Equitable Life Policyholders: Compensation

Debate between Peter Dowd and Lord Jackson of Peterborough

Thursday 23rd March 2017 Commons Chamber

[Peter Dowd]

I have no doubt whatever that these people are all our people.

My hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) talked about cross-party support and about the appropriate action that the Government need to take. He said that policyholders were still being short-changed. He, too, talked about the restoration of trust and confidence in the system, and referred to the WASPI women. He said that the erosion of confidence could cost more in the long run, and that justice delayed was justice denied. The hon. Member for East Renfrewshire (Kirsten Oswald) talked about her now elderly constituents who are in distress, and about the failed and toothless regulatory system. That saga cannot continue. The hon. Member for Strangford (Jim Shannon) talked about his constituency and looked to the Minister for solutions, saying that people are justified in their pursuance of full compensation.

[Mr Stewart Jackson (Peterborough) (Con)]

The hon. Gentleman is making a characteristically erudite speech. Does he agree with me, and possibly the hon. Member for Angus (Mike Weir), that it is important to redouble our efforts at the opposite end of the spectrum? It is imperative that young people receive financial education so that they understand the long-term benefits of securing a long-term and sustainable pension income.

[Peter Dowd]

That is an excellent suggestion—I would expect nothing less from the hon. Gentleman—but if people do take out a pension, they must have confidence in the system.

The Minister has heard the clear and unambiguous views of many Members from across the Chamber. The Opposition will not make any cheap party political points on this matter. We give credit where credit is due to the coalition Government for setting aside £1.5 billion in a compensation fund for those who invested in the Equitable Life Assurance Society, most of which was invested in pensions. The compensation scheme was set to close in 2014, but the previous Chancellor extended it to December 2015, with the fund set to close mid-2016. EMAG—the group that represents the policyholders—has called since February 2016 for £2.7 billion of additional compensation, arguing that that is the shortfall, and many Members have made the same point today.

The Conservatives committed in their 2010 manifesto to make fair and transparent payments to Equitable Life policyholders, and the debate continues about what that amount should be, but £4 billion is the generally accepted figure. In the previous debate on this subject, the then Minister, the hon. Member for East Hampshire (Damian Hinds), stated:

“The improvements our economy has made since 2010 are greatly to be welcomed and show that the Government’s long-term economic plan is working, but the plan is not complete and we have some way to go to fully restore the public finances.”—[Official Report, 11 February 2016; Vol. 605, c. 1186.]

The current Minister will also note that. The Chadwick report of July 2010 concluded that relative loss should be defined as those who have suffered financial loss, pointing out that the Ombudsman recognised that losses in policy values were only partly due to maladministration and that the backdrop to cuts in policy values was a sharp fall in world stock markets that all life insurance companies were forced to respond to. Similarly, the report also argued that compensation should be assessed on the cost of maladministration as opposed to the size of investor losses. However, we are politicians and we can make different decisions and choices, and the Minister has been asked to consider carefully whether we want to make different decisions or choices.

I want to make an important point that has been pushed time and again about regulatory failure. There is a broad consensus among the parties that compensation should have been paid out by the Government for maladministration, which has happened to a degree, but we are unsure whether regulatory failure continues to exist. We have to ensure that the regulatory frameworks that operate in this country are continually stress-tested and reviewed again and again. The regulatory organisations need the appropriate resources to ensure that proper regulation occurs. We have to consider that 100 or 150 people are looking at 200 insurance companies. I am not suggesting that there should be more staff; I am saying that we should take the resourcing of regulatory authorities into account.

This scandal does not relate to one particular Government. As Members have said, it was ignored by regulators throughout the ’80s. With the knowledge that the regulatory system did not work, however, it is all the more important that we continue to check it. The second ombudsman report states:

“The central story of this report is that this robust system of [financial] regulation was not, in respect of the Society, implemented appropriately—that is, consistently, fairly, and with proper regard to the interests of those directly affected—by the prudential regulators and those providing assistance and advice to those regulators.”

That is absolutely salutary. We have had scandals in the past, such as with PIPs and the 1980s endowment scandal, and we must always keep a lookout for them. There is the growing concern about the sale of leaseholds and some new properties, which we should not allow to become a scandal. There is even the problem of airlines refusing to pay people compensation for delays, so it is important to keep looking at the regulatory system.

I want to conclude by pushing the question about confidence in the regulatory system. What efforts are the Government making to trace policyholders who have still not been found after the scheme has closed? Can we have an update on the number of people who have received compensation from the £1.5 billion? How many policyholders does the Minister estimate are still affected? I know that this is a moveable feast. What are the broader steps that the Treasury has to take to restore faith in the financial regulatory system? In summary, it may be that the Government are not legally required to pay the compensation, but many Members have pushed the moral imperative, and the Government will have to consider that matter today and in the coming months and years.

