Equitable Life (Payments) Bill

Richard Fuller Excerpts

Wednesday 10th November 2010 Commons Chamber

[Mr Hamilton]

I thank my hon. Friend for making that very good point. We are talking about many hundreds of thousands of policyholders throughout the United Kingdom, but we know that there are about 37,000 or so post-1992 with-profits annuitants. We think there are about 10,000 pre-1992 such annuitants, but the further back we go the fewer there will be, so if it was a difficult, time-consuming exercise to work out relative losses for all policyholders, which it certainly was, which is why Sir John Chadwick was engaged, it will surely be a much easier exercise for the far fewer people who are with-profits annuitants prior to 1991. My hon. Friend’s point goes some way to answering the question.

[Richard Fuller (Bedford) (Con)]

I thank the hon. Gentleman for giving way again. This has been a long-standing issue, and perhaps he can help some of us who are new to the House. He mentioned a total of £100 million from subsequent years’ Budgets, plus £100 million from reserves to be allocated to pre-1992 annuitants who are not covered in the proposals. Is he making an estimate, or is that sum firm is in his mind? That is a key issue. The concerns expressed about computer records do not stand up against a point of principle, but it is important that we have a sense of how firm and solid the hon. Gentleman’s understanding is of the sums that might need to be paid.

[Mr Hamilton]

The hon. Gentleman makes a very good point, and I cannot give him a precise answer. The figures that I have quoted are estimates I obtained from the Equitable Members Action Group, which has quite a lot of good people working for it—people who have been in the financial services industry. I go on their expertise. This is the best estimate that we can gain.

The reality is that many of the annuitants are quite elderly. It is unlikely that in five years we will have the same number we have now. We already know, for example, that every single day since the disaster happened 15 policyholders throughout the entire spectrum of Equitable policyholders have died. We can therefore assume, unfortunately, that more will no longer be with us in the years to come, so the amount of money will be a diminishing sum. The best estimate that we can gain is £200 million, and that estimate comes from EMAG.

--- Later in debate ---

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

The hon. Member for Leeds North East (Mr Hamilton) made an impassioned and moral argument for amendment 1, to which I shall return later.

I have taken a very keen interest in this issue. It has affected a significant number of people in Stratford-on-Avon, to the extent that I have had hundreds of letters and e-mails about it. Like many other Members, I signed the EMAG pledge before the election, and I believe that backing the Government to get the Bill through is delivering on that pledge.

It is probably worth our spending just a few moments thinking about the economic landscape in which we are operating. We are borrowing about £500 million a day. Every time we go to sleep and wake up in the morning, we notch up another £500 million. To service the debt costs about £120 million a day—that is not to pay it down, but just to stand still. It is against that background that we must try to resolve the tragedy of Equitable Life.

Let me spend a couple of minutes on the timelines of the events. In 1988, Equitable Life stopped selling its guaranteed annuity rate policies and, in 1990, those policies became too expensive to honour because of the falls in interest rates and in inflation. In 1999, after the 1997 election, Equitable cut its bonus paid to 90,000 GAR policyholders. In July 2000, the House of Lords ruled that Equitable Life must meet its obligations to its GAR policyholders, thus leaving it with a £1.5 billion liability.

In February 2001, the Halifax agreed to pay £1 billion for the assets. In July, with-profits policyholders saw the value of their savings slashed by 16%—by almost one fifth. In August, Lord Penrose announced his investigation. In October, the then Economic Secretary to the Treasury told the Treasury Committee that the previous Labour Government might consider compensation for some victims if a grave injustice had occurred.

In January 2002, policyholders backed a compromise package. In March 2004, the Penrose report blamed Equitable Life’s management for the whole affair. Following the report’s publication, the Government ruled out compensation and were accused in this House of abandoning policyholders. In April, the parliamentary ombudsman announced that she would reopen her investigation.

In 2007, the European Parliament called on the UK Government to compensate policyholders. In January 2008, Equitable agreed to pay an undisclosed sum to 407 with-profits annuitants who launched proceedings in 2004. The ombudsman’s report was published in 2008. The previous Government said that they would respond by the autumn. When the deadline was missed, the then Prime Minister said that they would respond before Christmas. However, they did not respond until the new year.

In August 2009, Sir John Chadwick published his first interim report, and in March 2010—more than a year after his appointment—he published his third and final interim report with a promise of a final report in May 2010. That date was subsequently extended to July.

