House of Commons
Wednesday 10 November 2010
The House met at half-past Eleven o'clock
Prayers
[Mr Speaker in the Chair]
Oral Answers to Questions
Northern Ireland
The Secretary of State was asked-
Exports
1. David Morris (Morecambe and Lunesdale) (Con): What recent discussions he has had with ministerial colleagues on the contribution of Northern Ireland to the Government's programmes to increase the level of exports for the purposes of international trade. [22147]
The Minister of State, Northern Ireland Office (Mr Hugo Swire): My right hon. Friend the Secretary of State and I have had regular discussions with ministerial colleagues in Northern Ireland on economic development issues. We will continue to work with the Executive to rebalance the Northern Ireland economy and grow the private sector.
David Morris: Does the Minister agree that the inspirational visit to China by the Prime Minister shows that we should redouble our efforts on exporting?
Mr Swire: Yes, I certainly do. Invest Northern Ireland has recently led trade missions to Brazil, South Africa and Vietnam, and 35 Northern Ireland companies from across the sector went with it. What is going on in China should work as an incentive to others to export. Let me pay tribute to a company that I visited the other day in Ballymena-and I see that the hon. Member for North Antrim (Ian Paisley) is present. Wrightbus has just supplied 450 double-decker buses to Singapore and has won the design project for the replacement of the iconic Routemaster bus here in London. The answer to rebalancing part of the Northern Irish economy is to get-
Mr Speaker: Order. That answer is too long. The Minister will resume his seat, and he must not repeat that.
Ms Margaret Ritchie (South Down) (SDLP): I thank the Minister for his answer. Given the need to provide growth in the Northern Ireland economy and ensure jobs and investment, can he provide assurances to the House that the Prime Minister, on his current trade mission to China, is aware not only of the need to rebalance the economy in Northern Ireland but of the products that could be exported as part of international trade-and also of the fact that the Government are about to publish a paper on the Northern Ireland economy and corporation tax?
Mr Swire: Of course the Prime Minister continues to take an interest in Northern Ireland. The food, drink and tobacco sectors account for 45% of total sales and 46% of external sales. These figures could and should increase, and the Secretary of State and I will work with the devolved Administration, in whatever way we are asked, to support any incentive of that kind.
Ian Paisley (North Antrim) (DUP): Will the Secretary of State commit to making representations to the Treasury regarding alterations to how tobacco tax is lifted, so that the Treasury can receive a bigger taxation take while allowing the industry to invest in securing jobs in Northern Ireland?
Mr Swire: The hon. Gentleman has in his constituency the Gallaher Group, which my right hon. Friend the Secretary of State visited recently. The loss to the United Kingdom economy from contraband cigarettes and forfeited duty is in the region of £2 billion to £3 billion a year. We should consider that closely, and continue to make representations in that regard.
Naomi Long (Belfast East) (Alliance): Is the Minister as concerned as those of us who come from Northern Ireland that recent reports show a third quarter fall in growth in the private sector in Northern Ireland, and will he therefore redouble his efforts to rebalance the Northern Ireland economy more effectively?
Mr Swire: Clearly, Northern Ireland is not immune to what is going on in the rest of the world-one has only to look over the border at what is going on in Ireland to see that. We work very closely with Northern Ireland on rebalancing the economy and we have the support of the Finance Minister, who, along with the Minister of Enterprise, Trade and Industry, is meeting the Select Committee on Northern Ireland Affairs this afternoon to discuss corporation tax. We must leave no stone unturned in our attempts to rebalance Northern Ireland's economy and, critically, to provide well-paid and sustainable jobs.
Mr Speaker: Unless I am mistaken, the hon. Member for Morecambe and Lunesdale (David Morris) did not put a supplementary question to the substantive question. If he did he can nod his head, but if he did not, he should do so.
David Morris indicated assent.
Mr Speaker: He did; he is happy. He is sanguine about it.
The Disappeared
2. Gavin Williamson (South Staffordshire) (Con): What recent progress has been made on locating the disappeared. [22148]
The Minister of State, Northern Ireland Office (Mr Hugo Swire): In July, the Independent Commission for the Location of Victims' Remains successfully recovered the remains of Charlie Armstrong, and it awaits DNA confirmation regarding remains it believes to be those of Gerard Evans and Peter Wilson. This would take the total number of disappeared who have been located to nine.
Gavin Williamson: Is it still the case that the ICLVR is to be wound up at the end of this year?
Mr Swire: May I pay tribute to the excellent work of the ICLVR, particularly Geoff Knupfer and Jon Hill, who do such good work, as I have seen for myself? I met the Wilson family just before the find was announced, and I can testify to the very serious effect that it has on families who have waited for many, many years to find their loved ones so that they can be placed in a grave and they can go to see them regularly. That achieves closure for many people. The commission is a joint initiative between the Irish and the British Governments. It is led entirely by intelligence, and we will continue to be led by intelligence-
Mr Speaker: Order. The Minister will have to practise. He is far too long-winded, and that has got to change.
Eric Joyce (Falkirk) (Lab): The Minister refers to the recovery of remains, which is a painful reminder of the need to deal with the legacy of the past in Northern Ireland. If the Secretary of State decides to place any new obligations on the Historical Enquiries Team, will he ensure that it is fully and properly funded to undertake them?
Mr Swire: The two bodies are entirely different. We believe that the HET is a good organisation and should be properly resourced, as we believe that it represents the way forward.
Mr James Gray (North Wiltshire) (Con): The whole House will think fondly of that gallant soldier Captain Robert Nairac of the Grenadier Guards, who was so brutally killed by the IRA. Does the Minister have any up-to-date information about whether his remains may yet be discovered?
Mr Swire: My hon. Friend is right to draw attention to that. Alas, Captain Nairac is not alone. A considerable number of bodies have yet to be located, and that we hope that will happen in due course.
Mr Jeffrey M. Donaldson (Lagan Valley) (DUP): The Minister has already referred to the winding up of the commission dealing with the disappeared. Does he think that is wise, and does he think it is wise also to wind up the Independent Monitoring Commission, given the ongoing paramilitary activity in Northern Ireland?
Mr Swire: The right hon. Gentleman may have misheard me. I have not said that we will wind up the former. With reference to the latter, we announced that there would be one more valedictory report. It was established in the first place to monitor the connections between elected representatives and paramilitaries. We believe that that is no longer appropriate or necessary.
Lady Hermon (North Down) (Ind): Would the Minister kindly give me a commitment that fresh efforts will be made to retrieve my young constituent, Lisa Dorrian, who was murdered and disappeared by those with loyalist paramilitary connections five years ago? That is five long Christmases for the family, who deserve closure. What fresh efforts are being made to retrieve her body?
Mr Swire: The hon. Lady is entirely correct, but she must understand that the responsibility of the Northern Ireland Office in these matters is limited, and quite properly so. The ICLVR is an independent organisation and responds to intelligence provided to it-very often anonymous intelligence. I hope that it will listen to what the hon. Lady has said, but it will respond only when the intelligence comes. I hope that those who have any understanding or any knowledge will bring that forward.
Barnett Formula Funding
3. Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op): What recent discussions he has had with private sector companies in Northern Ireland on the effects on them of changes in Barnett formula funding for Northern Ireland consequent upon the outcomes of the comprehensive spending review. [22149]
The Minister of State, Northern Ireland Office (Mr Hugo Swire): My right hon. Friend the Secretary of State and I have regular discussions with people from the private sector in Northern Ireland. I have found a widespread recognition that the public sector can and should respond by delivering better value, and support for the objective that we and the Executive share of rebalancing the Northern Ireland economy.
Tom Greatrex: The Minister will be aware of the recent report from PricewaterhouseCoopers stating that 36,000 jobs will be lost in Northern Ireland as a result of the Government's policies-20,000 in the public sector and a further 16,000 in the private sector. What estimate has he made of the cost to the taxpayer of those 36,000 people currently in work being made unemployed by the Government's policies?
Mr Swire: The hon. Gentleman was not in the House at the time, but these are not the Conservative and Liberal Democrat parties' cuts. These are Labour's cuts- [Interruption.] Northern Ireland has done better out of the spending review than it was led to believe would have been the case under the previous Government. It is in the interests of everybody in the House to talk up Northern Ireland, to attract inward investment and to rebalance the economy so that it is not so dependent on the public sector. That is the way forward for Northern Ireland, and I hope the hon. Gentleman will support us on that.
Alun Cairns (Vale of Glamorgan) (Con): Does the Minister agree that to reform the Barnett formula, all the devolved nations would need to agree to a process, and that if one nation, such as the Scottish Government, refused to participate in that process, that would be showing disrespect to all the others?
Mr Swire: Of course I am aware of the House of Lords Select Committee report on the Barnett formula, the Holtham Commission on Welsh funding and other commentators on the system of devolution funding. At present we are trying to get the public finances under control to get the economy moving again. Any change in the system of funding the devolved Administrations must wait for the stabilisation of the public finances.
Sammy Wilson (East Antrim) (DUP): One of the impacts on the private sector will be the huge reduction of 40% in capital spending over the next four years, and there is disagreement about whether the settlement honours the St Andrews agreement settlement on capital spending. In the one area where there is dispute, does the capital settlement for Northern Ireland include capital spending on the police? Is that part of the Minister's assessment of the total capital budget for Northern Ireland?
Mr Swire: The hon. Gentleman knows that under the previous Government the reduction was likely to be 50% of capital expenditure. Under us it is 37% over four years. In response to his comments on policing and justice, I can tell him that we stand by the commitments. As he knows, the Northern Ireland Executive's capital allocation of £3.3 billion over the spending review period will permit those costs to be met, but there will be difficult decisions, and unfortunately it is up to the hon. Gentleman, as the Finance Minister at Stormont, to make those difficult decisions. It is up to him and the Executive, and I support his attempts to get them to form a budget.
Robert Halfon (Harlow) (Con): Does my hon. Friend agree that the people of Northern Ireland will welcome the cut in business taxes, which will create real private sector jobs, and the coalition Government's action to deal with the £120 million a day in interest and debt that we are paying?
Mr Swire: Yes, of course. Northern Ireland, like other parts of the United Kingdom, will benefit from those actions, which the incoming Government took very quickly. Beyond that, however, we are thinking about how, in the long term, we can stop the dependency on the public sector, which is disproportionate in Northern Ireland. In that context, one way forward will be to look at the whole issue of corporation tax.
Comprehensive Spending Review
4. Gemma Doyle (West Dunbartonshire) (Lab/Co-op): What assessment he has made of the likely effects on security in Northern Ireland of the outcomes of the comprehensive spending review; and if he will make a statement. [22150]
The Secretary of State for Northern Ireland (Mr Owen Paterson): Following the outcome of the 2010 spending review, it is for the Northern Ireland Executive to decide how funds are allocated to the Northern Ireland Departments. It will be for the Northern Ireland Justice Minister and the Chief Constable of the Police Service of Northern Ireland, in the first instance, to negotiate the PSNI budget with the Executive. My right hon. Friend the Prime Minister and I have made it clear that we will protect the people of our country from the terrorist threat with every means at our disposal.
Gemma Doyle: I thank the Secretary of State for his response. He will appreciate that people in Northern Ireland and throughout the UK will be concerned about the impact of spending cuts on peace and security in Northern Ireland. Can he assure the House that the comprehensive spending review will not impact on front-line community policing in Northern Ireland? That is something that the Minister stopped short of saying in response to an earlier question.
Mr Paterson: We have been absolutely clear that we will stand by Northern Ireland. We will do what is necessary to bear down on that threat, but the first port of call is for the Justice Minister and the Chief Constable to negotiate with the Executive on the very substantial allocation of public money that has been granted to them in the spending round.
