Equitable Life

Debate between Robert Neill and Geoffrey Robinson

Thursday 26th February 2015 Commons Chamber

[Robert Neill (Bromley and Chislehurst) (Con)]

I, too, congratulate the hon. Members who secured the debate. Like my hon. Friend the Member for Harrow East (Bob Blackman) and the hon. Member for Leeds North East (Fabian Hamilton), I have signed the pledge. This is not a phrase that often falls from my lips, but that was the right thing to do under those circumstances and it is right for Governments to keep their pledges. I know that there are constraints in Government and having served as a member of this Government I am conscious of the economic pressures, and I understand the point made by the hon. Member for Coventry North West (Mr Robinson) about the fact that periodically civil servants come to Ministers with rather convenient escape clauses, but the job of Ministers is sometimes not to accept such escape clauses.

I am speaking on the basis that this is a Government who are committed to markets and to stability and confidence in our markets. I believe in that. The financial services sector and insurance sector are a critical part of our markets. I speak as secretary of the all-party parliamentary group on wholesale financial markets and services. For the markets to work efficiently, there must be proper and secure regulation and when there is a failure in regulation there must be genuine certainty of recompense to those who have done no wrong, because otherwise honest and sensible investment is deterred. That is the risk if we do not do justice to the Equitable Life policyholders. What message would that send? We all say that it is right to invest prudently and wisely for one’s future and any such message would be against the philosophy of my Government and, I hope, against the philosophy of any responsible Government. In the long-term, it is in the interests of good economics and good financial planning that we do justice to the Equitable Life policyholders.

The motion is sensibly and moderately phrased. We are not saying that everything can be done at once, but that in the course of the Parliament this ought to be done. It might be that the proposal made by the hon. Member for Coventry North West is part of that. I will not be tied to an exact time frame, but it is particularly important that the oldest—the pre-1992 people—are given priority. It is also important to recognise that although the Government are picking up something that did not happen on their watch, part of being in government is that one has to deal with the consequences of what one inherits and has to do so fairly. Happily, thanks to the policies of this Government, the economy is improving. It is not unreasonable against that background to expect those people who have made a sacrifice, in that their fair recompense has been delayed, to share some of the fruits of that economic recovery.

[Mr Robinson]

I know that the hon. Gentleman did not mean to interject any sort of difference between party or Government, but what he said was not right. The lack of regulation and the failure of the policies happened under a Conservative Government’s watch. We must get away from mentioning Governments, as this affects all parties and all Governments over the period of the failure.

[Robert Neill]

I am sorry to disagree with the hon. Gentleman, but he misunderstands what I was saying. Regardless of party, there is an obligation on Government, and I must say that the 13 years for which there was a Government of which he was a distinguished member cannot be entirely ignored. We all must pick up what we inherit from our predecessors, of whatever party, and we must put them right. That is the key and that is why I agree that having done the history we need to move on and find a sensible way forward.

Local Government Budgets

Debate between Robert Neill and Geoffrey Robinson

Wednesday 12th January 2011 Westminster Hall

[Robert Neill]

The hon. Gentleman raises two points that I was about to come on to. First, I was setting the context. We all accept that a system that has worked but that has come to a point where it needs change must be readdressed, so I hope that Opposition Members will support the local government resource review and the alternative means by which, for example, we can enable local authorities to keep much more of the product of the business rate that they raise, in the same way that we want to give them much more flexibility. Indeed, we have already given them much more flexibility by significantly reducing the amount of grant that is ring-fenced, so that even within the tight settlement that we have at the moment they can move money around to reflect their priorities.

Secondly, however, the hon. Gentleman makes an error when he makes the comparisons that he did. That is because another part of what we have sought to achieve is to recognise not only that dependency upon a grant varies but that the formula grant is, of course, not the whole picture. That is why we use the concept of spending power, which the Local Government Association raised with us, because councils also have reserves and the ability—within some constraint—to raise council tax. Council tax doubled under the previous Government; there is a limit to how much more one can expect people to pay, so we do not want to encourage council tax rises.

