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27 Jan 2009 : Column 32WH—continued
“We find it unacceptable that the Government Minister is prepared to discriminate against some of those affected by the Regulators failure whilst others will receive compensation. Whether we have yet experienced hardship as a result of this fiasco is not entirely the point. If we are not compensated for the losses we have so far incurred we will of course experience hardship in the future.”
That just does not come under any jurisdiction that we have so far heard about from the Chief Secretary in the House.
My sense is—the point has been made previously—that the Government actively want a legal challenge in the court. In relation to a legal challenge, I will give 100 per
cent. support to the Equitable members who are here listening to this debate and to those in my constituency. I do not know whether it should be a judicial review or whether it should take place in the High Court as I am not a lawyer, but it is imperative that we support them as a House. It is critical that we go with the people concerned and support them—whether in the High Court or as part of a judicial review.
Susan Kramer: Does the hon. Gentleman not think it is a disgrace that a strategy of dividing people seems to underlie the Government’s position? That means that those who face extreme hardship are so desperate that they will accept any mechanism that might get them something, instead of banding together to fight for full justice. Considering the people concerned are so elderly, such an attempt to break, divide and conquer is even more despicable.
Derek Wyatt: I agree. I am reminded—this was mentioned previously—that we had miners’ compensation and compensation for dock workers who had cancer of the throat. There were loads of incidents in relation to which the Conservative party did not pay compensation for 18 years. It seems that this is in exactly the same territory—we are going to push and push, but, at this rate, there will not be a single cheque paid until 2012. That is just not acceptable. I agree entirely with what the hon. Lady says.
The issue is moral, which is exactly what the occupational pensions people said in 2002 and 2003. Ultimately, that is what Ministers came round to agreeing with and the money was paid. The Government must reconsider their response, and I hope that the presence of so many Members here today will make the Minister take back to the Treasury the fact that the initial response was inadequate and, to be frank, showed that nothing had been learned from the occupational pensions campaign. I believe that, in the end, Equitable Life members will win, however painful and slow the process may be.
11.30 am
Mr. Andrew Tyrie (Chichester) (Con): The Government appear to accept that there has been regulatory failure, that the failure amounts to maladministration and that a resolution should come sooner rather than later, but they have also, almost immediately, gone in for a series of blocking and delaying tactics in response to the ombudsman’s report, and that is wholly indefensible. I accept that the Government have apologised, but what exactly did they apologise for? It seems that they apologised for some vague 20 years of regulatory failure, but we need an apology for the decade of delay while the issue was on the Government’s books waiting to be dealt with—while it was on their watch.
I congratulate the hon. Member for Northavon (Steve Webb) on his remarks, and I shall sum up his key points, to which he has already alluded. There are two unacceptable factors: first, the arrangements for compensation and, secondly, the effect of the decisions on the time it will take before compensation comes through.
On the compensation arrangements, we have had the transmogrification of what should have been a compensation scheme into a hardship fund, and that is wholly unacceptable. The Government have rejected the parliamentary ombudsman’s recommendations for
arranging compensation, and they have introduced means- testing, which the ombudsman said would be a novel and worrying development. The approach has been rejected in other cases and, explicitly, by the Public Administration Committee. Somebody has already quoted point 84 from its second report on the issue.
Gregory Barker: I made exactly that point earlier. My hon. Friend is very knowledgeable about these matters, so can he think of a similar case in recent history, whereby a matter of injustice or maladministration was resolved by a means test rather than in relation to the scale of the losses of those with a grievance?
Mr. Tyrie: My hon. Friend has already made that point eloquently, and I certainly cannot think of a case. If there had been one, I am quite sure that we would have heard about it already from the Government.
In discussion with the Chief Secretary to the Treasury immediately after her statement, I sought from her in the corridor an explanation for the decision to create a hardship fund rather than a compensation scheme. She gave me a number of explanations that I did not understand, and I asked whether I could write to her and receive her explanations in writing so that they could be put in the public domain. I wrote that letter immediately—within 24 hours—but have not yet had a reply. I hope that the Exchequer Secretary is today furnished with something to enable us to take the explanation for, and justification of, the hardship scheme a little further.
Mrs. Maria Miller (Basingstoke) (Con): Does my hon. Friend share my concern about the message that the Government are sending to my constituents and to those of everybody in the Chamber about the importance of saving and providing for the future, and about how the message is being taken by people making such provision, when the Government statement clearly shows that it is not only in this process that they will discriminate against such people? That is what the ombudsman has done throughout the process.
Mr. Tyrie: I completely agree. Some big issues are involved. One is the damage that has been done to the savings culture in Britain. Large sections of the community were looking after themselves and did not want to allow themselves to become a burden by requiring some kind of benefit from the state. Many of them will now be thrown back, or have already been thrown back, on exactly that support.
I find some of the wider questions perplexing. I still cannot work out whether the Government want people to start saving or to abandon saving altogether and spend even more. The Government have so many contradictory policies on the conduct of economic policy that it beggars belief. However, that is a subject for another day.
