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Baroness Symons of Vernham Dean: My Lords, there are, sadly, in war always a number of individuals who go missing and of whom there is no account. We understand and have enormous sympathy with the anguish of families who go through that dreadful experience. We have in the past approached both the North Koreans and the Chinese in regard to what happened to such individuals. They may not necessarily have been prisoners of war; they may have been lost in action. It is indeed the Government's intention, following the establishment of diplomatic relations with the Democratic People's Republic of Korea, to make a fresh approach on these issues.
Equitable Life: Financial Services Authority Review
2.47 p.m.
Lord Steel of Aikwood: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In so doing, I must declare an interest, albeit a rather painful one, in common with many former Members of the other place.
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To ask Her Majesty's Government what action they propose to take to review the effectiveness of the Financial Services Authority following the judgment of the House of Lords in the case of Equitable Life.
As the Economic Secretary to the Treasury announced during a debate in Westminster Hall on 19th December last year, the Financial Services Authority intends to prepare a report on the events that led to Equitable Life's decision to close to new business. The report will cover both the FSA's role as a prudential regulator and its exercise of its functions under the Financial Services Act 1986, including the Personal Investment Authority's responsibility for conduct of business regulation of long-term investment-linked life insurance. The report is likely to take some months and will be published.
Lord Steel of Aikwood: My Lords, I am most grateful for that reply, but does the Minister accept that many people believe that an internal inquiry by the FSA is simply not good enough in the circumstances? Surely there was a failure of oversight as indicated by failing to follow up the Treasury memo of 1998. Even before the FSA came into being, were there not eight years of surveillance by the DTI during
which Equitable Life entered into unhedged and open-ended liabilities on the false assumption of continuing high inflation? In those circumstances, do not Her Majesty's Government have a moral obligation to inquire fully into what went wrong?
Lord McIntosh of Haringey: My Lords, I confirm that in the period between the late 1950s and 1988 Equitable Life offered guaranteed annuities which relied to some extent on higher levels of inflation than have since been the case. However, I challenge the noble Lord's assertion that this is purely an internal inquiry. After all, the Financial Services Authority, as set up under the Financial Services and Markets Act 2000, has 11 non-executive directors as compared with three executive directors. Ronnie Baird, the director of internal audit, who is responsible for the inquiry, reports not to any of the executive directors but to the board as a whole. I think noble Lords will agree that that gives a good deal of assurance that the inquiry will indeed be independent.
Lord Saatchi: My Lords, two parties stand accused of a failure of supervision in this case: the Treasury and the regulator. Do the Government think it appropriate to order an investigation in which one of the accused is asked to investigate the other?
Lord McIntosh of Haringey: My Lords, the Government did not order an investigation. The Financial Services Authority undertook to carry out such an investigation.
It is true that until 5th January 1998 these matters were the responsibility of the Department of Trade and Industry; and previously the Board of Trade. From 5th January 1998 to 31st December 1998 they were the responsibility of the Treasury. Since 1st January 1999 they have been the responsibility of the Financial Services Authority under contract to the Treasury.
I do not think that it does any good to do anything at present other than to ensure that the inquiry which takes place is independent, as I indicated to the noble Lord, Lord Steel, and covers the whole history of the affair. With hindsight all of us could imagine that an open-ended commitment to give guaranteed annuities might be unwise. If we had realised that that was available, some of us might have taken advantage of it. But we do not all have that hindsight. The noble Lord, Lord Saatchi, does not have it and neither do I.
Lord Avebury: My Lords, has the Minister noted that a number of policyholders have cashed in their policies with a penalty of 10 per cent? How many policyholders would have to take that step to enable the remainder of the policyholders to receive the full amount of their annuities?
Lord McIntosh of Haringey: My Lords, I understand that approximately 3,500 policyholders have cashed in their policies. Even if a large number of policyholders cashed in their policies, I do not think that it is plausible that Equitable Life would become
insolvent. Equitable Life is not insolvent; its customers' policies remain valid; and it is capable of meeting its contractual obligations under any reasonable actuarial assumptions.Police Recruitment
2.52 p.m.
Lord Bradshaw asked Her Majesty's Government:
Whether they are satisfied with the present level of recruitment and retention of police officers, particularly in areas of high housing cost.
The Parliamentary Under-Secretary of State, Home Office (Lord Bassam of Brighton): My Lords, most forces are recruiting successfully, helped by the national recruitment advertising campaign. Even in the Met, which has had severe problems, numbers of recruits are rising. By the end of September 2000, total police strength was up 444 on the March 2000 figure and will increase further as the impact of the Crime Fighting Fund increases. Wastage in the police service is very low at 4.7 per cent in the year 1999-2000.
Lord Bradshaw: My Lords, I thank the Minister for that reply. As I have previously declared in the House, I am a member of the Thames Valley Police Authority. Despite the intensive and quite expensive advertising campaign, we have recruited an additional 45 officers this year; and 44 officers have left the force to transfer to other authorities. In view of the recruitment difficulties experienced around London, will the Government give urgent consideration to the payment of part-time police officers in the same way that payments are made to people serving in the Territorial Army and the retained fire service? If the Government are unwilling to go along that route, do they have any other answers to the problems facing the police authorities around London?
Lord Bassam of Brighton: My Lords, we give active consideration to all useful ideas and contributions to the debate. One or two useful ideas came from the Liberal Democrat Benches and elsewhere following the Question posed last week in another place. We shall consider carefully that proposition.
I am pleased to hear that Thames Valley Police Authority is beginning to increase the number of recruits. The facts are plain. The figure for recruitment in the year 1999-2000 was 190. For the first six months of last year there were 126 recruits. If those figures can be reasonably extrapolated, they suggest that in the full year there will be in the region of 250 new recruits. The wastage rate runs at a lower level, so the Thames Valley Police Authority will increase its numbers. That is to be welcomed.
Numbers are now going in the right direction. The service should be congratulated on that. The Government should be congratulated, too, on having the courage to launch a national recruitment
campaign. We are sensitive to all those concerns, in particular as regards the police force areas surrounding London where there have been some additional problems.
Lord Cope of Berkeley: My Lords, does the Minister appreciate that low police morale--the chairman of the Police Federation wrote about it recently in the House Magazine--is indicated by the 60 per cent increase in police resignations over the past four years?
Lord Bassam of Brighton: My Lords, it is difficult to speculate on an accurate measure of changes in levels of morale in the police service. I well remember the fall-out from the Sheehy report in the early 1990s. As a consequence of the implementation of that report, there was a massive loss of morale in the police service.
I believe that wastage rates are relevant in this debate. The wastage rate in the police force nationally stands at 4.7 per cent--exactly the same as in 1997 when the administration of which the noble Lord, Lord Cope of Berkeley, was a member left government.
Lord Tebbit: My Lords, will the Minister care to give the figures--I am sure they are engraved on his mind--of the number of police officers in service when the Government were elected and the number in service today?
Lord Bassam of Brighton: My Lords, I am happy to provide the noble Lord with those figures. They may not be engraved perfectly on my mind but I am sure that they exist. In March 1997 there were 127,158 police officers. The strength at the end of March 1999 was 126,096 officers. There has been a further decline since then. Those figures are a matter of public record.
However, the fact is that police numbers are again rising. Those figures are true. In two-thirds of police forces in England and Wales police numbers are rising because of the active approach we have adopted to recruitment. We expect that police numbers will continue to rise until 2003. That is our objective. I believe that all sides of the House should congratulate the Government on ensuring that we keep police numbers high because we believe that that is the way to retain public confidence.
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