Equitable Life

Drew Hendry Excerpts

Thursday 31st January 2019 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Member for Harrow East (Bob Blackman) for setting the scene, and the hon. Member for Leeds North East (Fabian Hamilton), who is not in his place, for his help in bringing this matter to the House for consideration. It is always a pleasure to follow the hon. Member for Torbay (Kevin Foster). He usually sweeps up on the Government side of the Chamber and I often do the same on the Opposition side, but we often agree. And here we are again agreeing on an issue that he is interested in as the Member for Torbay, and that I am interested in as the Member for Strangford.

We all know the background to this story because we have spoken about it many times, but that does not take away one bit from the fact that, as the hon. Member for Harrow East said, it is as shocking today as it was back then. Like other hon. Members, I believe that we should honour the obligation and the pledge. The hon. Gentleman said that very clearly in his introduction. Well, I will tell the House something: I am also here to ask my Minister, of my Government, to honour that pledge. We look to the Minister for the satisfaction that our constituents need, and that is why each and every Member here is present today.



Let me gently break the issue down one more time, in the hope that the reality of the situation will provoke a greater scale of action some 20 years later. Let us remember that the Equitable Life victims are typically retired nurses, teachers, civil servants, factory workers, shop workers and small business owners who had no choice but to set up a personal pension. Before I was elected to this place in 2010, I was a Member of the Legislative Assembly in Northern Ireland, and one issue that came to my attention then was that of the Equitable Life policyholders, especially as there are dozens in my Strangford constituency. Unfortunately, some of them have passed on, so they never had the satisfaction of seeing this being addressed. I am here to uphold the policies of the people who are still living and to express some disquiet about those who have not had that satisfaction. With all our busyness as Assembly Members and MPs, I tried to address this matter along with many other Members, because this is not just Jim Shannon; this is everybody together—Members of all parties, on both sides of the Chamber—recognising that a wrong has to be righted.

There are people who have worked hard and worked away to secure their retirement, but to date almost 1 million pension savers have received less than a quarter—some 22%—of the losses they incurred when the Equitable Life Assurance Society nearly collapsed. Just before I was elected to this place in 2010, I was contacted by people in my constituency who had been stung by the Equitable Life scandal, and they all pointed to the fact that the parliamentary ombudsman clearly concluded in 2008 that the victims’ loss was directly attributable to a decade of serious, serial regulatory maladministration. In fact, just last year the Treasury admitted that it was culpable for the scandal. That is the story, so we look again to the Minister for his response.

In 2010, I can well remember the Government accepting that victims’ losses amounted to £4.3 billion, and I was disappointed at the allocation of £1.5 billion for compensation—a decision that was justified on the basis of the perilous state of the public finances, as other Members have mentioned. I was a member of the APPG that secured a small victory in 2010 with the passage of the Equitable Life (Payments) Act 2010 and the establishment of a scheme to pay limited compensation to qualifying Equitable Life members. But this payment was not enough, and the people who are missing out are the most vulnerable. The compensation amounted to only 22.4% of the relative losses of 895,000 traced pension savers. This was the sum left after compensating the people with annuities who had already retired. Ensuring that this large cohort of pension savers receive the unpaid balance of the full 100% of their relative losses would cost £2.6 billion. May I suggest that, when our finances are better, this small figure should be considered in order to bring the situation to a conclusion?

In the 2013 Budget, a cohort of 9,200 with-profits annuitants who took out contracts before 1992 received only £5,000 each, or £10,000 if they were eligible for pension credit. I stand today to support the call for these victims, who are the oldest and most vulnerable, to be afforded the same treatment as their younger counterparts, who bought their annuities later. We have a duty to deliver this. It would cost an estimated £100 million and could be funded today from the unspent £140 million in the Treasury’s coffers from the current scheme. If the money is there, let us do what is right. It seems like simple mathematics to me.

I am well known as someone who does not advocate borrowing like there is no tomorrow. I have a bit of Ulster Scots in me—every pound’s a prisoner. We are very careful in what we do, and that was instilled in me by my mum and dad.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

Only the good book.