Mr Laurence Robertson (Tewkesbury) (Con): The Select Committee on Northern Ireland met the assistant commissioner of the Garda two days ago, and he assured us that in spite of the financial difficulties in Ireland they would continue to police the border, in particular, in the same way. He said that there would be absolutely no reduction in their efforts. Can the Secretary of State give us the same assurance today?
Mr Paterson: Emphatically yes. We have exceptional co-operation with the Garda, and I should like to congratulate them on their seizure of a significant amount of armaments at Dunleer woods in County Louth. Emphatically yes: we will work extremely closely with them and match their effort.
Mr Gregory Campbell (East Londonderry) (DUP): The Secretary of State will be aware of the deteriorating security situation in parts of Northern Ireland due to the dissident threat. Will he be open to an approach, should it be required, for additional resources to deal with that threat as it materialises over the winter months?
Mr Paterson: We have been clear, from the early negotiations that I had with the shadow Secretary of State, when he was Secretary of State, that we would endorse the very substantial policing settlement that the previous Government negotiated with the Northern Ireland Executive. That was quite clear. Should there be security pressure, and should the security position deteriorate, it would be right for the Justice Minister and the Chief Constable to come to us and ask for contributions from the national reserve.
Security Situation
5. Andrew Stephenson (Pendle) (Con): What his most recent assessment is of the level of threat posed by terrorist groups in Northern Ireland. [22151]
7. Ian Murray (Edinburgh South) (Lab): What his most recent assessment is of the security situation in Northern Ireland. [22153]
The Secretary of State for Northern Ireland (Mr Owen Paterson): The threat level in Northern Ireland remains at severe. We are not complacent, but I am pleased to tell the House that this year, following eight further arrests this morning, there have been 195 arrests and 71 persons have been charged with terrorist offences. That compares with 106 arrests and 17 charges in the whole of 2009. I commend the security forces for their continued successes in frustrating the efforts of residual terrorist groups. The coalition Government are committed to continuing to promote peace, stability and economic prosperity in Northern Ireland, and standing firmly behind the agreements negotiated and the institutions that they established.
Andrew Stephenson: I thank my right hon. Friend for that answer. The national security strategy has highlighted the fact that there have been 37 separate attacks this year, so the threat from residual terrorist groups remains high. What steps is he taking to combat that threat?
Mr Paterson: I am grateful for my hon. Friend's question. We have taken this to the highest level of Government. We presented a paper to the National Security Council, and as a result of that, the threat from Northern Ireland has been put in tier 1 in the national security strategy.
Ian Murray: The latest Independent Monitoring Commission report highlights the continuing involvement of dissident republicans in very serious levels of criminal activity. Will the Minister assure the House that all resources will be made available to ensure that that threat does not continue?
Mr Paterson: I repeat that we are working extremely closely with the devolved Administration and the Dublin Government on bearing down on this threat, and we will do what is necessary.
Mr Nigel Dodds (Belfast North) (DUP): Will the Secretary of State acknowledge the deep anger among all sections of the community in Northern Ireland at the growing level of attacks by paramilitaries-with, indeed, activity on both sides, but particularly among dissident republicans? People are looking for action to be taken, and for co-operation between the agencies for which he is responsible and the Northern Ireland Executive to deal with this problem urgently.
Mr Paterson: The right hon. Gentleman is right to make that comment. That is why we produced a substantial paper for the National Security Council, which was discussed at the highest level; and that is why we are working so closely with the devolved Administration and the Justice Minister, to whom I spoke this morning, and the Government in Dublin. We are determined to work at all levels to end this security problem.
Mr Dodds: I thank the Secretary of State for his answer, and acknowledge the work that he is doing in terms of the tier 1 level of threat assessment in Northern Ireland. However, the fact that the recent bomb find at East Midlands airport happened on the same day as a bomb find at Belfast City airport shows the level of threat against citizens right across the United Kingdom. Can we be assured that while the threat of al-Qaeda is a priority, the threat in Northern Ireland is also treated as a top priority?
Mr Paterson: The right hon. Gentleman is right to point out that these threats affect us all in the United Kingdom. That is why the threat from Northern Ireland has been placed in the No. 1 category-in tier 1.
Mr Shaun Woodward (St Helens South and Whiston) (Lab):
The Secretary of State and his right hon. Friend the Prime Minister gave an unambiguous undertaking before the Hillsborough Castle agreement that the previous Government's financial arrangements for the devolution of policing and justice would be upheld. In relation to the security situation, this unequivocally included a
commitment that the Northern Ireland Executive would have access to the reserve. Can the Secretary of State confirm that he continues to stand by that commitment, without any new conditions being imposed by the Treasury?
Mr Paterson: I am grateful to the right hon. Gentleman for his question. I have said this already, but I am happy to look him in the eye and repeat it. Should the security situation deteriorate, then-according to the agreement that the previous Government, in which he was Secretary of State, made with the then Executive-the Justice Minister and the Chief Constable have the right to approach the Government with a clear strategy on security grounds in order to call on the national reserve.
Mr Woodward: I am grateful for that reply. We all note the decision to raise the threat level here in Great Britain, and the Secretary of State can be assured that the Opposition fully support the decision to address the problems created by that threat. Given the level of recent attacks in Northern Ireland, including the recent use of a hand grenade, and given the need for the response to be measured, proportionate and joined up, would a request by the First Minister and Deputy First Minister to meet the Prime Minister as soon as possible be fully supported by the Secretary of State?
Mr Paterson: The Prime Minister made regular visits to Northern Ireland when he was Leader of the Opposition. He met the First Minister and Deputy First Minister then, to discuss a broad range of issues. He intends to go back to Northern Ireland, and at that time he will have the opportunity to discuss matters with them. If the right hon. Gentleman is referring specifically to the budget settlement, it is appropriate that the First Minister and Deputy First Minister first discuss that with me, having done their utmost to come to an agreement and consensus in the Executive on a budget for the substantial funds that have been allocated to them in this spending round.
Parliamentary Voting System and Constituencies Bill
6. Mark Durkan (Foyle) (SDLP): What discussions he has had with ministerial colleagues on the implications for Northern Ireland of the provisions of part 2 of the Parliamentary Voting System and Constituencies Bill. [22152]
The Minister of State, Northern Ireland Office (Mr Hugo Swire): My right hon. Friend the Secretary of State and I have had regular discussions with ministerial colleagues and with elected representatives in Northern Ireland on the provisions of the Parliamentary Voting System and Constituencies Bill, and will continue to do so as the Bill continues its progress through both Houses.
Mark Durkan: Does the Minister recognise that as it stands, part 2 of the Bill has serious implications for the Northern Ireland Assembly, whose constituencies are meant to be coterminous with parliamentary constituencies? Reviews every five years that could put those constituencies out of cycle, or change the total number of constituencies in Northern Ireland, will be hugely unsettling. Will he take steps to ensure that full consideration is undertaken with the authorities in the Northern Ireland Assembly, as well as with his ministerial colleagues?
Mr Speaker: Order. I want to hear the Minister's reply.
Mr Swire: Thank you, Mr Speaker.
The hon. Gentleman raised this matter during the passage of the Bill. It is true that coterminosity between the parliamentary and Assembly seats has worked well, and the amended rules can continue to provide for the Electoral Commission to take that into account. I should say to him that as he knows, the size of the Assembly is up to the Assembly, not to Parliament or to this House through the Bill.
Presbyterian Mutual Society
8. Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op): When the Government plan to disburse their proposed financial assistance to savers with the Presbyterian Mutual Society. [22154]
The Minister of State, Northern Ireland Office (Mr Hugo Swire): In the spending review announcement, my right hon. Friend the Chancellor of the Exchequer announced that the Government would meet in full a £175 million loan and £25 million in cash to fund the Northern Ireland Executive's proposal to resolve the PMS crisis.
Jonathan Reynolds: I thank the Minister for that response, but given that the Government's proposals are a carbon copy of what my right hon. Friend the former Prime Minister announced, why did the Secretary of State delay the announcement by six months, causing unnecessary suffering and misunderstanding for the people who had lost money in the PMS?
Mr Swire: There is a fundamental difference between what the previous Government did and what the current Government have done about the problems connected with the PMS: we have actually done something. We have responded to the request from the Executive in full. We stand by the Prime Minister's commitment, and we are very pleased that we were able to act so swiftly-unlike some others.
Dissident Violence
9. Patrick Mercer (Newark) (Con): What assessment he has made of the reasons for the recent increase in the level of dissident violence in Northern Ireland. [22156]
The Secretary of State for Northern Ireland (Mr Owen Paterson): This violence is a direct response to the continued political progress in Northern Ireland. Those people are outdated and backward-looking. All that they have to offer is to destabilise the peace process and disadvantage the people of Northern Ireland, but they will not succeed. The Government take the terrorist threat in Northern Ireland extremely seriously. There have been 39 attacks so far this year, compared with 22 throughout 2009.
Patrick Mercer: I heard what the Secretary of State had to say earlier about the operations of the police in the Republic. Can he also give me some assurance that there is intelligence sharing between the Northern Irish Government and that in Dublin?
Mr Paterson: I am most grateful to my hon. Friend for his question, and for his interest in Northern Ireland affairs. I do not think I can give a better example than the fact that the current Chief Constable always had good relations with his neighbour when he was chief constable of Leicestershire, but has said that his relations with Fachtna Murphy, the Garda commissioner, are even better. I should like publicly to pay tribute to Fachtna Murphy, who is, sadly, retiring at the end of the year. He has been a great friend of Northern Ireland. The collaboration between the Garda and the PSNI is at an exceptional level, and I look forward to helping it continue.
David Simpson (Upper Bann) (DUP): The Secretary of State will be aware of the recent series of dissident republican operations in my constituency, including the bomb at a railway bridge and a previous bomb that almost killed three local children. Does he share the Chief Constable's current assessment of the levels of resources and manpower available to the PSNI?
Mr Paterson: I am grateful for that question. I am also pleased to send on my sympathies to the hon. Gentleman's constituents who have been subject to such intolerable attacks, which, thankfully, have not caused death or injury. Last week the Chief Constable said:
"We are absolutely putting huge resources back in, we are going to sustain that next year and the year after until those responsible are brought to justice or they can be persuaded to give up."
Fisheries (EU Legislation)
10. Jim Shannon (Strangford) (DUP): What assessment he has made of the effects on the Northern Ireland fishing fleet of the operation of EU legislation on working time; and if he will make a statement. [22157]
The Minister of State, Northern Ireland Office (Mr Hugo Swire): Responsibilities here are divided: fisheries generally are a devolved matter, but the UK Government have led on aspects of the EU working time directive as it applies to fishing vessels.
Jim Shannon: EU legislation includes a fundamental right to work. What steps has the Minister taken with his European counterparts to ensure that the fishermen of Portavogie, Ardglass and Kilkeen, who have had their days at sea restricted, have a right to work?
Mr Swire: I understand that Diane Dodds and other Northern Ireland MEPs are working hard to address some of the difficulties experienced by the fishing industry in Northern Ireland, particularly in relation to the matter that the hon. Gentleman raises. I must stress though that fishing matters are partly devolved. None the less, I undertake to look into the matter, write to the hon. Gentleman in due course and put a copy of the letter in the Library.
Prime Minister
The Prime Minister was asked-
Engagements
Q1. [22884] Jason McCartney (Colne Valley) (Con): If he will list his official engagements for Wednesday 10 November.
The Deputy Prime Minister (Mr Nick Clegg): I have been asked to reply. My right hon. Friend the Prime Minister has been leading a major Government and trade delegation to China, and is now travelling to Seoul for the G20 summit.
I am sure that the whole House will wish to join me in paying tribute to Senior Aircraftman Scott Hughes of 1 Squadron Royal Air Force Regiment, who died in Cyprus on Sunday while returning from operational service in Afghanistan. He was a professional and brave airman, and it is very sad that he died while returning home from a tour of duty. Our thoughts are with his family and loved ones.
