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Northern Rock plan debated by MPs Northern Rock plan debated by MPs
(about 1 hour later)
MPs are debating the bill to allow nationalisation of Northern Rock - as it emerged the bank's new executive chairman is a non-domiciled taxpayer. The chancellor has defended a decision to rush legislation through the Commons to nationalise Northern Rock, set to be approved by MPs tonight.
Alistair Darling told the Commons it was impossible to run a bank while it was unclear who was in charge.
Ministers want to put the troubled bank into "temporary public ownership" in the hope of finding a long-term buyer.Ministers want to put the troubled bank into "temporary public ownership" in the hope of finding a long-term buyer.
This has prompted Tory calls for Chancellor Alistair Darling to resign. Meanwhile the BBC's Robert Peston has discovered that Ron Sandler, the Rock's new boss, is a non-domiciled taxpayer.
Meanwhile the BBC's Robert Peston said Ron Sandler, the Rock's new boss, is a non-dom with a German passport who pays tax in the UK only on his UK earnings.
The Banking (Special Provisions) Bill to nationalise Northern Rock was published on Monday and is expected to become law by the end of Thursday.The Banking (Special Provisions) Bill to nationalise Northern Rock was published on Monday and is expected to become law by the end of Thursday.
Support for saversSupport for savers
It will spend one day in the Commons going through all its stages and at least one day in the Lords, where governments are less able to force the pace of bills. It is going through all its Commons stages on Tuesday and will spend at least one day in the Lords, where governments are less able to force the pace of bills.
Commons leader Harriet Harman said the Commons would consider any amendments made in the Lords on Thursday and the Commons would be kept going until the bill was passed. The Commons will then consider any amendments on Thursday and will keep going until the bill is passed.
The strict timetable was the subject of some criticism during the debate.
Shadow Treasury chief secretary Philip Hammond said MPs were expecting a "narrowly focused" measure - not a 24 page bill, which he said could allow other banks and mutual building societies to be nationalised.
Lib Dem Simon Hughes accused ministers of treating the Commons "disgracefully".
The chancellor said it was "essential we proceed quickly" and said the bill could only be used in "very defined and exceptional circumstances".
"It is impossible to run a bank - let alone any other company - unless it is clear who is in charge of that bank," he said.
Liberal Democrat support for the emergency law means it is likely to be approved.Liberal Democrat support for the emergency law means it is likely to be approved.
An independent figure will then be appointed to value the bank's shares and decide how much compensation shareholders will get.An independent figure will then be appointed to value the bank's shares and decide how much compensation shareholders will get.
Opening the second reading debate on the bill, Mr Darling told the Commons: "We are proposing a course of action that will maintain financial stability. 'Protects taxpayer'
Mr Darling told the Commons: "We are proposing a course of action that will maintain financial stability.
"It will support the savers and it also gives a chance for this company to refocus and restructure. It is also a proposal that protects the taxpayer.""It will support the savers and it also gives a chance for this company to refocus and restructure. It is also a proposal that protects the taxpayer."
Northern Rock was a bank that was "only trading today because of government support", he said. While ministers will not be involved in the day to day running of Northern Rock, they will need to approve its business plan, he said.
While ministers will not be involved in its day to day running, they will need to approve its business plan. It has become the policy that dare not speak its name George Osborne
Measures contained within the bill were "general" because they could be applicable in other circumstances, he added. Shadow chancellor George Osborne said the Conservatives supported an alternative plan of Bank of England-led administration and said the government was writing "a huge blank cheque".
City trouble-shooter
Shadow chancellor George Osborne said the Conservatives supported an alternative plan of Bank of England-led administration.
"Not only do we not know what we are paying for this bank, we don't know what we are buying into," he said."Not only do we not know what we are paying for this bank, we don't know what we are buying into," he said.
"The government simply refuses to tell us how risky this exposure is.""The government simply refuses to tell us how risky this exposure is."
Simon Hughes, for the Lib Dems, said it was "just not reasonable" to ask MPs to deal with all the bill's stages in one night. He accused the government of avoiding the word "nationalisation", adding: "It has become the policy that dare not speak its name".
The running of the bank and any restructuring will now be the responsibility of City trouble-shooter Ron Sandler, who will be paid £90,000 a month for taking on the role. Competition questions
BBC business editor Robert Peston said Mr Sandler had lived and worked in the UK since the mid-1980s, paying UK tax on what he earns here. But he was brought up in Zimbabwe, has a German passport and holds assets overseas. But Labour's Newcastle MP Jim Cousins accused the Tories of wanting a "rapidly managed run-down" of the bank.
Tax purposes Lib Dem Treasury spokesman Vincent Cable raised concerns about the "very messy area" of competitive principles in relation to other banks.
