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19 May 2009 : Column 375WH—continued


19 May 2009 : Column 376WH

David Davis: This is really a matter of courtesy. The Minister asked me about the quote I gave on the amount of time that it would take—I have only about 1 per cent. of my notes here and everyone involved in the case knows quite how deep the filing cabinets are. The Chief Secretary said that

I would be happy to hear the Minister say that the revised assessment will not take so long.

Ian Pearson: I will look at that reference, but the Government’s position is that we want to move forward as quickly as possible. The two-and-a-half-year time scale was mentioned by the ombudsman for a compensation scheme. We hope that Sir John Chadwick will be reporting to us and that we can design and implement a scheme as speedily as possible. I give my commitment to hon. Members—the hon. Member for Beverley and Holderness (Mr. Stuart) and others mentioned this—that we will not drag our feet. While I am Economic Secretary, I will manage a process that delivers an outcome, namely an ex gratia payment scheme that provides a remedy for those who have suffered disproportionate impacts. We are all aware of the circumstances.

John Barrett rose—

Mrs. Lait rose—

Ian Pearson: I will give way once, and then reply to all the points that were made in the debate.

Mrs. Lait: The Minister said that the Government want to respond to the ombudsman’s report in a way that is just, legal and fair. Which bits of the ombudsman’s report are not just, legal or fair?

Ian Pearson: In our response to the ombudsman’s report, we gave detailed reasons. The hon. Member for Fareham (Mr. Hoban) alluded to the Bradley case. The Government have to look at reports from the ombudsman and should depart from an ombudsman’s findings only when there are strong and cogent reasons to do so. We believe that there are such reasons for departing from the report, which is why we have done so. We have accepted other of her findings.

It is not quite true, as the hon. Member for Twickenham (Dr. Cable) suggested, that we have exonerated the previous Conservative Government and sought to put all the blame on the current Labour Government. We looked at the findings on their merits—it was not a matter of timing. For instance, we accepted part of finding 4, which relates to the period 1994 to 1996, and maladministration—but not injustice—in relation to finding 2, which relates to the period 1990 to 1993.

I wish to address the concerns about remedy that the ombudsman has recorded and to take the opportunity to update the House on Sir John Chadwick’s work. If there is time, I would like to inform hon. Members about the Government’s response, which we have issued today, to the Public Administration Committee.

On the ombudsman’s report’s comments about remedy, let us be clear—this has been recognised in the debate—that one option open to the Government was to reject the
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recommendation for compensation on public policy grounds and to have left it at that. Indeed, the ombudsman acknowledged that in her evidence to the Public Administration Committee. However, we did not do so. We did not accept the compensation recommendation, but at the Government’s discretion, and in recognition of the impact that may have been suffered by some policyholders, we have announced a scheme that will deliver help to those affected by the events at Equitable Life who need it most.

The right hon. Member for Haltemprice and Howden referred to the link between injustice and compensation. As he knows, the ombudsman, in her report, discussed breaking the link between injustice and remedy, and investigated what options for remedy had been in prospect from the start from the Government’s perspective. She was critical of what she saw as selective use of the Penrose report.

It has been suggested that the Government have relied on an absolute bar on payments of compensation for regulatory failure. That is not the case. At the outset of the ombudsman’s investigation, we could not and did not close our minds to the possibility that compensation might be appropriate. However, the Government stand by the principle that we have articulated: it is not generally appropriate for the taxpayer to fund compensation even where there is regulatory failure.

On the report by Lord Penrose, the Government have never denied that Penrose found fault with the regulatory system. Indeed, we referred to that in our response. The general principle, which I make no apology for repeating, is that the responsibility to minimise risks and prevent problems in a particular institution lies first and foremost, as the right hon. Gentleman noted, with the people who own and run that institution.

The nature of the Government scheme has also come under scrutiny. The ombudsman has referred to the clarity of the process and the timing of the work that we asked Sir John Chadwick to undertake. It would be irresponsible of the Government to design a scheme without full knowledge of the facts. It is premature to speculate or draw conclusions about, for example, who will be eligible and for how much. That will be determined during the design process in the light of the advice received from Sir John Chadwick. However, as a Government, we recognise policyholders’ legitimate interest in knowing the precise details of the scheme and when payments will be made. I assure them that we are working as quickly as we can to deliver the scheme. We have committed to giving regular updates on progress.

In that spirit, I will update hon. Members about the work of Sir John Chadwick concerning Equitable Life. Sir John has provided the Treasury with an update on his recent progress that I can now share with the House. The task to which he has been appointed requires detailed consideration of complex matters. It has always been recognised that although he will seek to provide his final advice as quickly as he can, his task cannot properly be completed within just a few months. However, I assure hon. Members that we are committed to making speedy progress. Sir John’s terms of reference require him to provide interim reports of his work on a continuing basis. I will now set out Sir John’s summary of the progress made.

