Equitable Life (Payments) Bill

Andrea Leadsom Excerpts

Tuesday 14th September 2010 Commons Chamber

[Andrea Leadsom (South Northamptonshire) (Con)]

I, too, congratulate the Government on getting to this issue so quickly, in line with the promise that we made before the general election. Will the Minister comment on the case of two of my constituents who between them had an annuity of about £11,000 a year? It is now worth roughly £4,000 a year and will continue to reduce; that is a loss of more than 55%. I should be grateful for the Minister’s comments on what I am to say to them.

[Mr Hoban]

I am not familiar with the policies held by every single Equitable Life policyholder. There are 1 million policyholders with 1.5 million policies, and 30 million policy transactions went through during the period concerned. That is why it is important that Towers Watson, which has provided actuarial advice to the Treasury, should look at the calculation of losses.

I suspect that my hon. Friend’s constituents may be part of one group for whom there is a great deal of sympathy. They are the so-called “trapped annuitants”—people who bought with-profits annuities policies. I have raised that topic with Towers Watson, to try to understand the losses that people in that category of policyholder have suffered, so we can understand the right approach in terms of compensation. Many people from that group believe that they have suffered quite significant losses, and we need to ensure whether that is the case. At the moment, I am trying to do some more work to establish that.

--- Later in debate ---

[Andrea Leadsom (South Northamptonshire) (Con)]

I am very conscious that I have only two minutes in which to speak. Let me begin by adding to the voices of many who have expressed their sorrow that this has happened. For so many years since the early 1990s there has been an injustice needing to be rectified. I pay tribute to the Government for their determination to do just that, in short order, and in particular for their commitment to a transparent, independent and clearly timetabled process.

Those developments are extremely positive, and I am very proud of them. Nevertheless, like many other Members, I have many constituents who are in dire straits as a result of the loss of their Equitable Life annuities, and I believe that we must take every possible step to put that right. I am well aware that we have been left in an impossible position by the last Government, with an economy that is on its knees and no money to spend in a discretionary way, and that the need to take into account the impact on the public purse is therefore very great. I have no doubt that some tough decisions will have to be made in the comprehensive spending review.

So much has already been said about justice and the need to put things right for Equitable Life policyholders that I do not need to add to it, but as a banker myself, I want to stress the importance of encouraging people to save. The last Government managed to destroy what was one of the best pension schemes in Europe, which was very strong and is now very weak. Not enough people in this country are saving for their pensions. We need to encourage people to have the confidence to save for their retirement, and that has never been more important than it is now.

I urge Ministers to take account of the fact that the country will be watching the results of this debate about compensation for Equitable Life policyholders, and will be expecting justice to be seen to be done.