees who lost their jobs, the concern and anxiety felt by the depositors, and the loss of value for so many individual shareholders will be indelibly placed on the record of this Government.

Given this track record, the Minister will understand why there is scepticism bordering on cynicism on this side of the House that again we see a new approach presented for Northern Rock in this setting. It is a new way that has not been tried before. Of course, we do not know whether it will or will not work, but neither do the Government—yet it is Northern Rock that is again the institution being experimented on in this respect.

The Government, the Chancellor of the Exchequer who announced the tripartite regime, and now the Prime Minister are centre stage. Now, the same bodies—the Treasury, the regulator and the Bank of England—who failed in 2007 are the ones to come forward to tell us that we can trust them—it will be all right and they will get it right this time. The people of the north-east will wait and see.

My Lords, we are all grateful to the noble Baroness for giving us the opportunity to have this debate. However, we noticed that the Conservative Front Bench in the other place did not provide such an opportunity. If there is to be a debate in the other place, it will be on the initiative of a Back-Bencher. That should put into context just how much anxiety there is about this order and what the Government are seeking to do.

At the beginning of his speech I was somewhat grateful to the noble Lord, Lord Bates, because at least he started to put the order and the reconstruction of the bank into the context of the events that led up to the crisis in Northern Rock two years ago. But I was somewhat disappointed when he continued by saying that this was yet another experimentation on Northern Rock. We are not about experimentation. He must know above all, as his former constituents were greatly involved and threatened at the time, that the queues at Northern Rock were because the bank was in very serious trouble.

There was no experiment by the Government. The measure received the most lukewarm endorsement from that side of the House, as we prepared to take what were effectively emergency measures with regard to the bank. We did that both for the bank and, I hasten to add, the deposit holders in the bank at that time. Because it was the first bank to be affected, the Government were quite rightly anxious that were that bank allowed to fail, the problems in the banking sector and for the wider British economy would have been profound.

In the light of the Treasury Select Committee report that I was quoting from, will the Minister acknowledge what it found—that, in the case of Northern Rock, the Government, the regulator and the Bank of England got it wrong?

If the noble Lord is going to apostrophise the British Government as getting regulation wrong at that time, what about the collapse of banks in Germany? What about the threat to banks in France or the American crisis, where one of the largest banks in the world collapsed in the United States? Is he somehow suggesting that this is a little local difficulty produced by mismanagement by the British Government?—of course not.

The noble Lord certainly ought to be aware of that. I know he is, with his usual acumen. The noble Baroness is certainly aware. I know that she was not able to participate in our debate on the Bill at that time, which was a great misfortune and we sorely missed her on that occasion. I am not so sure that she should strive to make up for her inability to participate at that time by engaging us in debate today, but she has the option to do that. But the noble Lord will recognise, I am quite sure, that emergency action was taken at that time.

The noble Lord, Lord Newby, indicated how hard we had to work on legislation over a very short period of time to deal with this, because the crisis was upon us. Is it contended on the other side that somehow the Government ought not to have acted in this way? These are somewhat misplaced criticisms of the Government’s strategy, which I will develop in a moment in response to questions about how the Government intend to set out the future for Northern Rock. One has to face the fact that Northern Rock was nationalised at a period of very great crisis. It will not do for the noble Lord to abstract from our position that the problems of Northern Rock at that time were not part of a much wider issue.

The Government acted with dispatch and, I should add, with success. We are now moving to the stage whereby restructuring is necessary to maximise the company’s capacity for new lending and protect taxpayers. We said at the time that we certainly wanted to protect depositors—lenders to the bank—and those with mortgages. We needed to protect the ordinary citizen and restore a degree of confidence in the wider financial system. However, we said all along that the other great objective was to protect the taxpayers’ investment in Northern Rock. This is the next stage in which we seek to do that.

I appreciate that these are significant sums and that therefore they should be the concern of Parliament. However, the Government are acting entirely properly. It is part of a wider government policy to encourage and support a well functioning mortgage market, whereby lenders lend responsibly and borrowers have access to a wide range of mortgages that they can afford to repay. The sooner that we are able to restore that confidence in mortgages and their supply, the greater the pace of economic recovery will be. That will also benefit our citizens, because we should not underestimate the stresses and strains of people’s inability to obtain mortgages at the level that they would like.

