---

Northern Rock

Yes, I do, although the lack of leadership of the directors goes back much further than that. However, the hon. Gentleman is right in the other part of what he said. I am still not convinced that the bank's position was sustainable, or that we can be certain that a run would not have happened, but the speed with which the run took place indeed resulted from that news bulletin deriving from that leak. Would we not all like to know how that came about and whether there was any motive on anybody's part that generated the leak? To return to what happened, if one drives round a blind corner at 80 mph and crashes into a broken-down bus, it is no use saying, ““Somebody should have stopped me speeding”” or ““I didn't know there was a broken-down bus round the corner””. That is essentially what the defenders of the bank's previous policy are saying—that the regulator should have stopped them having a bad business model, and that banks cannot be relied on to cater for unexpected circumstances. Banking is about managing the risk of the unexpected. That is what banks are for. What happened to risk management? Did it fail because Mr. Applegarth had a majority of executive directors on the risk committee? Then there is the squalid episode of the creation of the Jersey-based Granite Trusts, where Northern Rock parked its mortgage assets, supposedly to benefit Down's Syndrome North East. The association was completely unaware of its name being used and had not received a penny from the trust or network of trusts, whose real purpose was to facilitate the securitisation of the bank's loan book in terms intended to benefit charitable trusts. It transpires that other banks, including Halifax-Bank of Scotland, Standard Life and Alliance and Leicester, have all engaged in similar exercises, which may involve breaches of UK charity law or procedures. I hope the Charity Commission will look at this, and that the Government will review the law in this area. The irony is that Northern Rock's hard-working staff raised £40,000 for the Down's Syndrome Association by their own efforts six years ago, but the creature created in Jersey by the bank has not given a penny, so far as I know, to Downs Syndrome North East. The question that we must consider is whether the interests of the north-east are likely to be best served by waiting to see whether a saviour can be found who will repay the taxpayer's £30 billion and get the bank on a sound footing. That looks increasingly uncertain. The big danger is that the bank will be driven into administration, in which case the north-east's interests are not even in the queue for the proceeds of the resultant fire sale—and it would be a fire sale, selling into the market at a bad time. Or are people asking for the taxpayer to waive some part of the loan and the interest, perhaps as much as £10 billion, to give a potential buyer a better chance? If we start to say that we could do more to enable a private buyer to take over the bank, the only way in which that could be made realistic—everything else is being done at present—is to offer a lot more taxpayers' money to a particular private buyer to enable that to happen. For heaven's sake, if we can have billions of pounds of Government money to help the north-east, which certainly needs help, would we choose to put money on such a scale into a failing bank? What about all the other things that we need in the north-east, such as our infrastructure, the A1, fast rail links, schools, universities to build up our skills base, and new businesses? We have to ask whether that would be the best way to help the region, and note that it took not something about the north-east but a threat to London's banking system to drive those huge amounts of money out of London. Why is London, so to speak, sending so much money to the north-east? It is doing so because London's banking system, on which London depends, was threatened by what was happening at Northern Rock. The taxpayer is pouring into Northern Rock sums far beyond the wildest dreams of regional bodies, local authorities and the whole north-east business community, with no guarantee of getting more than a part of it back, no current interest payments, and precious little control over what is happening to all the money. That is why Northern Rock probably will be nationalised, and, if not, will probably go into administration. We probably ought to bite the bullet now, but in doing so we must recognise what the Government's principles failed to recognise—that the north-east has suffered and will continue to suffer from this disaster, and that the interests of the region must be one of the guiding factors in deciding how the business can be managed into a state where it can survive as a regional financial institution. That is what it was, before it was taken so recklessly into an aggrandising policy that has proved so disastrous. Frankly, to expect more than that—to expect to get more than a modest regional institution at the end of the day—would be unrealistic. Even now, no private bidder, realistically, looks able to promise that. We also need to ensure that the foundation survives. I hope that it will, and with wider participation from businesses in the region. At one time in London there was a 1 per cent. club of businesses that gave 1 per cent. of their profits to a charitable foundation. Here we have a ready-made charitable foundation, and I hope that more businesses in the north-east will see that it could belong to them in future. Whatever emerges from Northern Rock, it is unlikely to produce the yield for the Northern Rock Foundation that Northern Rock itself produced. It gives me no pleasure to say harsh things about what has happened to Northern Rock—still less does it please me not to be able to offer a comforting picture of a private participant coming in to rescue the business and meet all the conditions that we desire. I wish I could say that that would happen, but we are in a much more challenging situation.