First, Sir John has obtained, read and analysed the extensive material relevant to the ombudsman’s findings relating to maladministration resulting in injustice, which
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the Government accepted in our response to her report. Secondly, he has established an office to manage the work that will be required, appointed the key members of his team and secured accommodation for them. Thirdly, he has met and corresponded with representatives of Equitable Life and obtained documents from that source, including specimen policy documents.

Fourthly, Sir John has responded to an offer of assistance from the parliamentary ombudsman by requesting certain background material to which her report refers. Fifthly, he has replied to correspondence from numerous policyholders and former policyholders. Sixthly, he has interviewed applicants for appointment as actuarial adviser so that his office will have the expert technical support needed. The proposed appointment involves a number of commercial and technical issues that the Treasury is now addressing with its legal advisers. It is hoped that an actuarial adviser can be appointed shortly. Sir John expects to establish a website through which interested parties can keep informed of his work as it progresses and make representations to his office.

Mr. Stuart: Will the Minister tell us how many staff Sir John has appointed and how many days a week he is working on the issue?

Ian Pearson: I do not have those details to hand— [Interruption.] What I want to make clear to hon. Members is that my understanding of the situation is that Sir John has the resources that he needs to conduct the work required under the terms of reference to which he is working.

David Davis: I understand the Minister’s embarrassment, but the number of staff available, the amount of time that Sir John is working on the issue and the skills available are critical. Will he undertake to let the House know the answer to those questions by the end of the day?

Ian Pearson: I will undertake to find out the detailed information if it is available from officials. I will go further and undertake to contact Sir John to ask him whether he feels that he has the resources that he requires to do the job. It is my understanding that he does.

With the benefit of actuarial assistance, Sir John will be able to refine what issues he believes need to be addressed by his advice. The process is that he will then invite views from interested parties on whether, always having regard to his terms of reference, there are other issues that he needs to address. In light of the responses received, he will set out formally in a further interim report the questions that he will examine in carrying out his task, and will invite representations on those formal questions.

Several hon. Members rose

Ian Pearson: I encourage hon. Members to listen to the report that I am giving on Sir John’s progress. I think that they might find it helpful— [Interruption.]

John Bercow (in the Chair): Order. I apologise for interrupting the Minister. I understand that right hon. and hon. Members’ feelings are running high on this
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issue, but I say gently and in all charity to Mr. Selous that we do not conduct debates in this place by chuntering from a sedentary position.

David Davis: Can we chunter standing up?

Ian Pearson: Thank you, Mr. Bercow. I frequently chunter standing up, generally during Finance Bills.

It is certainly expected that in the course of and in parallel with his work, the actuaries assisting Sir John will carry out an extensive analysis of the data obtained from Equitable Life. It is important to do so.

Several hon. Members rose

Ian Pearson: In the time remaining, I want to say something about the report by the Select Committee on Public Administration on the Government’s response, as the report addresses a number of points made by right hon. and hon. Members. The Select Committee has endorsed the ombudsman’s recommendations, but has also recognised that the Government’s scheme could deliver help where it is needed most. I welcome that. I will not read out the detail of the Government’s response on each conclusion and recommendation, but I intend to make it available on the Treasury website for hon. Members to read in full as soon as the Select Committee has agreed to publish it. However, I will touch on several aspects of the report, as they relate to this debate.

I want to make it clear that the Government utterly reject any assertions of shabbiness or impropriety, in either constitutional or procedural terms, in the manner of our response; the right hon. Member for Haltemprice and Howden referred to such assertions. We are disappointed that the general headlines under which the Select Committee chose to publish its report were couched
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in those terms. On closer reading of the report, it seems that those words were triggered particularly by the timing of the Government’s engagement with the ombudsman on the principle of compensation for regulatory failure.

I have explained that the Government did not enter into the ombudsman’s investigation with a closed mind. To have done so would have justified the Committee’s criticisms. I add that the Government made representations during the course of the 2007 investigation that included discussion of the liabilities of regulators. Submissions on redress specifically were made when the Government were invited to do so in 2008.

The Committee also accused the Government of acting as judge and jury, another allegation repeated by the right hon. Gentleman. That is simply not borne out by the facts. In responding, the Government studied the ombudsman’s report with the greatest of care and sought to ensure that our actions were founded in full appreciation of the circumstances of the case. It is a gross characterisation to say that we did this on the back of a fag packet. Our response to the ombudsman’s report was the result of significant deliberation over a period of six months, and it includes a thorough appraisal of the findings in the ombudsman’s report.

As we have explained on several occasions, we do not depart lightly from the ombudsman’s findings. We have only done so where we believe that there is a cogent justification for doing so. The constitutional balance reached by the legislation permits the ombudsman wide powers of determination as well as the ability to make far-reaching recommendations, but on the other hand, it permits the Government to reject findings in certain circumstances—

John Bercow (in the Chair): Order. I apologise for interrupting the Economic Secretary, but we must move on to the next debate.


