The Government retreated on parts of the bill to nationalise Northern Rock in the House of Lords last night.
The Government was defeated yesterday when the Lords voted for an independent audit of the bank’s accounts within three months, followed by annual checks.
The Lords also agreed the stricken bank should be subject to regular assessments by the Office of Fair Trading to ensure Government backing did not give Northern Rock a competitive advantage over other banks.
The Government has now agreed to allow the OFT to oversee Northern Rock and said it would publish the bank’s business strategy and framework agreement governing the relationship between the Government and Northern Rock.
But it is still fighting to exempt the bank from the Freedom of Information Act despite the Lords voting against this clause. It believes Northern Rock would be put at a disadvantage to other banks if it were subject to the Act.
Conservative Shadow Chancellor George Osborne says: “These are important retreats over key areas from Alistair Darling. We will continue to press for Freedom of Information so that the public know what they are buying. It’s a case strengthened by the view expressed in the City that the lack of Freedom of Information may undermine bondholder confidence. 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.”