Equitable Life (Payments) Bill

Margot James Excerpts

Tuesday 14th September 2010 Commons Chamber

[Mr Hoban]

I should not have given way to the hon. Gentleman. He has identified the problem. The previous Government could have dealt with the matter, but it is left to the present Government. We have to sort out not just this mess, but the mess that Labour left behind in the state of the public finances. That is the problem that we have to face in dealing with the Equitable Life issue.

[Margot James (Stourbridge) (Con)]

Might the state of the public finances guide the Chancellor in his autumn statement on the public spending review to advance a compensation pot that would be in line with the rest of the Government’s overview of public spending reductions, that being of the order of 25% for the majority of Departments, and nothing to do with the 90% reduction advanced by the Chadwick report?

[Mr Hoban]

My hon. Friend will recognise that the spending review is not simply a linear process. Some projects will be scrapped completely; some will suffer a small cut. We need to look at each case on its merits, rather than assume that an across-the-board measure will apply to all spending bids in the spending review.

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[Stephen Timms]

Sir John has, in fact, reported. He did so in July. That was rather later than he was going to report; he would have reported in May, and my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) said that we would have produced a scheme within two weeks. As I have said, our view would have been that we should proceed as we had intended, and as we set out before the election, on the basis of the report that we commissioned.

The new Government delayed publication of the report until July, and we still do not know what the scheme will be. We know almost nothing about the timetable, but I am afraid it will not be what EMAG has been demanding, which it thought current Ministers were signing up to when they signed all those pledges. A great many people feel very let down indeed.

[Margot James]

The ombudsman has found much to welcome in the Bill and this Government’s proposals, such as the independent commission, the compensation scheme, the enabling mechanisms to be set up, the transparency and the progress made. She has welcomed that. Are not Opposition Members therefore getting ahead of themselves in writing off what the Government are proposing? It is one thing for long-suffering members of EMAG to be in that frame of mind because they have been let down so many times, but Opposition Members are getting ahead of themselves. The compensation pot has not yet been fixed, and we are all keen to see the maximum allowance made within the context of the state of the public finances. Opposition Members are being far too negative.

[Stephen Timms]

The ombudsman has said that the Chadwick approach is no longer relevant because the Government have fully accepted her recommendation, yet the Government are saying that they accept that recommendation but that Chadwick is the building block for the future scheme. There is a fundamental contradiction in the Government’s policy.

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[Tracey Crouch (Chatham and Aylesford) (Con)]

As requested, I shall keep my contribution short. First, I congratulate my hon. Friend the Member for Congleton (Fiona Bruce) on her excellent maiden speech, which was made during an extremely important debate for her and other Members’ constituents.

I have listened to the debate with considerable interest and should say at the very outset that I congratulate the Minister, who has done more for Equitable Life victims in his first 10 weeks at the Treasury than the last Government did in 10 years. The Equitable Life saga is comparable to an epic Shakespearean tragedy; the only difference is that even in Shakespearean tragedies there is an element of comedy. There is nothing funny about the Equitable Life story—it is a sad, tragic and complex affair, littered with incompetence and failure, but most of all with personal loss and hardship.

My constituency is no different from any other represented in the House; many people there are affected by the society’s failure. I am told that there were 470 Equitable Life policyholders in Chatham and Aylesford at the time of the collapse. That figure, however, accounts only for those constituents who held Equitable Life policies solely; it does not incorporate those who made additional voluntary contributions to their pensions. The revised figure, including those who made additional voluntary contributions, could be up to three times greater.

Unsurprisingly, I, like many Members here, have been contacted by policyholders, some of whom have lost tens of thousands of pounds and are now suffering financially as a consequence. The overwhelming feeling among policyholders in my constituency is one of injustice. They feel let down enormously by the last Government, who showed very little interest in trying to compensate their losses at a time when, to be frank, full compensation could have been afforded. Now, with the coffers bare, it is up to the coalition Government to try to provide fair and transparent payments.

Although I feel for the Minister, who is in charge of conjuring up money that does not exist, it is the victims in my constituency for whom I reserve my sympathy. They are the ones who have lost their savings.

[Margot James]

Will my hon. Friend give way?

[Tracey Crouch]

If my hon. Friend does not mind, I shall press on, as time is short.

Those victims put their faith in a financial institution to look after their money and in a regulatory system to protect it, but both failed them and they now face a very different retirement from what they had planned. I have always felt that there was an assumption that every person who had invested in Equitable Life was wealthy and that therefore their loss did not matter so much. That is simply not true. I have had letters and e-mails from people who were never rich, but had just sensibly put money aside, as Governments want them to, on a guarantee that in the end turned out not to be worth the paper that it was written on.

Sadly, it is estimated that nationally 7% of Equitable Life policyholders have passed away since the collapse. Applied to my constituency, that statistic equates to 33 policyholders. Thirty-three does not sound like a large number, but it is important to remember that as a direct result of the previous Government’s wilful inaction, 33 people have not lived to receive compensation for their loss. I welcome the Minister’s previous comments on the provision of justice for the deceased and I urge him to ensure that it, too, is fair and transparent, for the sake of the surviving family members.

The Bill is, I appreciate, one that enables the technical provisions that, fundamentally, will provide compensation to those who lost money in the collapse of Equitable Life. It does not provide a figure for compensation. To be honest, I do not like that, although I understand it. However, I want to take this opportunity to urge the Minister to be as generous and creative as he can possibly be on this matter. The country might be bankrupt right now, and full compensation is impossible. But in the future, when the economy has returned to full health, further payouts could be authorised. I am not asking him to decide today on future payouts; I merely want him not to close the door on the suggestion.

I congratulate the Minister on his progress. I will be supporting the Bill in the House tonight. I simply ask him to remember the human cost of this tragedy and to do all he can to ensure that fair and transparent compensation is exactly that.