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12 Dec 2002 : Column 388—continued

Penrose Inquiry

8. Mr. Peter Luff (Mid-Worcestershire): What recent representations he has received from or on behalf of policyholders in Equitable Life about the progress of the Penrose inquiry; and if he will make a statement. [85255]

The Financial Secretary to the Treasury (Ruth Kelly): I have received a number of representations from policyholders about the progress of Lord Penrose's inquiry. I understand that Lord Penrose has now examined the vast bulk of the documentary evidence and has begun a programme of witness interviews. He has said that he hopes to report to Ministers next summer.

Mr. Luff : That is a very long time away. Does the Minister understand that the many thousands of policyholders who have lost out so badly through the Equitable Life scandal—they include many hon. Members, of whom I am not one—would be forgiven for thinking that when the Government face a problem that they think might embarrass someone else, such as the BSE scandal, they hold a major public inquiry, throw resources at it and hold it in public, but when they face a scandal that might affect them, they starve the inquiry of resources, hold it in private and will not even allow an interim report to be published?

Ruth Kelly: I completely understand and sympathise with the position of policyholders at Equitable Life. I certainly understand the distress and indeed anger that they feel regarding some of the events that have occurred and their desire for a quick resolution and progress on the inquiry. However, I draw to the hon. Gentleman's attention the fact that this a judicial inquiry, headed by a senior Scottish judge who understandably wishes to produce an authoritative, thorough and accurate report of events dealing with the actions not only of the regulators, but of Equitable Life over a period spanning 50 years. That will necessarily take a significant time, although Lord Penrose is determined to proceed as quickly as possible.

Mr. George Mudie (Leeds, East): I appreciate that my hon. Friend shares the concern about the policyholders and understands the trauma that they are going through, especially those who are at retirement or approaching retirement. I appreciate also that the report will come through next summer, if it is on course. However, that seems a long time away. I wonder whether any discussions have taken place with the inquiry to ascertain whether additional resources could be made available to shorten the time that is taken. If not, will my hon. Friend make such an approach?

Ruth Kelly: Lord Penrose is free to suggest any addition to resources that he feels is necessary. He has not requested more resources than he has currently

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available to him. I would like to make a comparison with the ombudsman's inquiry, in which I know Members are interested. She says that her inquiry, which is focused only on the action of the Financial Services Authority over a two-year period, is so complex that she feels unable to give an authoritative account of that short period—that is inquiring into one of the actors—until at least June next year. It is appropriate to view Lord Penrose's progress in that context.

Mr. Mark Field (Cities of London and Westminster): I entirely accept the sincerity of what the Minister has had to say. All of us who have constituents who are faced with this appalling situation have great concern. However, what message does she have for current annuitants who have found themselves, only in recent weeks, being made aware of a 30 per cent. reduction in the pension on which they rely upon to live? I would be interested to know what message she has at this juncture, given the dire circumstances in which they find themselves. As has been said, we have many months to go until the Penrose inquiry finally reports.

Ruth Kelly: The situation of with-profit-annuitants to which the hon. Gentleman refers is one that strikes a chord with many people who are, in a sense, locked in to Equitable Life and do not have the freedoms at their disposal that other categories of policyholders enjoy. However, I would point out the case that Equitable has made when it judged these decisions, together with the FSA. It is that with-profits-annuitants continued to enjoy quite a significant rise in their policy values when others were already experiencing cuts in their policies. So the recent cut was to bring them into line with the experience of other policyholders.

We continue to work closely with the Inland Revenue to ascertain whether there is any way in which we can facilitate in general the transfer of annuitants from one company to another. That is not particularly in the case of Equitable Life, but for all annuitants who feel that their choice is a one-off decision made for life over which they have little control.

Mr. Mark Prisk (Hertford and Stortford): When our constituents listen to our proceedings on this issue, they are aware of the ever-lengthening delays that have been mentioned and the lack of Government leadership. They find that combination soul-destroying. Yet the Government could give them immediate reassurance by making one clear commitment. It is that if the inquiry finds that the Treasury and the Department of Trade and Industry failed in their regulatory duty, will the Government provide policyholders and annuitants with appropriate compensation? Yes or no?

Ruth Kelly: It would be ridiculous of me to pre-empt the potential findings of the inquiry. The important fact is that it was the Government who set up an independent judicial inquiry, headed by one of the most senior judges in Scotland, with commercial and accountancy experience in his background. That is what the policyholders were requesting. It is something that the Conservative party welcomed at the time.

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World Bank/IMF

9. Brian White (Milton Keynes, North-East): If he will make a statement on how he monitors and measures the performance of the World Bank and IMF. [85256]

The Chancellor of the Exchequer (Mr. Gordon Brown): Through a British initiative, a new independent evaluation office, which monitors and measures the International Monetary Fund's performance was created last year. We also support the review of the poverty reduction strategies of the World Bank and the IMF. They replace the structural adjustment facility.

Brian White : I welcome those changes. However, does my right hon. Friend accept that much of people's distrust of international organisations such as the IMF is based on their past practices, which were not open to the public? Will he help to ensure that such organisations are much more open and that the work of the independent evaluation office is much more widely known in this country?

Mr. Brown: As my hon. Friend knows, when the IMF reported on the British economy, the reports were not normally published. All are now published, and I hope that every country will publish the reports that the IMF gives them. That is one method of increasing transparency and openness. It is also important to monitor the IMF to ascertain whether it is doing a good job. That is the purpose of the independent evaluation office.

It is also crucial that the IMF and the World Bank work well together. That is why the structural adjustment facility, which was unpopular and, as my hon. Friend said, played a large part in annoying the poorest countries, has been replaced by poverty reduction strategies, under which the IMF and the World Bank must work together.

Sir Peter Tapsell (Louth and Horncastle): I should have thought that the Chancellor was far too busy monitoring the Prime Minister's performance to find time to monitor that of the IMF. However, the IMF is certainly monitoring his performance and becoming increasingly unhappy about it. Does he therefore believe that our Prime Minister will follow the example of his other friend, President Bush, and sack his Treasury Minister?

Mr. Brown: I do not know whether the hon. Gentleman, who takes an interest in such matters, read the IMF report. It states that our

It also states that the existing monetary framework has delivered impressive results. It goes on to praise the fiscal policy that the shadow Chancellor opposes.

Sir Peter Tapsell: Read on.

Mr. Brown: I would be happy to read on, but Mr. Speaker will not allow me to do that, as I have found on previous occasions.

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The IMF and I agree that we must be vigilant about excessive and inflationary wage claims. People must show the necessary responsibility so that we can maintain the low inflation and interest rates that are important to the economy's stability and growth. I hope that hon. Members of all parties agree that we must not allow inflationary wage claims to affect inflation or interest rates.

Hugh Bayley (City of York): What support have the World Bank and the IMF given to the Chancellor's proposal for an international financing facility? Are they talking to the United States Administration about whether any of the additional $5 billion that they are putting into aid would be a contribution to my right hon. Friend's proposed new fund?

Mr. Brown: I am grateful to my hon. Friend who has taken a long-standing interest in such matters. Important conversations, from the Government's point of view, about the new facility have taken place with the managing director of the IMF and the president of the World Bank. Both have given us a great deal of encouragement, but financing the facility depends on action by individual national Governments.

I am encouraged by the responses from European Finance Ministers and the interest of the US Administration. We are at an early stage, but I believe that, with the support of the churches, non-governmental organisations, business organisations and all parties, the British initiative, on an all-party basis, can make enormous progress with other countries around the world.

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