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Mr Matthew Offord (Hendon) (Con)
1. What recent assessment he has made of the political situation in the middle east; and if he will make a statement.
The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
The launch of direct talks is an important and welcome step in the search for lasting peace and security for Israelis and Palestinians. The parties have been meeting again today in Sharm el Sheikh. We look to Prime Minister Netanyahu and President Abbas to show the perseverance, commitment and courage needed in the weeks and months ahead to achieve a two-state solution.
Mr Hague
The issue of settlements will come to the fore very rapidly again, because the immediate challenge is the expiry of the settlement moratorium at the end of this month, on 30 September. The road map makes it clear that Israel should freeze all settlement construction, including the natural growth of existing settlements, and dismantle all outposts built since 2001. Our view is that all settlement activity in the occupied Palestinian territories is illegal and an obstacle to peace.
Sir Gerald Kaufman (Manchester, Gorton) (Lab)
But if the Israelis defy President Obama and the Quartet by resuming settlement building on 26 September, is there not a serious danger that that would scupper the current peace talks and make future talks more difficult? Would there not also be a danger, because of the population growth among the Palestinians, of eventually ending Israel as the Jewish state that it proclaims itself to be? Given that the Jewish day of atonement comes before 26 September, will the Foreign Secretary urge the Israeli Government to observe their own religion and repent at this stage?
Mr Hague
The right hon. Gentleman’s question encapsulates why it is in Israel’s long-term interests to seek agreement on a two-state solution. He is quite right to say that there is a danger to the talks, and therefore to any subsequent talks, and it is vital that all the parties involved are able to get through the end of September with the talks alive. We therefore look to the Government of Israel to take all the steps necessary to renew the settlement moratorium; we have made that quite clear to them. If they were able to do that, it would no doubt contribute enormously to the talks being able to proceed further.
Sir Malcolm Rifkind (Kensington) (Con)
Does the Foreign Secretary agree with the recent statement by the ambassador of the United Arab Emirates to the United States that the possession of nuclear weapons by Iran would constitute such a threat to the security of all the states of the middle east that all options—including, if necessary, military options—must be considered if it became necessary to prevent such a situation from arising?
Mr Hague
I have always argued that all options should be kept on the table, and that the option of military action should not be withdrawn from the table. I have also always stressed that we are not calling for that or advocating it. We do not want to relieve any of the pressure that is currently on Iran, but I must emphasise that I am not advocating military action.
David Miliband (South Shields) (Lab)
I am sure that we will all be relieved by what the Foreign Secretary has just said at the end of that response. I think it would merit at least an oral statement if he were going to advocate military action.
Can the right hon. Gentleman tell us whether it is true that Mr Frattini, the Italian Foreign Minister, proposed to lead a delegation of European Foreign Ministers, including the Foreign Secretary, to Israel and the occupied territories in the first half of September, but that the Israeli Government would not co-operate with such a visit?
Mr Hague
No, it is not true. Mr Frattini proposed a visit by EU Foreign Ministers at the very beginning of September, but it turned out that it clashed with the direct talks that were starting on the other side of the Atlantic. The proposed trip was therefore abandoned. There has been no proposal for a trip by the EU Foreign Ministers since then. Such a proposal has been reported in one or two newspapers, but I am afraid that it is not accurate.
David Miliband
I am glad to hear that from the Foreign Secretary because the Foreign Office was not able to explain it yesterday. Of course the Israeli Government have said that European Foreign Ministers are standing on the sidelines at the moment, so the question is why a delegation of European Foreign Ministers, including the Foreign Secretary, is not heading out to Israel and the occupied Palestinian territories as soon as possible. Prime Minister Netanhayu said on Sunday that Israel would not extend the moratorium on settlement building and Mr Abbas has threatened to quit the talks if construction resumes. Is it not true that there is a real danger of having an absent Foreign Secretary and not an active Foreign Secretary when the people of the middle east most need an active one?
