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Government suffers Rock defeats Deadlock over Northern Rock bill
(9 minutes later)
The government has suffered defeats in the House of Lords over parts of its plans to nationalise Northern Rock. Peers' demands for extra safeguards in the bill to nationalise Northern Rock have been thrown out by MPs.
Peers have voted for an independent audit of the bank's books within three months, followed by annual checks. The bill - which ministers hope to get on the statue books today - now returns to the Lords where peers must decide whether to insist on their amendments.
They also voted against plans to exempt the bank from Freedom of Information laws and to have regular assessments from the Office of Fair Trading. The emergency bill to nationalise the bank cleared the Commons on Tuesday but ran into opposition in the Lords.
The bill is back in the Commons, where MPs have already voted down two of the three amendments. Peers wanted an independent audit of the bank and for it to be made subject to Freedom of Information laws.
They overturned calls for an independent audit by 277 votes to 167 and for the bank to be brought under the Freedom of Information Act by 268 votes to 171. MPs overturned calls for an independent audit by 277 votes to 167 and for the bank to be brought under the Freedom of Information Act by 268 votes to 171.
They were kept back beyond the usual Thursday finish time of 1830 in an attempt to try to get the bill approved.
It paves the way for a session of Parliamentary "ping pong", where measures bounce between the Commons and the Lords.It paves the way for a session of Parliamentary "ping pong", where measures bounce between the Commons and the Lords.
The government should have nothing to fear from the truth Lord HuntConservatives What is Granite?Darling hits back over Rock trustThe government should have nothing to fear from the truth Lord HuntConservatives What is Granite?Darling hits back over Rock trust
A key battleground is Conservative and Lib Dem peers' decision to defeat the plan to exempt Northern Rock from Freedom of Information laws.A key battleground is Conservative and Lib Dem peers' decision to defeat the plan to exempt Northern Rock from Freedom of Information laws.
In the Commons Treasury chief secretary Yvette Cooper said it would not be right to publish "detailed commercial sensitive information" on Northern Rock and accused the Conservatives of "playing games" over a serious issue.In the Commons Treasury chief secretary Yvette Cooper said it would not be right to publish "detailed commercial sensitive information" on Northern Rock and accused the Conservatives of "playing games" over a serious issue.
But in the Lords Conservative peer Lord Hunt said it was "imperative" that there was sufficient transparency and accountability over Northern Rock's operations as "Its directors' salaries and bonuses will be paid out of taxpayers' funds." But in the Lords Conservative peer Lord Hunt said it was "imperative" that there was sufficient transparency and accountability over Northern Rock's operations as "its directors' salaries and bonuses will be paid out of taxpayers' funds".
Independent auditIndependent audit
He added: "The government should have nothing to fear from the truth."He added: "The government should have nothing to fear from the truth."
Peers also voted by 154 votes to 142 for an amendment requiring the Bank of England to carry out an audit of the bank after three months in public ownership, then at least annually.Peers also voted by 154 votes to 142 for an amendment requiring the Bank of England to carry out an audit of the bank after three months in public ownership, then at least annually.
"There are very important reasons why there needs to be an independent audit by a firm of auditors who are not associated with the previous regime," said Lib Dem frontbencher Lord Oakeshott."There are very important reasons why there needs to be an independent audit by a firm of auditors who are not associated with the previous regime," said Lib Dem frontbencher Lord Oakeshott.
"There are very serious concerns now in the City about the last interim report - the last published report - we have seen from Northern Rock on June 30 last year.""There are very serious concerns now in the City about the last interim report - the last published report - we have seen from Northern Rock on June 30 last year."
But Lord Davies, for the government, said it was "vital" in the interests of eventually returning the bank to private ownership, "that we do no apply inappropriate public sector requirements". But Lord Davies, for the government, said it was "vital" in the interests of eventually returning the bank to private ownership, "that we dot no apply inappropriate public sector requirements".
"The Treasury is the public authority subject to the Act and its relationship with Northern Rock as shareholder and lender will be in the public domain." "The Treasury is the public authority subject to the act and its relationship with Northern Rock as shareholder and lender will be in the public domain."
The government says the bank's audited annual accounts will be published after an independent audit, by the end of March.The government says the bank's audited annual accounts will be published after an independent audit, by the end of March.
Peers also backed an amendment requiring the Office of Fair Trading to report annually to Parliament on the nationalisation's impact on competition in the UK's banking market. A third amendment requiring the Office of Fair Trading to report annually to Parliament on the nationalisation's impact on competition in the UK's banking market, was rejected without a vote.
The Tories said Northern Rock would have access to "significantly cheaper money" than its competitors - which could damage the whole British banking system.
But Lord Bach, for the government, said Ron Sandler - the man now responsible for running the bank - was "acutely conscious of competition issues and has no intention of running the bank in a way that abuses its temporary state ownership".