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"In this case, I am satisfied that the injustice I found in my report to have resulted from maladministration on the part of the public bodies responsible for the prudential regulation of the Society has not so far been remedied. I am also satisfied, for the reasons I have given above, that it will not be so remedied whatever the outcome of the work yet to be done by Sir John Chadwick...I consider that it is appropriate to draw this to Parliament's attention, given the scale of the injustice I have found and the nature of the Government's response-which means that this injustice will not appropriately be remedied."
Mr. Heald: May I say how much I agree with the hon. Gentleman that there should be a procedure to bring an ombudsman's recommendation in a special report before the House automatically? If he would like to refer the matter to the Procedure Committee, I would be happy to support him, and if he wants to table an early-day motion, I would be happy to put my name to it, because it is important that the ombudsman is respected, and there should be a proper procedure for the House to consider such a matter.
Dr. Wright: That is a very fine offer and I shall certainly take it up.
I am quite realistic about this. Such things test every Government. It is quite proper for a Government to say, "If we were to provide a remedy of the kind that the ombudsman suggests in this case, or indeed in any other case, there would be a cost." In this case, the cost is substantial-there can be no equivocation about that. The figures look slightly less daunting than they did a couple of years ago; we now know how to use these big numbers.
It is in the public interest for the Government to point to the sizeable public expenditure implications of the recommendations, but there is a larger public interest
in maintaining the integrity of the ombudsman system. If we start to chip away at that and say, "Oh well, we'll accept some of her findings, but reject others," we chip away at the ombudsman system. This House decided to set up a system of independent investigation of the actions of public bodies, including Departments, and having adopted such a system we cannot-except in the most exceptional circumstances-say, "Well, actually, we do not like the findings, leaving aside the question of any remedy."
Mr. Byrne: I agree with much of what my hon. Friend says, but if a parliamentary ombudsman finds an injustice and proposes a remedy that is, let us say for the sake of argument, wrong, and the Government propose a different remedy, that automatically breaks the link between the injustice identified and the remedy on offer. What is the right way to approach that question, when a legitimate debate may be had about the range of remedies that may address the injustice that the ombudsman has rightly identified? I am sure that my hon. Friend would agree that it would always be unsafe, in any area of public life, to receive arguments and proposals as if they were written on tablets of stone. No matter who produces those conclusions, there must always be a way of testing them in case the remedies proposed are incorrect.
Dr. Wright: We are getting into interesting territory, and I am not sure how much further the House wishes to go, even though it is important territory. When the ombudsman was established 42 years ago, it was not said in the legislation that the ombudsman's findings would be binding. It was said that after recommendations were made, a response would be made. The assumption has always been that those recommendations would carry an authority with them and be routinely accepted. On the whole, that process has worked over the years.
We get into difficulties if Governments start saying that they want to depart from that convention, to pick and choose between findings and to vary the remedies recommended by the ombudsman.
Mr. Heald: The hon. Gentleman will know that for many weeks the shadow Leader of the House has asked for a debate on the special report from the ombudsman. That is the answer to the Minister's question: if the Government want to do something that differs from the recommendations, they should table a motion to be debated and voted on by the House.
Dr. Wright: The hon. Gentleman is right. It is also right that we should have this discussion. Having made a decision, the Government should put their case in the best way that they can, and my right hon. Friend the Chief Secretary is doing that. He made some important points about the mechanics of delivering redress systems, but the fundamental points are still at issue. Only the House can come to a view on those.
The ombudsman has settled views on how redress should follow from findings of maladministration leading to injustice. Redress is part of the system. We are not compensating for the mismanagement of the Equitable Life company, or for what happened to the markets that made life more difficult than it would have been otherwise for policyholders, but we are compensating for that element of serial regulatory failure that contributed to
what happened to those policyholders. It was only late in the day during the ombudsman's inquiries that the Government suddenly announced the doctrine that they would not compensate for regulatory failure. The ombudsman rightly said to that, "Well, I wish that the Government had said that at the beginning of my inquiry." When she was carrying out her inquiry, those bodies were not immune from ombudsman investigation or from paying compensation for regulatory failure.
The principle that the ombudsman advances is the same as the principle she advances in every other case that she investigates. When she finds maladministration by a public body, the people affected should be put back into the position that they would have been in had the maladministration not occurred. She has applied exactly the same principle in this case as in every other case that she investigates. The question for the House-I keep saying "for the House" because it is for the House to decide and not the Government-is whether it wants to adhere to that principle or not. If it does, it will have to go with the ombudsman's principle of redress in this case, which would mean that all those who have suffered loss as a result of maladministration must have some remedy. When the Government say, on seeing the big numbers, "We will only, for the sake of charity, compensate those who have suffered disproportionately," the ombudsman rightly says that that is not consistent with the principles of her office.
The fundamental point is that we have to decide, not as party people-that is how we do everything else in this place and it often demeans us-but as House people, whether we want to assert the integrity of the office of the parliamentary ombudsman, which this House established more than 40 years ago, or want to see it progressively undermined. That is the fundamental issue and that is why I shall support the motion, although as I said earlier, I wish that we were having a free vote on the ombudsman's report itself.