Mr Hague
No. I know we have little soundbites before the Labour leadership election—we are bound to have them—but in a way this is too serious an issue for things like that. Neither EU Foreign Ministers nor the UK Government are in any way on the sidelines. We have played an important role—a supporting role—to the United States, which has shown such leadership on this issue, in getting these direct talks going. My right hon. Friend the Prime Minister was, I think, held to be instrumental in that through the telephone calls he undertook in the summer with both Prime Minister Netanyahu and President Abbas. I am in close touch with the talks through Secretary Hillary Clinton and Senator Mitchell; indeed, we are in constant touch with all involved. We play a strong supporting role, as do many other EU countries, in the continuation of these direct talks. As the right hon. Gentleman can see from the answers I have given, we are emphatic about what needs to be done next.
Bob Blackman (Harrow East) (Con)
Does the Foreign Secretary agree that one of the biggest obstacles to peace in the middle east is the outrages committed by Hamas, which represents such a threat that we need to bolster the moderate ranks of the Palestinians to ensure that a proper two-state solution comes about? If he does agree, what action is the Foreign Office taking to ensure that the moderate elements of the Palestinian cause are promoted?
Mr Hague
We give a great deal of support to those moderate Palestinians and my hon. Friend will be aware of the aid that goes in from here and from the rest of the European Union to help the Palestinian Authority. He is right about Hamas. The terrorist outrage of two weeks ago was specifically designed, in my view, to disrupt the start of these direct talks. Hamas does not want to see these talks succeed and that fact should redouble the determination of all involved to make sure that they do succeed.
Katy Clark (North Ayrshire and Arran) (Lab)
3. What recent discussions he has had with his Sri Lankan counterpart on access to detainees in that country by the International Committee of the Red Cross.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)
I spoke to the Foreign Minister of Sri Lanka on 16 June and again this morning about a variety of issues, including human rights and access to former combatants. We hope to continue the dialogue with the Foreign Minister when he comes to London in October.
Katy Clark
I thank the Minister for that answer. Will he outline the role he believes the international community should play with respect to this issue, as we repeatedly hear concerns about the treatment of detainees and human rights abuses in Sri Lanka? Does he support the call for an international inquiry, particularly into the abuses in the final week leading up to the end of the war in May 2009?
Alistair Burt
Let us separate the two issues. As to detainees, I am sure that the hon. Lady will be pleased to hear that the International Organisation for Migration does have access to the camps. The Sri Lanka Minister told me this morning that negotiations continue on giving the Red Cross access, which we would certainly support. As far as allegations about what happened during the end of the conflict are concerned, we have repeatedly called upon Sri Lanka to make sure that there is a full, independent and credible inquiry so that these past allegations can be raised transparently. That would be in the interest of reconciliation in the future.
Mr Lee Scott (Ilford North) (Con)
Will my hon. Friend take up with the high commissioner the issue of why, in my role as the chairman of the all-party Tamils group, I am receiving reports that people who have returned to their homes are still being intimidated, singled out for abuse and are not being treated with the respect that they should be given? Can this issue please be raised with the high commissioner?
Alistair Burt
The number of internally displaced people who have been returned has grown significantly since the end of the conflict, but we remain concerned about reports of abuses of freedom, lack of freedom of expression and continued problems in the north. These issues are raised quite regularly with the Sri Lanka Government and the high commissioner, and the next time I see him, I will certainly make sure that my hon. Friend’s concerns are pressed.
Mr Chuka Umunna (Streatham) (Lab)
4. What steps he plans to take to improve his Department’s monitoring of human rights overseas.
The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
Human rights are at the core of our foreign policy. FCO posts overseas monitor and raise human rights concerns wherever and whenever they arise without compromise. I will ensure they continue this excellent work, tackling these challenges in the most effective manner. There will be further improvements in how we monitor human rights, which I plan to announce in a written statement in the coming days.