This week, on the eve of Remembrance day, we especially remember all those who have given their lives in the service of our country, both in recent years and through previous generations. The sacrifices made by our servicemen and women for our peace and freedom must never be forgotten.
On a much happier note, let me, on behalf of the Government, extend our warmest congratulations and best wishes to the Leader of the Opposition and his partner, Justine, on the birth of their baby son. It is wonderful news and we really are thrilled for them.
Jason McCartney: A 12-year-old haemophiliac from Lindley in Huddersfield was injected with contaminated blood products, giving him HIV, hepatitis C and CJD. When will he and the 2,000 other survivors of this shocking scandal get fair compensation?
The Deputy Prime Minister: I know that my hon. Friend is a vigorous campaigner for all those whose lives have been so tragically affected by contaminated blood. It really is a dreadful catastrophe for all those affected. The Under-Secretary of State for Health, my hon. Friend the Member for Guildford (Anne Milton), intends to report by the end of the year on the outcome of the current review to see what more can be done for those affected by contaminated blood. Tomorrow, Health Ministers will hold an open meeting in Westminster Hall at which hon. Members from all parts of the House and peers from the other place can raise their concerns.
Ms Harriet Harman (Camberwell and Peckham) (Lab): I join the Deputy Prime Minister in paying tribute to Senior Aircraftman Scott Hughes of 1 Squadron Royal Air Force Regiment. We honour his memory and send condolences to his family. We will remember all our servicemen and women on Remembrance day. I should like to echo, too, the right hon. Gentleman's best wishes to the Leader of the Opposition and Justine on the birth of their new baby.
In April, the Deputy Prime Minister said that it was his aim to end university tuition fees. Will he update the House on how his plan is progressing?
The Deputy Prime Minister: Of course I acknowledge that this is an extraordinarily difficult issue, and I have been entirely open about the fact that we have not been able to deliver the policy that we held in opposition. Because of the financial situation and because of the compromises of the coalition Government, we have had to put forward a different policy- [ Interruption. ]
Mr Speaker: Order. I want to hear the Deputy Prime Minister's update.
The Deputy Prime Minister: None the less, we have stuck to our wider ambition to make sure that going to university is done in a progressive way, so that people who are currently discouraged from going to university-bright people from poor backgrounds, who are discouraged by the system that we inherited from the right hon. and learned Lady's Government-are able to do so. That is why our policy is more progressive than hers.
Ms Harman: Well, I am glad that the Deputy Prime Minister thinks it is so fair. I hope he will be going out and telling that to all the students and lecturers who are marching on Westminster today. In April he said that increasing tuition fees to £7,000 a year would be a "disaster". What word would he use to describe fees of £9,000?
The Deputy Prime Minister: I think there is more consensus than the right hon. and learned Lady concedes on the simple principle that people who benefit from going to university should make a contribution to the cost of that university education. The question is: how do we do it? Do we do it fairly and in a progressive way? The proposals that we have put forward will mean that those who earn the least will pay much less than they do at the moment-while those who earn the most will pay over the odds to provide a subsidy to allow people from poor backgrounds to go to university-and will, for the first time, end the discrimination against the 40% of people in our universities who are part-time students, who were so shamefully treated by her Government.
Ms Harman: None of us agrees with tuition fees of £9,000 a year. This is not about the deficit: the Chancellor said that the deficit would be dealt with by 2014, when the new system will hardly have begun. No, this is not about the deficit; this is about the Deputy Prime Minister going along with a Tory plan to shove the cost of higher education on to students and their families. We all know what it is like, Mr Speaker. You are at Freshers' week. You meet up with a dodgy bloke and you do things that you regret. Is not the truth of it that the Deputy Prime Minister has been led astray by the Tories?
The Deputy Prime Minister: I know that the right hon. and learned Lady now thinks that she can reposition the Labour party as the champion of students, but let us remember the Labour party's record: against tuition fees in 1997, but introduced them a few months later; against top-up fees in the manifesto in 2001, then introduced top-up fees. Then Labour set up the Browne review, which it is now trashing, and now the Labour party has a policy to tax graduates that half the Front-Bench team does not even believe in. Maybe she will go out to the students who are protesting outside now and explain what on earth her policy is.
Ms Harman: As a result of the Deputy Prime Minister's plans, English students will pay among the highest fees of any public university system in the industrialised world, and why? It is not to give universities more funds, but to replace the cuts that he is making to university teaching. Can he tell the House what the percentage cut to the university teaching grant is?
The Deputy Prime Minister: I can certainly confirm that the right hon. and learned Lady and her party also had plans to make massive cuts in the budget of the Department for Business, Innovation and Skills, which would have affected higher education. Here are a few facts. Every single graduate under our scheme will pay less per month than they do under the scheme that we inherited from Labour. The bottom 25% of earners will pay much less in their contributions to their university education than they do at the moment. Part-time students will pay no up-front fees, and not a single student will pay a penny of up-front fees whatsoever. It is a fair and progressive solution to a very difficult problem.
Ms Harman: It looks as though the right hon. Gentleman has been taking lessons from the Prime Minister on how not to answer the question. I asked him about the cut in the teaching grant. The truth is that it is a staggering 80%--80%. No wonder he is ducking the question. The real reason he is hiking up fees is that he is pulling the plug on public funding, and dumping the cost on to students. Is that not why he is betraying his promise on tuition fees?
The Deputy Prime Minister: The graduate tax that the right hon. and learned Lady advocates would be more unfair and would allow higher earners to opt out of the system altogether. We all agree-she agrees-across the House that graduates should make some contribution for the benefit of going to university. The question is, how? We have a progressive plan; she has no plan whatsoever.
Ms Harman: But during the election, the right hon. Gentleman hawked himself around university campuses pledging to vote against tuition fees. By the time Freshers' week was over, he had broken his promise. Every single Liberal Democrat MP signed the pledge not to put up tuition fees; every single one of them is about to break that promise. He must honour his promise to students and their families throughout the country. Will he think again?
The Deputy Prime Minister: It is quite something to take lectures from the right hon. and learned Lady about party management after the mutiny in the parliamentary Labour party on Monday- [ Interruption. ] Labour Members are cheering her now, but they certainly were not at the mutiny on Monday night. The truth is that before the election we did not know the unholy mess that would be left to us by her party. On this issue, as on so many, the two parties on this side of the House have come together to create a solution for the future. The two parties on this side of the House have one policy; the Labour party has two policies.
Duncan Hames (Chippenham) (LD): In the international dialogue about democracy that we are witnessing, what would my right hon. Friend say to those who welcomed the elections in Burma, which were nothing more than an utter sham?
The Deputy Prime Minister:
I strongly agree that those elections were a complete and utter sham. Their conclusion was already decided well before they took place, with reserved seats for the military, and reserved seats for parties that were put up by the military. They are simply swapping their military uniforms for civilian clothing, but keeping their iron dictatorial grip on the
people of Burma. Aung San Suu Kyi should be released when her house arrest comes up for review in the coming days, and real democracy should finally be introduced in Burma.
Q2. [22885] Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op): Given that we all know how important consistency is to the Deputy Prime Minister, will he explain to the House why his Chief Secretary to the Treasury is pictured on the Liberal Democrat website leading the campaign against selling off forestry in Scotland, at the same time as he is proposing that in England?
The Deputy Prime Minister: The poor Chief Secretary to the Treasury is picked on all the time-first for being ginger. Did the right hon. and learned Member for Camberwell and Peckham (Ms Harman) make an impact assessment of her outrageously discriminatory remarks?-- [ Interruption. ]
Mr Speaker: Order. First, the Deputy Prime Minister must be heard. Secondly, the public thoroughly disapprove of this level of destructive barracking from wherever in the House it comes: note that, and learn from it.
The Deputy Prime Minister: I was simply making the point that any form of discrimination against rodents or ginger-headed folk is wrong.
As the hon. Member for Rutherglen and Hamilton West (Tom Greatrex) knows, on forestry issues, as on many others, there is a devolved division of responsibility. He should know that better than anyone else.
Q3. [22886] Charlie Elphicke (Dover) (Con): Will my right hon. Friend tell the House whether the Prime Minister received the "people's port" community mutual's bid for the port of Dover? Will he allow a community right to buy, or will it be another British icon sold overseas, as the previous Labour Government planned?
The Deputy Prime Minister: Of course I am pleased, as no doubt everyone is, that there is such a strong community interest in the future of the port of Dover. Campaigners have received stellar backing, and I wish their campaign all the very best of luck. As my hon. Friend knows, the port's assets are owned by Dover harbour board, not by the Government. The Minister of State, Department for Transport, my right hon. Friend the Member for Chipping Barnet (Mrs Villiers) is considering proposals for a scheme that would allow the board to sell the port, so it would be inappropriate for me to comment further on that decision.
Q4. [22887] Chi Onwurah (Newcastle upon Tyne Central) (Lab): AgustaWestland is an excellent company providing skilled manufacturing jobs in Yeovil. Sheffield Forgemasters is also an excellent company, providing skilled manufacturing jobs in Yorkshire. Why did the Government decide to support one and not the other?
The Deputy Prime Minister:
Of course I agree with the hon. Lady that both are outstanding companies. The difference is that the announcement of the decision to provide a loan to Sheffield Forgemasters was made 11 days before the general election, when there was no money in this year's budget to make that promise. It was a promise made by the previous Labour Government
knowing that the cheque would bounce. We have made a decision on Westland in the light of our difficult, controversial decisions to bring sense to the public finances. That is the difference.
Q5. [22888] Andrew Stephenson (Pendle) (Con): The Deputy Prime Minister might be aware that, in response to the comprehensive spending review, the three most senior officers of Pendle borough council have announced a wage cut of 27%. In contrast, the chief constable of Lancashire police, Steve Finnigan, has started a 90-day consultation on making all Lancashire's police community support officers redundant. Does my right hon. Friend agree that the chief constable should think again and that he should support our PCSOs- [ Interruption . ]
Mr Speaker: Order. I want to hear the Deputy Prime Minister's reply.
The Deputy Prime Minister: Of course I welcome the decision by Pendle borough council and its executive directors to reduce the council's wage bill. My right hon. Friend the Secretary of State for Communities and Local Government has called on all local authority chief executives earning £200,000 a year to take a 10% pay cut, and those on £150,000 to take a 5% cut. They need to make sacrifices, just as everyone else is. On policing, of course I understand everyone's attachment to PCSOs, but it would be a flagrant breach of the traditions of policing in this country if we were to start second-guessing chief constables. I think we all want more visible policing; it cannot be right that the system we inherited from Labour means that only 11% of police officers are ever seen on our streets at any one time. That is wrong and it must change.
Q6. [22889] Gavin Shuker (Luton South) (Lab/Co-op): Tens of thousands of students have gathered outside this place today to oppose the right hon. Gentleman's shameful policy of tripling student debt. He received a request to address the crowd, but as yet no response has been received. May I give him the opportunity to give that response now?
The Deputy Prime Minister: As the hon. Gentleman knows, I meet student leaders and representatives of the National Union of Students all the time. I hope that, when he joins the demonstrators, the first thing he will do is explain what on earth his party's policy is. We have a policy; he has no policy and no plan, and is giving no hope to future generations of students.
Q7. [22890] Brandon Lewis (Great Yarmouth) (Con): My right hon. Friend might be aware of the great work being done by the East of England Energy Group, and by the borough councils, the county council and local small companies in Norfolk to ensure that Great Yarmouth and East Anglia benefit from economic growth and regeneration through the energy markets. Will he and the Government support our work to ensure that East Anglia gets a fair and even chance to bid for the opportunities that these new markets can provide?
