Equitable Life (Payments) Bill

Justine Greening Excerpts

Tuesday 14th September 2010 Commons Chamber

[The Economic Secretary to the Treasury (Justine Greening)]

In closing this important debate, I want to thank all Members who have participated. This has been a passionate debate, and I pay tribute in particular to the maiden speech of my hon. Friend the Member for Congleton (Fiona Bruce). I thought she did a fantastic job. She was right that she has some special shoes to fill, but we got a flavour from her tonight that showed that she will fill those shoes very ably. I congratulate her on that maiden speech.

There have been 43 speakers in today’s debate, the overwhelming majority of whom sit on the Government Benches. Most Opposition Members realise that their Government thoroughly let down the members of Equitable Life, and we agree with that. We think that this saga has gone on for way too long. It has affected all our constituents, including my own.

We managed to get out of those on the Opposition Front Bench that—I think—they support the findings of the Chadwick report. If they disagree with that, perhaps they would like to intervene. It is quite important to make the point about how much they would have been willing to pay out as compensation to Equitable Life policyholders. We can take it from their silence that the Chadwick report was commissioned by the previous Government and is now accepted by Labour’s Front Benchers in opposition. It shows that, in spite of the warm words, within two weeks of getting the Chadwick report they would have been quite happy to set up payments much lower than many members of EMAG were hoping for. It is fair to put that into context: that followed 13 years of zero payments from the previous Government.

We have decided to take a different approach, which has been guided by three core principles: fairness, swiftness and transparency. In fact, my hon. Friends the Members for Sittingbourne and Sheppey (Gordon Henderson), for Worcester (Mr Walker), for Wycombe (Steve Baker) and for Macclesfield (David Rutley), as well as the hon. Member for Llanelli (Nia Griffith), all mentioned those principles, which we share. Indeed, my hon. Friend the Member for Oxford West and Abingdon (Nicola Blackwood) made a speech about the need for transparency, and we agree with that. That is why we have tried to make the process as transparent as possible—to make sure that all the interested parties know what is driving the process and so that they have the opportunity to contribute towards our thinking.

Since coming to office, the coalition Government have clearly shown that reaching a resolution for Equitable Life policyholders is a real priority. I assure hon. Members on both sides of the House who seem to be under the impression that there is some delay—those of us who have been in the House for a longer time have been working alongside our Equitable Life constituents who have suffered losses for many years now—that this delay is to make sure that there is no more delay. We are going through this process to ensure that the payments we are able to make are fair and transparent and so that there is some genuine compensation for the people who have suffered.

In our programme for government, we pledged to

“implement the Parliamentary and Health Ombudsman’s recommendation to make fair and transparent payments to Equitable Life policy holders”,

and we have already taken the first steps towards honouring that pledge. We have established the Independent Commission on Equitable Life Payments, which is assessing the best way of allocating payments to policyholders. For those Members who asked how payments will be allocated, let me be clear: the independent commission will report in January on its assessment of the best and fairest way of allocating payments, including, as the hon. Member for Strangford (Jim Shannon) mentioned, to the relatives of people who are now deceased. It is one of the greatest tragedies of this whole saga that some people simply did not live to get their compensation payments, but this Government will make sure that their families nevertheless get redress.

In spite of what we have just heard from the Opposition spokesman, we are introducing a fundamental part of the process by which we can make compensation payments. The Equitable Life (Payments) Bill—that title would have been something of an oxymoron under the previous Government—was announced as part of the Queen’s Speech and we can all welcome it as a key step along the path towards making the payments that have not been made for the past decade under the previous Government.

Several Members, including the hon. Member for Angus (Mr Weir), have talked about having a clear timetable, so let me be absolutely clear: we want to start making the first payments to policyholders by the middle of next year. Today is all about having the chance to take a further step towards reaching a resolution. Our passing the Bill will enable policyholders to receive payments irrespective of decisions about exactly how the future scheme will look or the value of payments made.

I remind hon. Members across the House that the setting up of an independent commission was a key point in the ombudsman’s report. I think we all recognise that that independence is critical and we need to allow the independent commission to get on with its work, to consider the various representations, including the Chadwick report, and to decide how best we can ensure that payments are fair. There are many different views about these difficult issues and, although those key issues are not the subject of the Bill, they are important when deciding how we should progress.

Members across the House have raised a number of important issues which I will try briefly to address in the time that is left. First, let me reiterate the timetable and the next steps. As I have said, the independent commission has started its work. My hon. Friend the Financial Secretary, who should be congratulated on the pace at which he has brought forward the various steps we are taking, will provide a response to Sir John Chadwick’s report at the time of the spending review on 20 October. At that stage, it will also become clear how much it will be affordable to put into the scheme. The commission will then look at how it will all work and it has been asked to report at the end of January. Following that, we will set about putting its recommendations into action. As I have said, our ambition is to have made the first payments by the middle of 2011.

[Frank Dobson]

I gave the Minister’s colleague the opportunity to answer this question: will the Government proceed with the scheme put forward by the commission if EMAG says it should be rejected?

[Justine Greening]

I know that my hon. Friend the Financial Secretary has met representatives of EMAG over the past few days. EMAG will have the chance over the coming weeks to make representations to the commission about what it considers the fairest way to allocate payments. The independent commission must be independent of everybody and must be allowed to get on with its job. That is what we propose to let it do. We should not prejudge it. We should allow it to proceed with the work that has been set out. As I said, the approach recommended by the ombudsman in her report was that the setting up of the scheme should be looked at independently. We have decided to follow her recommendation. It is important that that should now happen.

Members asked about an appeals process. That is a fair question. We are still considering the details of how such a process might work. I am sure that the independent commission will also consider how that could become part of the process. The key requirement is that any appeals process is independent of the initial assessment of an individual’s claim.