Mr Umunna
I think we are all very glad to hear of the Government’s U-turn on the scrapping of the Foreign Secretary’s Department’s annual report on human rights and to learn that it is not being sacrificed on the altar of deficit reduction, but can the Foreign Secretary give us some assurances about the substance of the report? Can he tell us when it is likely to be published, and whether it will be as substantial as the report from the last Government?
Mr Hague
Yes, it will be substantial. There has been no U-turn, only an inaccurate report about what the Government may do. The position is as I described it to the Foreign Affairs Committee in the House last week. The report will take the form of a Command Paper, and it will be detailed and authoritative. I intend it to be laid before Parliament in about March, in line with the practice of the last Government, but it will be accompanied throughout the year by up-to-date online reporting and evaluation of our human rights work and concerns. I hope that, overall, that will provide Parliament with a better service than has been provided in the past.
Sir Menzies Campbell (North East Fife) (LD)
While I understand the importance of the monitoring of human rights, does the Foreign Secretary accept that their promotion is just as, if not more, important? What steps are Her Majesty’s Government taking with regard to the promotion of the human right of sanctity of life, particularly in connection with countries that appear to be hellbent on barbaric ways of taking people’s lives?
Mr Hague
We intervene against the death penalty at every opportunity, in line with long-standing practice in this country. My right hon. and learned Friend will be aware of the strong protests that we have made recently about, for instance, sentences of stoning in Iran, an absolutely barbaric punishment that has no place whatsoever in the modern world. The strong stand that this country has taken on those issues will continue to be maintained.
Mr Ivan Lewis (Bury South) (Lab)
We have seen U-turns on the scrapping of the annual human rights report and on the BBC World Service pulling out of Burma, not as a result of pressure from the Liberal Democrats but as a result of the Opposition’s highlighting the intentions of the coalition Government. That raises serious questions about whether the Government’s commitment to human rights is at the heart of British foreign policy.
May I ask the Foreign Secretary a very specific question? We have already seen £560,000 removed from the Foreign Office human rights and democracy budget this year, and not in terms of future spending review decisions. Can the Foreign Secretary assure the House that there will be no further reduction in funding for that part of the Foreign Office budget this year?
Mr Hague
One would not think that the hon. Gentleman had been a member of a Government who reduced funding for human rights and democracy projects in Iran, Sudan, Zambia, Russia and central Asia, all in the course of the last year. There have been no U-turns on any of those subjects. I do not think that having to correct what appears in The Guardian now and again constitutes a U-turn brought about by the Opposition. As for future spending commitments, they will of course be set out in the future, once we have the results of the comprehensive spending review.
Paul Uppal (Wolverhampton South West) (Con)
5. What recent assessment he has made of the state of UK relations with countries in south-east Asia.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Henry Bellingham)
South-east Asia includes some of the world’s most important emerging powers, and offers huge opportunities for the United Kingdom. The Government enjoy excellent relations with most countries in the region. Burma is the exception, but we continue to work for democratic change so that its people can realise their potential.
Paul Uppal
Does the Minister not agree that our relationship has been uniquely enhanced by the recent visit by a trade delegation to the Indian subcontinent, and also by the fact that the United Kingdom has been at the forefront of alleviating the floods and stress facing the Pakistani population?
Mr Bellingham
I am grateful to my hon. Friend for raising the subject of the Prime Minister’s recent visit to India. It was a huge success, and has greatly enhanced our bilateral relationship. In particular, I warmly welcome the broadly based trade and investment agreement between India and the European Union. As for the Pakistani floods, our heartfelt sympathy goes out to the victims, but I am pleased to say that the Department for International Development has responded very positively by providing £64 million of aid.
Mr Ivan Lewis (Bury South) (Lab)
I do not regard deciding to attack Pakistan when in India as a great foreign policy triumph, particularly on the part of a Prime Minister of this country.
