Legislation to nationalise Northern Rock passes to the House of Lords today, after it was rushed through all its Commons stages in a single day.
MPs voted by a margin of 126 shortly after midnight to approve the temporary public ownership for the ailing bank, unveiled dramatically on Sunday by Chancellor Alistair Darling.
Conservatives voted against nationalisation, but with Liberal Democrat support there is little doubt the Banking (Special Provisions) Bill will pass through the Upper House, allowing it to become law by the end of this week.
Mr Darling defended his decision to rush the legislation through Parliament, telling MPs it was impossible to run a bank unless it was clear “who is in charge”.
The Government’s plans may hit a hiccup, however, if peers approve an amendment - tabled by Tories and Liberal Democrats – which would make the Rock subject to Freedom of Information legislation.
The Treasury argues it should be exempted in order to put it on the same footing as other commercial banks, and to avoid the expense of employing the lawyers and officials needed to check requests for information and ensure that individuals’ financial details are not exposed.
Conservative leader David Cameron called yesterday for the Chancellor to be sacked by the end of the week, but Prime Minister Gordon Brown voiced his support for Mr Darling at the first Cabinet meeting since the nationalisation decision was announced.
And there were calls last night for the Rock’s new executive chairman Ron Sandler to make clear that he will pay UK tax on all his income, after the BBC claimed that he benefits from “non-domiciled” status.
Paul Kenny, the general secretary of the GMB union, said it was “untenable” for Mr Sandler to remain a non-dom, with his overseas assets and income sheltered from UK tax.
Mr Darling has recently announced plans to require “non-doms” to pay a £30,000 annual fee after they have been in the UK for seven years, though he backed away from measures allowing HM Revenue and Customs to look into their overseas assets.
“To end this severe embarrassment, the Chancellor has no alternative but to ask Mr Sandler to end his non-dom tax status and become a resident taxpayer, otherwise Mr Sandler’s position becomes untenable,” said Mr Kenny.
Lib Dem Treasury spokesman Vince Cable told the House of Commons: “All the Government’s favourite businessmen including Sir Richard Branson and now Ron Sandler, appear to have so little commitment to the country, let alone the Government, that they prefer to pay their taxes somewhere else.”
And he raised laughter by adding: “The Government does seem to have an extraordinary search engine (with) which it finds banana skins to fall on.”
Neither Northern Rock nor the Treasury would discuss Mr Sandler’s tax arrangements. But the Treasury said it would be “quite relaxed” if it turned out he was a non-dom.
The Daily Telegraph today reported that Mr Sandler was lining up a team from management consultants McKinsey to work on a business plan for the bank following the passage of the Bill.
And the paper said he is considering hiring bankers NM Rothschild to advise him on the Rock’s future and drum up interest from potential future private sector bidders for the bank.
The expected completion of the Bill’s passage through Parliament later this week will allow an independent arbiter to be appointed to work out the value of the Rock’s stock and make an offer of compensation to shareholders.
Mr Darling last night told MPs that this valuation would be based on the worth of the bank without the billions of pounds in government loans and guarantees which have been propping it up – vastly reducing the potential price of the shares.
“If we had not intervened last September this bank would have gone under, it would have gone bankrupt,” said the Chancellor. It would be unfair to the general taxpayer to calculate compensation on the basis that this bank is continuing as a going concern.“
Shareholders have already warned him to expect legal action.