The Deputy Prime Minister:
I strongly agree with my hon. Friend that renewable energy is one of the great industries of the future, and we are doing everything we can to support those areas that want to exploit the
opportunities. We have committed £1.4 billion to a regional growth fund, and we are establishing a green investment bank with the explicit aim of creating further investment opportunities in green infrastructure in areas where private sector investment is currently constrained. I am delighted to hear about the way in which councils, businesses and the not-for-profit sector in Norfolk are working so effectively together.
Sheila Gilmore (Edinburgh East) (Lab): In answer to a question that I asked last week, the Minister for Further Education, Skills and Lifelong Learning indicated that the major reason for his proposals on fees was to change the way in which higher education was funded, and to shift the burden from the state to the student. How does the Deputy Prime Minister square that with his party's view that the proposals are a deficit reduction measure only, and that they could be changed in the future?
The Deputy Prime Minister: As I said earlier, I think every Member agrees that the funding for universities should be a mixture of direct support from the state and contributions made by- [Interruption.] As soon as we came into government, we looked exhaustively at the option of a graduate tax, which was proposed by some Labour Members and by the National Union of Students, but we discovered that that would be much more unfair and would allow particularly high earners to opt out of the system altogether, compared to the progressive system of graduate contributions that we are proposing now.
Q8. [22891] Eric Ollerenshaw (Lancaster and Fleetwood) (Con): Her Majesty's Revenue and Customs has a business payment support service, which has helped many businesses in my constituency that have met short-term problems to achieve a delayed payment of taxes-sometimes the taxman can help, apparently. Does my right hon. Friend agree that this is a valuable service and that HMRC, alongside every other part of Government, should provide as much flexibility and support as possible for business, if we are get out of the recession left to us by the previous Government?
The Deputy Prime Minister: I strongly agree with my hon. Friend. I think that HMRC's business payment support service is indeed, as he says, a very valuable and important service, and it remains in place. By the end of September this year, 371,200 arrangements had been granted, worth £6.38 billion. That is extraordinarily valuable to small and medium-sized enterprises, which are indeed struggling and deserve all the support they require to power us out of this difficult economic environment.
Paul Blomfield (Sheffield Central) (Lab): The Minister for Universities and Science has made it clear that all public funding will be withdrawn from non-STEM subjects in universities. Last Wednesday, the Minister for Further Education, Skills and Lifelong Learning told a Westminster Hall debate:
"We will continue to support the arts through the subsidy for teaching in universities."-[ Official Report, 3 November 2010; Vol. 517, c. 315WH.]
The Deputy Prime Minister: The statement we made was very clear. I hope the hon. Gentleman will accept that the model of mixed financing for our universities-partly from the Government and partly from graduates, who, as he knows, stand to benefit on average from tens of thousands in extra earnings because they have a university degree-is one that we are preserving and building on in a progressive manner.
Q9. [22892] Caroline Dinenage (Gosport) (Con): In Gosport, our Sure Start centres provide valuable support to some of our most vulnerable people, which proves that even the Labour party can get something right. I welcome the Government's continued support for Sure Start, but will the Deputy Prime Minister please reassure me that the programme will be refocused so that those in the greatest need get the greatest support?
The Deputy Prime Minister: I strongly agree. Sure Start children's centres play a vital role in helping families and giving them the help when they need it through early intervention. That is why we announced in the spending review that Sure Start funding will be maintained in cash terms. As for how that funding is allocated to reflect deprivation, which was the hon. Lady's question, the money is already weighted so that local authority areas with higher levels of disadvantage get more funding than others and, of course, local authorities have a high degree of flexibility and latitude themselves-and we do not propose to change that system at all.
Emily Thornberry (Islington South and Finsbury) (Lab): May I bring the right hon. Gentleman back to higher education? He says that higher education should be paid partly by the individual and partly by the state, but the confusion that the people of Islington will have is that the right hon. Gentleman was not saying that in April, so when did he change his mind? In the best possible scenario, if we had a fantastic economy and no debt at all, would he still believe that higher education should be paid partly by the student and partly by the state?
The Deputy Prime Minister: I find it extraordinary that the hon. Lady can piously ask questions about changing one's mind on this issue, when her party said no to fees in 1997, and introduced them; said no to top-up fees in the manifesto of 2001, and introduced them; said yes to the Browne review, but now says no to it; says yes to some graduate taxes, but no to others. Labour Members should make up their minds.
Q10. [22893] Julian Sturdy (York Outer) (Con): As the coalition continues to stabilise our economy, will the Deputy Prime Minister assure my constituents that providing long-term relief and support for small and medium-sized businesses remains high on the Government's priority list?
The Deputy Prime Minister:
Yes, absolutely, as I said in answer to the earlier question. Over the past six months, we have taken a number of steps to help small and medium-sized enterprises: reducing the small profits rate of corporation tax from 21% to 20% from April next year; introducing new rules whereby for any new regulation, another one must be scrapped; the new
enterprise capital fund of £37.5 million to provide additional equity finance; and of course the enterprise finance guarantee fund, which will be increased by £200 million. That is real support for the wealth creators of the future.
Q11. [22894] Meg Munn (Sheffield, Heeley) (Lab/Co-op): On 6 May, hundreds of the Deputy Prime Minister's constituents and hundreds of mine in Sheffield were denied the right to vote because of current legislation. Why has the Deputy Prime Minister not taken the opportunity of legislation before Parliament to change the law, so that in future all those in the polling station at close of poll are allowed to vote?
The Deputy Prime Minister: I am acutely aware of the problem. I visited polling stations several times on that day, and saw the huge queues of people, many of whom were denied their democratic right to exercise a vote. The question is: what do we do about it? I happen to think that, in this instance, simply passing a law will not deal with the problem, which was a lack of resources and poor organisation by the returning officer, who acknowledged as much, as the hon. Lady knows, in Sheffield. That is what we need to address; we should not always simply reach for the statute book.
Tim Farron (Westmorland and Lonsdale) (LD): The partnership between schools and universities in the provision of teacher education is absolutely critical, and at the moment it works terribly well. The university of Cumbria is Europe's largest provider of newly qualified teachers. Will the Deputy Prime Minister assure me that universities such as mine, which provide teacher education, will continue to have a leading role in the training of our teachers of the future?
The Deputy Prime Minister: Of course we must support all those institutions that produce the great teachers of the future. We must have great teachers who can also lift the aspirations of children in this country and particularly of bright young people from poor backgrounds who at the moment feel completely intimidated from going to university. I hope such teachers will explain to those young people that under the new scheme that we have proposed, they have a real route to live out their hopes and dreams at our great universities in the future.
Q12. [22895] Heidi Alexander (Lewisham East) (Lab): Yesterday, the National Housing Federation reported that a first-time buyer in London needs a salary of almost £100,000 to buy an average-priced property. In the light of that, will the Deputy Prime Minister tell me how many low-cost homes will not be built in the capital as a result of his Government's decision to cut the affordable housing budget by 63%?
The Deputy Prime Minister: What I do know, of course, is that we inherited a situation in which fewer- [Interruption.] They do not like to hear it, but they have to-it is the truth. Fewer and fewer affordable homes were built, and more and more people and families ended up on the waiting list for affordable homes. We have a plan finally to put that right, and to increase the construction of new affordable homes at a rate that the Labour party never achieved.
Mr John Baron (Basildon and Billericay) (Con): Successful counter-insurgency operations in the past, such as in Malaya, suggest that not one of the preconditions for success-control of borders, good troop density levels, a credible Government, and support of the majority of the population-exists in Afghanistan. Does this not beg for a more realistic assessment of the situation?
The Deputy Prime Minister: We have sought to introduce a strong element of realism, not only in the extra resources and support that are required for our troops in Afghanistan, but in the recognition-I think this is the implication of the question-that there is not a military solution to the conflict in Afghanistan. There must be a marriage of a military strategy, which applies pressure on insurgents who want to disrupt the peaceful co-existence of communities and people in Afghanistan, with a political process of reintegration and reconciliation, so that we can leave Afghanistan-
Mr Speaker: Order. May I ask the Deputy Prime Minister to face the House? Otherwise, it is difficult for him to be fully heard. [Interruption.] Order. I want to hear the Deputy Prime Minister.
The Deputy Prime Minister: I was always taught to address the person who had asked me the question, Mr Speaker. So let me say, addressing my hon. Friend, that we need to marry a political strategy with a military strategy. Only by balancing the two will we be able to leave Afghanistan with our heads held high, knowing that we have done the difficult job that we were asked to do there.
Q13. [22896] Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab): Apart from the promise to give rapists, murderers and paedophiles the vote, what pre-election promises has the Deputy Prime Minister kept?
The Deputy Prime Minister: I am not sure whether that was a question or merely a line that the hon. Gentleman has rehearsed over and over again over the past few days. As for the issue of prisoner voting rights, in 2005, as he knows, there was a court judgment on which the last Labour Government consulted repeatedly. At some point, regrettably, we need to bring our law into line with the court judgments, and that is what we will now seek to do.
Paul Uppal (Wolverhampton South West) (Con): Is the Deputy Prime Minister aware that, according to a report on Radio 5 Live this morning, after the changes in tuition fees graduates earning £25,000 a year will have to pay back only £30 a month?
The Deputy Prime Minister: Opposition Members simply refuse to acknowledge that the 25% of lowest graduate earners will pay much less than they do now. That seems to me to be a strong indication of the progressive nature of our proposals.
Q14. [22897] Mr Gregory Campbell (East Londonderry) (DUP):
Business to be dealt with later today includes
the Equitable Life (Payments) Bill. Is the Deputy Prime Minister aware of the anger and frustration felt by many thousands of Equitable Life policyholders, will he address that, and will today's business-with, hopefully, his support and that of Members in all parts of the House-reach a more satisfactory conclusion for those policyholders?
The Deputy Prime Minister: As the hon. Gentleman knows, under the last Government there was no prospect of any compensation for Equitable Life policyholders. He will also know that the compensation package that we announced in the comprehensive spending review is far in excess of the compensation levels recommended by the independent review. Of course the situation is difficult, and we would always like to provide more compensation, but the compensation that we are providing is much, much more than many people expected.
Stephen Lloyd (Eastbourne) (LD): The Times Educational Supplement recently published a feature article stating how effective the pupil premium would be. Does the Deputy Prime Minister share my frustration at the fact that the Labour party appears to be more interested in scoring partisan points than in supporting the coalition Government's serious attempts-
Mr Speaker: Order. We have got the gist of it, and we are grateful to the hon. Gentleman.
The Deputy Prime Minister: I think that the pupil premium is a significant policy. It puts an end to the system that we inherited from Labour, which meant that if you were a poor child at school in one part of the country a lot of extra money would be allocated to your education, whereas that would not happen if you were a poor child in another part of the country. The pupil premium is attached to children from poor backgrounds wherever they live, to lift their sense of aspiration and to improve the one-to-one tuition support that they need if they are to have the fair chance in life that all children deserve in our country.
Q15. [22898] Phil Wilson (Sedgefield) (Lab): Up to 100,000 tenants are paying rent to more than 44,000 private landlords who are being investigated for non-payment of tax on rental income, and 53% of those tenants are receiving housing benefit. What are the Government doing to clamp down on private landlords who fiddle the tax and housing benefit system?
The Deputy Prime Minister: I strongly agree that we should come down very hard on those unscrupulous landlords, who are profiteering from the housing benefit system that was so poorly administered by the previous Government. As the hon. Gentleman will know, rents in the private sector have declined by about 5% over the last year, while rents that depend on housing allowance have increased by 3%. That is why we need to bring some sense and proportion to the way in which we administer housing benefit, which has more than doubled over the past few years.
Point of Order
12.34 pm
Mr Gerry Sutcliffe (Bradford South) (Lab): On a point of order, Mr Speaker. On 1 November, the Home Secretary made a statement in the House on aviation security. The shadow Home Secretary asked her a number of questions that she was not able to answer. She said that she in due course would write to the shadow Home Secretary with the answers. Ten days later, we have not received those answers. I seek your advice, Mr Speaker, on how we can deal with the situation.