When we were in government, we took every opportunity to highlight and campaign against the horrendous human rights abuses perpetrated by the Burmese regime, to demand the release of Aung San Suu Kyi and more than 2,000 political prisoners, and to apply maximum pressure on the international community to challenge that regime. May I ask the Minister what his Government are doing to put pressure on the Burmese regime? Does he accept that the November elections were entirely illegitimate, and that there is a flawed constitution? Can he tell us what progress is being made on an arms embargo against the Burmese regime, and will he guarantee no dilution of the BBC’s World Service output in Burma?
Mr Speaker
That was three questions, but I know the Minister will be able to provide a single pithy reply.
Mr Bellingham
The Prime Minister recently met the Foreign Secretaries of India and China to express our concern about Burma and to urge them to use their good offices to push for change. I certainly agree with the shadow Minister, because for elections to take place on 7 November and to be credible in any way Aung San Suu Kyi must be released, as well as 2,100 other political prisoners.
Henry Smith (Crawley) (Con)
6. What his policy is on the process for UK ratification of future EU treaties.
The Minister for Europe (Mr David Lidington)
I refer my hon. Friend to my written statement yesterday. The Government are clear that there should be no further transfers of competence or powers from the UK to the EU in this Parliament, and we will introduce legislation to ensure that any subsequent future treaty that proposes to transfer such competence or powers would be subject to a referendum of the British people before it could be ratified by this country.
Henry Smith
I am grateful to the Minister for his reply. Can he elaborate on exactly how transparent the process for deciding on a referendum will be, and will the legislation be drafted in such a way that there will not be undue delay by possible judicial review?
Mr Lidington
The legislation will be drafted to make clear those aspects of the European Union treaties on which the Government would expect to require a referendum were there to be a proposal for change. It will, of course, be possible for people to use judicial review if they wish to challenge a Minister’s decision. I think that is likely only in cases where a Minister were for some extraordinary reason—no Minister in the current Government would do this—to wish to deny the people the right to have their say.
Chris Bryant (Rhondda) (Lab)
The Minister seemed to get his ratchets in a bit of a twist in his written ministerial statement yesterday. First he said that all ratchet clauses would be subject to primary legislation, then that major ratchet clauses would be subject to a referendum, and then, towards the end of his written ministerial statement, he confessed that there is no agreed definition of what a ratchet clause is at all, so his legislation is a pile of nonsense really. Does he not accept that the real danger here is that, effectively, what he is doing is asking the courts to decide when there will be a referendum or when there has to be primary legislation, because they will be deciding what is a ratchet clause? Some of us would like the Government to opt in rather more frequently, not least to the directive on human trafficking.
Mr Lidington
When the hon. Gentleman sees the Bill, I think he will find that we have very clearly defined those articles of the treaties where a referendum would be required and those where primary legislation would be required. I only wish that the Minister had it in him to welcome the fact—[Hon. Members: “Minister?”] Old habits die hard, I am afraid. I wish the hon. Gentleman would have the grace to recognise that whereas in the Government in which he served decisions to cede powers to the European Union took place on the sofa in No. 10 Downing street, we are ensuring that under this Government it is the British people who will have the final say before any further powers are transferred to Brussels. It will be up to the people, and I wish the hon. Gentleman had as much confidence in democracy and the will of the people as we on this side of the House have.
Chris Heaton-Harris (Daventry) (Con)
Has the Minister read last week’s interesting and very long speech—a state of the Union address—of the President of the European Commission, Mr Barroso? He calls for own resources to be raised by the European Union. What is the Government’s view and will this be subject to the referendum lock?
Mr Lidington
The President of the Commission made his comments in the context of the forthcoming negotiations about the new financial perspectives. The Chancellor of the Exchequer, who will be leading the Government in our approach to those negotiations, has made it clear that we will seek cuts in the European Union budget for the protection of the British rebate and no new European-level taxes.