The restructuring of the bank successfully took place on 1 January 2010 and, as a result, two companies are carrying out the business formerly carried out by Northern Rock: Northern Rock plc, a new savings and mortgage bank, and Northern Rock (Asset Management) plc, the existing company, renamed, that holds and services the majority of the existing residential mortgage book, as well as the government loan. Everyone knows that our long-term objective is to restore these companies to the private sector when they are in a position to command a price which safeguards taxpayers’ interests. Both entities will continue to be wholly owned by the Government and will operate at arm’s length from them on commercial principles. I am grateful to the noble Lord, Lord Bates, for indicating that he takes a keen interest in the management of Northern Rock, for whom he has considerable regard. UK Financial Investments has taken on the management of the Government’s shareholdings in the two companies.

As regards the restructuring, I understand the criticisms of the noble Baroness, who is right to test the Government on this order, but I hope that I am able to refute them. Her speech would have been rather better if she had recognised that the decisions are good news for Newcastle, the north-east region and the wider UK banking sector. They are important for Northern Rock and its staff, because the Government’s actions to stabilise Northern Rock over the past two years have protected the savings and deposits of hundreds of thousands of British families. From 1 January, Northern Rock will offer savings and mortgage products, increase competition in the sector and provide consumers with more choice. I should have thought that there would be universal rejoicing in the House at that development, but noble Lords opposite have concentrated overwhelmingly on the down side.

With the restructuring process now complete, the bank and its team can move forward towards playing a full role in supporting the recovery of the economy. We should all note that the recovery successfully began in the last quarter of last year. The Government have made it clear that they want to see a well functioning mortgage market, where lenders lend responsibly and borrowers have access to a wide range of affordable mortgages. The successful launch of the new Northern Rock is a significant step towards meeting those aims. As we have stated, our objects are quite clear: we want to see Northern Rock flourish, to support financial stability, to protect depositors’ money and, in due course, to protect the interests of taxpayers and to repay them. In the White Paper, Reforming Financial Markets, the Government announced that the conditions for the eventual sale of Northern Rock would be that it must promote competition for retail services, secure the best possible return to taxpayers and ensure that Northern Rock continues to lend to home owners.

My Lords, it is often too easy to cite market sensitivity as a reason for not giving information to Parliament. As I was asking only for information about how these transfers were being effected and what the Government’s commitment was—the Minister was at pains to say that this was somehow within the envelope of money which had been described at an earlier stage—could he describe the market sensitivity in a little more detail?

My Lords, I want to emphasise that the Government have acted entirely properly in regard to this order; they are giving the facts and making the sum involved clear as soon as they are able to do so. The problem with regard to the position before 1 January was obvious enough; namely, that it is not clear what the total figures will be on the commitment in these terms. After all, it will be recognised that there is a constant flow of assets both ways as regards the company. Consequently, the Government have to be in a position where they can give quite definitive figures. That could not be done in December. The noble Baroness will recognise the reasons for that. The Government have acted entirely properly and have made clear what the figures involve.

The suggestion has also been made that the issue has been wrongly presented as far as being an order is concerned. I am of course aware of the Merits Committee’s anxieties—the noble Baroness identified some of them—and its concerns about the procedure adopted for the order. I want to address that point. The Banking (Special Provisions) Act 2008, in whose passage the noble Baroness participated and where we had rather more time for debate than we did on Northern Rock, provides that where a transfer order of this kind includes provision for determining the amount of any consideration payable by the transferee for the transferred property, the affirmative procedure applies. If that situation had obtained with Northern Rock, the Government would certainly have followed the normal form with an affirmative order.

If part of the business of Northern Rock was being transferred to a third party purchaser who was paying the purchase price of that transfer, and it was necessary to provide a process by which that price was to be determined, which would of course have involved a valuer, the affirmative procedure would have applied. However, that was not the case here. The value of the assets and liabilities being transferred to the new company is matched. The new company is not paying any consideration or price for the assets and liabilities being transferred to it, which is why it was entirely proper to consider this under the negative procedure.

I also highlight the obvious fact that the Joint Committee on Statutory Instruments has now considered the transfer order and did not consider it appropriate to draw it to the attention of the House, so I reject this issue of the procedures that the Treasury has been involved in and that the Treasury somehow had something to hide. It is clear that the Treasury has acted entirely appropriately, and we have the negative procedure because that was appropriate. However, there is the opportunity for a prayer to be heard against it, and we have the advantage of that in the noble Baroness’s prayer this evening.

