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"may wish to take into account when considering which policyholders have experienced disproportionate impact."
In other words, the report will be only a polite suggestion to the Government about what they might do, and it will leave them scope for what might be regarded as a wider and remaining injustice, which those representing policyholders might easily reject. If we have only those tentative suggestions, we face the awful prospect, 16 or 17 years after the first warning signs, of still no resolution for about 40,000 Equitable Life pensioners, whose average age as the hon. Member for Banbury (Tony Baldry) said, is 79. Certainly, many of them are elderly and many have sadly died while waiting for compensation, and, as I said in an intervention, it is estimated that as many as 2,500 could die in the next 12 months without ever having received compensation.
Policyholders were told to expect a final report from Sir John Chadwick in spring 2010. Well, the daffodils are out and my personal benchmark of spring, the Cheltenham gold cup, is imminent-the Cheltenham festival has started-but there is still no report. The real shame, as many Members have pointed out, is that in the end it will be a post-election report, and that adds to fears that the report will be controversial; that it might, as my hon. Friend the Member for Richmond Park (Susan Kramer) pointed out, use over-pessimistic assumptions and that, in the end, it will be highly contentious.
Dr. John Pugh (Southport) (LD): My hon. Friend is making dire predictions, but one feature of this case is that the pessimists have invariably been right.
Martin Horwood: Indeed, that is absolutely true, but let us hope that it is not true on this final-or what we hope will be this final-occasion.
The human impact of this fiasco has been absolutely terrible. Mr. and Mrs. Littlewood of my constituency wrote to me in 2008, describing that human impact. They said:
"Personally our pension payments have been sabotaged to the effect that we are now always, even more, conscious of the cost of
daily expenses and costs... The annual payments we put into E. L. to achieve a modest pension out of our earnings have been ravaged."
That is the effect. Like many others, their prospects of a happy and modestly prosperous retirement, reasonably free from financial worries, which is what most of would hope for at least, have been wrecked.
It is pretty difficult for many Equitable Life policyholders to bear that situation, for a number of reasons. First, as the hon. Member for Cities of London and Westminster (Mr. Field) pointed out, there have been bail-outs for those in cases such as Barlow Clowes, when the current Prime Minister championed the rights of investors. It therefore seems ironic that, on his watch, we have not been able to expedite similar compensation for Equitable Life policyholders. Secondly, in the Government's view the bail-out culture apparently extends to wealthy bankers who have brought this country to the brink of economic collapse, but not to hard-working pensioners who have done nothing wrong. They simply and prudently tried to save for their retirement, but they have ended up in a much worse situation. Finally, because there is a clear risk that the Chadwick report may not lead to an agreed resolution, the prospect of an actual payment that helps people in their daily lives and with their current financial situation will recede still further into the middle distance.
I urge the Government to accept a couple of requests. First, they should urgently look at the prospect of an interim compensation scheme. Government Front Benchers gave a pretty feeble answer earlier, and the idea that the Government are not willing to consider such a scheme because there might be a small overpayment to some Equitable Life policyholders, many of whom have been waiting 10 years for any payment at all in compensation for their losses, will sound rather hollow to all policyholders, but that is a risk that the Government ought to be prepared to take. Indeed, there may not even be a real risk, because, as other Members have pointed out, EMAG's estimate of the cost of that compensation scheme is £200 million-a fraction of the compensation that is likely to be paid in the final analysis.
Secondly, I urge the Government even at this late stage, to clarify urgently the remit given to Sir John Chadwick and express the hope that his recommendations will propose compensation in the spirit of the ombudsman's report-in a way that rebuilds a level of confidence among policyholders and offers some prospect of justice at the end of this whole long-drawn-out and sorry business.
6.40 pm
Mr. Greg Hands (Hammersmith and Fulham) (Con): This has been a good debate, and I am delighted that we Conservatives tabled the motion for discussion today. It shows the importance that we attach to the issue of Equitable Life; after all, this is likely to be the last debate in Opposition time on Treasury matters before the election.
