Northern Rock nationalisation debate
Philip Dunne pursues his concerns about Granite and the nationalisation of Northern Rock.
Mr. Philip Dunne (Ludlow) (Con): Is the Chief Secretary therefore telling us that the audited accounts, which will be published at the end of March, will include the consolidation of the assets and liabilities held within the series of Granite subsidiaries of Northern Rock? If that is the case, will she clarify what she was signally unable to clarify last Tuesday? Will the Government have a call on the assets in the Granite subsidiaries in the event of defaults on its liabilities?
Yvette Cooper: We have set that out repeatedly. Clearly, the accounts will need to be set out in the normal way. The accounts of Northern Rock will need to meet all the ordinary accounting practices. It is right that that should be so. We have also repeatedly made it clear that the Government guarantees apply to Northern Rock and not to Granite. Again, it is right that that should be the case and that is the arrangement that has been set in place.
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Mr. Dunne: It is revealing to learn that the hon. Gentleman is an expert not only on matters of faith but on global securitisation. As he has criticised the hon. Member for Twickenham (Dr. Cable) for raising the subject of Granite, perhaps he will expand on the final sentence of the technical note from the Treasury which states:
"Northern Rock is not liable for the Granite bonds and bondholders have no access to Northern Rock's assets."
If that is the case, why is it that Northern Rock not only controls all the cash flowing into Granite, but has an obligation to top up assets and the seller's share that it holds in Granite?
8.30 pm
Hon. Members: Answer!
Sir Stuart Bell: I am very happy to answer, because the hon. Gentleman has shown his total ignorance of economics as they apply to securitisation. [Interruption.] Yes, he has. That is the nature of a securitisation, and that is the nature of a bond. The hon. Gentleman's failure to understand that demonstrates the Opposition's failure to understand anything about the taking of Northern Rock into public ownership, the reasons why it is happening, and the reasons why it is temporary. The hon. Gentleman must understand-although he seems not to wish to understand-that Granite is an independent legal entity. That is a fact from Northern Rock. Granite is owned by its shareholders; Northern Rock owns no shares in Granite. This is a normal procedure.