Steve Baker (Wycombe) (Con)
8. What steps he plans to take to promote self-determination for Kashmir.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)
It is not for the United Kingdom Government either to prescribe, or mediate in, a solution to the situation in Kashmir. It is the long-standing policy of the British Government that this is a matter for the Indian and Pakistan Governments, taking into account the wishes of the Kashmiri people.
Steve Baker
I am grateful to my hon. Friend for that. Does he agree that many British Kashmiris, particularly those in Wycombe, hold this Government to account for the actions of our forebears in relation to Kashmir and its predicament?
Alistair Burt
I hear the sentiment from my hon. Friend. I must say that the British Government work on, and devote resources to, assisting with conflict resolution in Kashmir, tackling human rights concerns and helping to build confidence on both sides of the line of control. With that confidence, we then continue to ensure that there is a dialogue with the Indian and Pakistan Governments, because the resolution of this long-standing situation is for them, taking into account the wishes of the Kashmiri people.
Robert Flello (Stoke-on-Trent South) (Lab)
I recall that the last time I raised the issue of Kashmir on the Floor of the House the Secretary of State was going to refresh his memory on the British Government’s position on Kashmir. I hope not only that he has had an opportunity to do that but, given the further increased violence in the region of late, he will consider that it is the position of the British Government to mediate where there are conflict areas, particularly given the historical impact that Britain has had on that region; indeed, it has possibly caused some of the problems there. Will he or his Minister commit to thinking carefully about whether the British Government’s position can be changed slightly to ensure that we can mediate in that area?
Alistair Burt
It has been a difficult summer. The television pictures of yesterday’s violence in Kashmir shine a spotlight on the situation, but they emphasise, yet again, how important it is for a long-standing resolution to be achieved. It should be, and the long-standing position of the British Government has been, that this resolution has got to be achieved through dialogue between the Governments of India and Pakistan, taking into account the wishes of the Kashmiri people. What the events of the summer and of yesterday have shown is that there is increasing concern, and that should increase the emphasis that the Governments should place on finding a resolution to the situation.
Karen Lumley (Redditch) (Con)
9. What steps his Department is taking to ensure political stability in the Maldives.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)
The Foreign and Commonwealth Office has been in regular contact with senior political figures in the Maldives during a difficult summer there and, in particular, during the recent political crisis; I last spoke to members of the Opposition and of the Government in the Maldives on 16 August. We continue to urge parties there to get over their difficulties and their conflicts with each other and not to lose the gains that have been made in democracy since the reforms of 2008.
Karen Lumley
I thank the Minister for that answer. Having spent a great deal of time in the Maldives helping to elect a democratically elected President—[Interruption.] Somebody has to do it—[Interruption.]
Mr Speaker
Order. I want to hear about the hon. Lady’s time in the Maldives.
Karen Lumley
It was great to see President Mohamed Nasheed elected as the first democratic President, and I was proud to be part of that. What practical help can we give the Maldives at this time of constitutional crisis?
Alistair Burt
As well as the informal contacts between parliamentarians, which I am sure bolster a great deal of support in the Maldives, we give practical support through our bilateral programme. We give support to police reform, to civic and electoral voter advice, to media training and to counter-radicalisation work. The Commonwealth is also interested in providing support for judicial and constitutional reform. It may assist stability in the Maldives if a lengthy fact-finding visit were made by a British Minister and, reluctantly, I am prepared to put myself forward for that, should the occasion arise.
Mr Christopher Chope (Christchurch) (Con)
10. What representations he has made at EU level on the affordability of EU external action programmes.
The Minister for Europe (Mr David Lidington)
I recently stressed to the High Representative of the Union for Foreign Affairs and Security Policy, Baroness Ashton, the importance of delivering greater efficiency savings from the merger of European institutions with a view to achieving the agreed goal of budget neutrality. Both my right hon. Friend the Foreign Secretary and I will continue to press this point strongly during our contacts in Brussels and with our European colleagues in other capitals.