Housing and Planning Bill (Fourteenth sitting)

Debate between Peter Dowd and Lord Jackson of Peterborough

Tuesday 8th December 2015 Public Bill Committees

[Mr Jackson]

My Whip is giving me a strange look, so I will be quick. Before I start, I should parry the hon. Member for Bootle with hideous monstrous socialist carbuncles. I offer him the Chalkhill estate in Wembley and the Stonebridge estate in Harlesden as two great results of socialist architecture.

Moving on, the amendments are intellectually incoherent. They pray in aid a commitment to localism and local autonomy, but were they ever given effect they would be very prescriptive and present serious impediments to new house building. In fact, they would kill stone dead many marginal prospects for regeneration on brownfield sites across the country, and that is a serious concern.

[Peter Dowd]

It is a shame the hon. Gentleman mentioned brownfield sites, because I know one or two things about them, certainly in terms of my constituency. He talks about the amendment killing marginal developments, but some of the sites are so contaminated that the developments should be killed. The contamination is dreadful. The concern I have, which is missed out of these measures and I would like the Minister to comment on, is the testing done on those sites, which can be incredibly dangerous. Those tests should be done and should be codified.

[Mr Jackson]

In fairness, I do not know the hon. Gentleman’s constituency as well as he does, but I have visited Bootle and seen the challenges with regeneration across Merseyside, with Scotland Road, Rock Ferry, Tranmere and other parts of Wirral. Looking at the whole country, there are marginal regeneration cases that have resulted in good-quality housing.

My second criticism of the amendments tabled by the hon. Member for Dulwich and West Norwood is that there is no context. The context is that there are structure plans and local development plans that have gone through the proper processes of public engagement and formal consultation, and those plans are subject to the strictures imposed in primary legislation, including the Town and Country Planning Act 1990. A local planning authority should come to a settled view on what it wants to do with its land. The clue is in the name; the measure is a permissive capacity for the Secretary of State to intervene in extremis where a local authority has not brought forward appropriate land use plans. As my hon. Friend the Member for Croydon South said so eloquently, to put these strict impediments on the face of the Bill would kill stone dead attempts to build more homes and to develop marginal units.

On the points made by the hon. Member for City of Durham, I was concerned by land banking so I looked at the Local Government Association figures from 2012. When one looks below the surface at the facts, the No. 1 factor in this was the capacity and expertise of the planning departments. If a legal duty is imposed on those planning officers to spend significant amounts of public money, both in consultation and viability assessments for these units, it would reduce the capacity of those local planning authorities to give permission. We need to look at the Secretary of State’s plans in that context.

Housing and Planning Bill (Twelfth sitting)

Debate between Peter Dowd and Lord Jackson of Peterborough

Thursday 3rd December 2015 Public Bill Committees

[Peter Dowd]

I was going to raise that point later. If the difference between the two markets is so negligible, what is the point of putting such significant administrative burdens on local authorities, whose budgets have been cut so dramatically—by up to 50%? What is the point of or rationale for the proposal?

[Mr Jackson]

The hon. Gentleman pre-empts my comments. That point will become clearer as I progress in my remarks. The key point is that there is confusion about whether the Labour party agrees with the principle of the threshold, despite the hon. Member for City of Durham having been challenged about that, I think, five times. If it agreed with the principle that a £60,000 threshold would be right, we could reach some consensus about the right lower figure to put in the Bill. I think that was a reasonable challenge, and she failed to rise to it. She did not answer the question clearly, other than to quote what housing associations thought when Conservative Members had challenged her specifically about what she thought.

If Her Majesty’s Opposition agreed with the principle that people who have the wherewithal should pay a higher market rent to divert scarce resources to people on low incomes, who are the bedrock of the country—blue collar workers who get up in the morning, get their kids ready for school and do the right thing, who live in social housing and need our help—I think we could establish a consensus, which we do not have at the moment.

[Peter Dowd]

In that case, would the hon. Gentleman agree that Her Majesty’s Revenue and Customs, for example, should inform local authorities directly of the earnings of people living in that accommodation?

[Mr Jackson]

No. The hon. Gentleman must understand that the amendment is effectively a wrecking amendment to the proposals. Irrespective of whether the cap is £40,000 in London or £30,000, or whether in the normal course of events, as often happens with regulation and guidance, it is eventually changed through secondary legislation, he must know that it is a bit rich to say that there is an onerous bureaucratic burden on housing associations in finding out their tenants’ household income. Incidentally, they did not struggle that much to fight quite rigorous and robust campaigns against the so-called bedroom tax, with all the figures at their disposal, which they shared regularly with the media. However, we are now told that it is too difficult for them to find out about those financial circumstances.