The noble Lord, Lord Newby, asked several important questions. I cannot at this stage give a timescale for when Northern Rock will emerge from its position into a situation where it can be ready for the market, but that is the Government’s objective. As the noble Lord, Lord Bates, indicated, we have trust in the management making good progress with putting the bank on a very secure basis. The noble Lord, Lord Newby, was anxious also about the order, and mentioned that it might have been laid just before the Recess to avoid parliamentary scrutiny. I hasten to tell him that the order was laid well within time—21 days elapsed before it came into force—so it was entirely proper in this instance; I hope that he will accept that.

The noble Lord also asked whether there was any question of Bradford & Bingley and Northern Rock merging. That is certainly an option; the noble Lord would not have raised it if he did not think it a possibility. However, no decision has been taken either that it should happen, or regarding any possible timetable if the decision were that that was in the nation’s interest.

The noble Baroness, Lady Noakes, asked about the creditors in the Northern Rock (Asset Management) position. Northern Rock (Asset Management) is going through an orderly wind-down, just like Bradford & Bingley, and all creditors will indeed be paid in full as and when liabilities mature. There is no question of creditors being sold short in those terms; nor would the Government be party to any position where that could possibly be so.

I am conscious that I have spoken for a considerable period and that, given the plethora of questions that I have been asked, I have not answered every single one. However, I hope that the noble Baroness will give me credit in two respects. Process was one dimension of the Motion. The Government are confident that they have addressed process and information entirely appropriately. We are conducting with Northern Rock a restructuring which honours our initial undertakings when it was nationalised; namely, that we act properly and in the nation’s interest so far as the bank, its creditors, its depositors and those who hope in due course to borrow from it are concerned. We are acting entirely appropriately, as we were two years ago. We shall take the slings and arrows of somewhat outrageous criticism that come from opposition Benches, knowing full well that, when the two years have elapsed, following the degree of success which has attended the nationalising of Northern Rock, we shall see the prosperity also of the institutions.

The Minister said that he had not managed to answer all my questions. In fact, I asked him relatively few questions. There is one that I would like him to answer before I conclude, which relates to the pension fund. The Minister responded in respect of creditors globally, but I raised some specific questions about the pension scheme and the defined benefit element of it. Mr Frank Field has said in an article in Pensions Week that the pension scheme has been left in the bad bank and that the only destination for it will be the pension protection fund, with the potential for less than full pensions being payable, because the PPF does not guarantee by a long way full payment of pensions. Is that so?

My Lords, when the noble Baroness looks at Hansard tomorrow, she will see the number of questions that she raised, which I manfully but probably unsuccessfully sought to answer as fully as I was able. However, I thought that I had perhaps failed to answer her question on pensions through my deficiency in handling my papers. Such is the complexity of the issue, I am not in a position to respond now, but I shall of course write to her.

My Lords, I thank the noble Lord, Lord Newby, and my noble friend Lord Bates for their important contributions to the debate. As the Minister knows, I was keen to raise issues related largely to process and whether Parliament had been given a proper opportunity to consider the order. I remain unconvinced by the Minister’s answers. At one stage, I think that he suggested that if a certain number of pages had to be included in the paperwork that came with an order it would make it unacceptable or too detailed. That rather misses the point of the role of Parliament. As the noble Lord, Lord Newby, was kind enough to point out, we should not have to go devilling around websites looking for several hundred pages of information and to interpret them ourselves.

I remain concerned at the Government’s saying that selling something to a third party would be a consideration and might require an affirmative order, but if one transfers to something that is not a third party—although as between two companies, they are third parties—it is simply mathematics and it is not paying a price. However, it is a price and it could be argued that it was a consideration which should have received an affirmative order. I shall not pursue that line further today. In addition to the process orders, where I think the Minister has not answered, I raised some substantive issues. I hope that he will write to me on the pension scheme. If necessary, we will debate that further in the Chamber.

I was interested to hear the Minister say that in the orderly wind-down of the bad bank, all the creditors would be paid in full in Northern Rock (Asset Management). I would like to study further in Hansard what the Minister has said, because it is an extremely interesting statement which may result in further discussions in your Lordships’ House. I beg leave to withdraw the Motion.