I turn to the second of the unacceptable aspects of the statement, which to some degree has already been discussed—the question of delay. As I said a moment ago, the Chief Secretary sought in her statement to shift blame by talking of decades of regulatory failure, going back well into the 1980s. As I pointed out, the Government have had the opportunity to do something about that for well over a decade, but they have done virtually nothing.
The delays built into the compensation scheme are unfair and will be seen to be unfair by the hundreds of thousands of policyholders who might be affected. Further delay will be seen as the Government kicking everything into yet more long grass. Policyholders now realise that the Government are not endorsing the recommendations of the parliamentary ombudsman; they are not even attempting to do so, but are doing the opposite and setting them aside. The Chief Secretary said in her report that any compensation scheme should be “independent, transparent and speedy”. No one could use any of those words to describe the Government’s response to that report.
In all the time that I have been campaigning for the policyholders of Equitable Life, I have tried very hard to avoid party politics. It would be difficult to find statements of mine that are party-political. Early on, when I was on the Front Bench and responsible for such issues, I had discussions with the hon. Member for Twickenham (Dr. Cable). We decided to work together in a wholly non-partisan way. However, the statement, with its attempt to shuffle blame on to an Administration of 20 years ago and the calculated introduction of further obstacles to speedy compensation, has drawn me to conclude that the quickest route to a measure of compensation—the hon. Member for Sittingbourne and Sheppey (Derek Wyatt) in effect confessed this—will probably be the election of another Government.
11.38 am
Mr. Mike Weir (Angus) (SNP): I congratulate the hon. Member for Northavon (Steve Webb) on securing this debate. The subject affects constituents of all of us. As a former court lawyer, it occurs to me that the Government’s actions in relation to Equitable Life are similar to those of an old lag up before the sheriff. He starts with an outright denial, but as the evidence accumulates he reluctantly accepts that he will have to plead; he makes a half-hearted plea and then tries to minimise it and wriggle out of the consequence of his actions.
No one could have been in any doubt from the ombudsman’s report that the Government had a case to answer on the inaction of the regulator that led to the downfall of Equitable Life. I do not intend to cover the cause; what is required is urgent action to put right a wrong. Frankly, the actions announced by the Treasury are far too little, far too late. Like all hon. Members, I have a significant number of Equitable Life policyholders as constituents, most of them now elderly, who have suffered significantly. Sadly, some died while waiting for justice.
When the Government said that they would apologise, there was real hope that action would finally be taken to end the saga. It was therefore a considerable let-down—to put it mildly—when all that was announced was yet another investigation, under Sir John Chadwick, on how a compensation scheme, if it was even that, would work. Worse still, it was abundantly clear that the Government expected that it would be some years before compensation was paid to anyone. In her statement, the Chief Secretary said:
“The ombudsman recommended that a payments scheme should be completed two and a half years after the decision to pay out. The Select Committee said that it could not assess whether that
was viable, and our initial assessment of the ombudsman’s approach is that it might take significantly longer than that to implement fully.” —[Official Report, 15 January 2009; Vol. 486, c. 379-80.]
The more cynical among us might consider that statement as putting a decision beyond the next general election. However, it raises some pertinent questions. What is the date of the decision to pay out? Is it the date of the Chief Secretary’s statement to the Commons, the date on which Sir John Chadwick reports with specific recommendations or some other day? We do not know whether the two and a half year period has even started. It could be some time before it does. There is absolutely no time scale for telling anyone if and when they will get any payment. In responding to the debate, will the Minister clarify that point? How long do the Government think it will be before payments are made?
It seems that even after nearly 10 years of waiting, policyholders will still have to wait several more years before compensation is available, but of perhaps even greater concern is the Government’s stance on who will receive compensation. It seems abundantly clear that they do not intend to compensate everyone who has lost out but only those who have suffered disproportionately. What that means is unclear to me and, I think, to many others, but it seems clear that some sort of means test is envisaged, and the hon. Gentleman gave a clear exposition of what that could mean. Will the Minister clarify how the disproportionate effect will be calculated? How will it be determined which losses are directly due to maladministration? Both concepts could keep the lawyers in business for years, if not decades.
The worst thing about the scheme is that it will inevitably lead to endless arguments about definitions, calculations and who is more worthy of compensation than others. It is a mean-minded scheme that will set policyholders against each other. I appeal to the Minister, even at this late stage, to give justice to that group and come up with a simple, even-handed scheme so that my ageing constituents need not wait interminably before finding out whether any of them will be compensated. I leave it at that, as many more Members wish to speak in the debate, and I hope that the Minister will take these points on board. There is extreme anger within the House and among our constituents at how such a vulnerable group is being treated by our Government.
11.43 am
Daniel Kawczynski (Shrewsbury and Atcham) (Con): In all the documents about Equitable Life that I have read recently, one of the most salient came from the Equitable Members Action Group on 26 January. It states:
“EMAG estimates that, under this Treasury proposed process, more than 90% of Equitable policyholders would receive absolutely NO COMPENSATION whatsoever. It is Parliament’s prerogative to stand up for authority of its own Ombudsman and reinstate the independent Tribunal proposed by the PO.”