[Jim Shannon]

Absolutely. Joking aside, the mathematics are plain. I understand that it is my children and grandchildren who will be paying off our debts for their whole lives, and I am supportive of efforts to reduce the deficit, although this cannot be done at the expense of those who are vulnerable and ill. More focus should be put on the higher rate tax bracket, but that is a debate for another day.

We have brought down the deficit and are no longer in a position of a financial crisis. I thank the Government for that because they worked hard to make it happen, and we support them—well done. Therefore, there could well be a time when we can do what is right by every person affected by the maladministration.

A briefing provided to me has outlined the fact that Equitable Life victims were pushed to one side as a direct consequence of the timing of the 2008 financial crisis, which saw the UK’s banking corporations bailed out while hard-working and responsible pension savers took the hit. Now that the Government have sold their interest in Lloyds and are reducing their stake in RBS, it would be fitting to use a small portion of the money recouped to finally settle the acknowledged debt to Equitable Life victims. There is a clear cross-party consensus, from right hon. and hon. Members on both sides of the Chamber who have a real heart for their constituents—for Equitable Life members who have policies that need to be delivered. It is so important that we honour that pledge, but to be able to do this we must be able to retain the necessary information.

Like other Members, I ask the City Minister to guarantee that Her Majesty’s Treasury and other relevant agencies will retain indefinitely the necessary data—addresses, policy numbers and amounts paid—to make the further future repayments that we are calling for. If he were to provide this assurance on the Floor of the House, it would provide a great deal of comfort to Equitable Life victims that there is hope for the future. I say very gently to everyone here that our duty is to deliver for our constituents. We are in this House because they voted for us, and we are here today to put forward their case. It is a collective decision of all Members present to request that these things happen.

Time has beaten me but I must stress one last time, on behalf of the Democratic Unionist party, that these people are victims. We have outlined wrongdoings and maladministration, and have paid out a small amount of money that is due. If we are in the position to do more, we must ensure that we do. But, more importantly, we must send the message that we are actually willing to do that; that it what it is really all about.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

Today we have heard a powerful and consistent voice across this Chamber to end this scandal. I pay tribute to the hon. Member for Harrow East (Bob Blackman) for bringing this debate to the House. Like all former councillors, he cut straight to the heart of the matter and how it affects people’s daily lives, and he did so with eloquence and controlled anger. He is right to be angry on behalf of the people who have been affected by this scandal. He laid out the history and pointed out that it is a Ponzi scheme, and he is right that it has been a web of greed and exploitation leading people to this point. I add my voice to his clamour for the Government to honour, in full, the support needed by the victims, and I back his three asks in getting past this situation.

The hon. Member for Leeds North East (Fabian Hamilton), who is not in his place, talked about the life-changing negative effects of this issue, and has been a constant champion of the victims. [Interruption.] I am glad that he returned in time to hear me say that. He mentioned the report that described a decade of regulatory failure. It gave a well-informed exposition of the issue, and mentioned two shocking statistics—that 100,000 cannot be traced and over 15,000 people have died. What a disgrace.

The right hon. Member for New Forest West (Sir Desmond Swayne) and the hon. Member for Torbay (Kevin Foster) asked how people having to save for their retirement can have confidence in the system when this matter has been allowed to drag on in this way and left in this state of affairs. They also, quite rightly, pointed out that this is creating a framework for hostility towards pension saving. The hon. Member for North Tyneside (Mary Glindon) underlined those points. The right hon. Member for Haltemprice and Howden (Mr Davis), who is no longer in his place, said that it was a failure of Government to have dealt only partly with this. He should know. He is an expert in failures of Government, so we should listen to him.

The hon. Member for Blackpool South (Gordon Marsden) said that there was a “Bleak House”-type history to this, and, as many others did subsequently, talked about the opportunity to get some of the money back on the RBS shares as a way of settling this scandal for people. That should be taken on board. The hon. Member for Strangford (Jim Shannon) talked about the choices that Governments make. As a DUP MP, he knows about the choices that this Government make in terms of spending their money. There are lessons to be learned by Government Front Benchers on this. The hon. Member for Erewash (Maggie Throup) also underlined some of the things that need to be done by the Government, so I hope that the ministerial earplugs were left behind before the Minister came into the Chamber today.

