Northern Rock nationalisation complete
Friday, 22 February 2008 12:00 AM
The government has completed its nationalisation of high street bank Northern Rock.
Chancellor Alistair Darling signed the order authorising the transfer of shares in the lender to the Treasury late yesterday evening after the bill allowing him to do so was rushed through parliament.
Speaker Michael Martin notified the Commons the banking (special provisions) bill had received its royal assent shortly after 23:00 GMT. The order was then made and laid before parliament, to come into force today.
A memorandum on the Treasury website explaining the pace with which the procedure took place said: "It is important that the transfer of securities in Northern Rock, and other related matters, has effect as soon as possible following the making of the order.
"Shares in Northern Rock have been suspended since February 18th, and it is in everyone's interest for the transfer of shares to be effected as swiftly as possible to avoid any further uncertainty and so as to enable Northern Rock to have clarity about its position."
The bill received just three days' debate in parliament, having been introduced to the Commons on Monday.
Yesterday's session could have run into the early hours of this morning if it had not been for a Lords backdown over key amendments.
Earlier the upper house defeated the government on three amendments to the banking (special provisions) bill, setting up a potential standoff between the two chambers.
The Lords were seeking an independent audit of Northern Rock, the removal of its exemption from freedom of information laws and extra safeguards about its impact on competition in the banking sector.
When the bill returned to the Commons, Treasury chief secretary Yvette Cooper, leading for the government, rejected the amendments outright.
She said the legislation was "in the spirit of the Freedom of Information Act" and that it "would not be appropriate" to ask the Bank of England to conduct a separate audit of the bank.
On additional scrutiny from the Office of Fair Trading Ms Cooper insisted the body "has the powers to step in at any time", but conceded it will report regularly on the effect it is having.
When the bill returned to the Lords again the upper house backed down, allowing the government to achieve its aim of rushing the nationalisation through parliament by the end of the week.
The Conservatives voted against the bill but shadow chancellor George Osborne said his party had won key concessions over the OFT, the publication of its business strategy and the "framework agreement" between the government and Northern Rock.
"These are important retreats over key areas from Alistair Darling," he commented.
"Nationalisation is the worst option for Northern Rock, but at least our vigorous scrutiny in parliament has forced important concessions that make a bad bill slightly better."
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