Mr Speaker: I am grateful to the hon. Gentleman for giving me notice of his point of order. His complaint will have been heard by Ministers. I hope, from his point of view, that it will also be heeded, and that he will receive the promised answers soon. It may also be helpful for the hon. Gentleman and the House to be reminded that business questions will take place tomorrow. I hope that that is useful.
Support and Protection for Elderly People and Adults at Risk of Abuse
Motion for leave to bring in a Bill (Standing Order No. 23)
12.35 pm
Mr Nigel Dodds (Belfast North) (DUP): I beg to move,
That leave be given to bring in a Bill to promote awareness of abuse of elderly people and adults at risk, to promote training on how to recognise and respond to such abuse amongst those who are likely to encounter abuse in the course of their work, to promote greater awareness and understanding of the rights of victims of abuse amongst agencies with responsibilities for providing, arranging, commissioning, monitoring and inspecting care services, to promote the development of local strategies for preventing abuse of elderly people and adults at risk and for ensuring that victims are assisted in recovering from the effects of abuse.
I am delighted to have this opportunity to move this motion and introduce the Bill. The abuse of elderly people and adults at risk is a hidden problem, and I hope that by raising it in the House today I will help to focus attention on this matter which affects hundreds of thousands of people every year, and which a range of organisations, including Age UK and the Alzheimer's Society, have already done much to highlight.
Issues of abuse are complex and much abuse goes unreported. The failure by abused elderly people and adults generally to report instances of abuse is down to a number of reasons: stigma, shame and even a feeling of guilt by the abused, wrongly but genuinely felt, for having provoked the abuse. Very often, the abused adult is dependent on the abuser. Isolation also plays a part, as does lack of contact with care providers or criminal justice agencies.
The complexity of the problem is illustrated by a piece of work recently carried out in Northern Ireland which showed that three quarters of incidents in which elderly adults were subjected to abuse involved a family member, including very close relatives. Often in such situations the abused person will want to maintain some kind of relationship with the abuser, and they might be threatened that if they report the abuse they will be denied access to other family members, such as grandchildren, thus reinforcing the feelings of loneliness and isolation. In such cases, the elderly person often decides to balance the abuse they are actually suffering against the fear of some future action that they believe would result in their being left in an even worse state.
As a country, we must do everything we can to protect people at risk, especially our senior citizens, from abuse that can take many different forms. Often these factors are combined, but generally abuse falls into the following categories: emotional, psychological, financial, physical, sexual and neglect. Although Members will be aware of extreme examples of abuse when they are reported in the press and other media, it is clear that much abuse happens almost unnoticed or is passed off and excused as "poor care", or with the comment, "That's just the way he or she"-the family member-"behaves."
The issue of financial abuse is causing increasing concern. A 2008 Help the Aged report found that up to 2.5% of elderly people felt they had experienced some kind of financial abuse, exploitation or coercion, and in
my constituency case load I have come across increasing numbers of specific issues involving the administration of the personal finances of vulnerable adults. That is now becoming a greater problem given the difficult economic times we are facing and pressures on family finances, yet public awareness of the issue is limited.
Many members of the public at large do not understand the nature of the different types of abuse. That was borne out by the work of a partnership project in Northern Ireland, Uniting Against Elder Abuse, which brought together Age Concern and Help the Aged-which are now united as Age NI-and the Alzheimer's Society and Carers Northern Ireland. The project delivered a two-year strategic programme aimed at raising awareness of the problem generally, providing access to independent advocacy for frail older people and those with dementia, and developing a therapeutic response for those who experience abuse. I can say from the experience we had then in Northern Ireland that people were genuinely taken aback at the report's findings and the extent of the problem.
The number of people affected is much greater than is sometimes realised. It is estimated that one in 25 of all older people living in the community is affected by some kind of abuse every single year. As the majority of cases occur in the older person's home, agencies such as social services are not necessarily involved or aware. According to one survey, 62% reported that they had had no contact whatever with social services or any other support organisation, highlighting the fact that there is likely to be a considerable hidden minority of older people living in an abusive situation or subject to some kind of abuse without recourse to traditional forms of support or help.
There must therefore be greater commitment to educating and informing people about the support available to them. There are gaps in education, knowledge and training at the individual level and across the public and voluntary sectors. Those gaps must be plugged. It is vital that we have a single, common piece of legislation to reinforce existing policies designed to protect the elderly and adults at risk of abuse. Current safeguarding legislation is too complex and spread across many and various Acts and measures. It therefore offers only limited protection. No single professional, whether it be a social worker, a police officer or a nurse, could ever be expected to be aware of all the legislation that is out there. That is why overarching, comprehensive and consolidating legislation is needed.
There would be immense benefit in bringing existing provisions together, including principles, definitions, a duty to investigate, clarification of powers of entry, powers to remove a perpetrator or perpetrators of abuse, and a duty of co-operation. Legislation should not only be about responding to individual allegations of abuse, but should place a strong emphasis on prevention-and not just preventing an abusive situation arising for an individual. What is needed is a major shift towards
understanding the circumstances and situations that contribute towards abuse or render people vulnerable to it, acknowledging the reality of its effect and how we as a society must move towards eradicating it.
Often, there appears to be little formal contact between agencies and services, and support can be unco-ordinated and fragmented. Let us compare that with the protection of children, which is a benchmark that we should seek to emulate. There is too much buck-passing over vulnerable adults and senior citizens, and only legislation will end that. Legislation would require suspected abuse to be investigated. Guidance is all well and good, but it applies differently to the various authorities and statutory agencies. The law should apply to all agencies involved in preventing and responding to abuse. Specific legislation would force better co-ordination of the various statutory agencies as they confront the silent offender of abuse. The same legislation could address the training and education deficit, which I have already mentioned, across the range of elderly support services, including the private, public and voluntary sectors.
Devolved Administrations are already taking steps, or have taken steps, to target elder abuse, with Scotland introducing the Adult Support and Protection (Scotland) Act 2007, Wales preparing to make recommendations by the end of this year, it is hoped, and Northern Ireland preparing a policy framework for consultation in early 2011.
The Department of Health opened up consultation on the "No secrets" guidance in 2009, but neither the previous Government nor this one-I acknowledge that they have been in office for only a short time-have responded to the findings of that consultation, including those on whether legislation is needed.
Legislation on the abuse of elderly people and adults at risk would facilitate a more comprehensive assessment, with a common benchmark standard across all support agencies. It would establish a more consistent and effective response by statutory providers, ensure better training and education, which would improve awareness, and consolidate local authority guidelines and offer enhanced guidance to the criminal justice system.
The day we set aside or neglect our responsibility to help and cater for the needs of our senior citizens and those who are open to and at risk of abuse within our society is the day that we lose our moral compass. I believe that this is an extremely important issue and hope that the presentation of the Bill leads to Government action. I commend the Bill to the House.
That Mr Nigel Dodds, Andrew Percy, Malcolm Wicks, Greg Mulholland, Dr William McCrea, Mr Jeffrey M Donaldson, Mr Gregory Campbell, Sammy Wilson, David Simpson, Ian Paisley and Jim Shannon present the Bill.
Mr Nigel Dodds accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 17 June 2011, and to be printed (Bill 105).
Equitable Life (Payments) Bill
[Mr Nigel Evans in the Chair]
12.46 pm
Mr Fabian Hamilton (Leeds North East) (Lab): I beg to move amendment 1, page 1, line 7, at end insert-
'(2A) Payments authorised by the Treasury under this section to with-profits annuitants shall be made without regard to the date on which such policies were taken out.'.
The First Deputy Chairman of Ways and Means (Mr Nigel Evans): With this it will be convenient to discuss the following:
Amendment 2, page 1, line 7, at end insert-
'(2A) The Parliamentary Commissioner for Administration shall report to Parliament on the implications for payments to which this section applies of the findings of the Independent Commission on Equitable Life Payments, no later than one month after the publication of such findings.'.
Amendment 7, page 1, line 7, at end insert-
'(2A) In determining the amount of the payments that it is appropriate for the Treasury to authorise under subsection (2), the Treasury must have regard to such matters relating to the adverse effects of that maladministration on those persons and the proper calculation of their resulting losses as have been determined by the Parliamentary Commissioner for Administration to be relevant to and appropriate for that calculation.'.
Mr Hamilton: I tabled my amendment because, although I am well aware that the Bill is an enabling measure, I feel strongly that a group of Equitable Life policyholders has been unfairly excluded from the compensation scheme that the Government have put in place. You will be pleased to know, Mr Evans, that I will not rehearse the entire history of the Equitable Life saga, because I do not think that we have the time this afternoon. However, to put my amendment into context, it might help right hon. and hon. Members if I remind them of some of the background to the case that I am about to put for the with-profits annuitants who took out their policies before 1992, for whom the Government's proposed scheme will not offer any compensation at all-in stark contrast to the post-1992 with-profits annuitants for whom 100% compensation is now proposed.
Founded in 1762 as a mutual insurance company based on the ideas of James Dodson, a fellow of the Royal Society and a man well ahead of his time, Equitable Life started selling pensions as early as 1913, but it was not until 1957 that the society started to sell its infamous guaranteed annuity rate, or GAR, pensions, which gave a clear and unambiguous return on capital invested depending on the age at which the policyholder decided to start taking the annuity. That was to carry on until 1988, at which point the society realised that its rates were so good and so far ahead of the rest of the market that they were unsustainable.
In December 2000, Equitable Life was forced to close to new business. By that time, it had more than 1.5 million members. In the last Parliament, the Select Committee on Public Administration said in its introduction to its December 2008 report:
"Over the last eight years many of those members and their families have suffered great anxiety as policy values were cut and pension payments reduced. Many are no longer alive, and will be unable to benefit personally from any compensation. We share both a deep sense of frustration and continuing outrage that the situation has remained unresolved for so long."
In June 2009, following many complaints from constituents over the past few years I introduced an Adjournment debate in Westminster Hall on Equitable Life. In it, I was critical of the then Labour Government -my own party's Government-and although I loyally and strongly supported almost all the previous Government's policies, I felt that we were wrong on this issue and should have done far more to implement the parliamentary ombudsman's full and damning report of July 2008 entitled "Equitable Life: a decade of regulatory failure". Needless to say, that did not make me very popular with my colleagues on the Front Bench at the time. My right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne), the then Chief Secretary to the Treasury, tried his best at the end of the last Parliament to implement what I believe to have been a flawed exercise to bring in some sort of compensation scheme by employing Sir John Chadwick to design a system, but that took so long that it was overtaken by the general election in May.
The new coalition Government decided initially to continue the Chadwick process, to the disappointment of the Equitable Members Action Group. However, I must thank my right hon. Friend for his courtesy and the help that he tried to give me when he was Chief Secretary. He clearly understood the moral imperative that Parliament and the Government had to Equitable's policyholders, but his hands were tied and no compensation scheme was forthcoming under the previous Government. That was a great shame.
When Sir John Chadwick finally published his long-awaited report on 22 July, his recommendation on the total compensation to Equitable policyholders was for just £400 million to £500 million, or about £400 to £500 per person, out of the estimated total losses of approximately £4.8 billion, as calculated by the actuaries Towers Watson almost two years ago. I am reluctant to give praise to the Government parties, but I was delighted when the Chancellor of the Exchequer, in his speech to the House on the comprehensive spending review on 20 October, scrapped the Chadwick report and proposed a compensation package amounting to £1.5 billion. That figure was a threefold increase on Sir John Chadwick's initial proposal but was still insufficient to make up for the losses incurred by Equitable policyholders. More importantly, however, the Government accepted at long last the report of the Parliamentary and Health Service Ombudsman in full. Again, I must reluctantly give credit to the Government for having done something that I wish my Government had done long ago.