Let us be clear: the only thing equitable in this whole saga is the name “Equitable”; everything else about it has been rotten. This scandal has simply been allowed to continue beyond any reasonable timeframe. So as Equitable Life is finally wound up, the UK must now, belatedly, ensure that justice is delivered for those affected by this scandal. That means dealing with the issue of compensation, and that can only be done when the loss is fully quantified by negotiating the correct sums involved. The EMAG website states that the £1.5 billion covers only 20% of the losses incurred and argues that there should be Government action to pay full compensation. At the moment, there is a huge gap between what is required and what the Government have set aside in their £500 million fund. I ask the Minister: when will the compensation be fully agreed?

In June 2018, it was announced that Equitable Life would finally be shutting down, with a surprise £6,900-a-head windfall for the last remaining policyholders, while about 261,000 people will have a share in a £1.8 billion pay-out following the transfer of its business, Reliance Life, through unlocked capital. That is good news, perhaps, for those who have hung around, but the 800,000 former policyholders—the vast majority—who were shifted to other providers or encouraged to cash in and cut their losses will get nothing from that. EMAG says that policyholders who left Equitable Life will still remain £2.5 billion out of pocket. As Paul Braithwaite of EMAG said:

“Equitable has crafted an elegant termination strategy for the small number of remaining members, but it will be no benefit to the vast majority of victims. If the remaining members vote in favour of this deal, they are likely to come out ahead. But for every one of them, there are five who left the society who are much worse off.”

That vote, as we know, will go ahead in the coming months.

The UK Government must now finally deal with the outstanding injustices felt by these aggrieved policyholders. Those people saved throughout their lives. They were encouraged—told—to do so by successive Governments in this place. They lost the savings they had entrusted to those whom the Government, in turn, had entrusted to look after them. The Government have not only failed them—they have failed to treat this with the due urgency it requires, or, indeed, the compassion it requires. They failed to compensate them, and that must be put right now. In doing so, the Government must consider the deep impact that scandals such as Equitable Life have on public confidence in pension schemes, and how they could end up actually deterring those who should be saving for their future needs. I therefore say to the Minister: “Let us make a commitment. Let us hear that from you to end the scandal, to belatedly make amends, to make it right, to make it fair, and, with no irony intended, to make it equitable for all those who have suffered.”

--- Later in debate ---

[Bob Blackman]

With the leave of the House, I would like to thank the 10 right hon. and hon. Members who have spoken in the debate and the numerous other colleagues who made interventions. I regard the Minister as an honourable Friend, and I understand that he has to maintain a solid line from the Treasury and the Chancellor. That is clearly his job, but the 1 million people out there who are victims of this scandal will be disappointed with what my hon. Friend has had to say. The reality is that we have a debt of honour. I believe that we should repay that debt. It can be done over a period, not necessarily all at once, as we have said during the debate.

[Drew Hendry]

Will the hon. Gentleman give way?

[Bob Blackman (Harrow East) (Con)]

I am summing up, and I have to keep very tightly to time.

I am grateful for all the praise that has been heaped on me and the hon. Member for Leeds North East (Fabian Hamilton) for the campaign that we have continued to run. I would much rather that the Government honoured the commitment that we all made in 2010 to deliver full compensation for the victims of the scandal. During the debate, our membership of the all-party parliamentary group has increased yet again. We now have 238 members, and we have been joined by no less a figure than the right hon. Member for Doncaster North (Edward Miliband), the former leader of the Labour party.

If the Government do not wake up to the fact that, on a cross-Bench basis, we are determined to get justice for Equitable Life policyholders, they may find that if they do not do the right thing it will be forced upon them.

Question put and agreed to.

Resolved,

That this House welcomes the Government’s acceptance in full of the Parliamentary Ombudsman’s findings in relation to its maladministration with regard to Equitable Life; notes that the Parliamentary Ombudsman recommended that policy holders should be put back in the position they would have been in had maladministration not occurred; further notes that the overwhelming majority of victims have only received partial compensation compared to the confirmed losses directly attributed to regulatory failures; and calls on the Government to make a commitment to provide full compensation to victims of the scandal with the end of austerity now in sight.