Mr Chope
I am grateful to my hon. Friend. He refers to budget neutrality, but I understood from an earlier question that we were talking about budget cuts in the EU. Surely my hon. Friend will accept that nothing is going to be acceptable to people in this country except budget cuts in the EU while we have to make severe cuts to our own British diplomatic service.
Mr Lidington
We believe that the External Action Service should operate only in those areas of policy where collective action at European Union level can genuinely add value to the work already being done by national diplomatic services. We will certainly be looking for economy, but I am sure that my hon. Friend would want to see the secondment of national diplomats, including those from the United Kingdom, to the European External Action Service and not to rely entirely on people transferred in from existing European institutions. That will require a short-term spike in expenditure for the EEAS. The High Representative has committed herself to bringing that down as soon as possible and to seeking 10% cuts in her budget as a first priority.
Mr Nigel Dodds (Belfast North) (DUP)
Does the Minister not agree that it would be totally unacceptable if the UK’s contribution to the EU budget were to rise? Given the fact that we are facing massive cuts in all areas across the board domestically, it must be the case that in this area—and across the board—this country’s contribution to the EU must be cut.
Mr Lidington
I think it is important that we seek the greatest possible value for money and economy in expenditure in every aspect of European Union spending, whether that is in one of the relatively small items of expenditure, such as external action, or in one of the large items, such as agriculture.
Tim Farron (Westmorland and Lonsdale) (LD)
Is the Minister aware of the enormous cost to the British taxpayer of the United Kingdom’s remaining outside the EU’s Schengen agreement? Is he aware, for example, that this year there will be four times more Chinese tourists going to Germany than to the UK because of the additional complications that this absence creates? Will he stand up for tourism businesses in the Lake District, the Yorkshire Dales and other tourist venues in the UK and look to engage with Schengen in a more appropriate manner?
Mr Lidington
My right hon. Friend the Home Secretary, who leads for us on these matters, is very clear that the priority for the people of the United Kingdom should be the maintenance of our own domestic controls over our borders and not giving control of immigration policy to European institutions.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
I am amazed to find out that Schengen has anything to do with the External Action Service. I certainly welcome the Minister’s balanced approach to this matter. In fact, is it not true that in other parts of the EU the complaint is that there is far too much British influence in the diplomatic corps of the European External Action Service? Surely we must commend that, because it will bring a UK perspective to the actions in the EEAS that we should welcome.
Mr Lidington
The hon. Gentleman is right to say that that complaint is frequently heard in Brussels and in other European capitals. What I would say to those Members of the House, on both sides, who, like me—I freely admit it—voted against the establishment of the EEAS is that now that this body exists we should do all that is within our power to help shape it so that it can be used to give greater leverage to British influence throughout the world.
Mark Menzies (Fylde) (Con)
11. What reports he has received on the case of Ebrahim Hamidi, sentenced to death on charges of homosexuality in Iran.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)
We are aware of, and we share, the concerns about the case of Ebrahim Hamidi. I last raised the issue with the Iranian ambassador on 18 August.
Mark Menzies
I thank the Minister for his answer, but he must be aware that the great injustice that Ebrahim Hamidi has suffered brings into question Iran’s human rights record. I urge my hon. Friend—and through him, the British Government—to do everything he can for this young man and to press Iran to honour its international obligations?
Alistair Burt
I am grateful to my hon. Friend. A number of hon. Members have raised this case with me by letter in the past few weeks. The European Union and the United Kingdom have raised the subject of human rights with Iran some 70 times in the last year. We continue to press Iran to live up to its obligations under the international covenant on civil and political rights. We have joined the international condemnation in the case of Sakineh Ashtiani and of the death sentence against her. We continue to make it clear to Iran that its human rights record is a barrier to its relationship with other nations and that the sooner it moves on this, the better for all of us.
Damian Hinds (East Hampshire) (Con)
12. What his most recent assessment is of the state of the UK’s bilateral relations with Zimbabwe; and if he will make a statement.
