‘I am not here to close you down’

Feb 22 2008 By Andrew Hebden, The Journal

Move gives ‘breathing space’ to bank

NORTHERN Rock moved a big step closer to nationalisation last night after emergency legislation was approved by Parliament.

Opposition parties abandoned a bid to make the troubled bank subject to freedom of information (FOI) laws, ending fears of a night-long battle.

Ministers must now secure approval for an order specifically transferring the bank to public ownership, using the new powers pushed on to the statute book, in just three days.

And a new poll suggests they have public support for the move – with half of voters questioned by Populus for today’s Times backing nationalisation.

Peers had earlier inflicted three defeats on the Banking (Special Provisions) Bill, including an amendment forcing it to answer FOI requests.

Tories and Liberal Democrats joined forces to call on ministers to "let the people know the facts" about exactly where their money was going and how it was being used.

The changes – which also included demands for extra scrutiny by the Bank of England and the Office of Fair Trading – were resisted by the Government and overturned in the Commons. Ministers insisted the FOI provisions were not appropriate given the commercial nature of the Bank’s operations – and the fact that the nationalisation was designed to be temporary.

With a prolonged bout of Parliamentary ping-pong the only other option, the upper chamber ended the stand-off and the Bill was granted Royal Assent, becoming law.

The order transferring ownership of Northern Rock may now be passed today – with a further order dealing with compensation to shareholders following.

North East Labour MPs also stressed temporary public ownership would give the bank "breathing space." Newcastle North MP Doug Henderson said: "It is a new opportunity and it gives more stability and a more sound business future and better prospects of going forward and not back."

Tyne Bridge MP David Clelland said: "We have still got questions to ask but at least now the bank has breathing space and in due course will get back to the private sector and be OK."