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24 Jun 2009 : Column 275WH—continued
2.57 pm
Dr. Richard Taylor (Wyre Forest) (Ind): I am staggered but absolutely delighted to be called so early, Mr. Caton. As an independent, I have not had to choose where to go this afternoon, because other independents are speaking, I hope, in the debate in the main Chamber. I relish this opportunity and thank you for calling me.
Like many hon. Members, I have a large number of constituents who have suffered from the situation under discussion. The number of letters that I have received on the matter competes with that on any other affair in which I have been involved. The correspondence goes back a long time, and many of the people who have been writing have been persistent.
What makes the situation so bad is that it has been such a rollercoaster. There have been moments of deep gloom, and moments of slight optimism. When the ombudsman’s report came out after four years of
investigation, there was hope and optimism, but it was transient. There was an apology, but, as we know from the health service, an apology is easy to give but means nothing if it does not lead to action. Action and, obviously, compensation are needed.
In the few minutes available to me, I want to read some quotes from some of the letters that I, like the hon. Member for Leeds, North-East (Mr. Hamilton), have received. I wish to remind the House and the Minister of people’s anger and complete frustration.
This is from a letter dated 19 January that was written following the Commons statement:
“Yes I would like to comment but will keep these comments brief least my disappointment makes my ‘pen’ run red. I consider the statement, some 10 years in the making was abysmal. It was deliberately vague, timescales are non-existent and it depends on public finances...Maybe they hope that if they can defer any payment for another 10 years, the remaining members will have died or will not be able to remember that Equitable Life even existed.”
Another long letter, of which I will read only a little, mentions the personal loss by a couple who had put all their savings into Equitable Life on the advice of various Governments and trusted regulatory bodies. Their pension expectation is now less than 20 per cent. of what they thought it would be. They make a cutting comment:
“While the government merely sat back and absolved itself of all responsibility, its only action was to resolve the issue as far as their own members were concerned granting all MPs, many of whom had entrusted their own pensions to Equitable Life, a generous and secure pension funded by myself and other taxpayers.”
“I also find it sad that the cost of any request for justice must inevitably fall on the taxpayer and am therefore reluctant to pursue this issue.”
Sir John Butterfill (Bournemouth, West) (Con): Does the hon. Gentleman agree that the present position not only undermines people’s faith in their ability to invest for their future, but significantly undermines the office of the ombudsman and the public’s belief that they may obtain some redress for wrongdoing by going to the ombudsman? We have a brave ombudsman, and she should have had better recognition.
Dr. Taylor: I am grateful for that intervention, and that will be one of my main concluding points.
Other letters that I have received emphasise how much and how many people had put all their savings into Equitable Life, because they were probably not brought up to know that one should not put all one’s eggs in one basket. They put them all in one basket, and they have lost vast amounts. One investor transferred funds from his company’s final salary scheme as recently as 2004. He asks:
“Could it be possible that the society was insolvent when my funds were transferred in 2004 from my company’s final salary scheme? Probably I will never know.”
Another correspondent, who has written frequently for many years to the Prime Minister and the Chancellor of the Exchequer, and has copied every one of his 30 or 40 letters to me, drew attention most recently to the state pension, which when he wrote was only 31 per cent. of average earnings, compared with an average 59 per cent. in other OECD countries. That compounds the outrage felt by Equitable Life members.
The final letter that I will read is short and to the point. It was written on 22 June and says:
“My wife and I have suffered appallingly at the hands of both Equitable Life and the Government’s refusal to compensate. Please let me know what positive action you are taking in this direction.
This is far more important to us than your wretched expenses debacle and who the next speaker is.”
The anger, frustration and disappointment are immense. Obviously, I would like the Minister to answer the questions posed by the hon. Member for Leeds, North-East. Would compensation have to come from the taxpayer? I am sure that the Government have some secret money somewhere, tucked under someone’s mattress. I like to think that the money could come from somewhere else. Would paying compensation to people who have suffered so badly from proven maladministration form a totally unaffordable precedent? Are there any exact replicas of the Equitable Life situation? The Barlow Clowes affair was mentioned in a previous debate, but at the time maladministration had not been proven for Equitable Life. I hope that the Minister will offer a constructive and rapid way forward.
