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24 Mar 2010 : Column 75WH—continued
"no saver has lost money as a result of the economic and financial crisis"?
We all believe that we must do something, but time is running out. Possibilities seem to be getting limited, but one possibility that is not acceptable to my constituents and, I believe, those of my right hon. and hon. Friends, is for those honourable people to be left stranded. Reams have been written on the subject and column inches thick with suggestions have been recorded by the wise and the good, but a resolution is still not a reality. I hope that in the debate we will get cross-party support on the matter. I urge Members to encourage the Government to redouble their efforts to find a solution to that urgent and important matter. I tell the Minister to be innovative and bold, to take the lead and to make his name for the good people of Northern Ireland.
9.55 am
Mark Durkan (Foyle) (SDLP): It is always a pleasure and an honour to serve under your chairmanship, Sir Nicholas, but today is touched with sadness. This is the last occasion on which you will preside, with your keen interest and intense sympathy, over our deliberations on matters affecting people in Northern Ireland. I congratulate the hon. Member for East Antrim-[Interruption.] That was a map-reading error. I congratulate the hon. Member for South Antrim (Dr. McCrea) on securing this timely debate on a hugely important matter.
The hon. Gentleman said that people do not want blame games in relation to this matter, and the Presbyterian mutual society savers I have talked with-both constituents and others-do not want claim games either. People are concerned that there is some partisan tripping going on in relation to things that emphasise the role of Ministers of particular parties in certain ways. I remind him and other right hon. and hon. Members that when the crisis happened, the Minister rightly and alertly moved to legislate. That was supported by all parties and by the Committee for Enterprise, Trade and Investment in the Assembly, which I happened to chair at the time.
The Committee took a keen and active interest and engaged with officials and the administrator in ways that did not cut across what the Minister and her colleagues were doing and did not distract in any way or compromise the role of Ministers in their engagements with the Treasury and others. That must be remembered as an important matter of context.
Reference was made to the Treasury Committee report published last month, which was a welcome intervention in the matter. I hope that we Northern Ireland Members will not waste time today, in front of the Economic Secretary, disagreeing with and quibbling about aspects of that report. The report tried to inject urgency into the situation and show a real and keen sympathy. It was particularly helpful in cutting through the fog of obfuscation coming from the Treasury and others in London on the status and circumstances of the PMS savers.
In particular, the report effectively refuted the nonsense that the savers should be treated as investors rather than bona fide savers and as shareholders with regard to the equity, as though commercial and tradable shares had been involved; they were simply withdrawable shares that the savers thought were the form of their savings engagement, on a mutual basis. That is what they always understood them to be, no matter how others have sought to characterise them.
The Treasury Committee had to look at the background of what had happened, with regard to the performance and conduct of the society and the regulatory environment in which it all took place.Were there issues and lessons there?
One reason why the Treasury Committee had to look into the background was that it has done exactly that in respect of every other banking or financial institution failure. If we are going to say that the Treasury and others should not treat the PMS any differently from any of the other institutions that have collapsed or got into difficulty, we cannot ask the Treasury Committee to treat the PMS and its circumstances any differently from how it has treated any other institution. For other institutions, it has drawn attention to mistakes, misjudgments and misdeeds on the part of the institutions. It has also drawn attention to some of the regulatory failures, assumptions, oversights and gaps-the kind of twilight zones that have given rise to the difficulties that were caused, which people are still locked into. It was right and proper that the Treasury Committee should do that.
I regret the fact that people in the Department of Enterprise, Trade and Investment were perhaps a bit oversensitive to some of the observations. Indeed, I could have taken issue with aspects of the Treasury Committee's report, which rightly and understandably questioned why no one in the Assembly knew that this problem was about to come up. Why did the Enterprise, Trade and Investment Committee, which I chaired, not realise or anticipate that there might be a problem? I could say, "That is misplaced. It is undue criticism, and an unfair question to ask of us. How could we know, in the circumstances?", but the issue here is not civil servants, Northern Ireland politicians or Ministers of whatever party in Northern Ireland. The issue is the need and plight of the PMS savers, and we have to roll with the punches when questions are asked about the political and regulatory systems.