The hon. Gentleman forgets something when he looks at the amount of settlement that is received by local authorities; in fact, the amount of settlement is very instructive. He quotes figures about certain authorities because it suits the purpose of his argument. For example, he refers to Wokingham. Actually, let us make the comparison between Wokingham and Birmingham. Birmingham receives formula grant of £663 per head; Wokingham receives formula grant of £125 per head. So Wokingham gets something like a quarter of the support from central Government that Birmingham gets. That is a reflection of the fact that there may well be greater needs in Birmingham, but the suggestion that that element of need is ignored in the system is inaccurate, because we must look at not only the changes within the grant but where we are starting from. That is one of the points that has not been mentioned in this debate.

In the context that the hon. Gentleman refers to, it is also very significant that it was this Government, in refining the formula after consultation with local government, that actually increased the weighting given to what is called the relative needs element of the formula. That is the element that reflects greater pressures, elements of deprivation and other demands. So we as a Government—as a coalition—increased that weighting to 83%, which is more than it had previously been. That change was made to assist councils that are under pressure.

It was also this Government that set up for some authorities—generally including those in the west midlands —a transitional grant to cushion the loss of the working neighbourhood fund. The working neighbourhood fund was set up by the previous Government as a three-year fund and they were going to end it in May 2011 anyway. As far as we know, they were not planning any transition arrangement. To alleviate the difficulties for local authorities that are under pressure, this Government made available moneys even in difficult times to put in place transitional funding.

So, with respect, there is a little bit of protesting too much by Opposition Members that this Government have not recognised the difficulties that local authorities in the west midlands face. We have tried, within the constraints that we inherited, to do something about those difficulties.

The right hon. Member for Coventry North East (Mr Ainsworth) referred to the specific representations that have been made about the damping formula. Perhaps I can take those representations on board. We have received a number of representations about the formula. The consultation period has not yet closed; I think it closes next Monday. Therefore, I am sure that the right hon. Gentleman will understand why I cannot say today what our response to that consultation is. I am aware of the suggestions that have been made. We will give a proper response to the consultation, but it is obviously right and correct that I do not make any response to the number of local authorities that have written in until we have had all of the material from the consultation process in.

[Mr Robinson]

The Minister has confirmed that the discussions are taking place. Of course we understand why he cannot necessarily tell us today about those discussions. However, can he just assure us about what he has just said, namely that the consultation will be taken seriously and that we will, in due course, receive a reply to the specific points made by the city council in Coventry? I am sure that such a reply would be well received.

[Robert Neill]

Certainly I can do that and I hope that in the future, when we have the local government resource review, Coventry city council and other interested local authorities will put forward views about how we can take the new system forward.

The Government are making the best of the difficult hand that we have inherited. However, we have done so with a determination to pass down more flexibility to local authorities. The number of separate grants has been greatly reduced—from 90 to about 10—and considerably more money has been rolled into the formula grant, which is generally regarded as being more equitable in its distributional effects than the various specific grants that had existed previously. We have also increased the weighting given to a needs formula.

Of course I accept that regeneration is important for the west midlands in particular. It is worth remembering, however, that outside the limited area of formula grant the Government are in fact spending very considerable sums of money to support regeneration, and that money includes money that will benefit the west midlands. More than £20 billion is being provided to support regeneration, including regeneration of housing, which is important in the region. We are honouring existing Homes and Communities Agency contracts and existing regional development agency contracts, investing some £4.5 billion to deliver new affordable homes. In addition, there is £1.4 billion from the regional growth fund, which we are seeking to align with a similar sum in the European regional development fund. There is also investment in transport, including some £750 million for High Speed 2, which will have a particular impact on regeneration by speeding up journey times to Birmingham and the west Midlands.

So I think it is fair to say that the Government are putting in money to try to assist the councils in the west midlands and we are seeking to do so in a way that will encourage private sector investment. That is why the RDAs, which many of us believed had become unduly cumbersome although others may not agree, are being replaced by local enterprise partnerships that genuinely have private sector businesses working with local councils. It is also why we are committed to a new homes bonus, to encourage private sector investment in house building, and to the review of local government resource, which will actually make it worth while for councils such as Birmingham and Coventry that have a good history in relation to business, industry and commerce to grow their tax base once again.

So the Government are adopting a very positive approach. First, the settlement deals with difficult immediate issues. We have endeavoured to be fair and we believe that the settlement is fair and progressive, for the reasons that I have set out. Secondly, there is a plan that goes beyond the settlement, with the review of local government resource, which is consistent with both the current requirements and our commitment to localism. Of course, we will be entrenching that commitment when we introduce the Localism Bill for its Second Reading in the House next Monday.