Equitable Life

Adrian Bailey Excerpts

Thursday 11th February 2016 Commons Chamber

[Bob Blackman]

I thank my hon. Friend for that clear conclusion.

The Government allocated £1.5 billion of compensation to policyholders who had lost money. Some £45 million was then promised and delivered to the pre-1992 trapped annuitants. The Chancellor accepted at the Dispatch Box in November 2010 that the total loss was some £4.1 billion, so the shortfall in compensation is £2.6 billion.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

I congratulate the hon. Gentleman on bringing this issue forward for debate in the Chamber. I am sure that, like me, he has received representations from elderly decent people who have done the right thing throughout their life and who invested in Equitable Life in order, they thought, that they had a secure pension in the long term. The Government need to foster a savings culture and promote pensions. Does he not think that the failure to compensate people in full for what they did responsibly and in good faith risks undermining the culture that we need to develop for the future of this country?

[Bob Blackman]

When people make an investment decision, they understand that the market can go up or down. What made this scheme different from other investment choices was that it was a scam, and we should recognise it as such. It was a scandal. There is a moral duty, as hon. Members have said, on the Government to provide full compensation.

What has changed is that the Government set a time limit for the submission of new applications for compensation and said that they had to be in by 31 December 2015. Therefore, we now know the total number of people who are due compensation and can look at how the compensation scheme is operating. I have no doubt that the Minister will outline the progress that has been made in compensating individual policyholders.

I want to draw attention to two elements. A contingency fund of £100 million was deliberately set aside because, at that time, it was not known how many policyholders would need to be compensated. Also, because it has not been possible to trace a large number of policyholders—I think it is about 110,000—there has been an underspend of some £39 million. My first ask of the Minister is that that £139 million goes to the people who have suffered loss. That would not cost the Treasury anything because it has already allocated that money.