The Conservatives know all about nationalising banks. As Bloomberg reminds us, the last bank nationalisation was when, in 1984, Maggie Thatcher bought Johnson Matthey PLC's lending operation for £1. And in 1994 the Tories rescued Slater Walker Securities by advancing about 70 million pounds.
Small beer compared with Northern Rock, yes. But these couple of examples of the Tories helping out private financial operations with public support indicate that "nationalisation" in an emergency has not been anathema to the Tory party in the past.
So why are they talking about "nationalisation" now as if it is the Black Death?
They are trying to make out that Labour is returning to the days of British Leyland and nationalised electricity, coal, water etc etc. Of course, it is not a return to those days. It is a temporary nationalisation which allows the business to continue trading.
The Tories are trying to paint this as Brown's Black Wednesday. To an extent it is. But I think they are over-doing it. They protesteth a tad too much. They are accusing Brown and Darling of "delay and dither" but they themselves seem to be majoring on wisdom after the event.
They call for Darling's resignation. But the only person in a secure enough position to call for his resignation is Vince Cable. He's actually got the thing right all the way through.
The Tory alternative to nationalisation is "Bank of England reconstruction" or "public administration". One of the arguments they use for this method is that it would not allow Northern Rock to be unfairly competitive. Nonsense. As of today, Northern Rock won't be able to be unfairly competitive under EU rules anyway. So that is a completely void argument.
Let us look at the definition of the "administration" (from http://www.bized.co.uk/) which the Tories advocate:
Administration. An application to a court by the company to suspend the requirement to pay creditors for a period of time. During this period of time, the company will be administered by an IP (Insolvency Practitioner) and it will be their job to either find a new buyer for the business or parts of the business, negotiate with the creditors to restructure the debts or oversee the liquidation of the assets to pay off creditors. Going into administration gives the firm some breathing space to help deal with its problems and can result in the firm surviving albeit probably in some different form than before it went into administration.
The first thing to note is that a company usually applies for administration of itself. Not the government. And Northern Rock haven't done that and didn't seem to be about to.
The other thing is that administration, to a large extent, seems remarkably similar to nationalisation anyway. In fact, it's "spot the difference" time. The Bank of England is "wholly owned by the government". So putting Northern Rock into "public administration" (George Osborne's words) under the Bank of England is putting it, effectively, into public ownership albeit, perhaps, for a shorter period than the government's "temporary public ownership". But such an administration would seem to have the disadvantage of effectively throwing in the towel as far as Northern Rock continuing as an effective viable company.
So goodness knows what the difference is between Labour's "nationalisation" and the Tories "public administration". It is very difficult to put a fag paper between them. If anything, the Tory plan seems marginally worse because it would effectively be surrendering the battle to continue Northern Rock as a going concern in more or less the same form as it is today. At least under the Labour plan there is a competent commercial manager in place who will attempt to run the bank on a commercial footing. The Bank of England public administration plan would have something of a winding up/selling off operation about it.