We could have called for a debate on the record-breaking deficit, on the longest recession of any G20 country, on the Government's flip-flopping on ruling out rises in VAT or on the slide of the pound, but instead we chose to debate Equitable Life. The whole Equitable Life saga serves as an allegory for the Government Treasury
team's whole approach to the economy-saying that there are hard choices to make and then not making them. They are dithering rather than taking action; they promise that things will be sorted out, but put off paying the money until another day.
I should mention the many scores of my own constituents-51 in the past 18 months alone-who have written to me about their own difficulties as Equitable Life policyholders. I have read harrowing letters detailing lives blighted and retirement dreams dashed.
This is not the first time that we have debated Equitable Life in the House. I have gone through the various pledges made by the Government in the last debate on the issue, in October. To be fair, the Chief Secretary to the Treasury took a huge number of interventions during that debate, as he did this time. Frankly, however, he deserved his battering-so weak was his case and so unable or unwilling was he to answer any questions. I want to quote his response during the last debate to an intervention from my right hon. Friend the Member for Wokingham (Mr. Redwood), who asked whether the Government would go into this election
"having to say to Equitable Life policyholders, 'We have not agreed any compensation for you'".
He was told, weakly, by the Chief Secretary:
"I hope that we will not be in that position."-[ Official Report, 21 October 2009; Vol. 497, c. 934.]
But that is exactly his position as we go into this election.
Mr. Byrne: Will the hon. Gentleman spell out for the House whether he is going to accept the Sir John Chadwick process or whether-as his motion suggests-he wants to replace the Chadwick process with the ombudsman process?
Mr. Hands: I thank the Chief Secretary for the intervention, but that is just not good enough. I will outline the position, but I thought that he was intervening to tell us what he told us in October he would be able to do-go into the general election campaign with a clear pledge on amounts and a timetable. I am afraid that he has failed on both counts. I will answer his question when the time is right.
It is pretty clear that the Chief Secretary's position is as I have described, and it is a terrible position for him to be in. I agree with my hon. and learned Friend the Member for Harborough (Mr. Garnier), who said that the Chief Secretary is playing a game with the public on this issue. He tried to set up an artificial dividing line between following the Chadwick process and fulfilling the ombudsman's recommendations. That is a false choice. We very much hope- [Interruption.] The Chief Secretary should listen for a moment. We very much hope that the Chadwick recommendations will comply with the ombudsman's recommendations. The Chadwick recommendations will, we hope, deliver the principal recommendations made by the ombudsman-that payments should be made to policyholders to reflect the losses arising from the failure to regulate Equitable Life properly.
The Chief Secretary also considered the two issues of deceased policyholders and means-testing; it was noticeable that he did not rule in payments to estates and that he did not rule out means-testing. I am afraid that very
little comfort was given there. His speech contained nothing about amounts or timing, both of which are of the utmost importance and were promised by him back in October.
The hon. Member for Castle Point (Bob Spink) made a notable intervention on the Chief Secretary; it left me confused about the hon. Gentleman's status. After the Conservative Whip was withdrawn from him, he sat as an independent, then as a member of the UK Independence party, then again as an independent. Then last week, he was part of the Canvey Island Independent party. Last Friday, his local papers reported that he had set up his own party, the Save our Green Belt party. The House of Commons Library has listed him as an independent, but he seems to be following the Labour Whip as he votes in the Division Lobby on crucial matters. I shall be interested to see under which party Hansard records his intervention.
The hon. Member for Twickenham (Dr. Cable) outlined the cumulative effect of foot-dragging and we wholeheartedly agree with him on that. The hon. Member for Leeds, North-East (Mr. Hamilton) talked about the danger of the Equitable Life issue becoming a party political football. I have to disagree; in fact, the last Opposition motion on the subject, tabled by the Liberal Democrats, had our full support, and I assume that the same will apply in reverse this evening. Unfortunately, the hon. Gentleman was not one of the Labour Members who voted in favour of that Opposition motion last October.
My hon. and learned Friend the Member for Harborough pointed out the cynicism of delaying any compensation until after the election. He also rightly pointed out, as did the hon. Member for Leeds, North-East, that the vast majority of policyholders were or are of very modest means. The hon. Member for Brent, North (Barry Gardiner) said that nothing that the Government had done had made him more ashamed than the saga of Equitable Life. Let us bear in mind that the hon. Gentleman resigned from the Government in protest against his own party leader. Strangely, however, he did not support the Opposition motion on Equitable Life last October, when the chips were down.