The hon. Member for South Antrim rightly highlighted the circumstances of PMS savers, and when we consider logic, circumstances and emotions, we can see that two statements made this morning-in response to the announcement of 12p in the pound being given to people who had more than £20,000 committed to the PMS-are true: one, there is at last some welcome comfort for some savers; and, two, it is too little, too late.
We need to ensure that things move forward from here. The ministerial working group was established last year on the back of an intervention during Northern Ireland Question Time by the Chair of the Treasury Committee, who called on the Secretary of State for Northern Ireland to convene a meeting of Treasury Ministers, devolved Ministers and Northern Ireland Office Ministers. That initiative then became the ministerial working group. Savers are waiting for outcomes and results. They feel that what they have had from all of us who are involved in this has been a lot of finger-pointing and hand-wringing. They want answers-not insults to their intelligence and motives, or mischaracterisations of them as speculative investors.
I have constituents who are members of the PMS; some of them had their life savings or life-start funds for their families committed to the society. Not all of them are actually Presbyterian, even though it is a condition of membership. One constituent is a woman who received significant but hard-won compensation for serious brain injuries resulting from a road traffic accident. Her solicitor, who helped her for many years in that fight, said, "I know a good place for that money." So, as well as £20,000 in withdrawable shares, more than £900,000 awarded by the court to look after her for life was committed to the PMS in trust through the solicitor. She is in a dire situation, as are many others. She has cause to resent the insinuations made by some people that those who have more than £20,000 invested are fat cats who do not really deserve sympathy as smaller savers with less than £20,000 do. She does deserve sympathy.
I have another constituent who has significant money involved-well over £600,000-in a charitable trust in his family's name. The trust does good work in my constituency and the constituencies of other hon. Members, including the hon. Member for East Londonderry (Mr. Campbell), and in Africa. There are many good causes and worthy circumstances that need to be borne in mind and considered, and the Treasury needs to show more sympathy and urgency in that regard.
We need from the Treasury a firm indication that it gets what is wrong. It is no good its pretending that we can afford to allow the PMS savers to linger in their plight because they are not systemically significant. It is no good its saying, "There are serious questions for the PMS itself; some of what it was doing was illegal." If some of what it was doing was illegal, it was not down only to the DETI in Northern Ireland to spot that. The illegalities were in the areas of interest and oversight that were the business of the Financial Services Authority. What was that institution doing during that period about sectors in which it should have had an interest?
As the hon. Member for South Antrim said, we need to look at everyone else who has faced difficulties because of pressures on their institutions. It needs to be borne in mind that in those cases there were institutional mistakes and misjudgments, and regulatory oversights
and failures, but in none of them did the savers themselves end up having to pay the price or carry the can. PMS savers in Northern Ireland are uniquely put in that position, and the indifference that has been shown by the Treasury borders on injustice.
10.6 am
Mr. Peter Robinson (Belfast, East) (DUP): It is an honour today, as it always has been, to serve under your chairmanship, Sir Nicholas. We have always appreciated the extensive interest that you have taken in the affairs of Northern Ireland, and you will be greatly missed by this House, not least for the authority and command that you have exercised. The House is to lose one of its star performers. We very much appreciate the role that you have played and your interest in the affairs of our Province.
I have no direct interest to declare, as I am neither a Presbyterian nor a saver, anywhere, but I should at least declare my membership of the Prime Minister's ministerial working group. The working group was not set up as the result of any call made in the House of Commons. I was present at the meeting when the group was put together; I was present when its terms were agreed; and I was present when the statement was agreed on its being set up in direct response to a request made by the Deputy First Minister and myself. The Prime Minister readily made that response because he accepted that there was a "moral obligation"-that was the term that he used-on the Government to assist the savers of the Presbyterian mutual society. He did not use the term "savers"-that has always been my term. He prefers "investors", but we have already heard the challenges to the use of that term.
Like others, I do not want to involve myself in a blame game, nor do I want to make claims about how we might move forward. It is clear to me that the problems faced by the PMS arise directly from the fact that the Treasury restricted the guarantees if offered to financial institutions to those that were authorised by the Financial Services Authority. There is a special set of circumstances in relation to the PMS which I believe should have been taken into account. The society should have been covered by that umbrella, but it was not, which led to a run on the liquid assets of the PMS as soon as it was discovered that guarantees were available in other banks. People started to move money across and pressure came on the PMS, with the consequences about which we are all aware.
