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Dr. Tony Wright (Cannock Chase) (Lab) rose-
Anne Main (St. Albans) (Con) rose-
Mr. Byrne: I shall give way to my hon. Friend and then to the hon. Lady.
Dr. Wright: So that the House is not misled, may I put it to my right hon. Friend that the issue is not the technical efficiency of different schemes for delivering redress, but a fundamental difference in approach between the ombudsman, who says that redress should be as of right because of regulatory failure, and the Government, who say that they shall create an ex gratia remedy for those who have suffered disproportionate loss? That is a fundamentally different approach.
Mr. Byrne: It is, and my hon. Friend might want to intervene again. However, the Bradley judgment and last week's court judgment confirmed the legal basis of the Government's ex gratia proposal, and that brings us to the point that there is no legal obligation on the Government to provide compensation for regulatory failure. The ombudsman appeared before my hon. Friend's Committee, and it may have been him who asked her directly whether she would have been content for the Government to accept all the recommendations and then provide no compensation whatever. I think that it was question 29 of the relevant report, and her answer was yes: she would have been, perhaps not satisfied, but content that it would have been perfectly legitimate for the Government to provide no compensation whatever. However, even though there is no legal obligation to provide compensation, all parts of the House agree that there is a legal and moral demand for the provision of some compensation. The question then becomes, what is the rational basis on which to put in place that scheme?
Mr. Byrne: I shall give way to the hon. Member for St. Albans (Anne Main) and then to my hon. Friend.
Anne Main: The Chief Secretary is doing a wonderful job of dancing on the head of a pin. I met Equitable Life victims yesterday, and the reason they have gone down their particular route is that they do not trust the Government. If we do not sort out the matter now, we will live with that fundamental break in trust-in terms of being encouraged to invest-as a very poor legacy of this situation. Therefore, may I ask the Chief Secretary yet again to respond to my hon. Friend the Member for Guildford (Anne Milton) on the question of dates? Spring is not good enough.
Mr. Speaker: Order. That was a notably lengthy intervention, but I feel that the reply from the Minister will be characteristically pithy.
Mr. Byrne: Spring is my target date for providing the House with the design of the ex gratia scheme.
Mark Hunter (Cheadle) (LD) rose-
Mr. Byrne: I shall give way to the hon. Member for Cheadle (Mark Hunter).
Mark Hunter: I am grateful to the Minister for giving way; he has been generous in doing so. All who are concerned on behalf of their constituents about the issue will not be surprised at what I suspect will be the fury of the many thousands of people who will have looked in on this debate and, frankly, expected and hoped-despite all the odds-for a little better from the Government. Has the Minister calculated how many fewer people-because people with legitimate claims are dying-he will have to pay by his target date of spring next year?
Mr. Byrne: Perhaps the hon. Gentleman will want to intervene again if I pose this question. How much faster does he think that compensation would flow to policyholders if an independent process were set up that then reviewed the investment decisions-all 30 million-of 2 million people? Will he intervene again and tell me how much faster he thinks that compensation scheme would be up and running?
Mark Hunter: I am happy to, because the point was made before: the question is not about having to review 30 million individual cases, but about reviewing policyholders' different levels of policy. With respect, the Minister is making a fatuous claim.
Mr. Byrne: I am glad that the hon. Gentleman says that a better approach is to review different classes of policyholder, because that is exactly the approach that Sir John Chadwick recommends. Perhaps the hon. Gentleman will answer the following question by intervening again. What is at stake is a test of approach, and the hon. Member for Twickenham prayed in aid the ombudsman's report, citing paragraph 9.27, which says:
"My second-and central-recommendation is that the Government should establish and fund a compensation scheme with a view to assessing the individual cases of those who have been affected by the events covered in this report and providing appropriate compensation."
Is the hon. Member for Cheadle prepared to intervene again and say that that is the wrong approach and that we should consider providing compensation for different classes of policyholder, which is of course Sir John Chadwick's approach?
