Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 566 - 579)



  Q566  Chairman: Lord Penrose, welcome to this evidence session on Equitable Life this morning. It is nice to see you. Can I start with a general question? As you know, we had a meeting and various exchanges of letters over the last year or so about the progress of your inquiry, which took longer than many people would have hoped. When the inquiry was first announced, what discussions did you have with the Treasury about the timetable for completion?

  Lord Penrose: There were discussions about the sort of time I might be prepared to devote to an inquiry of this kind, rather than the sort of time it might take. I think it was recognised that I was being taken out of my ordinary way of life, as it were, and would be likely to be translated to London, and it was recognised that that would be a major disruption and around that there was developed the general notion that if I were away for about a year that would be tolerable. It was not a forecast of the time the inquiry would take; it was rather a question of the time I might find it not too inconvenient to be away from home. There was no way of forecasting the time it would take.

  Q567  Chairman: For the sake of the public record, maybe I should make it clear at the beginning, at the outset, what we expect of you this morning. This session is intended to contribute to the public debate about the developments at Equitable Life and the position of affected policyholders. But it is not our   intention to prejudice any possible legal proceedings, and we recognise that there are accordingly limitations and that it may not be appropriate for you to say certain things. We recognise your position as a judge in the conduct of the Inquiry, and we recognise also that the appropriateness or otherwise of the payment of compensation by the Government is not a matter for you. Did the Treasury consult you before they told the House in October 2001 that it was expected you would report before the end of 2002?

  Lord Penrose: On the precise formulation of statements made to the House of Commons?

  Q568  Chairman: Yes.

  Lord Penrose: No, I did not discuss that, but, as I have said already, there was a hope that the process would have taken a lot less time than, in the event, it did.

  Q569  Chairman: In a previous statement you kindly informed me as to why the process was taking longer than was originally envisaged. Can I move on to your terms of reference? They were wide, but they did not specifically invite you to adjudicate on responsibility for what had gone wrong. Did you feel that you had a sufficiently clear view of precisely what questions you were expected to answer?

  Lord Penrose: No. I think that the breadth of the terms of reference had to reflect the fact that at that stage no-one had a clear idea of what the questions might ultimately be. I understood that I was given a deliberately wide field, as it were, to enable me to work out where there might be important issues to be addressed and to find the answers to them. There were limitations, of course, on the remit, and there had to be in the case of an inquiry of this kind. Responsibility, viability, fault, things of that kind, in my view, could not properly have been dealt with by the sort of investigation that I was asked to take on in a non-statutory inquiry. So it was a balance, but I think the terms were wide enough to let me do what I understood I had to do without prescribing particular questions but narrow enough to save me, if you like, from trespassing into areas that are properly the remit of the ordinary courts of the land or other financial tribunals that have to adjudicate in an adversarial way on some of the issues that might arise out of the problems with Equitable.

  Q570  Chairman: Some of the potential witnesses refused to co-operate with your inquiry. Could you clarify who these were? Were any of them serving Civil Servants? To what extent do you feel that that has hampered your investigation and report?

  Lord Penrose: That is quite a complex question. Can I deal with Civil Servants first? No Civil Servant refused to co-operate with the inquiry. One person did not persist, if you like, and I cannot really explain that. I should make it clear that the process of interview was not intended to be gentle or unsearching, and it would not surprise me in the least if a person found it uncomfortable or if a person found that an inability to recollect detail was difficult and embarrassing, but, that apart, Civil Servants did co-operate. I did not necessarily find them all the most attractive of people, but they did co-operate. So far as non-Civil Servants are concerned, there were former directors who did not operate, but one must understand that they were all people who were involved in litigation, and, as a former litigation lawyer—I do not think a judge is entitled to say he is still a litigation lawyer, but as a former litigation lawyer—I can well understand that people would be given advice that they could, potentially at least, prejudice their position by co-operating with a non-statutory inquiry. Of course, they are not protected.

  Mr Burns: Can I add that the Civil Servant who did not persist in giving evidence to this inquiry was not a serving Civil Servant.

  Q571  Mr Plaskitt: I am sorry?

