Richard Spring MP
Member of Parliament for West Suffolk

It is not over. We will be hearing more about the Northern Rock debacle. Ron Sandler appointed McKinsey to give advice as to how to reconstitute Northern Rock. If I were being paid over £1,000,000 a year I think I would have done the job myself, without the need of the admirable McKinsey organisation. I thought that this was why he was appointed. 

However a number of over excited commentators have suggested that the Tories are disappointed, and have been embarrassed, by Northern Rock not being Labour’s equivalent of Black Wednesday. No Tory believed it ever would be. It simply is part of the process of the unwinding of Labour’s reputation for economic competence. And unlike Black Wednesday, which was actually economically liberating, if not ultimately politically hugely devastating, Northern Rock is part of a pattern of procrastination and misjudgement which are increasingly the hallmarks of a very tired looking Government. 

Just watch this space over the next few months. 

It is no wonder civil servants are restless, no wonder so many of them have rapidly declining morale, and it is not surprising that leaks are growing in number.

If you look at this week, the reasons are all too obvious. The GP sick note “get them back to work” announcement was a simple re-hash, and backfired. After five months of possible preparations, the Northern Rock nationalisation legislation proved to share the characteristics of gruyere cheese: some poor draughtsmanship and some policy elements that did not stand up to close scrutiny as a result.

Yes it did pass into legislation last night but it leaves behind an unpleasant taste of ill thought out incompetence. The words dogs and breakfasts spring to mind. Then databases seem to have a habit of disappearing all too frequently.

With the embarrassing reversal on non-domiciles and capital gains tax, civil servants’ faith in the judgment of their political bosses will have plummeted. There is now an air of drift and lack of focus - it is so palpable- all of which arises out of a lack of management by politicians of their respective departments.

This week this sorry state of affairs really did come into focus.  

I spoke in the debate on the nationalisation of Northern Rock yesterday. Here are a few of my comments…

 Mr. Richard Spring (West Suffolk) (Con): This is called the Banking (Special Provisions) Bill, but it should really be called the Banking (Pig in a Poke) Bill. We do not know the price, or the cost, of the whole exercise. We do not know what we are buying into, or for how long.

The demise of Northern Rock arose out of the sub-prime mortgage crisis in the United States. However, it happened specifically in this country because of the national situation here. Of course there was managerial excess, but it was the asset-based, overspend economic policies pursued by this Government, and the regulatory system instituted by the Government, which failed. We did not see queues of people in Paris, New York, Sydney or Beijing concerned about their deposits. We were in a unique situation.

We have before us no clear business plan, either for our benefit or for that of the European Commission—it will have to wait another month—so we are being asked to sign a blank cheque. What on earth have Ministers been doing? Why did they not develop some sort of plan B over the past five months in case they had to go down the route of nationalisation, when such a huge sum of taxpayers’ money is clearly at risk? Now we understand that the very details of how the bank will be faring are to be denied to us through an exemption from the Freedom of Information Act 2000. That is an absolute disgrace.

The Chancellor has been tilting at City bonuses recently, yet a whole series of bankers and lawyers will be rejoicing at the opportunity that has now been presented to them. When will we know exactly when fees are being dispensed, and how much they will be?

My hon. Friend the Member for Tatton (Mr. Osborne) has dealt with the crucial element in the Bill, which is the right being given to the Government to nationalise other financial institutions. The excuse for this has been hybridity. On a moment’s reflection, however, does it not become clear that to keep the power to nationalise in reserve, even if for supposedly technical reasons, sends out a truly incredible message to the outside world? It is no wonder that the Chancellor finds it impossible to say the word “nationalisation”. Now that depositors are fully protected by the state, will Northern Rock draw savings away from other financial institutions? How will the Financial Services Authority monitor this? The consequences for other financial institutions could be dire. What will they be able to do about it?

We have come full circle because of the failure of the regulatory system. We have heard much about the arm’s length relationship between the Government and the new management of Northern Rock, but that has come from a Prime Minister whose micro-management is famous. We leave the debate today with myriad questions about how Northern Rock will be run, and about what information will be made available to Parliament, when the situation is at present beyond opacity. Despite the dithering and delay, the fiscal excesses, the regulatory failure and the massive risk to the taxpayer, we can only hope that Ron Sandler and his team will salvage something of the impaired reputation of this country, which has been so brutally and incompetently tarnished by this Government.

Yesterday was an exceptionally busy day in the Commons chamber. There were Government statements on both Northern Rock and the loss of a laptop with details of 600,000 people on it. And the EU Reform Treaty started its marathon progress through Parliament. Yet the Prime Minister, who refused to sign the EU Treaty in front of the cameras, was nowhere to be seen. Nor was Nick Clegg. 

The EU Reform Treaty could cause some considerable damage to the Prime Minister over the upcoming weeks. Many Labour MPs are rebelling. The Labour dominated Commons Foreign Affairs Select Committee has published a damning report. Its conclusion; there is little or no difference between the EU Reform Treaty and the old constitution. 

In Europe, the manner in which Gordon Brown signed the EU Reform Treaty has not gone unnoticed by our European partners. He is likely to have lost influence in Brussels because of it. 

The British people continue to get more irritated by the conduct of the Government. Labour’s election manifesto said there would be a referendum on the Constitution. Yet Gordon Brown took it on himself to agree to the renamed EU constitution without letting the British people have their say. British voters will not forget this in a hurry. In effect, Gordon Brown is in the worst of all worlds. 

William Hague made one of the most brilliant speeches I have ever heard in the Commons. David Miliband looked very uncomfortable indeed, and all the Liberal Democrats did was attack the Tories. 

This was on a day which saw one of the steepest falls in the history of the London Stock Exchange. 

Northern Rock, the EU constitution, terrible overspending by the Government, and a poor stock market….. just keep watching the polls.