Dr. John Pugh (Southport) (LD): If my hon. Friend will allow me, I should say that the Minister has not answered the question from our hon. Friend the Member for Twickenham (Dr. Cable). The Minister offers what he calls a swifter and better way, but, if it is, why has he not convinced one single policyholder-they are not stupid-that that is the case?
Mr. Byrne: All I can do is point to the ombudsman's recommendation for, and assessment of, when her proposed compensation scheme would be up and running and have concluded its business. That best-case assumption was December 2010. When we and, indeed, Sir John Chadwick looked at what running that scheme would entail, we found that it was a pretty conservative estimate of how long it would take to get through the business. I think that Sir John's approach is right and offers a swifter route to justice.
Mr. Byrne: I shall give way to my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz).
Mark Lazarowicz: I am grateful to my right hon. Friend for giving way again. I, unlike many colleagues, was convinced of the correctness of the Government's ex gratia scheme approach, rather than of an approach that seemed to be a lengthy way of resolving the issue. However, I am concerned about the time scale-and even more now. We are told that the proposals for the scheme will be in place by 2010. Allowing for the natural delay to such schemes, anyway, we are probably talking about proposals coming forward next summer and there will be months of debate after that. By the time any money starts being paid out, we will probably be well into 2011, or beyond. That is unacceptable, so may I ask the Chief Secretary to-
Madam Deputy Speaker (Sylvia Heal): Order. The hon. Gentleman's intervention has been quite lengthy.
Mr. Byrne: As I say, my goal is to ensure that a scheme is up and running within a timetable that is administratively quicker than the ombudsman's proposed approach, and I know that the House will hold me to account for delivering that proposal.
Rob Marris (Wolverhampton, South-West) (Lab) I do not share this love-in with the ombudsman, who took a slothful more than four years to produce her report. Nor do I share any love-in in terms of the time that the Government have taken. My right hon. Friend says today that a design for the scheme will be finalised by spring 2010, and that seems to be much better than the ombudsman's proposal to review 30 million decisions. However, spring is an elastic date. By what dates does my right hon. Friend think that pay-outs will start?
Mr. Byrne: That, I know, is the million dollar question, which I cannot answer this afternoon. [ Interruption. ] I know. Until Sir John has finished looking at the principles of how we calculate relative loss and assess disproportionate impact, both of which we will want to debate in the House, I cannot answer that question. I can commit to a date for the next stage-the scheme's design.
Mr. Mark Hoban (Fareham) (Con): The Chief Secretary is in danger of treating the House and our constituents like fools. He tried to dance around the issue of when payments will be made, and he said that Sir John Chadwick would design a scheme by spring 2010. Surely the Treasury has looked at how long it will take to implement a scheme. Treasury officials tell us that it has been working in parallel on those issues since Sir John's appointment. When will payments be made to policyholders who have lost out? The Minister must have an indication of the timetable for delivery.
Mr. Byrne:
As I have said, the regulatory failures of the 1990s, which we are now attempting to clear up, unfortunately entail Sir John having to go back over 2 million policies and information going back to 1990, to review several hundred different products and to assess the relative losses that people may have suffered. That will entail, quite obviously, an assessment of the money that people could have made by putting their cash into alternative products. If a fair system is what we want, a fair system will require a thorough examination of the records. The hon. Gentleman will share my
ambition and determination, given his party's responsibility for and involvement in some of the regulatory failures of the past, to ensure that the ex gratia scheme is fair to policyholders. He will not want any short-circuiting during the review; he will want us to ensure that all the records are checked.
Mr. Byrne: I shall give way to the hon. Member for East Londonderry (Mr. Campbell).
Mr. Gregory Campbell (East Londonderry) (DUP): Can the Chief Secretary not assure the House and Equitable Life policyholders that, at the close of today's debate, they will receive what they have not received to date-clarity and certainty about the dates when payments will be made?
Mr. Byrne: I can only repeat the answer that I gave a moment ago.
Sammy Wilson (East Antrim) (DUP): The Chief Secretary has outlined the work that still has to be done, all of which I assume will be in the framework that he intends to have published by spring next year. What further steps must be taken after next spring that cause the uncertainty that he has expressed as to when payments will start?