  Mr Burns: The Civil Servant who did not—it was a former Civil Servant who did not persist.

  Chairman: Before I hand over to the rest of the Committee, some of us have a declaration of interest to declare. I have a policy with Equitable Life at present. Is anyone else in that position?

  Mr Fallon: I am a policy holder.

  Mr Cousins: Chair, my former employers have just transferred the ownership to me of some dormant Equitable Life policies whose ownership they have retained for a period of almost 30 years.

  Norman Lamb: I am a former policyholder.

  Mr Walter: I am a current policyholder.

  Q572  Mr Fallon: To follow up this point about the witness, in Chapter 19, paragraph 173, you say the Government actuary declined to complete the interview process. This is the incident that you are referring to, is it?

  Lord Penrose: Yes, not the Government actuary, a member of his staff. I was not referring to the Government actuary.

  Q573  Mr Fallon: You are using phrases to us this morning like "he did not complete" or "did not persist". You mean he walked out of the interview?

  Lord Penrose: No, no, he did not come back.

  Q574  Mr Fallon: He did not come back?

  Lord Penrose: Yes.

  Q575  Mr Fallon: We are still being very gentle about this, but did you not deplore that?

  Lord Penrose: No. I think one must be very careful about making judgments about individuals. I do not know the circumstances. I would judge him if I knew all of the circumstances, but since I do not I prefer to leave matters as they are.

  Q576  Angela Eagle: Lord Penrose, I wonder, looking at your letter to the Financial Secretary, which is at the beginning of this very long and detailed report, and trying to get some more colour about the context and the way in which you approached what is a very complex and difficult job stretching over so many years trying to trace what happened in the case of Equitable, you say in paragraph 2 of your letter that you were initially given a very broad remit and it was left to you to determine how to proceed. You then, in paragraph 4, say that you opted for an approach that had no formal powers and no statutory powers either. Could you say a bit more for us about why you did that? Can you particularly share with us your thoughts on whether statutory powers would have been helpful to you, given that some people, as you have just explained, did refuse to appear?

  Lord Penrose: Another very complex question, if I may say so. It seems to me, or it seemed to me at the time, generally to be preferable to approach an inquisitorial exercise using persuasion, a little bit of carrot and occasionally stick, to obtain the material that I required. I did not know at the outset what the material would turn out to be. If I had had statutory powers, I would have had to have been very certain about their exercise or I would have risked judicial review from the outset and I think I would have been in and out of the High Court regularly.

  Q577  Angela Eagle: For many years?

  Lord Penrose: For many years. So it seemed to me at the outset that, if I could make it, as it were, without statutory powers, that would produce the best result in the long term. As the inquiry has progressed I have become more ambivalent about that. I think that, looking to the future rather than to the past, it could be that the public interest would be best served if there were a suite of general powers that could be conferred on inquiry chairmen perhaps to use at their discretion. I think that to force all inquiries into a statutory mode would not be a desirable thing to do. So I am ambivalent. I think that at the end of the day it would have helped me use the stick if I had had available to me a suite of powers, perhaps in primary legislation, that could be called upon, but for this inquiry I felt at the outset that I was better off without them. Whether that is right or wrong, I do not know. I think I incline still to the view that it was probably right to go without.

  Q578  Angela Eagle: So you are happy. Although you are obviously projecting into the future and making some comments about general powers for future inquiries, you are fairly happy with the tools that you were given to do the job and you are reasonably happy that you were able to proceed in the way that you wished?

  Lord Penrose: Essentially, I was the tool that I was given to do the job and it was really up to me to make the best of that position. All I can say is that I hope I have, but it is for others to judge whether that was a correct view to take.

  Q579  Angela Eagle: Did you receive the appropriate cooperation that you expected from the Treasury during the course of their work? Are you happy with the way that they dealt with this?

  Lord Penrose: I am happy that they provided the resources I needed as I identified them. I cannot think of any occasion when I was denied either the human support or the technological support that I sought. As in every exercise of this kind, there are some things that I wish I had asked for earlier now in retrospect, but, no, the Treasury gave me the support it promised and I have no complaint to make about that.

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