"What is the kind of deposit interest rate that can be offered? Can it offer a higher rate of interest in attracting deposits or the same? How is it going to be constrained. What are its lending practices going to be?"
HAVE YOUR SAYDue to greed, political and financial incompetence, the taxpayer has been left with a huge billHoss, EdinburghSend us your comments
The running of the bank and any restructuring will now be the responsibility of City trouble-shooter Ron Sandler, who will be paid £90,000 a month.
BBC business editor Robert Peston said Mr Sandler had lived and worked in the UK since the mid-1980s, paying UK tax on what he earns here, but he was brought up in Zimbabwe, has a German passport and holds assets overseas.
And the woman he has chosen as his £75,000-a-month chief financial officer, Ann Godbehere, is resident for tax purposes in Switzerland and is also likely to adopt non-dom status.
Job cuts
The government is currently targeting non-domiciled taxpayers - people who live in the UK but who say their real home or "domicile" is elsewhere.The government is currently targeting non-domiciled taxpayers - people who live in the UK but who say their real home or "domicile" is elsewhere.
At present, these "non-doms" pay no tax in the UK on their overseas earnings.At present, these "non-doms" pay no tax in the UK on their overseas earnings.
The Treasury is currently planning for all non-doms in the UK for seven years to have to pay a £30,000 fee to remain as a "non-dom", or pay taxes in the UK on all their income from across the world.
The BBC's Peston said the woman Mr Sandler has chosen to be his £75,000-a-month chief financial officer, Ann Godbehere, is currently resident for tax purposes in Switzerland and is also likely to adopt non-dom status.
A Treasury spokesman said they would be "very relaxed" if Mr Sandler had the non-dom tax status: "Contrary to what some might think we don't have a problem with non-doms."A Treasury spokesman said they would be "very relaxed" if Mr Sandler had the non-dom tax status: "Contrary to what some might think we don't have a problem with non-doms."
Taxpayers have been saddled with debts the private sector did not have much appetite for Matthew SinclairTaxpayers' Alliance
Ministers opted for public ownership of the bank after a bid from a consortium led by Sir Richard Branson's Virgin Group, alongside a proposal from the board of Northern Rock.Ministers opted for public ownership of the bank after a bid from a consortium led by Sir Richard Branson's Virgin Group, alongside a proposal from the board of Northern Rock.
Mr Sandler, who has the task of finding a strategy for the bank, said it was too early to discuss potential job cuts among its 6,000 employees.Mr Sandler, who has the task of finding a strategy for the bank, said it was too early to discuss potential job cuts among its 6,000 employees.
Subsidies
But he added that there was a good platform from which to stabilise the bank and repay billions of pounds of loans.
The Unite union, which represents 4,500 of Northern Rock's staff, called for the government to guarantee nationalisation would not lead to compulsory redundancies.The Unite union, which represents 4,500 of Northern Rock's staff, called for the government to guarantee nationalisation would not lead to compulsory redundancies.
Graham Goddard, the union's deputy general secretary, said the bank's new management had given a commitment that they would be able to discuss Northern Rock's future, for the benefit of everybody. Share trading frozen
He said he was hopeful they could find an alternative to compulsory redundancies, such as retraining and natural wastage. Taxpayers are subsidising the bank in loans and guarantees to other lenders to the tune of about £55bn.
HAVE YOUR SAYDue to greed, political and financial incompetence, the taxpayer has been left with a huge billHoss, EdinburghSend us your comments
Taxpayers are currently subsidising the bank in loans and guarantees to other lenders to the tune of about £55bn.
Under the new strategy this will rise to £110bn, an equivalent of £3,500 per taxpayer.Under the new strategy this will rise to £110bn, an equivalent of £3,500 per taxpayer.
Matthew Sinclair, from the Taxpayers' Alliance, said this was a very big price for taxpayers. Matthew Sinclair, from the Taxpayers' Alliance, said: "Taxpayers have been saddled with debts the private sector did not have much appetite for."
"Taxpayers have been saddled with debts the private sector did not have much appetite for," he said.
Trading in Northern Rock shares was suspended on Monday morning, ahead of the introduction of the emergency legislation.Trading in Northern Rock shares was suspended on Monday morning, ahead of the introduction of the emergency legislation.
Groups representing Rock shareholders, who are likely to receive very little in the way of compensation, say there are "good grounds" for legal action over the government's move.Groups representing Rock shareholders, who are likely to receive very little in the way of compensation, say there are "good grounds" for legal action over the government's move.
Northern Rock's problems were prompted last autumn by a slump in the US housing market and a freezing up of global credit markets that started a run on the bank.