One of the other issues that has come up is why we have not put more detail about the scheme in the Bill. Although that it a fair question, it prejudges what the independent commission might propose. As I have said a number of times, we need to allow it to get on with its work so that it can propose the design of the scheme. It is wrong to prejudge that by baking into legislation steps that the commission may consider unnecessary.

[Mr Weir]

When the Minister was introducing the Bill, I asked him whether the details of the scheme would be debated on the Floor of the House. Those details are important. We all understand that this is an enabling Bill, but we must have the opportunity to examine the scheme in more detail.

--- Later in debate ---

[Justine Greening]

We will make sure that when the document from the independent commission is published and the final proposal emerges for how the scheme should work, Parliament will get the chance to hold the Government to account for it. We will consider the best way for that to happen. There is no doubt that today was a good opportunity for Members across the House to air their views on the key aspects of any scheme. I encourage them to continue doing that. One of the questions that we heard from those on the Government Benches was how Members could continue to be part of the process of reaching a resolution. I urge Members to continue to have their say and to represent their constituents in the way that many did so passionately today.

On the issue of delayed payments, aiming to make an interim payment and a more substantial payment at a later date would prolong the process unnecessarily. What we need to do now is reach a solution for the Equitable Life policyholders who have suffered, so that they know where they stand and get full redress according to what we are able to pay them. Spreading payments over many years would greatly increase complexity, not to mention administration costs. It might also leave most policyholders in limbo about how much they would receive in financial settlement.

Many Members are concerned about the delays that have already occurred. We want to minimise the time before which people know what their final settlement will be, not least because, as we have heard from across the House, many Equitable Life policyholders are dying while they wait for that to happen.

It was fair to make the point about tax and welfare, and we have included the relevant clause in the Bill precisely because we want to look at how we might handle the tax situation in relation to any future compensation payments to Equitable Life policyholders. We have included it precisely to give ourselves some flexibility. I have no doubt that Opposition Front Benchers will want to return to the matter and debate it in Committee, and we will be very happy to hear what further remarks they have to make. However, in order really to provide some reassurance, I must say that we have structured the Bill as we have because we do not want any legislative impediments to making the settlement that we want to make. With this Bill, we have tried to ensure that we have the powers that we may need, so that we do not suddenly reach the point at which an issue arises and find out that we have to return to the Chamber to secure further powers that further waste time. We have decided to get on with the matter.

A number of Members, including the hon. Member for Leeds North East (Mr Hamilton), who I cannot see in his seat, and my hon. Friend the Member for Halesowen and Rowley Regis (James Morris), talked about a moral obligation to make payments, and we agree that now is the time to take action. We very much hope that over the coming weeks we will secure cross-party support, and I am pleased that the Opposition will not divide the House tonight. That would have been a real mistake and a continuing tragedy for Equitable Life policyholders.

Inside Parliament and outside, the Government are committed to continuing their programme of extensive engagement on the issues that have been raised in today’s debate, and on the issues that we know we will have to address if we are to reach a fair resolution.

As I wrap up this debate, I should like to highlight the work of the various action groups that have campaigned vigorously on behalf of policyholders, in particular the members of the Equitable Members Action Group and the Equitable Life Trapped Annuitants who have played their role in ensuring that some of the worst affected policyholders have had their voices heard. The Government have held meetings with representatives of both parties and are now carefully considering their views as part of the wider resolution process. We know that we need to get the matter right, and I want to stress that at this point no final decisions have been made about the size of the future scheme. We want to continue to gather the views of a wide range of parties before any plans are set in stone.

I know that Members from all parts of the House have a great deal of respect for the parliamentary ombudsman; we heard that in today’s debate. My hon. Friend the Financial Secretary met her this week to discuss the issues, and her input has been vital. We recognise her concerns and share her desire to achieve a resolution that is fair for policyholders and for the taxpayer. The resolution must not only achieve justice for policyholders but, as the ombudsman herself pointed out,

“consider the potential impact on the public purse of any payment of compensation…and…the opportunity costs elsewhere through the diversion of resources.”

There are many important conversations to be had about how the scheme will operate, and about the size of the payments that will be made to policyholders, but there is no doubt that policyholders have waited too long for a conclusion to the saga, so I for one do not want to see the process unnecessarily extended, and nor do the coalition Government. We take the maladministration of Equitable Life very seriously; we have highlighted in our programme for government that resolving the issue is a real priority; and we have taken a number of steps towards achieving a resolution. By passing the Bill, the House can now show how important it regards the issue, and that its Members recognise the need to act swiftly on the matter.

I fully sympathise with the plight of policyholders, who have waited for more than a decade for justice, but justice will be achieved only by passing this important piece of legislation, so I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Equitable Life (payments) Bill (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Equitable Life (Payments) Bill:

Committal

1. The Bill shall be committed to a Committee of the whole House.

Proceedings in Committee, on consideration and on Third Reading

2. Proceedings in Committee, any proceedings on consideration and proceedings on Third Reading shall be completed at one day’s sitting.

3. Proceedings in Committee and any proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.

4. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion one hour after the commencement of those proceedings or at the moment of interruption on that day, whichever is earlier.

5. Standing Order No. 83B (Programming committees) shall not apply to proceedings on the Bill in Committee and on consideration and Third Reading.—(Miss Chloe Smith.)

Question agreed to.

Equitable Life (Payments) Bill (Money)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Equitable Life (Payments) Bill, it is expedient to authorise the payment out of money provided by Parliament of any expenditure incurred by the Treasury or a government department by virtue of the Act.—(Miss Chloe Smith.)

Question agreed to.