Equitable Life Policyholders: Compensation

Jim Shannon Excerpts

Thursday 22nd October 2026 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

It is a real pleasure to serve under your chairmanship, Ms Furniss. A big thank you to the hon. Member for Leeds North East (Fabian Hamilton) for setting the scene incredibly well, as he always does in subject matters that he brings to Westminster Hall and the Chamber. He has been very much at the fore in leading the campaign for this. He clearly set out the injustice suffered by Equitable Life policyholders and made a compelling case for proper compensation. I do not intend to repeat everything that the hon. Gentleman said, but the core argument underlying this unresolved issue is profoundly important.

When the state accepts responsibility for a mistake, and acknowledges the financial losses flowing from it, the state should make good in full. I fully recognise that, as was the case in 2010, the state of the public finances is not as we would wish, and the competing demands on the Government are legion. But there are some principles that we should uphold at all cost. I hope that the Government will set out a path to ensure proper justice and fairness for those people affected, as they have rightly done in other important cases.

I am always pleased to see the Minister in his place, and I hope that he can give us the answers and reassurance that we seek on behalf of our constituents. I will focus on one specific issue that I believe requires immediate attention and answers from the Minister: the apparent underspend in the existing compensation scheme and whether funds originally set aside to compensate victims are being retained when they could have been used to provide the redress.

At the heart of this is a simple question. If the Government have acknowledged that people suffered losses because of serious regulatory maladministration, and if money was allocated to compensate those people but it will not be spent for a particular cohort or purpose, should that money return to the Treasury or should it go to the people who were wronged? I suggest the latter. This is not an abstract accounting question; it is one of fairness and public accountability.

I will start with the figures: in 2010, the Government allocated £1.5 billion to compensate victims of the Equitable Life scandal. That allocation was divided into three principal elements: £625 million for the with-profits annuitants via annual payments for life; £100 million held by the Treasury as a contingency in case those annuitants lived longer than expected; and £775 million for other policyholders. The £625 million allocation for the with-profits annuitants was not the total amount of cash expected to be paid over the lifetime of the scheme, it was a discounted valuation of future payments. EMAG has established that the forecast cash cost of those payments was £836 million, extending to 2050.

The distinction clearly matters, because Government must be transparent about what was committed when, what the forecast spend was and what is now expected to be required. We always thank the Library for the information it gives us, and its briefing on this says:

“The scheme was set up in 2010 to make payments to eligible policyholders who had suffered a ‘relative loss’ (meaning the policyholder would receive less under the Equitable Life policy than they would have if they had invested with a different company).”

In his intervention, the hon. Member for Bishop Auckland (Dr Rushworth) referred to the fact that people saw Equitable Life and said, “This is the one to invest your money in”. But that did not work out, and it is clear that that has been the issue right down the line.

The EMAG figures also state that approximately £171 million of compensation funding was expected to be unspent as of 31 May 2025. There are three clear elements to that figure. First, approximately £47 million is from the lower-than-forecast annual payments to the with-profits annuitants. Secondly, a £100 million contingency was held back in case those annuitants lived longer than expected; the fact that annual payments to annuitants are significantly below forecast strongly suggests that that contingency is no longer needed. Thirdly, approximately £24 million of the £775 million allocated for other policyholders was unspent—for what reasons, it is unclear. Answers are needed, and I would like to see answers on that unspent figure if possible.

I appreciate that the Minister may wish to distinguish between money that has not yet been spent, money reserved for future liabilities and money that can genuinely be released. That is a legitimate distinction—I understand that—but it makes the need for transparent accounting all the more important. I am sure that the Minister will give us the answers we are seeking. The Government must explain to those affected precisely how much was forecast to be spent, how much has actually been spent and what liabilities are thought to remain outstanding. I must put this on the record on behalf of my constituents: victims of this scandal are concerned that, as well as their having to bear a cut of their acknowledged losses of 78%, the Treasury may be trying to pocket, through clever accounting tricks, more than 10% of the limited compensation that was allocated. I believe that that is a question that must be asked, and the Minister has to answer it on the record.

Can the Minister confirm that the £625 million allocation for the with-profits annuitants was calculated on a discounted basis? Can he also confirm that at the outset of the compensation scheme, cash payments to that cohort were forecast to total some £836 million, so the total cash spend under the scheme was forecast to be around £1.7 billion? If those figures are correct—I understand that they are based on Government-published documents, ministerial correspondence and freedom of information requests that are on record, so the Government have to acknowledge that they are—I ask the Minister for an explanation as to why those funds cannot be redirected towards further compensation right now, because they should be. If they are not correct, we need to understand how and why, although I suspect that as Government figures, they are correct.

The victims of maladministration deserve to know whether the Government are holding on to money that could be put to the use that Parliament intended when legislating for the Equitable Life payment scheme. If the Government dispute the figures, I ask that they publish a detailed breakdown and analysis explaining the difference, which will give us all a chance to come back on that. I will conclude on this point, as I am conscious that others want to speak. If the £100 million contingency remains necessary to cover longevity risk, let us see the evidence. If money can be released, I ask the Minister to set out a plan for doing so. I hope that will be the answer to our queries today. If it is, it would be a massive step forward. I thank the Government for recognising that my constituents need help, but more needs to be done right now, and I look forward to hearing from the Minister how that can be accomplished.

[Several hon. Members rose—]