I shall conclude with two points. The first, to which reference has been made, is about the ombudsman. I thought the word must come from Greek and I looked in Webster’s dictionary. Webster had not heard of it, but it had the word “ombu”, which is a tree with a broad trunk that is isolated in the south American pampas. I thought that that was the origin of the beginning of the word because the ombudsman is isolated, on her own, works against many people, and has a tremendously broad base. But when I looked in Chambers and the Oxford dictionary, I saw that it is a Swedish word, which I am sure all hon. Members know. I like the Chambers definition of the Swedish meaning, which is “grievance man”, and it adds, importantly, that he is “independent”.
What have the Government done? They have disregarded all the ombudsman’s recommendations, vitally undermining her position as an independent critic of the Government who must be listened to.
Mr. Letwin: I believe that the Government have accepted four of the ombudsman’s recommendations, but the gist of what the hon. Gentleman says is right. Does he agree that the position is even worse than he says, because the Government have not only rejected the recommendations, but failed to explain why they rejected them? They have not even treated the ombudsman seriously enough to explain.
Dr. Taylor: I thank the right hon. Gentleman. Such behaviour by the Government towards the ombudsman has occurred at a time when she is vital.
I cannot resist returning to the subject of the NHS. Its complaints system has been dramatically changed because the Government have removed the second stage, which was the automatic independent review by the Healthcare Commission, so there is now no promised independent review without going to the ombudsman. She is now the Parliamentary and Health Service Ombudsman, so the Government are broadening the
trunk on which she must work. What extra resources will the ombudsman have, and how will the Government restore confidence in her power and effectiveness?
I hope that my final point will not be too unpopular. Remembering the bitter comment about MPs feathering their own nests with their pensions, what are we, as MPs, going to do? Are we going to think of other people when we discuss our parliamentary pensions, and are we going to remember the people who are so much worse off than ourselves?
3.7 pm
Barry Gardiner (Brent, North) (Lab): There is
“clear and unmistakable evidence in the ombudsman’s report of five significant areas of maladministration by the Department... Many pensioners have...lost their life savings... I must ask why we have had to rely on the ombudsman to confirm the mismanagement...and incompetence that was widely known about more than one year ago... Does the Secretary of State agree that the House will find it strange that he...continues to deny the Government’s responsibility for mistakes and does not even apologise for his Department’s role?”—[ Official Report, 19 December 1989; Vol. 164, c. 204.]
Hon. Members will realise that those are not my words, or even those of my correspondent, Mr. GKB of Mount Stewart avenue. They are the words of the Prime Minister when he was a Front-Bench spokesman commenting on Barlow Clowes. Sadly, they are equally relevant to today’s debate.
Mr Robert C of Churchill avenue, Kenton wrote to me simply saying:
“I am an 81 years old with-profits annuitant who has seen his annuity decrease by almost one-half over the past few years.”
One of his close neighbours—I am sure that they are unconnected and unknown to each other—Mr. Harold G of Grendon gardens, Wembley Park, tells that he suffered a 53.34 per cent. drop in his income. In the light of the comments of the hon. and independent Member for Wyre Forest (Dr. Taylor), I calculated just what that would mean for a Member of Parliament. Instead of our salary of £64,000 a year, we would have an income of £34,000 a year—about a 53.34 per cent. drop—but the incomes of Mr. Harold G and Mr. Robert C are nowhere near those levels. Indeed, the 53.34 per cent. drop that Mr. Harold G was talking about results in a loss of £4,740 a year. His income—much less than £10,000 a year—has been cut in half.
Lorely Burt (Solihull) (LD): Does the hon. Gentleman agree that despite the perception that these pensioners had huge amounts of money in Equitable Life and other places, the vast majority are real people who are in real difficulty at the most vulnerable time in their lives? Indeed, at a recent EMAG meeting, I met a lady and a gentleman who now live in a caravan because they have lost their home, which they could no longer afford to pay for when the Equitable Life pension that they expected was not forthcoming. Does the hon. Gentleman agree that we really need to get across to the Government that we are not talking about people with huge amounts of money? People all over the country are being reduced to living in basic, dire circumstances.
Barry Gardiner:
The hon. Lady speaks eloquently about the situation. I absolutely agree that these people are not rich—they are not fat cats and they have not
salted away great quantities of money for their old age. They have simply done what they believed was right by making provision from their normal, average incomes when they were in work, so that they could support themselves when they were not in work. Sadly, through no fault of their own, they have sometimes found themselves trapped. One constituent wrote to me, saying:
“We ‘trapped’ Annuitants have fared inexcusably badly, especially after assurances at the outset of Government surveillance. We couldn’t leave, and did not have any options other Policy Holders had, such as only AVCs. We have also borne the brunt of losses with E.L., continuing through to Prudential, with no relief from the E.L. calculation system, and probable further reductions”.