I go through these events in chronological order to demonstrate the pain that the victims of Equitable Life have had to go through. This is a true human tragedy. The hon. Member for Leeds North East talked about the e-mails and letters that he has received from his constituents, and the same is happening in all our constituencies.

The Government’s offer is a very good one. My hon. Friend the Member for Cardiff North (Jonathan Evans) said that, at best, he expected them to offer up to £1 billion. Many colleagues and I voiced our concerns the last time we debated this matter in the Chamber. When one makes a pledge, one must try to honour it.

[Richard Fuller]

Like many of us, my hon. Friend is wrestling with this question of fairness and with the political obligation to find a fair payment scheme that was mentioned in the Public Administration Committee and that many of us have signed up to. Hon. Members from both sides of the Committee are caught between wanting to praise the Minister for the swiftness of his recommendations—we praise him for that—and finding, in these difficult times, £1.5 billion. We often talk about that figure in comparison with the Chadwick number. However, does my hon. Friend not accept that we should view the figure with respect to what the Government themselves have said about policyholders’ relative loss, which Towers Watson estimated at, I think, £4.3 billion? Does £1.5 billion represent meeting our obligation of fairness if it is set against the relative figure of £4.3 billion that the Government themselves have accepted?

Oral Answers to Questions

Richard Fuller Excerpts

Tuesday 13th July 2010 Commons Chamber

[Mr Hoban]

The Government are committed to tackling unacceptable bonuses in the financial sector, and we have put forward a series of proposals on that. We have talked about increasing the disclosure of remuneration, we have asked the Financial Services Authority to examine ways in which the link between risk and remuneration can be investigated, and we are taking forward work on the financial activities tax. Also, we have today published a consultation on a bank levy, which will raise an extra £2.5 billion in revenue from the banks.

[Richard Fuller (Bedford) (Con)]

T10. Average wages in my constituency are below the national average, so the rise in the income tax threshold announced in the Budget was most welcome. Can the Minister please give an assurance that he will maintain a focus on increasing the personal tax threshold, as the prospect of being taken out of tax altogether is far more appealing than the prospect that the previous Government offered, which was the non-stop filling in of forms to claim back just a fraction of the money that people had already earned?

[Mr Gauke]

I can confirm to my hon. Friend that it remains our long-term objective to raise the income tax threshold to £10,000, and we have made significant progress.

Budget Resolutions and Economic Situation

Richard Fuller Excerpts

Tuesday 22nd June 2010 Commons Chamber

[Richard Fuller (Bedford) (Con)]

I rise for my maiden speech to applaud my right hon. Friend the Chancellor for his courage in meeting the challenge of the most parlous state of our public borrowings, and for proposing a series of measures that attempts to deal with that problem while striving to protect the most vulnerable. I know it is a task he does not relish, but it is a burden he shoulders on behalf of us all.

I appreciate the opportunity in this robust debate to have a brief interlude—a commercial break, if you wish, Madam Deputy Speaker—to say good things about my home town and constituency of Bedford. I hope that in so doing, I can do as good a job for Bedford as my hon. Friend the Member for Dewsbury (Simon Reevell) did for his constituency in his maiden speech. I shall of course thereby lose the enticing opportunity to correct some of the breathtaking assertions I have heard from the Opposition Benches, not least from the hon. Member for Nottingham East (Chris Leslie), who strains the credulity not only of those of us on this side of the House but of a great proportion of the British public, who really do not understand where he is coming from.

I am the first Member to represent Bedford who was born there since the Liberal Member, Mr James Howard, in 1868. I truly love my home town. It is a wonderful and diverse community, and I am extremely honoured to be able to represent the people of Bedford and the neighbouring town of Kempston. It is an honour that I share with my predecessor Patrick Hall, who was a tireless advocate on behalf of the constituents of Bedford and Kempston. I can say honestly that his work on their behalf knew few limits. He was their constant companion in their navigation of the bureaucratic state that has come to bedevil the lives of so many of us. Patrick was the first Labour MP for Bedford to be re-elected, and in fact he secured a second re-election, a feat so remarkable that I doubt it will ever be repeated by a Labour politician in Bedford.

I also pay tribute to Patrick’s predecessor, Sir Trevor Skeet, who represented the constituency for 27 years. I remember him fondly as I began my political career delivering leaflets for him in 1979. I am happy to say that 150,000 deliveries later, the post finally arrived.

