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| MPs approve Northern Rock plans | |
| (30 minutes later) | |
| MPs have taken the first step towards nationalising Northern Rock, by backing plans to put the troubled bank into "temporary public ownership". | |
| Despite Tory opposition the bill was approved by a majority of 203 MPs. The emergency measure is expected to clear the Commons tonight. | |
| The decision to rush through the bill was criticised by MPs, but Chancellor Alistair Darling said it was essential. | |
| He said it was impossible to run a bank while it was unclear who was in charge. | |
| 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. |
| On Tuesday evening MPs backed it by 367 votes to 164 at its second reading - a government majority of 203 - allowing it to go on to its next Commons stage, where it is examined in more detail, all in one day. | |
| Support for savers | Support for savers |
| Once through the Commons it will spend at least one day in the Lords, where governments are less able to force the pace of bills. | |
| The Commons will then consider any amendments on Thursday and will keep going until the bill is 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. | 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. | 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". | Lib Dem Simon Hughes accused ministers of treating the Commons "disgracefully". |
| The chancellor said it was "essential we proceed quickly" and 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. | "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. |
| 'Protects taxpayer' | 'Protects taxpayer' |
| Mr Darling told the Commons: "We are proposing a course of action that will maintain financial stability. | 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." |
| 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 the day to day running of Northern Rock, they will need to approve its business plan, he said. |
| It has become the policy that dare not speak its name George Osborne | It has become the policy that dare not speak its name George Osborne |
| 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". | 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". |
| "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." |
| He accused the government of avoiding the word "nationalisation", adding: "It has become the policy that dare not speak its name". | He accused the government of avoiding the word "nationalisation", adding: "It has become the policy that dare not speak its name". |
| Competition questions | Competition questions |
| But Labour's Newcastle MP Jim Cousins accused the Tories of wanting a "rapidly managed run-down" of the bank. | But Labour's Newcastle MP Jim Cousins accused the Tories of wanting a "rapidly managed run-down" of the bank. |
| Lib Dem Treasury spokesman Vincent Cable raised concerns about the "very messy area" of competitive principles in relation to other banks. | 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?" | "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 | 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 and, it has emerged, is a non-domiciled taxpayer. | |
| 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. | 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. | 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 | 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 and pay no UK tax on their overseas earnings. | |
| 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." |
| 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. |
| Taxpayers are subsidising the bank in loans and guarantees to other lenders to the tune of about £55bn, which will rise to £110bn under the new strategy, equivalent to £3,500 per taxpayer. | |
| 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. |