Any delight that surviving Equitable policyholders and I felt at the Chancellor's announcement was soon clouded by the details of the proposed compensation package. All the 37,000 post-1992 with-profits annuitants will eventually receive 100% compensation for their losses since then, but none of the estimated 10,000 pre-1992 with-profits annuitants will receive any compensation. Let me explain how my amendment goes to the heart of this issue.
Jonathan Evans (Cardiff North) (Con): I have no reluctance in paying tribute to the hon. Gentleman for his independence of thought and the campaign that he has waged on this issue. He has been not a lone voice, but one of very few Labour voices addressing the matter. On pre-992 annuitants, how on earth could one calculate what their losses might be as at that time, bearing in mind the fact that it is very likely that in the late 1980s and early 1990s bonus payments that were probably much larger than was warranted, given subsequent events, were added to their asset share? In other words, they might well already have been overcompensated.
Mr Hamilton: I thank the hon. Gentleman for his kind words. I hope that in continuing my comments I shall answer his question.
I have long believed that the Equitable saga is a moral issue for us in Parliament. We sought, through the Financial Services Authority, to regulate financial institutions such as Equitable so that those who invested their valuable savings to ensure their future income were protected against fraud and maladministration. Our own ombudsman, Ann Abraham-she works for us-called the failure to regulate Equitable "catastrophic" and pointed to examples of savers encouraged to invest with that company long after it clearly could no longer meet its obligations.
If we as a nation want to encourage people to save and to provide for their retirement and old age, in addition to what they will receive in state pension, it is essential that the companies offering those savings products can be trusted and relied on. With hindsight, we can see that Equitable clearly could not deliver to the hundreds of thousands of investors who trusted it and those people have been badly let down as a result. We had an obligation to ensure that that could not happen and we now have an obligation-indeed, a duty-to ensure that those who have lost out are fairly compensated for all their losses. This matter is above crude party politics; it is an obligation to which 380 sitting MPs signed up before the last election when they put their names to EMAG's pledge. We must not let the policyholders down now.
Let me relate some heartbreaking cases that will illustrate better than I can just how people have suffered as a result of Equitable's failure. One of my constituents, Mrs B of Leeds, has written:
"I signed for my With Profits Annuity in March 1991, investing £57,000. I am really suffering just now with my husband now being disabled and I am still trying to work four days a week to make ends meet. I receive only £141 a month from Equitable and it will continue to reduce. Surely all With Profits Annuitants should be included in the compensation! Have I been harbouring false hopes all these months? If so, there does not seem any point in my continuing to write to my MP or the Prime Minister."
Another policyholder, Mr D, who is not a constituent of mine as far as I am aware but will be a constituent of somebody in the House, writes:
"In his letter of 20 October Mark Hoban refers to the government's concern with the plight of the WPAs. However, he fails even to mention the Government's decision that those who started to receive their annuities before September 1992 are to get nothing. This is in spite of the fact that they too have not been allowed to get out, are continuing to suffer, year by year, reductions in their annuities and are older than any of us.
Fortunately Paul Braithwaite [the Secretary of EMAG] perceived from the first what was going on and has placed the matter of the treatment of the pre-September 1992 WPAs at the top of the agenda for a judicial review. However"-
this is the crux of what Mr D says-
"I think our MPs are fair minded enough to perceive for themselves how unjust the proposed action of the Government is. I am writing to my MP straight away."
Whoever that might be should look out for the letter.
Once an annuity has been purchased it cannot be sold or changed, so the with-profits annuitants who took out annuities before the September 1992 cut-off date are trapped.
Stephen Lloyd (Eastbourne) (LD): I, too, pay tribute to the hon. Gentleman for his work. It has been a pleasure to work with him on this issue and I support his amendment. In a nutshell, on the moral case, the parliamentary ombudsman and Sir John Chadwick both said in writing in advance that all the annuitants should be treated equally and that these annuitants should not be excluded, not least because they are the oldest and most frail.
Mr Hamilton: I thank the hon. Gentleman for his kind remarks about the work I have done but, as the Committee will know, he is the secretary of the all-party group on justice for Equitable Life policyholders, and I thank him for his efforts in this regard. He is absolutely right: Sir John Chadwick did say that, as I shall mention later.
The with-profits annuitants who took out annuities before the September 1992 cut-off date are as trapped as those who purchased them after that date and their incomes diminish each year. Having taken out policies that they believed would allow them to make ends meet in old age, they now face increasing poverty because Parliament did not act soon enough to prevent the collapse of Equitable. That is why we owe them the compensation that they deserve as much as the post-1992 with-profits annuitants.
What is so important about September 1992? Let me give further reasons why this is an artificial and unfair cut-off date, which I seek to stop with my amendment. First, annuities could not be exchanged once bought, so every annuitant has suffered from the consequences of regulatory failure irrespective of when their annuity was taken out or what extra bonuses were added. The cut-off date ignores the views of the parliamentary ombudsman, Ann Abraham, and Lord Chadwick in their reports. Even Chadwick, who came up with a much smaller overall compensation package than the £1.5 billion now on the table, agreed that the pre-1992 with-profits annuitants should not be excluded, as the hon. Member for Cardiff North (Jonathan Evans) pointed out.
It is said that because of the changes to the computer system, Equitable's records prior to late 1992 were not available, but the current chief executive of Equitable, Chris Wiscarson, who has been extremely helpful, has previously stated that this is a problem that could be surmounted. The parliamentary ombudsman has previously made it clear that nobody would sensibly have invested in Equitable after 1 July 1991 had the regulator acted effectively and transparently. If that situation had been made apparent to the media and the public at that time, nobody would have sensibly invested after that date.
It seems clear to me that anybody who took out a policy between July 1991 and September 1992 is being unfairly penalised simply because of a change in Equitable's
computer system. This is exacerbated by the fact that policies brought out in this period had the longest exposure to the adverse effects of maladministration. The coalition Government gave a commitment to
"implement the Parliamentary and Health Ombudsman's recommendation to make fair and transparent payments to Equitable Life policy holders, through an independent payment scheme, for their relative loss as a consequence of regulatory failure."
My amendment would ensure that this commitment could be carried out properly and at a relatively small additional cost.
Let me be clear. I am not recommending that we take some of the compensation from the 37,000 who have already been promised 100% compensation, which amounts to about 50% of the total offered by the Government. I am suggesting that we bring forward the £100 million of the total package that was proposed to be given in the next Parliament, and that we add to that a further £100 million from current, albeit limited, reserves.
As I said earlier, I believe that this is a moral obligation and that Equitable pensioners are looking to us, their recently elected representatives in this Parliament, for justice, which is why I intend to press the amendment to a vote so that there can be no discrimination between with-profit annuitants according to when they purchased those annuities.
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Andrea Leadsom (South Northamptonshire) (Con): Does the hon. Gentleman accept that there might be more support for the amendment if it did not incur further cost to the taxpayer, bearing in mind the current severe financial constraints?
Mr Hamilton: Yes, of course the amendment would attract far more support if there was a net zero cost. However, this is an important moral issue. Many of my hon. Friends and other Members know my views, for example, on the Trident replacement, which I know has now been shelved for a while, and on various schemes that take a huge amount of capital expenditure. The sum that we are discussing now is relatively small. I believe there are other savings that may be made, particularly in defence spending, which could pay for this.
That is a decision that the Government and the two parties that make up the coalition will have to grapple with, but I believe that the policyholders look to us to ensure that the justice they have been promised is delivered. It is a moral obligation, and it overrides many of the other areas of expenditure to which any Government are committed.
Frank Dobson (Holborn and St Pancras) (Lab): Does my hon. Friend agree that if there is a moral case to compensate anybody, there must be a moral case to compensate everybody, and not leave some people out because of some mess-up over a computer system?
Mr Hamilton: I thank my right hon. Friend for that. He is right. It is galling when the very vulnerable and frail pensioners who are the ones suffering most because they are the pre-1992 with-profits annuitants look, for example, to the quite correct compensation given to Icesave investors of up to £50,000 per investor, and to some of the other compensation schemes in which the Government have been involved over the years, and find that they, who might not have much longer to live, are going to be without compensation at all.
Jonathan Evans: I am grateful to the hon. Gentleman, who is being extremely generous in giving way. I fully accept the moral argument that he is putting forward. That is why I was a signatory to the pledge as well. In response to the question I asked earlier, he certainly has a point about taking back the date to 1991. His amendment, though, would go back well before that, but he has not made the argument for going beyond 1991. My second question was how he would compute the compensation. That must be a central question, and in his argument so far I have not heard an answer to that.
Mr Hamilton: I thank the hon. Gentleman for his intervention. First, there would be relatively few annuitants from further back in time. Clearly, a person who retired in 1981 or 1985 would be getting on a bit in years now, so only a small number of people would be involved. Secondly, Equitable must have records showing what bonuses were paid at different times.
The further back the scheme goes before 1991, the fewer annuitants there will be who demand or need that compensation, but the need will be greater because of the frailty and the loss in the value of those annuities since then. Since 1991, those annuitants, even though they may have had bonuses before that, continue to see a decline because of the maladministration, which affects them as much as it affects post-1992 annuitants. I hope I have at least partly answered the hon. Gentleman's point.
Jim McGovern (Dundee West) (Lab): Actuaries are sometimes disdainfully referred to as people who found accountancy too exciting, but surely a good actuary would be able to calculate the sums in question, whether for pre-1991 or post-1991 annuitants.
Mr Hamilton: I thank my hon. Friend for making that very good point. We are talking about many hundreds of thousands of policyholders throughout the United Kingdom, but we know that there are about 37,000 or so post-1992 with-profits annuitants. We think there are about 10,000 pre-1992 such annuitants, but the further back we go the fewer there will be, so if it was a difficult, time-consuming exercise to work out relative losses for all policyholders, which it certainly was, which is why Sir John Chadwick was engaged, it will surely be a much easier exercise for the far fewer people who are with-profits annuitants prior to 1991. My hon. Friend's point goes some way to answering the question.
Richard Fuller (Bedford) (Con): I thank the hon. Gentleman for giving way again. This has been a long-standing issue, and perhaps he can help some of us who are new to the House. He mentioned a total of £100 million from subsequent years' Budgets, plus £100 million from reserves to be allocated to pre-1992 annuitants who are not covered in the proposals. Is he making an estimate, or is that sum firm is in his mind? That is a key issue. The concerns expressed about computer records do not stand up against a point of principle, but it is important that we have a sense of how firm and solid the hon. Gentleman's understanding is of the sums that might need to be paid.
Mr Hamilton:
The hon. Gentleman makes a very good point, and I cannot give him a precise answer. The figures that I have quoted are estimates I obtained from
the Equitable Members Action Group, which has quite a lot of good people working for it-people who have been in the financial services industry. I go on their expertise. This is the best estimate that we can gain.
The reality is that many of the annuitants are quite elderly. It is unlikely that in five years we will have the same number we have now. We already know, for example, that every single day since the disaster happened 15 policyholders throughout the entire spectrum of Equitable policyholders have died. We can therefore assume, unfortunately, that more will no longer be with us in the years to come, so the amount of money will be a diminishing sum. The best estimate that we can gain is £200 million, and that estimate comes from EMAG.
Jim Shannon (Strangford) (DUP): Can the hon. Gentleman clarify that last point? Obviously, since our last debate on the subject in the Chamber way back in July, some people have passed away. Is there any provision in the amendment for the next of kin to take advantage, in the absence of those who have passed on?