I have constituents who are facing real hardship as a result of their circumstances, just as my hon. Friend the Member for South Antrim (Dr. McCrea) and the hon. Member for Foyle (Mark Durkan) outlined. I have a constituent who is in precisely the circumstances outlined by the hon. Member for Foyle: they were seriously injured in a car accident and received a compensation payment, which was placed in the PMS, but they cannot get access to the funds for their care and are having to rely on family members to provide them with help, enabling them to mark time until the moment when the problem is resolved.
There are four ways forward. One of them, which in my view should not be entertained, would be to allow events to take their course and allow someone to go to the courts and force the administrator to have the fire sale that my hon. Friend the Member for South Antrim
spoke of. That would be the worst set of circumstances. I suspect that that course of action would lead to most, if not all, of those who have lent money receiving their funds back, but all those who have less than £20,000 probably not getting anything back. That would lead to considerable hardship on the part of those who need the funds most of all.
The next option is to set up a hardship fund, which would allow the previous option to play out, but ensure that help was available to those in the greatest difficulty. That would have limited appeal. It might take away some of the pain, but it would take a very long time for the administrator to work through his end of the problem, it would probably be several years before the fire sale took place, and it would take considerable time for the hardship fund to be put in place.
The next option is for assistance to be given for an orderly run-down of the affairs of the mutual society. All of us recognise that the administrator has indicated that we are not dealing with a society that is holding on to toxic assets. The fact that it was said that, recently, lenders were given 12 pence in the pound because funds of more than £20 million were available to the administrator to disburse indicates that funds are coming in to the mutual society. Its assets are solid and strong. It is the problem with the property market that gives the greatest difficulty to the administrator. Given time for the property market to recover, I believe, on the basis of what the administrator has indicated, that it will be possible for the administrator to be able to recover the funds not only of the lenders, but of those who would be described as shareholders-those with less than £20,000 saved.
That option should be seriously considered, but only if there is no commercial option available-that is, no banking option. That is much the best option open to the society. All of us recognise that, the longer we go without someone stepping forward and indicating that they are prepared to take over responsibility for the society, the more likely it is that we will have to consider other alternatives. I understand that a commercial interest is still looking at the society's affairs and carrying out due diligence, so there is a strong possibility that something may come from that.
The Deputy First Minister and I have been considering this matter for a long time with our colleagues, including the Finance Minister and the DETI Minister. I say to the hon. Member for Foyle that those people happen to be members of my party, but their portfolios and their ministerial responsibilities bring them together with the Deputy First Minister, who, in spite of the fact that he can, like myself, say that he is neither a Presbyterian nor a saver in the PMS, has shown an interest and has attempted at all times to be helpful in this matter. We are agreed on a proposition that we have put to the Treasury. It would be a fall-back position-an option to be picked up if it is not possible to move ahead with a commercial proposition. It would require the support of the Executive and the Assembly, and changes to Assembly legislation would be required to bring it about.
The real problem is timing. The more I speak to savers with the PMS, the more I realise that this affair cannot go on until the next Government are in place. It has to be brought to a head and dealt with now. This Administration have the detailed knowledge of the
issues involved. On behalf of all those who have been involved with the ministerial working group, I want to put on the record our appreciation of the work done by the Economic Secretary to the Treasury, who has at all times been helpful and has been prepared to extend himself to see if a solution can be found. I trust that, working closely with the Northern Ireland Executive, we can within days, and certainly within a few weeks, allow some hope to be expressed tangibly to those who have funds locked in the PMS.
All of us know about the difficulties being experienced by people in our constituencies, including those whose money is in the PMS for the purposes of funeral expenses. I cannot overstate the extent to which the thought that their funds will not be available in such circumstances causes anxiety and concern to elderly people who are without other means. Businesses have funds locked in the PMS, as do churches, whose building programmes have ground to a standstill because funds cannot be realised as a result of the present difficulties.
I urge the Minister to look favourably on the solutions and to assist in whatever way he can any commercial interest that is still sitting there, so that this matter can quickly be resolved.
