Bradford & Bingley plc

Debate between Duncan Hames and Cathy Jamieson

Wednesday 27th November 2013 Westminster Hall

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

I have listened with great interest to the comments of the hon. Member for Shipley (Philip Davies), whom I congratulate on securing this important debate, and of the hon. Member for Calder Valley (Craig Whittaker). I was struck by the fact that both referred to a duty of care. I therefore hope they will see fit to support the work that I and colleagues have done to try to get a fiduciary duty of care written into legislation. I have tabled amendments to that effect to financial services Bills on various occasions.

Let me return to some of the issues that have been raised. Hon. Members will no doubt be disappointed that I was not in Parliament or a member of the Government at the time of Bradford & Bingley’s nationalisation, and I am therefore not able to speak from personal experience. The collapse of Bradford & Bingley came about during the worst global economic downturn since the great depression, and we must remember the serious situation that the then Government were facing, which, to be fair, hon. Members have recognised. It is also worth remembering that we had seen just 12 months earlier the first run on a bank for 80 years at Northern Rock. I recall queues of people outside the bank’s branches seeking to withdraw their money, with police having to be deployed in some instances. It was the duty of the Government of the day not only to secure an agreement on the future of Bradford & Bingley but to steady the financial system and to ensure that the country would get through those turbulent times.

We should also remind ourselves of the surrounding circumstances at that time. It was important to take account of the 2.5 million people who had a total of £22.2 billion invested in Bradford & Bingley. A million people had a mortgage with the bank. It had also been particularly exposed to the falling house market after specialising in buy-to-let and self-certification mortgages. I am tempted to go off on a slight tangent and discuss how housing bubbles are created, but that would do a disservice to those concerned about this particular debate, so I will not at this point.

Bradford & Bingley had fallen £26.7 million into the red in the first six months of 2008, so the circumstances were serious. Bad loans increased by 86% between January and June 2008 compared with the same period the previous year. Shares had fallen some 93% in the year before nationalisation, dropping to just 20p the week before. In the first six months of 2008, more than 9,000 customers had their homes repossessed or were more than three months behind with their payments, which was twice the average. Some 370 jobs had been lost, with a further 3,000 at risk. At that time, following various plans to raise funds from shareholders, the confidence of the City had been lost.

[Duncan Hames (Chippenham) (LD)]

I do not envy the position that the hon. Lady finds herself in today. I appreciate that we cannot do anything about what occurred in 2008, but we can today do something about the culture of secrecy that followed. Will she commit to the hon. Members gathered here that she will speak with her Scottish colleagues—the previous Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), and the former Chancellor, the right hon. Member for Edinburgh South West (Mr Darling)—and ask the two of them to provide answers to the questions posed both here and by our constituents about what happened between the rights issue and the nationalisation of Bradford & Bingley?

[Cathy Jamieson]

I have not, to date, spoken directly to the previous Prime Minister or the former Chancellor on this particular issue. I was interested to hear what the debate would be about today, and I look forward to what the Minister has to say about any action that the current Government will take. If there is something useful to be gained from my discussing the matter with the previous Prime Minister and the former Chancellor, I would be more than willing to do so, but I do not know whether that would produce the result that the hon. Gentleman seeks.