Mr Hamilton: That is a good point, and it was made during the previous Parliament, in February, at a packed meeting with the former Chief Secretary to the Treasury, my right hon. Friend the Member for Birmingham, Hodge Hill, and Sir John Chadwick. My right hon. Friend made a commitment, which I am not sure the Financial Secretary has made, so perhaps he will clarify the situation in his contribution, that the estates of those who had passed away would receive some compensation. The point that I have just made may be contradicted, but it depends on what the Financial Secretary and the Treasury want to do.
The Financial Secretary to the Treasury (Mr Mark Hoban): Before the hon. Gentleman continues, let me just make it clear that long ago we established the fact that, under any compensation scheme designed, we would make payments to relatives of those who were deceased, and that there would be no means-testing.
Mr Hamilton: I thank the Financial Secretary for clarifying that point, which somewhat contradicts what I said earlier about the diminishing amount of money.
The best estimate that EMAG can give us is £200 million for the 10,000 existing pre-1992 annuitants. I confirm that I wish to press my amendment to a vote, and simply conclude that we owe some of our most frail and vulnerable pensioners no less. I urge all Members to support my amendment.
Jonathan Evans: I am very pleased to have the opportunity to participate in this debate, but may I begin by declaring an interest? I am the chairman of a life insurance company, but I have no connection whatever with Equitable Life, financial or otherwise.
The hon. Member for Leeds North East (Mr Hamilton), alongside many Conservative and Liberal Democrat Members prior to the election, fought hard to put forward the cause of Equitable Life policyholders, and I am pleased and proud of the position that my colleagues and the Minister adopted. Many of us, in the lead-up to the election campaign, signed a pledge to seek to put into operation a number of factors. The first was the
recognition of all the individual provisions that the parliamentary ombudsman put forward. The hon. Gentleman will know that the previous Government only partially accepted the ombudsman's report, and I am very pleased and proud of the fact that the Minister fully accepted all its points. I rather wish that EMAG had been a little more generous in its praise of him for having done so.
Secondly, the compensation that has been put forward will come as a disappointment to some, but the ombudsman made it clear that we had to take account of pressures on the public purse at the time. When we heard Sir John Chadwick's proposals, there was virtual unanimity among those newly elected Government Members that £400 million was completely and utterly inadequate. I thought that the Government might put the figure up to about £1 billion and hope for the best, but we ended up with £1.5 billion.
James Morris (Halesowen and Rowley Regis) (Con): Does my hon. Friend agree that we would not be in this situation, or have to have this conversation, if it had not been for the delay imposed by the previous Government?
Jonathan Evans: That is true, and the record of the outgoing Labour Government in that regard is inglorious, but I do not want to be partisan. In essence, Equitable Life policyholders do not want us endlessly to bash the Opposition; they want to know which way we can go forward. So I shall turn my remarks to the specific points made by the hon. Member for Leeds North East. He made a good moral case for not excluding people who ought properly to be included in the category to whom compensation could be paid, but, as I suggested in my intervention on him, some factors cause me some concern.
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First, the hon. Gentleman referred to the elderly pensioner who had put in £57,000 and now receives a very low monthly figure. I certainly share his concern about that, but, if we were to unpick financial arrangements going back to the 1980s, we would have to consider the difficulty that arose from the fact that Equitable Life gave guaranteed annuity rates to some of its policyholders and, at the same time, record bonus rates to those people who did not have those guarantees. In reality, Equitable Life was building its business on the basis of becoming a market leader in the bonuses that it granted-even to the point where the parliamentary authorities recommended that all hon. Members making additional voluntary contributions should make use of Equitable Life because of its market-leading rates.
We know now that those rates were deceptive, but during the 1980s those rates were paid and those bonuses added to the asset pool being put together. Therefore, it cannot be gainsaid that, certainly by 1990, most people with an asset share in an Equitable Life policy probably had an amount that was well beyond what was appropriate for the investment that they had made. In other words, they were over-supplied with bonuses during that period.
Stephen Hammond (Wimbledon) (Con):
I have taken part in a number of these debates during my short period as a Member, and, unlike some hon. Members, I am not reluctant to praise the Minister. However, in my
constituency surgery last Friday I saw an 80-year-old gentleman who accepts the points that my hon. Friend now makes, but makes the point himself that the pre-1992 group are still trapped and unable to take any action. Had they been able to take some action to mitigate or ameliorate their circumstances, they would have done so. My hon. Friend the Minister has done a great job in moving the issue forward so quickly, but I hope that he will at least listen to the concerns of the pre-1992 annuitants.
Jonathan Evans: I am grateful to my hon. Friend for that contribution. He approaches the issue with significant expertise, so he will know that, if we are to achieve justice, it is not just a question of treating all those pre-1992 policyholders in the same way as everybody after 1992. One would go back and assess the pre-1992 annuitants' asset share to see whether they were paid 105%, 110%, 120% or 140% of asset share; and one would correct that, so that the pre-1992 and post-1992 annuitants were dealt with in a balanced way. The danger with the proposed approach is that there will not be that balance. It is already clear, from the question asked by my hon. Friend the Member for Bedford (Richard Fuller), that we do not have a basis for the figure of £200 million; it is a wet finger in the air in order to assess the situation.
The second factor that causes me significant concern is the lack of available actuarial information. I share all the concerns about the Chadwick process, and, although Sir John might have made an observation about the pre-1992 annuitants, he did not compute their liabilities. The danger, therefore, of being seduced by the strong arguments of the hon. Member for Leeds North East, is that we would enter into an open-ended commitment and have great difficulty realising its objective. During the debate, however, he has made a good case on behalf of those annuitants who go back to 1991. We should remember the judgment made by the ombudsman and her terms of reference. Most of the inquiries started looking at the period from 1999 onwards, but most of the condemnation about regulatory failure goes back to events prior to 1991. It is important that the Committee should take that factor into account when invited to say whether compensation should be granted going back very many years before that.
Chris Leslie (Nottingham East) (Lab/Co-op): I should like to speak to amendment 2, which is grouped with amendment 1, tabled by my hon. Friend the Member for Leeds North East (Mr Hamilton) and amendment 7, tabled by my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson).
In wishing you a happy birthday, Mr Evans, let me say that I do not have any registrable financial interests in the matter under debate. However, I want to place on record that 18 months ago, some while before I was returned to the House, I was occasionally commissioned to give advice and training on parliamentary and public policy matters, and on one occasion, I undertook a day's work for a company whose clients included the former chief executive of Equitable Life; by then, of course, its fund had been closed for many years. I thought it important to disclose that encounter for the avoidance of any doubt. Although I had a day's work indirectly related to Equitable Life some time before coming into Parliament, I have not had any financial or policy discussions on the matter subsequently.
I have held this brief for a couple of weeks, and it has been an extremely steep learning curve of reviewing history and policy that dates back well over 25 years, as my hon. Friend the Member for Leeds North East said. I was struck by the opening words of the House of Commons Library background note to the Bill:
"Describing the Equitable Life (Payments) Bill as the tip of an iceberg would be harsh on icebergs: at least they have 10% or so of their bulk above the water line. The Bill is but a tiny atoll below which lies the immense bulk of the Equitable Life tragedy."
In general, I intend to be as supportive as I can of the Bill, as it is a positive step forward in the attempts to rectify a long and sorry saga. The amendment simply seeks to encourage the parliamentary ombudsman to
"report to Parliament on the implications for payments...of the findings of the Independent Commission on Equitable Life Payments, no later than one month after the publication of such findings."
I do not want to go through the entire background that has brought us to this Committee stage today. By my count, eight separate inquiries, and possibly more, have done that, and there are conflicting and sometimes contradictory findings and accounts of what happened in the past and who should be responsible for rectifying the situation for policyholders. However, we know that in the spending review the Government accepted the ombudsman's approach to maladministration and, more relevantly to this debate, to the framework for a compensation package. The Government say that they want to honour the interpretation of the ombudsman's second report in full. That is their choice. There are clearly arguments in favour of that approach, as well as against it.
The Minister now places great emphasis-although it could be argued that he did so to a lesser degree before the general election, when there were a lot of loud campaigns on signing up to the EMAG pledge-on it being appropriate to consider the potential impact on the public purse of any payments of compensation in this case, as the ombudsman has said. The Treasury has concluded that it will initially focus on total relative loss as the basis for its payments and will cover those losses in full for post-1992 with-profits annuitants, to the tune of some £620 million. Some 37,000 individuals will be involved in that. That means that that group of with-profits annuitants will receive compensation equivalent to that which they would have gained had they invested in companies other than Equitable Life. However, because of the cap of about £1.5 billion that the Treasury is placing on the total payouts, the other 1 million or so policyholders, including annuitants with older policies-I presume, although I may be wrong about that-will have to have their compensation for relative loss adjusted to fit within the envelope available.
The Independent Commission on Equitable Life Payments, which is chaired by Brian Pomeroy, has been set up by the Minister to advise on the allocation of compensation to policyholders other than those with-profits annuitants, who will be getting 100% compensation. I am conscious of the words of Sir John Chadwick when I think through the technical challenge of administering a compensation payment scheme; it is important that its design and delivery are clear and efficient. I hope that we are not on the brink of a further failure that compounds the problems of the majority of policyholders by opting for a compensation scheme that could be so complex and opaque that it might risk grinding to a halt. We need a scheme that works in practice.
If the Minister is opting for the ombudsman's approach-as I say, that is the Government's choice-there are questions that need to be answered, and I would be grateful if he could reflect on those when he makes his comments. First, exactly how will the apportionment of the relative loss figures for other policyholders not receiving 100% compensation be calculated under the ombudsman's approach, if we will not be following the Chadwick methodology given the Government's acceptance of all 10 findings by the ombudsman?
Secondly, will the other policyholders-the vast majority-be classified into broad categories or subject to individual assessment of their cases? Will there be any burden of proof requirement on the other policyholders in the assessment of their relative loss, or is it likely that the compensation scheme will have some assumed automaticity in all cases? I ask that only because the ombudsman's findings of loss are very specifically linked to a policyholder's reliance on the regulatory return data. She said:
"I find that injustice was sustained by any policyholder who relied on information contained in the society's returns between 1990 and 1996."
I am trying to get a sense of precisely how that process will work.
Thirdly, how will the payment scheme take into account all the other maladministration factors for other policyholders that Sir John Chadwick's methodology would not have covered, if we are following a classification scheme?
Whatever compensation scheme the independent commission eventually alights upon, it is an important starting point to establish that it is consistent with the Minister's intentions-in other words, that it encompasses all the parliamentary ombudsman's conclusions. I gather that there are moves afoot by the Public Administration Committee to interpret whether the ombudsman's model aligns with the payment scheme that eventually emerges. That might be a good idea, but perhaps it is a little circuitous. It would be far better, in my view, to give the ombudsman directly the right and the opportunity to say publicly whether the payment scheme is indeed in keeping with the spirit of her own findings. She could then say whether the total relative loss figures are accurate and whether the compensation scheme is fair, particularly given the controversy over the dates and whether some people will or will not be included in the 100% compensation for with-profits annuitants. The purpose of our amendment is simply to give voice to the ombudsman so that she can confirm her view.
It is worth noting at this stage that, far from granting the wishes of the Equitable Life policyholders regarding everything they wanted, the main pressure group formed to speak for their interests, EMAG, is angry and perplexed at the nature of the compensation scheme envisaged by Ministers and the constraints placed on the independent payments commission. EMAG says on its website:
"The independent Commission's recently torn up terms of reference have not at this date"-
this was a week after the announcement in the spending review-
"yet been replaced."
It says that the Minister's letter of 20 October to the commission's chairman
"makes clear that retrospectively the remit will now totally exclude"
the full class of with-profits annuitants. My hon. Friend the Member for Leeds North East alluded to that point. EMAG continues:
"So its remit now is to divvy up £775m between 600,000 and to suggest the prioritisation. This surely cannot be what the Parliamentary Ombudsman had in mind as the role for the independent Commission?"