Mr Mark Spencer (Sherwood) (Con)
14. What his most recent assessment is of the state of the UK’s bilateral relations with Zimbabwe; and if he will make a statement.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Henry Bellingham)
We are doing all we can to support the aspirations of the Zimbabwean people to a peaceful, prosperous and democratic Zimbabwe. We will go on working with reformers in Zimbabwe and in the region to maximise the prospects of achieving the reforms needed for properly conducted elections.
Damian Hinds
I am grateful to the Minister for that answer. Does he agree that despite the progress that has been made through the inclusive Government, the situation in Zimbabwe remains critical and it is vital to continue all moves towards free and fair elections? What role can he play, working with the Department for International Development and others in the region, in bringing that day closer?
Mr Bellingham
I am grateful to my hon. Friend for mentioning DFID, because its aid budget to Zimbabwe, at £60 million, is the largest it has ever been. All DFID bilateral funds continue to go through the UN and non-governmental organisations, and regular monitoring and robust processes are in place to ensure that those funds go where they are meant to go. None of the funds go directly to Zimbabwean Government Departments.
Mr Spencer
What can the Government do to ensure that any referendum next year or any future elections are carried out in a free and fair manner? How can we ensure that they are monitored and overseen?
Mr Bellingham
I am grateful to my hon. Friend for his question. Our Government are doing all they possibly can, working with the Southern African Development Community, front-line countries, the UN and the EU. I agree entirely with him: two important polls are coming up next year—the referendum on the constitution and the presidential and parliamentary elections—and it is vital that monitors and observers are in place early on. We must learn the lessons of the 2008 election. They need to be in place early and after polling day they need to monitor the count as well.
Keith Vaz (Leicester East) (Lab)
Given the critical situation in Zimbabwe, does it remain the Government’s policy that Zimbabwean citizens who have claimed asylum here will be removed to Zimbabwe?
Mr Bellingham
The UK Border Agency is looking to start work on a process aimed at normalising our returns policy to Zimbabwe as and when the political situation develops. However, we are not starting enforced returns yet by any means.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
The Minister will, I am sure, join me in welcoming the fact that the BBC World Service has recently been able to have a correspondent back in Zimbabwe. Given the important aspects of accountability and information that the BBC World Service brings to Zimbabwe and other parts of the world, what assurances can he give that it will continue to be supported by the Foreign Office?
Mr Bellingham
There are currently no proposals to close any language service. Any such proposal requires ministerial approval and no such approval has been sought or given as yet. There was an article in The Guardian that was wholly inaccurate and pure speculation. Discussions are ongoing and there will be a robust discussion involving the Foreign Office about the World Service’s £272 million annual direct grant, but no decisions have been taken. I stress that any closure of a language service requires ministerial approval.
Gareth Johnson (Dartford) (Con)
Is my hon. Friend aware that Israel has recently altered its approach to the blockade of Gaza and ensured that there will be an increase of genuine aid—
Mr Speaker
Order. I am sorry, but I am trying to be helpful to the hon. Gentleman. He was standing in relation to a question about Zimbabwe.
Mr Speaker
It is okay, but another time. We are grateful to the hon. Gentleman.
Steve McCabe (Birmingham, Selly Oak) (Lab)
13. What his most recent assessment is of the state of UK-Iranian relations; and if he will make a statement.
The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
We would welcome improved relations with Iran. Improved relations will come with the Iranian Government engaging in good faith with the E3 plus 3 on their nuclear programme and on improving their increasingly poor human rights record.
Steve McCabe
Iran claims that criticism of attacks on Camp Ashraf refugees and the stoning to death of Sakineh Ashtiani are part of a soft war that the west is waging on Iran. Are we engaged in a soft war, and does more need to be done now to confront that regime’s intolerable human rights agenda?