I should like to praise the work of my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) as co-chairman of the all-party group on Equitable Life Policy Holders. He and I were elected for the first time in 2005; clearly, the Equitable Life issue predates that time. My hon. Friend has shown courage and done a great service to many people by taking on the co-chairmanship. He called for a better working relationship between EMAG and the Government and we wholeheartedly endorse that.
The hon. Member for Luton, North (Kelvin Hopkins)-who, to be fair, did vote for the Opposition motion last October-showed us yet again that whatever the question, his answer is always more public ownership. He criticised us for our pledge to take into account the cost to the public purse of any compensation, but it is worth pointing out that that was a key recommendation of the ombudsman herself.
My hon. Friend the Member for Banbury (Tony Baldry) made a strong and attacking speech, reiterating the powerful points made by my hon. Friend the Member for Fareham (Mr. Hoban) about the damage done to our savings culture. He also called for speed in the compensation process, saying rightly that not much apparent progress had been made since July 2008.
My hon. Friend the Member for Cities of London and Westminster (Mr. Field) pointed out that he first spoke about Equitable Life seven and a half years ago. Again, that shows how long this sorry saga of Government mishandling has lasted. As my hon. Friend put it, the safest course of action for the Government appears to be inaction.
The hon. Member for Angus (Mr. Weir) reminded us of the importance of respecting the role of the ombudsman, while my hon. Friend the Member for Wimbledon (Stephen Hammond) told us in a strong speech how he was ending where he started this Parliament: speaking up for his constituents about Equitable Life. He talked wisely about the importance of enhancing our savings culture in this country. The hon. Member for Cheltenham (Martin Horwood) also made important points about the speed of compensation.
This all reminds me of the last time the issue was debated in the House. A sizeable number of Labour Back Benchers rebelled against the Government, voting for a motion from the Liberal Democrats and Conservatives. I ask those Labour Members to make their voices heard again, on behalf of Equitable Life policyholders, and to vote for the Opposition motion tonight.
By refusing to take responsibility for the appalling delay in giving compensation, the Government are behaving once again like a soldier deserting his post. Their approach to this problem, like their approach to the deficit, is one of hoping that the problem will simply go away.
Rob Marris: Will the hon. Gentleman give way?
Mr. Hands: I will not; my hon. Friend the Member for Fareham gave way 27 times, and I have only one and a half minutes left.
The Government have had the best part of a decade to get this matter right, and thousands have died with neither compensation nor justice. There may be only six weeks left in the lifetime of the Government, but it is still not too late for them to do the right thing. If they choose not to, we will make sure that justice is done.
The response from those on the Conservative Benches is absolutely clear: we accepted the ombudsman's findings from the very beginning. My right hon. Friend the Member for Witney (Mr. Cameron) has stated clearly that if we win the election, we will sort out Equitable Life very early on. We make this pledge today: we will sort out the mess, and we will sort it out at some speed.
6.49 pm
The Exchequer Secretary to the Treasury (Sarah McCarthy-Fry):
I thank all Members for their interesting and passionate contributions to this debate. I think that we are all agreed on one thing-the need to resolve this important issue quickly and fairly. I believe that we have been making good progress. Sir John's recent interim report represents a significant step towards resolving the issue and, as the Chief Secretary said, he will submit his final report in May. As far as possible, the Government are progressing work on scheme design in parallel with Sir John's work. We cannot prejudge Sir John's final advice, and final decisions cannot be made until it has been received and considered. However, I want to reiterate what the Chief Secretary said in his opening speech: we recognise that there is a strong case for the estates of
policyholders who have passed away to be included in the scheme; we recognise that it is neither desirable nor administratively feasible to means-test every individual policyholder; and we are able to commit to responding to Sir John Chadwick's final advice within two weeks.
