Equitable Life

Tom Tugendhat Excerpts

Thursday 11th February 2016 Commons Chamber

[Crispin Blunt (Reigate) (Con)]

I declare an interest: I invested in Equitable Life while a special adviser. I cheerfully put 17.5% of my salary into an Equitable Life scheme over four years, when I worked for Malcolm Rifkind, and then watched, after I was elected to this place, as the whole Equitable debacle developed over the next decade or so. But at least I was sharing the pain of many of my constituents—well north of 3,000, according to an estimate given to me. The situation that my hon. Friend the Member for Romsey and Southampton North (Caroline Nokes) laid out is exactly my experience. To start with, there was a substantial lobby, but that dwindled, although there remain some persistent people—I have their letters—who lost hundreds of thousands of pounds, and they come from all classes of annuitants and policyholders.

[Tom Tugendhat (Tonbridge and Malling) (Con)]

I welcome this debate. Does my hon. Friend agree that some people, like him and my father, did at least have time to make up the shortfall, but that others, including many of my constituents, simply did not have that time? Will he mention the fact that some people did not have the opportunity to recover their losses?

[Crispin Blunt]

My hon. Friend makes an extremely pertinent point.

On being returned in 2010, I found myself a member of the Government and obliged, at one level, to support their decision to limit the compensation to £1.5 billion. At the time, as the Prisons Minister, and the prisons budget being rather less than the total compensation required, I could understand, in the circumstances, why they decided to limit the overall compensation. I resolved, however, to speak in this debate and to re-examine the letters I sent out defending the Government’s position, and to re-evaluate my position to see whether it was reasonable.

I was much taken with the comments from the hon. Member for West Bromwich West (Mr Bailey), the former Chairman of the Business, Innovation and Skills Committee. This is about confidence in the entire savings system. I can remember Labour’s first Budget in 1997 and the consequences—unreported from the Dispatch Box—of IR35, which saw £5 billion cheerfully lifted from investors in pension funds through a tax on dividends. If a £5 billion change can be made in a Budget, announced not in the House of Commons but by press release, we need to be aware that we are dealing with vast numbers when it comes to pension policy. I tell the Economic Secretary, who is replying to the debate, that I believe we are on the verge of a substantial—and, for me, very welcome—change in pension policy. As part of that, we need to acknowledge the point made by the hon. Member for West Bromwich West that this issue is about confidence in the system as well as fundamental fairness to our constituents.

I congratulate my hon. Friend the Member for Harrow East (Bob Blackman), who introduced the debate so effectively, on securing it. I also congratulate my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) on setting up the all-party group in 2006-07 to reinforce the efforts that were already under way. He attempted to corral those efforts, make them more effective and secure from the Conservatives and the Liberal Democrats an undertaking that the issue would be addressed in their manifestos leading into the 2010 election. It is important to highlight that as a simple issue of fairness we need to revisit the sum of £1.5 billion and decide whether or not we have discharged our duty.

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[Peter Heaton-Jones (North Devon) (Con)]

I congratulate my hon. Friend the Member for Harrow East (Bob Blackman) on securing this incredibly important debate. In common with Members on both sides of the House, I have received a considerable amount of correspondence on the issue and met people in my surgeries who have been affected by it.

Other Members have mentioned this, but I want to pay particular tribute to the Equitable Members Action Group, which has done extraordinary work to highlight the issue and to represent members who have suffered as a result of the unfairness. The group members are persistent, dogged and effective campaigners and lobbyists. I have had the pleasure of meeting the EMAG chairman who covers the whole of the south-west. He is an extraordinarily effective campaigner.

As many Members have said, this is an issue of fairness. Policyholders who were doing the right thing and saving for the future have found themselves in an awful position. We need to take account of that. They have our sympathy, without doubt. Whatever solution we find, however, we also have to keep it in mind that we need to be fair to taxpayers as a whole. Although £2.6 billion is a considerable amount of money that would plug the gap and ensure that those who lost out are compensated in full for their losses, it does, none the less, place a burden—it is a big ask—on the taxpayer and the Treasury to find it. We need to be aware of that.

I am glad that the Treasury has responded to a number of letters from me. There has been a considerable amount of correspondence back and forth. I am particularly happy to have received a letter from a Treasury Minister, which addresses the need and, indeed, the desire to keep the matter under review. As my hon. Friend the Member for Tewkesbury (Mr Robertson) says, time is short, so I urge the Treasury not only to keep the matter under review, but to bear it in mind that, sadly, the passage of time means that it needs to be addressed quickly. The letter, which I received in response to a letter I wrote on behalf of the chairman of EMAG in the south-west, makes it clear that the Treasury welcomes submissions and ideas for my right hon. Friend the Chancellor to include in the Budget statement. I am sure that the Treasury is taking account of all those submissions.

It is worth bearing in mind that the Chancellor has already announced—and I am sure he will announce more—extremely welcome changes and reforms to the pension system. I hope we can look at the issue as part of that wider package of reforms.

[Tom Tugendhat]

As the Treasury looks at that wider package, may I urge it to ensure that helping the EMAG pensioners is very much part of setting the conditions for other people to save? If people feel that their savings will go unrewarded, that undermines the tone that the Chancellor and the Economic Secretary have rightly set in the various pension arrangements they have made, helping people to realise that pensions are worthwhile and will help them in the future.

[Peter Heaton-Jones]

My hon. Friend makes a very good point. That is, indeed, the tone of the pension package reforms that the Chancellor and the Treasury have made and will continue to introduce. The Equitable Life policyholders need to be part of that wider package.