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Heart of Wales Railway Line

12.30 pm

Mr. Martin Caton (Gower) (Lab): I am delighted to have this opportunity to celebrate the qualities of the Heart of Wales line, which is one of the most beautiful railway lines in the country. There are two views about what should be described as the Heart of Wales line. One view is that it is just the line from Llanelli in south Wales to Craven Arms in Shropshire, England. However, most people who talk of the Heart of Wales line mean the 120 miles of track between Swansea and Shrewsbury. Historically, the line was known as the Central Wales line. A route was then included that goes through Gowerton in my constituency down to Swansea bay at Blackpill in the west of the city. The line was constructed and opened by five railway companies between 1839 and 1868.

It surprised some that this rural branch line survived the Beeching axe. There are two views on why that was. Some say that it was because the line carried extensive freight traffic at the time. It served the steelworks in Bynea and industrial areas in Ammanford in east Carmarthen, and Dinefwr and Pontardulais in Gower. The line provided a link with the docks in Llanelli. The alternative view of the reason for its salvation is that the line ran through six marginal Labour constituencies at the time and that Prime Minister Harold Wilson vetoed any closure proposals. Who knows what the truth is? Perhaps it was a bit of both. Whatever is true, the line was saved.

With your indulgence, Mr. Bercow, I would like to take hon. Members on a whistle-stop journey along the Heart of Wales line before I move on to the recent history and outline my concerns about the current service. The whole length of the line is extremely attractive and some parts are stunning. Starting in Swansea, there is soon a taste of the visual pleasures ahead. We ride alongside the Loughor estuary and look over the Gower peninsular in my constituency—the first designated area of outstanding natural beauty in the country. The first stop is Llanelli, from where the millennium coastal path, the wildfowl and wetlands centre and Pembrey country park can be accessed.

The line carries on through what was industrial south-west Wales, through Bynea, Llangennech, Pontardulais, Pantyffynnon and Ammanford, all of which are strong communities that are rich in history and which are undergoing considerable regeneration. From there, the rural landscape opens up through Llandybie, Ffairfach and Llandeilo, which is an extremely handsome old country town overlooking the Vale of Towy. From here, one can visit Dinefwr park and Newton house, where the work of the landscape artist Capability Brown can be enjoyed.

The line follows the course of the River Towy through Llangadog and Llanwrda to Llandovery, which was described by George Borrow in “Wild Wales” as

It is still very pleasant. It is appropriate that Borrow saluted it because it is a good place from which to explore the wild Wales that he celebrated in the 19th century.

The next stage of our journey is my favourite. We go over the Cynghordy viaduct, which spans the River Bran. There are magnificent views to the Cambrian
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mountains to the north and the Black mountains to the south. We go on past the Sugar Loaf and through the 1,000-yd tunnel that carries its name. We then arrive in Llanwrtyd, which is one of the spa towns that supported the development of the line. It is still famous for the quality of its eating places, one of which receives its supplies of organic food from Shropshire via the Heart of Wales train.

We go on through Llangammarch, Garth and Cilmeri to arrive in Llandrindod, which is a larger, pretty spa town with lovely ornamental parkland. With its many hotels, it has developed as a conference centre, which can at least sometimes be accessed by the Heart of Wales line. One of the most memorable journeys I spent on the line was when I attended a meeting in Llandrindod in the middle of winter. The landscape was carpeted with snow and it was beautiful. It must have been the right sort of snow because we arrived on time.

We travel on through Pen-y-bont, Dolau, Llanbister Road and Llangynllo, climbing all the way to the line’s summit, which is nearly 1,000 ft above sea level. We then go across the Knucklas viaduct, with its 13 arches, and arrive at the English border at Knighton. Knighton station is in England, whereas the town is in Wales. We move on to Offa’s dyke, the 8th-century earthwork that was built to separate Wales and England and is now a long-distance path. That is yet another wonderful attraction that can be accessed by the Heart of Wales line.

We now pass through a beautiful, lush and green part of Shropshire through Craven Arms, past the Long Mynd hill range to Church Stretton. Another of my favourite memories of the Heart of Wales line goes back nearly 20 years to when my wife and I took our daughter and a friend for a camping weekend. We alighted at Church Stretton and walked to Little Stretton where we set up camp and spent two days exploring that wonderful part of Shropshire. From Church Stretton, the line continues to Shrewsbury, another wonderful old town that is a fabulous place in which to spend time.

This is a special stretch of railway. About 40 years ago, I worked on a farm in Shropshire. I had only an old bike with no gears on which to get around. The Heart of Wales line gave me enormous freedom at that time, as it still does for many people. However, I must report that the line is not delivering anywhere near its potential. The main reasons are that there are not enough trains, capacity is too low and the timings are unsatisfactory. The Monday to Saturday service set out in the franchise agreement is for just four trains each way end to end. There are two trains each Sunday. The service is operated by Arriva Trains Wales.

Lembit Öpik (Montgomeryshire) (LD): I am grateful to the hon. Gentleman for taking us on a journey of outstanding beauty with his words. As he knows, Arriva Trains Wales also operates a service that goes through my constituency to Shrewsbury and Aberystwyth. What is his view of the reliability of the service? I must admit that it has improved now that the trains go through to Birmingham International. Is there any collective action he thinks we can take to ensure that the reliability of the service continues to improve?


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