I shall now try to cover, as best I can in the time available, some of the points that hon. Members have raised. The hon. Members for Twickenham (Dr. Cable) and for Shrewsbury and Atcham (Daniel Kawczynski) referred to EMAG's withdrawal from the Chadwick process. It is regrettable that EMAG has withdrawn from Sir John's work. Sir John is a well-respected former Court of Appeal judge who carries out his work independent of Government, and I do not believe that his integrity is in question. Throughout the process, he has carefully considered representations from all interested parties, including EMAG, and has given equal time and weighting to the views of those parties. That is reflected in his latest interim report, which publishes all the representations that he has received. The independent panel appointed to peer review the work of Sir John's actuaries comprises specialists in their field. They are all highly regarded and were selected on the basis of their professionalism and integrity.
Many hon. Members, including the hon. Member for Twickenham, my hon. Friend the Member for Leeds, North-East (Mr. Hamilton), and the hon. Members for Cities of London and Westminster (Mr. Field) and for Cheltenham (Martin Horwood), asked about interim payments. In order to make interim payments, we would be required to pre-empt Sir John's advice, and we would have to make assumptions about a wide range of factors without having the full extent and analysis of the information required. I believe that it is important that all resources are directed towards ensuring that the final payment scheme is implemented as swiftly as possible, and at this point I do not want to divert resources that may, in turn, lead to delays in that implementation process. However, as the Chief Secretary said, we are investigating the possibility of prioritising payments within the scheme so that groups that have been the most disproportionately impacted would be paid first.
My hon. Friends the Members for Northampton, North (Ms Keeble) and for Leeds, North-East, and the hon. Member for St. Albans (Anne Main), who is not in her place, mentioned data cleansing. I would like to confirm that officials are in contact with Equitable Life on the issue of data, and the data cleansing process is part of the work that is being carried out in parallel with Sir John's work. I am confident that data cleansing will not cause delay once Sir John reports.
Many Members, including the hon. Members for Angus (Mr. Weir) and for Wimbledon (Stephen Hammond), asked when payments will flow. At the moment, it is impossible to tell. At the very least, we will need to know who we are paying and how we are paying, and we will need to consider different delivery options. However, as I said, we are starting preparatory work so that we can move as rapidly as possible when Sir John reports. We have scheme design consultants on board who are developing options, and extensive work by officials has included discussions with Equitable Life and with stakeholder groups. This is potentially one of the largest schemes of its type and, as the Chief Secretary
said, history tells us that extensive preparation is needed to get this right; its scale and complexity should not be underestimated.
Mr. Garnier: In order for this process to be efficient and effective, I have absolutely no doubt-I am sure that the Minister will confirm this-that the Government will get sight of Sir John's final recommendations well in advance of the published date noted in the amendment. Do the Government expect to get the report, either in draft or in its final form, before the end of April?
Sarah McCarthy-Fry: The hon. and learned Gentleman will be aware that we have received interim reports from Sir John during this process. [ Interruption. ] I believe that he just said that we have already seen the draft final report-I can assure him that that is absolutely not the case.
The hon. and learned Member for Harborough (Mr. Garnier) and the hon. Members for Shrewsbury and Atcham and for Banbury (Tony Baldry) expressed their cynicism about Sir John's reporting in May. This is Sir John's timetable. Sir John does not work to a parliamentary or a political timetable, and he is carrying out the work as quickly as he is able. Clearly, it would be irresponsible to rush to implement a scheme before the facts are established.
Many Members, including the hon. Member for Cheltenham, raised the question of Sir John's independence. Sir John will come to his own views independently of Government. We have, of course, offered our own views and comments to the process, and they will be published along with all the responses, but they are representations, not directions. We have been very clear that we will take full account of Sir John's advice.
Rob Marris: Speaking of cynicism, does my hon. Friend share my view that the Conservatives are sitting on the fence? Their motion calls for the implementation of the ombudsman's recommendations. Today, their spokesperson said that they hope that Chadwick will follow the ombudsman's recommendations but did not say what would happen if the recommendations from Chadwick are different from those of the ombudsman: they are silent on that point.
Sarah McCarthy-Fry: Exactly. As my hon. Friend suggests, Sir John's approach is already different from that of the ombudsman. Her approach was based on the scrutiny of individual cases, coupled with the requirement to prove that policyholders had relied on regulatory returns. Sir John has taken a flexible approach that already differs from that approach.
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