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23 Jan 2003 : Column 424—continued
Competitiveness
6. Mr. Adrian Flook (Taunton): What recent representations he has received on the effect of Government policy on competitiveness of the financial services provided by the City of London. [92738]
The Financial Secretary to the Treasury (Ruth Kelly): The Treasury regularly receives representations from many sources about the effect of Government policies on the competitive position of the City of London's financial services industry. The agreement on the taxation of savings secured in Brussels earlier this week by my right hon. Friends the Chancellor and the Paymaster General is a clear demonstration of the positive role that the Government are playing in championing the City.
Mr. Flook : The Minister forgot to mention stamp duty on share transactions. In a globalised market, the City of London operates as a major financial centre, yet that duty affects only British companies, as well as impacting on the value of any individual's pension to a total of £8,000. Will the British Government help to level the field for British companies, and more
importantly, help pensioners after the imposition of the disastrous pensions tax introduced by the Chancellor and abolish stamp duty?
Ruth Kelly: I understand the point that the hon. Gentleman is making, but perhaps he could explain to the House why during 18 years of Conservative government, his party did absolutely nothing to reduce or remove stamp duty on shares. Perhaps he could also explain to the House how he would propose to raise the £3 billion revenue—
Mr. Speaker: Order. It is for the Minister to explain the policies of the Government.
David Taylor (North-West Leicestershire): Is it not the case that, since 1999, about a third of the international financial service transactions denominated in euros have been carried out in the City of London? Does that not highlight the views of those of us in Labour Against the Euro that the siren voices on the Labour Benches and the eurozealots among the Liberal Democrats are wrong to suggest that membership of the euro is necessary for a successful financial services industry?
Ruth Kelly: The City of London has performed well since the euro was launched. We strongly welcome that. Indeed, it reflects the City's hard work and preparation, with the co-operation of the Bank of England, before the launch. My hon. Friend should be patient and wait for the assessment of the five economic tests, which, as my right hon. Friend the Chancellor has often said, will be published by the end of the first half of this year.
Dr. Vincent Cable (Twickenham): How does the Financial Secretary respond to the controversial suggestion by the chairman of the London stock exchange that maximum harmonisation of financial regulation and minimum national discretion is the best way in which to preserve the City's competitiveness in Europe?
Ruth Kelly: I have not heard the comments of the chairman of the London stock exchange, but the Government and the majority of participants in the City do not share the view that the hon. Gentleman outlined. We strongly believe that fair tax competition is the way forward. That is why I emphasised the importance of the agreement that was secured earlier this week and sets a new agenda for sharing information on taxation matters.
Pension Credit
8. Mr. Michael Jabez Foster (Hastings and Rye): What estimate he has made of the number of people who will be eligible in October to receive pension credit in the Hastings and Rye constituency. [92740]
The Paymaster General (Dawn Primarolo): Last year, 3,500 pensioners in Hastings and Rye were receiving the minimum income guarantee. They and others will benefit from the pension credit. Nationally, the
Department for Work and Pensions aims to ensure that at least 3 million pensioner households receive their entitlement by 2006.
Mr. Foster : I thank my right hon. Friend on behalf of the pensioners of Hastings and Rye for the enormous difference that the minimum income guarantee has made to their lives. They receive some 30 per cent. more than they would have received under the Conservatives' inflation-only increases.
I also thank my right hon. Friend for the opportunity for those who have saved to take advantage of the new pension credit, which will ensure that thrift as well as work pays. How will she ensure that each pensioner knows how to make the claims?
Dawn Primarolo: The pensioners who receive the minimum income guarantee will be transferred automatically. We will write to all pensioners to inform them of their entitlement. There will be a national campaign supported by local partners—people who have regular contact with pensioners. Pension Service centres will run surgeries, including drop-in surgeries. I look forward to working with my hon. Friend, my right hon. Friend the Minister for Pensions, and the shadow Chancellor, whose constituency is next door to my hon. Friend's, to ensure that all pensioners receive the massive increase to which they are entitled under the pension credit.