2.18 pm
Susan Kramer (Richmond Park) (LD): I shall also try to be brief, because the hon. Member for Cannock Chase (Dr. Wright) said so much of what I wish to say, but said it a great deal better than I could ever have said it.
I first wish to congratulate EMAG. I am incredibly conscious of the many members of the action group and their appointed leadership who took the difficult decision to put themselves at risk and raise the resources to proceed with a judicial review. They have been utterly vindicated by the court, which accepted most of the principles that they brought before it, and changed the likely outcome for the many policyholders who lost money in Equitable Life because of regulatory maladministration. Those people deserve credit from this House.
I also join in the sentiment that the judicial review has been a marked success for Parliament and the parliamentary ombudsman. When the ombudsman produced her report, I was incredibly impressed, like many others, by the degree of detail, care and objectivity that were so evidently present in the analysis of the circumstances and the carefully drawn conclusions that she reached. I am shocked, therefore, by the Treasury response, which in many ways was arrogant, superficial and dismissive, and not the kind of response deserved by the work,
thought and care that went into the ombudsman's initial report. In a sense, the response was a comment on the Treasury's view of the ombudsman system.
Mrs. Theresa Villiers (Chipping Barnet) (Con): I cannot think of another instance in which we have seen the Government respond to an ombudsman's report in a remotely similar way. It seems that this is unprecedented. Does the hon. Lady agree?
Susan Kramer: I very much agree with the hon. Lady's comments. I also say to the Exchequer Secretary that we saw today a repeat of some of that attitude when the ombudsman's timetable for delivering compensation to injured Equitable Life policyholders was questioned.
Bob Spink: Does the hon. Lady agree that it would show greater respect to policyholders were the Labour or the Conservative party-whichever wins the general election next year-to undertake to make interim payments or payments in full to policyholders before the end of next year? That is a substantive issue.
Susan Kramer: I can only agree with the hon. Gentleman. On the ombudsman's timetable, the Government's response to the ombudsman's recommendations, published in January 2009, states:
"The Ombudsman has said that the scheme"-
"should be established within six months of any decision being taken to set it up"-
the ombudsman would have assumed that that meant summer 2008-
"and that its work should be completed"-
completed means all payments made-
"within two years of its being established."
We would have been almost through the entire process had the ombudsman's ideas and structure, which came out of the detail of four years' work-they were not off the cuff or the back of an envelope-been accepted. Today, once again, the Government and Treasury have suggested something very different from the ombudsman's position.
Jo Swinson (East Dunbartonshire) (LD): I totally agree with what my hon. Friend says about the detailed work done by the ombudsman. We have an ombudsman to consider such cases and recommend justice. Does she agree, however, that the Government's response undermines the whole office of the ombudsman? Treating this report in such a way could create a precedent for future ombudsman reports being ignored and recommendations being cherry-picked.
Susan Kramer: I could not agree more with my hon. Friend. Everything that we do has the potential to create a precedent. I and, I suspect, many other hon. Members would like the ombudsman's role to be accepted and strengthened, rather than weakened dramatically.
I want quickly to raise a second issue. What, for most of my constituents, goes to the heart of the matter is the issue of "disproportionate impact", which is to be the principle for compensation payments. In June 2009, Sir John Chadwick, who was asked to consult on this matter, used the following phrase:
"I am satisfied that the Terms of Reference"-
"do not require me to engage in any form of means-testing in relation to individual policyholders."
What we have heard from Treasury Ministers today seems to conflict with that statement. Therefore, I hope finally to hear in the winding-up speech a definition of "disproportionate impact". I certainly do not want to argue against a principle if the Government have already abandoned it, but it did not sound to me, from the Chief Secretary's opening speech, as if they have.
Mark Durkan (Foyle) (SDLP): Like many of us, the hon. Lady has received many representations from constituents and others. Has she received any representation from any policyholder who feels that they suffered, or whom she believes suffered, merely a proportionate impact?
Susan Kramer: The hon. Gentleman speaks with great common sense and reflects the voices in the letters and representations that I have received.
Andrew Stunell (Hazel Grove) (LD): I am sorry to interrupt my hon. Friend when she is in such fine form, but does she not also agree that the fact that the judicial review struck down the Government's alternative plans shows very clearly that the Government have been on the wrong foot right the way through in their response to the ombudsman?
Susan Kramer: I am glad that the judicial review has been raised, and I agree with my hon. Friend. I do not want to repeat the comments about the judicial review made by my distinguished neighbour, my hon. Friend the Member for Twickenham (Dr. Cable), in his opening speech, because he summed up most of the situation extremely effectively. However, I want to point to one issue raised on the Floor: the presumption that somehow there is some resistance to the principle of compensating for regulatory maladministration. Comments were made by the judges on precisely that issue. We should pay attention to such comments when they come from such a distinguished source. They said that they
"found no evidentiary support, at least in the material before us, for the claim...that Parliament 'has accepted' that compensation for regulatory failure is 'not generally appropriate'".