Mr. Byrne: My assessment is that payments can begin moving quite quickly once the final design of the scheme is understood and provision is made from the public purse.
Mr. John Redwood (Wokingham) (Con): Is not the bottom line, then, that whenever the next general election is held the Government will go into it having to say to Equitable Life policyholders, "We have not agreed any compensation for you"?
Mr. Byrne: I hope that we will not be in that position.
Mr. Crispin Blunt (Reigate) (Con): I want to record my interest as a former Equitable Life policyholder in relation to my pension as a special adviser.
The Chief Secretary is treating all the policyholders with the most enormous contempt if he says that he will not put the responsibility on to them to assess the compensation for claims that they may put in. To say that he is going to set up a system that will assess 2 million possible investment decisions in order to come forward with proposals puts the thing precisely the wrong way round. The one way to get policyholders in a position to make claims is to reverse the burden and put the burden on policyholders to come forward with their claims against a set of criteria that the Government and this House set.
Mr. Byrne: I did not quite follow the hon. Gentleman's argument. I said that requiring individual policyholders to come forward and provide an explanation to a tribunal about how they relied on regulatory decisions that turned out to be erroneous, and then show how losses were entailed, would place an undue burden on them. That is why the proposal from Sir John Chadwick is quite different-it is to look at different classes of policyholders to understand what their relative losses are and to propose an ex gratia payment scheme on that basis.
Mr. Byrne: I will give way one last time before I make some progress.
Mr. Binley: On 15 January, the Chief Secretary stated that policyholders would be paid. Why have not the Government done any contingency work at all on this matter? Why did they not start the process much earlier? Will he cut to the chase and tell us what disproportionality of suffering really means? People out there are bewildered and horrified by the Government's approach.
Mr. Byrne: In essence, relative loss is about losses that are suffered by policyholders once one has stripped out factors such as market movements, and disproportionate impact is about the effect of those losses on policyholders. As I said in an earlier answer, those are questions on which we have asked Sir John's advice, and I will bring those conclusions back to the House at a later stage.
Sandra Gidley (Romsey) (LD) rose-
Mr. Byrne: I will give way one last time and then conclude my remarks.
Sandra Gidley: I appreciate the complexity of the situation, but could the Chief Secretary confirm that Sir John Chadwick has had the resources that he needs to deal with it properly? Given that we get the impression that this problem is yet again being kicked into the long grass, could it be dealt with more quickly with more resources? Is Sir John dealing with it full time or part time?
Mr. Byrne: I asked Sir John before the summer whether he has sufficient resources to undertake the work that we have asked him to undertake, and he assured me that he had-but as I have explained, there is a considerable task for him to sieve through.
This has been a difficult legacy from the past that the Government have had to clear up. For me, the three principles are to deliver a payment scheme that meets the moral imperative to act; to deliver an ex gratia payment scheme in a way that is administratively simpler and faster than the way that the ombudsman suggested; and, perhaps most importantly of all, to ensure that the right people are included in the scheme. That is the approach reflected in the Government's amendment, and I urge my colleagues to give it their support.
1.44 pm
Mr. Mark Hoban (Fareham) (Con): Conservative Members welcome this debate and will support the motion in the Division Lobby later this afternoon. The motion has cross-party support, and early-day motion 1423, which is at its core, has support from Members in all parts of the House.
The strength of cross-party support is a testament to the work of the Equitable members action group and to the number of constituents whose lives have been badly affected by the problems of Equitable Life. Each of us will have had letters and e-mails over the course of the past couple of days asking us to support the motion, but throughout this whole period policyholders have maintained pressure on MPs to ensure that justice is done. Many Members will have received harrowing letters from constituents whose lives have been blighted
by the crisis at Equitable Life. It is easy to get lost in the detail of the ombudsman's report, the Penrose report, the Baird report and the report produced by the European Parliament, but at the end of the day real lives have been affected by the problems at Equitable Life. The problems that arose back in the 1990s and at the turn of this decade continue to affect people's lives today as they wait for justice.
In their response to the ombudsman's report, the Government said, at paragraph 80:
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