That is what people have been faced with.
The point has already been made that we are talking about people who are in the later years of their lives. Many have been pensioners for seven, eight or more years and have found themselves in this nightmare at a time in their lives when they should be able to feel that they have got away from the stress of working life and careers. They should actually be enjoying some form of retirement, but they have not been able to do so. The hon. Lady’s comment about her constituents who have been forced to move into a caravan displays exactly the problems that people now face.
I do not wish to speak at great length. I simply wish to say that all of us come to the House because we are propelled in some way by a sense of justice, and I know absolutely that my hon. Friend the Minister also has that at the core of her political being.
For far too many years, we have been meeting in this Chamber to discuss this issue—indeed, I remember our first debate, which I attended with other hon. Members who are present today—and we have had subsequent debates on the Floor of the House. We have gone over so much of the same ground, but officialdom has prevaricated and tried to weave in and out of the complexities.
I absolutely accept that the Government should not put themselves in a position where every failure by financial organisations becomes a matter for Ministers. Of course none of us would wish to see that. That would be to write a blank cheque to financial institutions and encourage them not to take care in their management and procedures.
Annette Brooke (Mid-Dorset and North Poole) (LD): Does the hon. Gentleman not agree that basic principles of fairness, timeliness and transparency would be much appreciated at this stage?
Barry Gardiner: The hon. Lady is absolutely right. She goes to what we all believe is the central point: the situation has gone on too long. People are dying, having spent the last years of their lives worrying and being unable to afford the little niceties that they would have liked to buy for their grandchildren’s birthdays. That is the fundamental injustice here, and officialdom and bureaucracy must take that on board. A Government who are in listening mode must not simply acknowledge that point—they must do something to redress it. That is why it is essential that the Treasury move with speed and certainty to make full compensation available quickly, before any more people are unable to benefit because of the time that has elapsed while the Government have dithered.
3.15 pm
Mr. Alan Reid (Argyll and Bute) (LD): I congratulate the hon. Member for Leeds, North-East (Mr. Hamilton) on securing the debate and giving us another opportunity to try to persuade the Government to do the right thing by Equitable Life policyholders.
The title that the ombudsman gave her report—“Equitable Life: a decade of regulatory failure”—sums the situation up very well. When Equitable Life was forced to default on its obligations to policyholders in 2000, it is estimated that more than 1 million policyholders lost part of their savings. Therefore, we all have victims in our constituencies. I share the hon. Gentleman’s outrage at the fact that the situation is still unresolved nine years later.
In the nine years since 2000, about 30,000 policyholders have died. As we heard earlier, the Library estimates that another 15 people die each day. It is important to remember that the victims of the collapse are elderly people who now face hard times. They did what successive Governments recommended they do, by making provision for their retirement. They made sacrifices earlier in their lives to make provision for their old age. These are the victims that we are talking about.
Paul Holmes (Chesterfield) (LD): I apologise to the hon. Member for Leeds, North-East (Mr. Hamilton) for not being here at the start of the debate, but I was in a Delegated Legislation Committee at the time. Have constituents approached my hon. Friend to tell him about the double whammy that they face? One constituent, who lives in a terraced house close to my constituency office—she is certainly not a fat cat with lots of assets—faces a double whammy. She is a pensioner who has been denied the Equitable Life investment that she prudently saved for all her life, but she also cares for her two elderly parents, one of whom has Alzheimer’s and the other of whom has Parkinson’s. She can no longer get attendance allowance, because she is a pensioner. She is being hit on every side. All she ever did was prudently save for her old age, but she has been denied her investment.
Mr. Reid: My hon. Friend is quite right. I am sure that a lot of elderly people are in that situation.
The parliamentary ombudsman concluded that there had been maladministration and injustice, yet the Government are fiercely resisting paying the compensation that the ombudsman said was due to policyholders.
Mr. Letwin: Does the hon. Gentleman agree that a remarkable feature of the scene is that the ombudsman made it clear that she thought that it was reasonable for the Government to take into account fiscal constraints? She was not even asking for total compensation, but for compensation that was reasonable under the circumstances.
Mr. Reid: The right hon. Gentleman is right about what the ombudsman said, and I agree that the Government should take that into account in implementing the ombudsman’s recommendations.
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