The requirements in the amendment are onerous and extremely bureaucratic. To check and cross-reference with the Department for Work and Pensions database—

[Peter Dowd]

Will the hon. Gentleman give way?

[Mr Jackson]

I am just getting into my flow but, as the hon. Gentleman is agreeable, I will give way to him.

[Peter Dowd]

Does the hon. Gentleman agree that the bedroom tax had nothing to do with tax per se? It had to do with the bedroom for which the person had to pay—their income was irrelevant.

[Mr Jackson]

The hon. Gentleman cannot very well pray in aid the autonomy, authority and independence of housing associations in what is a voluntary scheme and then say, “Well, actually, you can’t trust them to check their own tenants, so let’s hand it all over to Her Majesty’s Revenue and Customs.” He cannot have it both ways. If they want to be independent and focus their scarce resources—we all agree on that, so there is a consensus—on the most needy of their tenants who require that assistance, then, frankly, and this is a wider issue, they have to raise their game.

However, if we look at amendment 200, we see that it refers to

“people aged over 65…people on zero hours contracts”.

How can we possibly police people on zero-hours contracts? Things change in respect of people’s working circumstances —each week, each month—and policing that will be very difficult.

Housing and Planning Bill (Second sitting)

Debate between Peter Dowd and Lord Jackson of Peterborough

Tuesday 10th November 2015 Public Bill Committees

[Mr Jackson]

Q 188 So the Government are doing you a favour in prompting you to collect information better, to use the resources at your disposal better. Would you agree?

Tim Pinder: I am not so sure it helps, no.

[Peter Dowd]

Q 189 With your permission, Mr Gray, I will use Mr Patchitt as a case study, to tease out an issue. Many of the houses under your control, Mr Patchitt, are in my constituency. I have some figures here. You say that you have 53,000 homes. Is that correct?

Mark Patchitt: Yes.

--- Later in debate ---

[Mr Jackson]

Q 222 If they give their correct names, which anecdotally is an issue.

My second and final point is that you have obviously read the whole Bill. Some evidence was given to us earlier by the British Property Federation about the build to rent fund, and about the fact that institutional investors, for some reason that was not clear to me—perhaps I am a bit obtuse—are not interested in putting their money into build to rent when there are starter homes on the large-scale site, whether they be flats or houses. Are you in a position to make a value judgment about that assertion?

David Cox: I am afraid I have not heard any evidence to that effect. At the moment, although there are several in the pipeline, only one build to rent scheme is functioning in the UK: the old Olympic park, which is now Get Living London. It works very well, and it has three-year tenancies as the standard, but it has caused problems for people trying to exit the tenancy, potentially to buy a property of their own or move overseas.

We want to see more institutional investment. Going back to the housing shortage, the large pension funds and other financial investment vehicles have the ability and resources to build the housing we need. They are much more likely to be at the more professional end of the sector. All of Get Living London’s staff are fully qualified through the only regulated qualifications in the sector. Therefore, they have the desire and the reputation. Large companies cannot have their brands tarnished by poor property management. Therefore, they will be at the more professional end of the sector. They give tenants higher-quality properties and higher-quality service. We want to see much more of that.

David Smith: We have actually made proposals to the Treasury to try to get smaller landlords to be more interested in a “build to rent to sell” model. We are effectively trying to move shared ownership from just the social sector into the private sector. We have suggested that the Treasury could expand the Help to Buy scheme to tenants who wish to buy their own homes, and possibly offer a capital gains tax reduction to landlords who reinvest that money in a new property. We are trying to kick-start a new concept of private landlords seeking to buy property to rent it to tenants, with the aim of selling it to those tenants and then buying other new property in a continuous cycle.

Our view is that it is important to do everything. So many homes are required that simply throwing all our eggs into one particular sector is not going to work. We almost have to take a scattergun approach—although that is an unfashionable thing to do—and promote as many possible ideas as we can, provided they do not cost a vast sum of money, to get as many properties as possible. Once we have tried a lot of things, we can start to core it down to the ones that are the most effective.

[Peter Dowd]

Q 223 I suppose the point about regulation relates to rogue landlords. As a health and care professional, I pay an annual fee for my regulation, and if I practise inappropriately I am challenged. Is there any reason why that ought not to happen in relation to landlords, for example, with application to rogue landlords?

David Cox: Absolutely not. We have been campaigning for it for 20 years, and we are the closest there is to a regulatory body in the lettings industry. We do our best to regulate our members, and we would like to see a statutory footing for that. We are, of course, talking about people’s homes. For landlords, it is probably the largest investment they will make, beyond the house in which they live.