Tuesday, November 20, 2007

Would you buy shares in this Labour MP?

Put £24 billion of public money into a bank to prop it up and it would be a dereliction of duty not to ask serious and searching questions about whether or not the money can be repaid and if so, how and when. Northern Rock has had more money put into it to save it from collapse that our schools have had over the past year. It outstrips all public spending in the North East put together. So any MP not asking some very searching questions about this money is not doing their job.

It seems that a good many Labour MPs in the North East are pushing the line that anyone who so much as blinks at the thought of handing over to a discredited management who have nearly bankrupted a medium size PLC more money than many government departments have to spend is somehow hostile to ensuring the company survives and is turned around. Labour argue that anyone who asks questions is out to destroy the North East, to take away jobs and, for good measure, eats babies as well.

Let me state my interest in this issue now. My partner and I are shareholders. We have in effect written off this investment. That's what you have to accept if you invest in the stock market. Fortunately the holding was only a tiny part of our portfolio but if you want to enjoy the benefits that go with the stock market, you have to accept the risks as well. That's how the system works.

I also have one close relative who works for Northern Rock. What happens with the company is therefore important to my family. And coming from the North East and refusing to give up on my region which is my home, the future of the company is clearly very important to me. But it does not stop us asking the questions about the financing of the company by the public that has happened.

I am not a fan of nationalisation. But there are times when it is necessary in strategic parts of the economy, such as the banking system, when things go horribly wrong and the private sector is unable to rescue the situation. Even the Conservatives know that - after all under them, the Bank of Credit, Commerce International, BCCI, was bought by the Bank of England.

So Vince Cable is right to argue that the extreme circumstances require a public takeover of Northern Rock, until such time as it is restored to health and can operate again as a going concern. The last thing that should be allowed is for another private operator to step in and buy somethign for less than its true value, leaving the public purse to pick up the difference. Such a huge subsidy to another bank, hedge fund or Richard Branson is completely unacceptable in a market economy. So if the private sector cannot come up with the right offer, the state should step in to protect its now huge interest as well as saving the business and the jobs.

David Anderson is the Labour MP for Blaydon - my home constituency (5000 majority over the Lib Dems, Conservative no chance here). Like other Labour colleagues in the debate yesterday, he trotted out the line that anyone so much as questioning the money that's gone in are akin to the dark forces of evil and need to be treated as such.

The most hopeless, crass and embarrassing intervention in the debate came from Mr Anderson. It was mercifully short which probably added to its potency as one of the worst interventions in a Parliamentary debate I have ever experienced. People’s jaws dropped at how cringingly bad was his performance. And then people just rolled about on the floor in laughter and merriment at such an atrociously poor performance. For entertainment value, it was a 5 star performance. For content and serious contribution to the debate, Mr Anderson is facing a debt almost as large as that of Northern Rock. Hopefully there will be no one willing to buy shares in Dave Anderson PLC. After yesterday’s exhibition, he cannot be regarded as a going concern (perhaps going nowhere concern would be better?) Best put him into liquidation.

1 comment:

Brenda Dean said...

How could you even contemplate liquidising him ? The environment agency has spent a great deal of money cleaning up the River Tyne over the years. Liquidising him would undo that overnight.