That is extremely important. We as Members of Parliament have a duty to stand up for the mechanisms put in place by the House to protect citizens. The Government are deliberately trying to obstruct the findings of the parliamentary ombudsman and making it impossible for her recommendations to be implemented. That is why MPs from all parties should be working together to ensure that the ombudsman’s findings are upheld. The time has come to create an all-party group specifically
to look after the interests of Equitable Life policyholders, and we are in the process of setting one up. If anybody wishes to be involved, they should contact my office. We should harness all the interest and passion expressed in this debate into one all-party group to campaign on the issue. We cannot just leave it to the Treasury Committee and others, who will review the situation on a piecemeal, ad hoc basis. We must have an all-party group that uses its wherewithal in Parliament to support Equitable Life policyholders.
I shall be brief because other hon. Members want to speak, but the Chief Secretary has thrown the issue into the long grass, because she announced neither the scale of the compensation nor the timetable. Many of my constituents in Shrewsbury are very concerned that only a fraction of the £5 billion claimed will ever be paid out. As has been said, the system involves a means-tested concept, whereby if someone still has some savings or a roof over their head, they may receive no compensation at all. That is scandalous. It shows that new Labour is totally dead because the Government are saying, “We don’t care a fig about the middle classes. We’re only going to help those who are the worst off and the ones who are in dire straits.” That is disgraceful. What if someone expects to rely on a pension of £20,000 and is suddenly told that they will have only £15,000? That may not be a dire situation for the Chief Secretary, but it will have a massive impact on some of my constituents.
When the Chief Secretary made her announcement in the House, she gave no assurance that the first payment to policyholders would be made in 2009. That is another matter of deep concern. There must be interim payments. I would like the Exchequer Secretary to let us know whether she will consider ensuring that interim payments are made, given that there is no guarantee that the first payment will be made in 2009.
Even more worrying, the Chief Secretary refused to confirm the ombudsman’s time scale for the final payment—that everything would be done and dusted within two years. Again, she refused to give those assurances, and as we have heard, 30,000 constituents have died already. It is imperative that the situation is dealt with speedily.
I congratulate the hon. Member for Northavon (Steve Webb), who initiated the debate. He made an excellent speech. I reiterate what he said about estates and widows and widowers; people must receive compensation should their loved ones die.
Sir John Chadwick will now set up an office and will obviously have to recruit staff to sift through the hundreds of thousands, if not millions, of documents in order to arbitrate in the matter. What budget will the Government give him? Will he have enough resources to recruit sufficient numbers of staff and to be accessible, so that the process is carried out as speedily as possible? I intend to go and see Sir John Chadwick with the all-party group and hold him to account directly, because it is important to make him realise the extent of feeling about the issue in the House.
11.48 am
Anne Main (St. Albans) (Con):
I congratulate the hon. Member for Northavon (Steve Webb) on securing the debate. He is absolutely right. If the Minister does not realise today that there is a truly human face to this
disaster, that real people are suffering and that the difference it is making to their lives is incalculable, something is very wrong. I am appalled by the idea of means-testing. I ask the Minister to consider who would sign up to any savings or pension plan if the small print said, “By the way, if this goes wrong, you will be means-tested.” I suggest that no one would do so. To introduce that concept retrospectively is appalling, and it is not just me and other hon. Members in the Chamber today who are making such remarks. People have not been hoodwinked by the Government’s deciding to address the issue selectively.
I am aware that the debate is coming to a close, so I shall leave the Minister with a comment from a constituent of mine who has been affected by the matter. He used an interesting analogy to make it clear how he feels about the Government’s choosing to exclude people from fair and just compensation. He said to me:
“If, in a leisure moment you have seen any of the popular ‘Pirate’ films...you will remember Cap’n Jack Sparrow had a rather unusual compass—it pointed in any direction he wanted it to...a device borrowed”—
“to respond to the Ombudsman report. Point it...in any direction except justice and fair compensation.”
He could not have put it better.
The perception, and the reality—unless the Government change their mind rapidly—is that the Government are choosing who is worthy. I cannot think of a more iniquitous way to proceed with elderly people, many of whom are relying on the scheme to make their lives comfortable.
I want the Government to bear in mind that those people are suffering disproportionately as a result of many different blows. In particular, the Department for Work and Pensions presumes an income savings rate of 10.4 per cent., which is actually five times the achievable level of savings accounts should people have savings elsewhere. When the Minister is deciding who is in disproportionate need, will she consider that point? Some people might have savings in other accounts, but they too will not be generating what was expected. That is a double blow for people caught up in the Equitable Life scandal. Should the Minister wish to meet any of my constituents, I am sure that they will tell her what it feels like to face an impoverished old age, because someone has decided that they are not worthy of receiving what is due to them.
11.51 am
Mark Hunter (Cheadle) (LD): It is a pleasure to contribute to this important debate under your chairmanship, Lady Winterton, and I compliment my hon. Friend the Member for Northavon (Steve Webb) on securing it. I say that with particular regard to the fact that the Government have so far steadfastly refused to allow such a debate in Government time. Just last week, I asked in business questions whether the Leader of the House would consider making time available in the Government’s timetable.
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