Given this question mark over the parliamentary ombudsman's intentions, we felt it important to table the amendment to try to give voice to that.
There is doubt about whether the compensation arrangements are as much in alignment with the ombudsman's approach as the Financial Secretary would like to argue, and I hope that our amendment will give the ombudsman a chance swiftly to comment on the calibre of the scheme and clarify once and for all whether it fits with her approach. We believe that that can be done quickly, and there seems to us to be no reason why it could not happen within one month of the publication of the scheme's proposals. There would not be any reason to delay payments, and it would aid transparency and confirm whether the Government's arrangements via the commission's payment scheme were the same as those envisaged by the ombudsman. Although amendment 2 may be a belt-and-braces approach, at this stage of the saga we need some cast-iron assurances all round.
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Mr Mike Weir (Angus) (SNP): If the hon. Member for Leeds North East (Mr Hamilton) presses his amendment, we will certainly support him.
I have been debating Equitable Life in the House ever since I was first elected, and I well remember endless debates in the two previous Parliaments in which I was joined by Conservative Members in trying to get the Labour Government to take action. I recognise that some Labour Members also pushed their own Government for action. It was a long battle, and frankly we did not get very far.
When the new Government were formed, I cannot say I had any great enthusiasm for the thought of the coalition, but I did at least think that perhaps we could get an end to this saga, which had brought so much unfairness to so many people throughout the country, many of them elderly.
One difficulty has always been what the final compensation bill should be. It is easy to get lost in figures, as they range from Chadwick's £500 million up to EMAG's latest figure of more than £6 billion, but the generally accepted figure seems to be in the region of £4.6 billion. The Government have set a figure of £1.5 billion, which is about a third of that generally accepted figure. I understand their reasoning that that is all that can be afforded, but sorting out Equitable Life could have been one of their great early achievements. It is being undermined by arbitrary decisions, the worst of which is the overall cap on the amount. Rather than an independent commission considering the matter and recommending a figure, a figure has been put in place and all the independent commission can do is decide how it is divided among policyholders.
Mr Fabian Hamilton: As I mentioned in my contribution, about half the overall £1.5 billion package will be consumed by the 100% compensation for the 37,000 post-1992 with-profits annuitants. Does the hon. Gentleman agree that the remaining balance will provide a considerably smaller sum in the pound to the rest of the policyholders?
Mr Weir: The hon. Gentleman is quite right. I understand that the figure quoted by EMAG is about 15% of their loss, which is a very small amount for people who have suffered.
What could have been a very good outcome seems to have been undermined by arbitrary decisions. I hope that the Financial Secretary will explain the rationale behind excluding the 10,000 pre-1992 annuitants from compensation altogether. I do not understand the logic of that. I do not see any suggestion that it should be done in the ombudsman's recommendations.
I have said in previous debates that it is important that this Parliament supports its independent ombudsman, and there seems to have been a major deviation from what the ombudsman recommended. The hon. Member for Cardiff North (Jonathan Evans) made some interesting and relevant points about how compensation for pre-1992 annuitants should be calculated, which is undoubtedly a difficulty. I am not an actuary and cannot give him the answer to that, but I do not think it is beyond the wit of man-or even an actuary-to work out a figure.
Ultimately, this is a matter of principle. I raised that point on Second Reading. We are dealing with a situation in which many thousands of our fellow citizens have lost out through maladministration. The Government are ultimately responsible for that maladministration-the previous Government, not the present one, but they are the heirs to that. We should not accept the principle that the Government can say, "Okay, there has been maladministration. We are responsible, but we will set a cap on how much compensation we give and then arbitrarily decide which of the group who have suffered will be compensated." That is a very bad principle. In no other case in which there has been loss and there is liability would anyone be entitled to say, "I'm only paying a proportion of that. That's all I can afford." The Government should not go down that route.
I believe that we will debate an amendment later to set up a totally independent organisation to consider the matter. We need that to be done independently, not with a cap and not with some people arbitrarily excluded. We will support amendment 1 if it is pressed, because it is only reasonable. We have to right what has been a terrible injustice going back well over a decade.
Frank Dobson (Holborn and St Pancras) (Lab): I shall speak very briefly in support of all three amendments in this group-those tabled by my hon. Friends the Members for Leeds North East (Mr Hamilton) and for Nottingham East (Chris Leslie), and even the one that I have tabled.
As drafted, the Bill leaves practically everything to the discretion of the Treasury, which I find objectionable. I remind the Committee of what Winston Churchill said about people at the Treasury-that they were
"like inverted Micawbers, waiting for something to turn down".
The chance of their coming to any generous conclusion for people who suffered in the Equitable Life scandal is very small. The courts have held that bodies given
discretion are not allowed to fetter their own discretion. It is therefore necessary for the House to fetter the discretion of the Treasury.
I strongly support the view that we should not allow a situation in which the most elderly people will be excluded from compensation. In view of the fact that everyone places so much weight on the ombudsman's contribution, I strongly support the amendment tabled by my hon. Friend the Member for Nottingham East, which suggests that we should give her a further look at what is being proposed. It will be preposterous if, in trying to do what the ombudsman wants, we end up doing something that she thinks is unsatisfactory and inadequate. The reasoning behind the amendment in my name is the same.
I do not wish to say any more, but the House should do its proper job of telling the Treasury what the rules should be when it considers the matter. I am not getting at Ministers; I am getting at the Treasury as an organisation. It does not have a good record, and ethics and decency are not major considerations for it. They never have been, and perhaps they should not be its major considerations, but we should bear them in mind, so that we can bear down upon the Treasury.
Nadhim Zahawi (Stratford-on-Avon) (Con): The hon. Member for Leeds North East (Mr Hamilton) made an impassioned and moral argument for amendment 1, to which I shall return later.
I have taken a very keen interest in this issue. It has affected a significant number of people in Stratford-on-Avon, to the extent that I have had hundreds of letters and e-mails about it. Like many other Members, I signed the EMAG pledge before the election, and I believe that backing the Government to get the Bill through is delivering on that pledge.
It is probably worth our spending just a few moments thinking about the economic landscape in which we are operating. We are borrowing about £500 million a day. Every time we go to sleep and wake up in the morning, we notch up another £500 million. To service the debt costs about £120 million a day-that is not to pay it down, but just to stand still. It is against that background that we must try to resolve the tragedy of Equitable Life.
Let me spend a couple of minutes on the timelines of the events. In 1988, Equitable Life stopped selling its guaranteed annuity rate policies and, in 1990, those policies became too expensive to honour because of the falls in interest rates and in inflation. In 1999, after the 1997 election, Equitable cut its bonus paid to 90,000 GAR policyholders. In July 2000, the House of Lords ruled that Equitable Life must meet its obligations to its GAR policyholders, thus leaving it with a £1.5 billion liability.
In February 2001, the Halifax agreed to pay £1 billion for the assets. In July, with-profits policyholders saw the value of their savings slashed by 16%-by almost one fifth. In August, Lord Penrose announced his investigation. In October, the then Economic Secretary to the Treasury told the Treasury Committee that the previous Labour Government might consider compensation for some victims if a grave injustice had occurred.
In January 2002, policyholders backed a compromise package. In March 2004, the Penrose report blamed Equitable Life's management for the whole affair. Following
the report's publication, the Government ruled out compensation and were accused in this House of abandoning policyholders. In April, the parliamentary ombudsman announced that she would reopen her investigation.
In 2007, the European Parliament called on the UK Government to compensate policyholders. In January 2008, Equitable agreed to pay an undisclosed sum to 407 with-profits annuitants who launched proceedings in 2004. The ombudsman's report was published in 2008. The previous Government said that they would respond by the autumn. When the deadline was missed, the then Prime Minister said that they would respond before Christmas. However, they did not respond until the new year.
In August 2009, Sir John Chadwick published his first interim report, and in March 2010-more than a year after his appointment-he published his third and final interim report with a promise of a final report in May 2010. That date was subsequently extended to July.
I go through these events in chronological order to demonstrate the pain that the victims of Equitable Life have had to go through. This is a true human tragedy. The hon. Member for Leeds North East talked about the e-mails and letters that he has received from his constituents, and the same is happening in all our constituencies.
The Government's offer is a very good one. My hon. Friend the Member for Cardiff North (Jonathan Evans) said that, at best, he expected them to offer up to £1 billion. Many colleagues and I voiced our concerns the last time we debated this matter in the Chamber. When one makes a pledge, one must try to honour it.
Richard Fuller: Like many of us, my hon. Friend is wrestling with this question of fairness and with the political obligation to find a fair payment scheme that was mentioned in the Public Administration Committee and that many of us have signed up to. Hon. Members from both sides of the Committee are caught between wanting to praise the Minister for the swiftness of his recommendations-we praise him for that-and finding, in these difficult times, £1.5 billion. We often talk about that figure in comparison with the Chadwick number. However, does my hon. Friend not accept that we should view the figure with respect to what the Government themselves have said about policyholders' relative loss, which Towers Watson estimated at, I think, £4.3 billion? Does £1.5 billion represent meeting our obligation of fairness if it is set against the relative figure of £4.3 billion that the Government themselves have accepted?
1.45 pm
Nadhim Zahawi:
My hon. Friend is quite right: the figure is £4.3 billion. I, too, have wrestled with the problem. In the current economic climate, offering £1.5 billion to the victims is fair and it delivers on the promise that many of us have signed up to. I hope that many colleagues will support the Government to expedite the process and finally get money flowing to the victims, something that we hope will happen by the middle of next year. The figure of £1.5 billion is about four times higher than the £340 million that victims would have
received if the coalition Government had accepted the Chadwick report, which is what we feared would happen. I am very comfortable with the sum being offered.
Stephen Lloyd: I accept my hon. Friend's premise that the amount is considerably higher than the previous Government proposed. I also accept that we are in a desperate situation in which we are paying £120 million a day to service a debt. That is outrageous and clearly we must focus on that. However, a way around the challenge is the one that I have presented to the Economic Secretary to the Treasury, which is to urge the Treasury to revisit the matter in five years' time for the second tranche of the £500 million. By then, the economy will be transformed and we will be in a stronger position. Does my hon. Friend not agree that while the £1.5 billion seems a very generous sum at the minute, a little flexibility from the Treasury means that the further £500 million could be revisited in five years' time?
The First Deputy Chairman: Order. Before the hon. Gentleman responds to that intervention, may I remind Members that interventions should be short and that this is not a Second or Third Reading debate? We are speaking to the amendments that are before us and if we focus on them, we will make quicker progress.
Nadhim Zahawi: My hon. Friend makes a good point. However, having listed that extraordinary chronology of debacles, it is clear that there could be a problem if we left things open and said, "We might be able to revisit them at some other stage." We would be opening up other doors, and that may cause further delay. I come from a world of business rather than of politics and I believe that, if we try to put a line under a terrible situation and compensate people, we should do it quickly and completely.
Mr Evans, I take on board your remarks. All I will say is that the Minister should be applauded. There will be no means-testing and the dependants of the deceased policyholders should be included in any compensation. I have had a number of heartrending letters in which relatives have written, saying, "It is too late for us because our loved ones have passed away."
I understand the passion that the hon. Member for Leeds North East has shown through amendment 1. The problem with the amendment was outlined by my hon. Friend the Member for Cardiff North (Jonathan Evans), who said that it was very difficult to put a quantum on what that number should be. In the current economic climate, I would find it hard to support it if we said, "Oh well, maybe it is £100 million extra from reserves; maybe it's £100 million that we can bring in from future years." None the less, the hon. Gentleman made a strong point about the annuitants from 1991 going forward, and I hope that the Minister was listening carefully.
Mr Fabian Hamilton: Does the hon. Gentleman not agree that creating an arbitrary date-which is what the cut-off point would be-would lead to a great deal of anger and distress among some of the oldest and most vulnerable policyholders?
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