Mr. Speaker: Order. Many hon. Members are standing, but the question relates to only one constituency.
Equitable Life
9. Norman Lamb (North Norfolk): If he will make a statement on Equitable Life. [92741]
The Financial Secretary to the Treasury (Ruth Kelly): The Government appreciate the genuine difficulties that many of Equitable Life's current and former customers face.
The Government recognise the importance of events at Equitable Life. That is why we set up an independent inquiry under Lord Penrose. Our main concern is to ensure that the lessons arising from this situation are learned. That will allow both regulators and the industry to develop the tools that they need to avoid similar incidents in future.
Norman Lamb : I declare an interest as a former policyholder and apologise for not making that clear on the Order Paper. Is not it outrageous that the Penrose inquiry has started interviewing witnesses only this week? What hope is there for the hundreds of thousands of affected people when we have a dog's dinner of four inquiries? They are being conducted by Penrose, the parliamentary ombudsman, the financial ombudsman service and the complaints commissioner for the
Financial Services Authority. What are the Government doing to co-ordinate that to provide some hope of an outcome for all those affected?
Ruth Kelly: I must correct the hon. Gentleman's understanding. One full independent judicial inquiry is being conducted into Equitable Life. The other inquiries to which he refers result from independent decisions made elsewhere. They are of interest but not direct concern to the Government. The Penrose inquiry covers 50 years and examines not only the regulator's actions but those of Equitable Life. Lord Penrose made it clear that he is keen to proceed as quickly as possible, consistent with providing a thorough and authoritative account of the relevant period.
Mr. Barry Gardiner (Brent, North): I welcome the fact that the inquiry is under way, as will many people, but does my hon. Friend understand the anger and frustration felt by many of the policyholders at the fact that the market value adjusters that have been put on, taken off—with assurances that nothing further would happen—then put back on again, stems from the decision of the chairman and the chief executive to say to the public and to their policyholders that the funds would sustain their profitability in the long term even though there were no new policyholder entrants? Does she agree that that was a fundamental error in their assessment of how to take the company forward?
Ruth Kelly: I certainly understand and sympathise with the distress felt by the policyholders at Equitable Life. The company has made it clear that it considers itself to be solvent, but it has also pointed out to its policyholders and the regulators that there are fundamental uncertainties associated with its accounts. I believe that policyholders recognise, particularly in the light of the difficulties and uncertainties reflected in the global stock market at the moment, that they are not alone in experiencing either exit penalties or cuts in bonus payments. Of course, that does not make it easier for them, but at least it puts the matter into some sort of context.
Mr. Stephen O'Brien (Eddisbury): It is not sympathy that the Equitable Life policyholders and those with annuities want, it is action. On 12 December, the Minister told the House that Lord Penrose had
- "begun a programme of witness interviews."—[Official Report, 12 December 2002; Vol. 396, c. 388.]
- "The inquiry started to interview individual witnesses only yesterday."—[Official Report, House of Lords, 21 January 2003; Vol. 643, c. 554.]
Ruth Kelly: The conduct of the inquiry is clearly a matter for Lord Penrose himself. When I made the comments to which the hon. Gentleman refers, that was the information that Lord Penrose had made available to the Treasury. It is clearly an independent inquiry, and
I think that policyholders expect a thorough, independent inquiry to be carried out and that all the lessons that can be learned are indeed learned.
Mr. Harry Barnes (North-East Derbyshire): This involves not only the Financial Services Authority, the parliamentary ombudsman and Lord Penrose; it also involves the Exchequer. The policyholders require a sign that action will be taken to defend their interests, that the Treasury is not just waiting for Penrose, and that something is going to be achieved.
Ruth Kelly: It was clearly an important decision to set up a full, independent judicial inquiry to consider all the circumstances that led to the situation at Equitable Life. Lord Penrose has said that he will not hesitate to allocate blame where blame is necessary. We set up the inquiry to learn all the lessons that we can, so that this situation does not recur. Action is being taken and it will be seen to be taken.
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