These are judges. They understand how to read legislation and Hansard, and they did not think that this House had set up a barrier, or raised some principle, against compensating for regulatory maladministration. I understand the judges' words to mean that we might strongly presume that the House expects regulatory maladministration-as others have said, we are not talking about market or management failure at Equitable Life-by the regulator to lead to some form of compensation, or the expectation of it.
I do not want to take up the time of the House by talking about my many individual cases, but it is important to make it clear again on the Floor of the House-this has come up in previous debates-that people impacted by maladministration do not form a select group of highly paid, wealthy professionals who happened to take out exotic life policies. Those who have been impacted in my community range across the social scale. Some are on very low and meagre incomes; others are on decent incomes. However, the notion that this is a case of the rich coming to us with a cry from the heart is completely false, yet often that belief seems to underpin much of the thinking of those on the Treasury Bench.
I want to make a plea that I have made before on the Floor of the House: we should be able to hold such a debate in Government time. We have heard that from others, but we all ought to make it clear that this is our expectation. Many people will resist supporting a motion tabled by an Opposition party, particularly on one of its Opposition days, merely on the principle that that is what is done. That is unfortunate, because an issue like this, given the suffering that has been caused, overrides any such facile view of how Parliament should function. The Government keep challenging us, over and over again, on our position on this issue, but surely this is exactly the kind of instance in which the Government should be introducing the debate, presenting it to the House and allowing the House the final word. We live in a parliamentary democracy, and surely we must fight for that principle, as well as the principle of justice-real justice-for our constituents.
I want to make one last remark on Sir John Chadwick. I have great respect for him, but he has been very resistant to meeting the all-party group on Equitable Life policyholders, of which I happen to be the secretary. I find that unfortunate and I take it to mean that the debate that he is conducting is far less well informed than it should be. I ask the House to call again on Sir John Chadwick to rethink his interest in excluding Members of Parliament from considering these issues.
2.28 pm
Mr. Fabian Hamilton (Leeds, North-East) (Lab): I start by thanking the Chief Secretary for reiterating the apology given by his predecessor, my right hon. Friend the Member for Pontefract and Castleford (Yvette Cooper), which was certainly a good start.
Earlier, the hon. Member for Reigate (Mr. Blunt), who is no longer present in the Chamber, said in an intervention that policyholders should be able to come forward and apply for compensation against criteria and for a sum of money determined by this House. That was reiterated, in a way, by my hon. Friend the Member for Cannock Chase (Dr. Wright), who said-many of us agree with him-that we are talking about a matter for the whole House. It is a matter that should be discussed without partisan interest, but in the interests of our constituents only, as the hon. Member for Richmond Park (Susan Kramer) has said.
I was interested in the contribution made by the shadow Chief Secretary, the hon. Member for Fareham (Mr. Hoban). He said in his conclusion that the subject of this debate is not a partisan issue. I agree with that: it is not a partisan issue, and I hope that the parties here will not make it a party political issue for their own gain. It is something that the public look to this House as a whole, and that our constituents look to us as individuals, to put right.
On 24 June, I had an Adjournment debate in Westminster Hall. I was subsequently asked to stand as the joint chairman of the all-party group on justice for Equitable Life policyholders, which I agreed to do. There are many officers here today, from all parts of the House, who support that group and its principle of justice for those policyholders. I do not want to repeat the remarks that I made on 24 June, but I want to draw out some important points from that speech, to remind hon. Members and those on the Government Front Bench
exactly why we are holding this debate. I am sorry that this debate is being held in Opposition time, as many hon. Members have said, because that has certain implications for the way in which Members vote.
I said on 24 June that I did not want simply to repeat the words that had been said in previous debates. I wanted to try to bring to the House some of the experiences of my constituents to remind us why we are debating the issue yet again, and to try to persuade the Government to agree to the recommendations contained in the parliamentary ombudsman's original report, "Equitable Life: a decade of regulatory failure", which was published in July 2008.
As we know, after the publication of Ann Abraham's report, the Public Administration Committee produced a report entitled "Justice delayed", on 11 December 2008. On 5 May this year, the parliamentary ombudsman published a further report, "Injustice unremedied", which has been referred to on a number of occasions. There is no shortage of reports, just a shortage of justice for those who through no fault of their own have suffered huge losses in their life savings, accrued over years of hard work. That surely cannot be right.
Like many other hon. Members who until recently knew little about how all that had come about, I was not very sympathetic at first. However, as the hon. Member for Richmond Park has said, as much as the world's oldest mutual insurance company had overstretched itself and as much as the real issue was poor regulation, I became more and more concerned about what my constituents were telling me. I suspect that that experience has been echoed throughout the House, and that there is not one Member who has not received correspondence from constituents about Equitable Life.
The Public Administration Committee said in the introduction to its December 2008 report:
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