Bedford is a town remarkable for its diversity, both in ethnicity and in culture. It is a most harmonious town and has much to teach the rest of our country about the power and potential of diversity. It can truly be said that a child in the course of their school career in Bedford may well meet other children whose parents come from every single nation in the world. What a fantastic start that gives children in my home town, and what a wonderful job the teachers of my town are doing to ensure that those children have a world-class education.

We are very proud of our education in Bedford, and it is very important to us because we are a town of young families. We embraced the legislative freedoms that the previous Government provided through the opportunity for schools to set up their own trusts. We are also looking forward to September, when two of our finest institutions, Bedford college and the Bedford Charity, join together to establish the John Bunyan academy. I know that many parents and teachers in Bedford look forward to the legislation that my right hon. Friend the Secretary of State for Education will propose, and we intend Bedford to be at the forefront of the free schools initiative.

Great schools beget great Bedfordians. Archbishop Trevor Huddleston was born in Bedford and was a relentless campaigner against apartheid. He was so strong in his actions, against such great odds, that he earned the nickname in South Africa of “the dauntless one”. John Le Mesurier, better known as Sergeant Wilson of “Dad’s Army”, was another Bedfordian and a great man of comedy, who penned his own obituary in The Times thus:

“John Le Mesurier wishes it to be known that he conked out on November 15th. He sadly misses his family and friends.”

It is said that his last words were, in true Sergeant Wilson fashion, “It’s all been rather lovely.”

The challenge for the Government, met in the Budget, is to balance our books while rewarding work; to find a way in which our public services can support and raise up the people of this country who need their help, and not—as happens too frequently, despite the best intentions—hold them down. I believe that a key to that is unleashing the power, potential, leadership and creativity of our social enterprises and charities.

Recently, Bedford college hosted an evening with the entrepreneurs—an opportunity for schoolchildren to meet some of the leading lights in our social enterprises, including Adele Blakebrough of Community Action Network and Tim Campbell of the Bright Ideas Trust. The schoolchildren could hear the passion that guided those people’s lives, and learn about their potential to provide for social services in a better way than the bureaucratic state.

In Bedford, groups of charities have already come together in a formal coalition, Consortico, which will enable them better to compete for the contracts that local government offers. Those charities and social entrepreneurs need the Government as an ally who will enable them to overcome the inertia and intransigence of some arms of the bureaucratic state. We need the leaders of the arms of the bureaucratic state to become champions of unbundling their privileges, not intransigent defenders of their own interests.

Social enterprise is one key, but as has been said many times in the debate, enterprise is absolutely critical. For the arc of my life, my home town has been in economic decline. It is not unique in that—indeed, the causes transcend party and are a pattern repeated throughout our country. Manufacturing jobs have been exported as we plugged into the global economy. There are measures in today’s Budget that will start to address that and rebalance growth throughout our economy. We have witnessed a persistence by Government in permitting those who are able but idle not to contribute to the economy. Again, this Government will tackle that.

In Bedford, we have experienced a doubling of unemployment in the past 10 years. The so-called boom of the past decade seemed to pass our town centre by. It is now in urgent need of regeneration, but incapable of making that happen unless we achieve the economic recovery that we need. The measures the Chancellor proposed today will hasten that recovery.

Our bypass is tantalisingly close to completion after 70 years of waiting. As a town, we need to start punching above our weight to attract more capital to it and to the constituency. We will do that together as a community, by promoting entrepreneurship so that we can start more small businesses, and by opening up our bureaucracies to the social entrepreneurs who can provide a much better service for our community in the long term. We will provide a beacon for other communities to show what can be done by harnessing the opportunities that are presented even in these most difficult times for communities to step forward and fulfil the challenges.

It is said that courage is often found in the most challenging times. With the very difficult measures that he proposed in his speech today, the Chancellor has shown us the courage that is needed, and that he can set us on the right course.

We need a House that can both strive for the most important interests of this country and amplify the weakest and quietest voices in our community. The people need a House that can be a beacon for liberty, freedom and democracy for those in the world for whom those are still ideals and not reality. We need a House that will restore probity to the public finances, so that future generations of Britons are not shackled by the excesses of this generation. The Budget has made a start. I hope, in my time in this House, that I can make a brief and small contribution to achieving those ambitions.