Dr. McCrea: Can my right hon. Friend assure me that, whatever proposal is being made, takes into consideration not only those with more than £20,000, but those with less than £20,000, who are also suffering greatly?
Mr. Robinson: To me, it is not a solution if it does not resolve that issue as well. Those of us in the ministerial working group are of the view that the lenders could probably have their funds returned to them through a fire sale, but those with less than £20,000 saved with the PMS would be harmed and left outside. It is a solution that helps to resolve the matter, or at least removes the greatest element of pain for people in that category. I urge the Minister to use all his influence and ability to try to get a commercial outcome; but, in the absence of that, to give the Treasury support that would be necessary for the Administration's option, should that be required.
10.19 am
David Simpson (Upper Bann) (DUP): As well as congratulating my hon. Friend the Member for South Antrim (Dr. McCrea) on securing this debate, I join others in congratulating you, Sir Nicholas, on your esteemed career in this House, not only as a friend of Northern Ireland, but-dare I say it?-as a loyal friend to Northern Ireland. You were a great help to me when I was a young-[Interruption.] I thought that that would raise a reaction-first-time MP. I thank you for your help and guidance over the past five years, and I wish you and your wife well for the future.
The Presbyterian mutual society is an issue that has hung like a dark cloud over our Province for far too long. My constituency has been steeped in Presbyterianism for many hundreds of years. Indeed, the current Moderator, who is with us for this debate, lives there. I pay tribute to him for his tireless efforts in trying to resolve the problem for his congregations. I also pay tribute to his predecessor.
The prolonged crisis of the Presbyterian mutual society has many complex and technical aspects, but above all we must never forget the severe impact on ordinary, decent people. Suddenly, in October 2008, as a result of
a dramatic run on its resources, caused by the Government's decision to guarantee deposits in conventional banks, the PMS collapsed and savers were plunged into a nightmare. Not surprisingly, they were consumed by panic and despair. If words could solve the problem, it would have been sorted a long time ago. We have had numerous debates and questions in the Northern Ireland Assembly, and the matter was debated again as recently as Tuesday last week, but words are not enough; we need action. My party has worked tirelessly to try to achieve a satisfactory outcome.
When the news broke, we took immediate action to try to create some stability, and to allow room for a solution to be found. Following an approach by the directors of the PMS, my party colleague, Arlene Foster, the Minister of Enterprise, Trade and Investment, made an order under insolvency legislation to give the society the option of going into administration. That prevented an immediate sale of the assets belonging to the society and provided an opportunity for an administrator to manage its affairs with a view to safeguarding its assets and funds, and preserving the interests of its members.
The Minister of Enterprise, Trade and Investment has worked tirelessly, as have the First Minister, who is with us today, and the Minister of Finance, to bring the crisis to a satisfactory conclusion. The PMS working group was set up as a result of pressure from my party and it continues to work for a resolution. With my hon. Friend the Member for East Londonderry (Mr. Campbell), I sit on the Assembly's Select Committee on Enterprise, Trade and Investment, and the matter is regularly raised. I also sit on the Select Committee on Northern Ireland Affairs at Westminster, with the hon. Member for North Down (Lady Hermon), and again the matter is raised regularly, because we know the difficulties that many savers are going through. We continue to lobby hard on behalf of investors.
I was disappointed by the recent court ruling, which indicated that savers who had deposited £20,000 or less could not be classed as creditors and therefore would not be entitled to a share of any of the £20 million income generated by the PMS since it went into administration. I, for one, certainly see considerable merit in the idea of a bank-based rescue plan, and I look forward to hearing what the Minister says about that commercial route.
Last month's report from the House of Commons Select Committee on the Treasury has not helped. Instead of suggesting a solution, it seemed more concerned to pass the buck by blaming Stormont, particularly the Department of Enterprise, Trade and Investment. We want a resolution.
Lady Hermon: Will the hon. Gentleman take this opportunity to clarify a point? When his party-I am pleased to say-reached agreement at Hillsborough on 5 February, there was speculation and unfair criticism that a side deal had been negotiated by his party. I am sure that the hon. Gentleman would like to take this opportunity to clarify that that was not the case.
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