Mr Hague
We are not engaged in a war of any kind, but we want legitimate expressions of opinion to be heard and we want the human rights record of the Iranian Government to be seen for what it is throughout the world, because it is utterly unacceptable to anyone who cares about basic human rights anywhere on earth. I do not call that a war, but certainly, we want those things. The most important thing that we seek is for Iran to negotiate on its nuclear programme with the E3 plus 3—the three leading European nations and the other members of the UN Security Council—so that the danger of nuclear proliferation in the middle east can be addressed.
Robert Halfon (Harlow) (Con)
If, as expected, Iran looks as though it will acquire nuclear weapons capability and if all other avenues have been exhausted, will the Government support Israel if she takes military action to deal with that terrible threat?
Mr Hague
I hope, Mr Speaker, that I dealt with that in answer to my right hon. and learned Friend the Member for Kensington (Sir Malcolm Rifkind). I stress that we are taking a twin-track approach to the Iranian nuclear programme. One of those tracks is sanctions, and we agreed in the European Union at the end of July a strong and wide-ranging set of sanctions that puts additional pressure on Iran over its nuclear programme. The other track is to remain open to negotiations about that nuclear programme. It is on that twin track that we must concentrate now.
Barry Gardiner (Brent North) (Lab)
16. What recent discussions he has had with the UN High Representative for Human Rights on the situation of Tamils in detention camps in Sri Lanka.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)
There are still some 25,000 Tamils as internally displaced persons in camps. We maintain a regular dialogue with a variety of NGOs, including UNHCR, about their condition. As I indicated in answer to an earlier question, we also maintain a dialogue with the Government of Sri Lanka in relation to the issue.
Barry Gardiner
My question was specific. It asked what recent discussions there had been, and it asked about the situation of Tamils in those detention camps. I do not believe I got an answer to either of those elements of the question, and I therefore ask the Minister to respond specifically—when, where, what, and what is going to be done?
Alistair Burt
The hon. Gentleman has been assiduous in his pursuance of Tamil constituents’ concerns and he has raised these issues before. I indicated that there is a regular and constant dialogue between the Government’s representatives in Colombo and UNHCR, and I meant exactly that—it is regular and ongoing. The United Kingdom Government have spent about £13.5 million to support internally displaced persons. We are concerned and our most recent discussions revealed the concerns about the clampdowns on NGO activity with those in the camps. So in answer to the hon. Gentleman’s probing about the conditions, we remain concerned. I raised the matter with the Foreign Minister this morning and he is aware of people’s concerns. We will continue to do so because if the Government of Sri Lanka are serious about their attempts at reconciliation, these matters must be cleared up and dealt with. The hon. Gentleman is right.
Mr James Gray (North Wiltshire) (Con)
The Minister’s word “reconciliation” is right after 25 years of appalling civil strife. In addition to the Tamils who are kept in such dreadful conditions in the camps, is he aware that quite a number of Sri Lankans in Colombo and elsewhere who were thought to be vaguely sympathetic towards the Tamils are also in detention without trial? There is huge human rights abuse there as well. Is my hon. Friend addressing that with the new Government?
Alistair Burt
Yes, my hon. Friend is correct. Human rights issues, particularly freedom of expression and concerns about the media, have been raised. There is no doubt that conditions have changed in Sri Lanka and have improved to a degree after the conflict, but the issue, as he says, is just how far that goes. That is why we are pressing the Government of Sri Lanka. If they meant what they said about reconciliation at the end of the conflict, we all have to see that in practice on the ground, rather than just words.
Siobhain McDonagh (Mitcham and Morden) (Lab)
Given the widespread allegations of war crimes during the civil war in Sri Lanka, does the hon. Gentleman agree that the Sri Lankan Government are being unreasonably provocative in appointing as their new high commissioner and deputy high commissioner two of their most senior military leaders, Admiral Wasantha Karannagoda and Major General Paranna Silva, who were responsible for some of the most brutal fighting during the conflict? If he agrees with me, what do the Government intend to do?
Alistair Burt
I am not aware that any representations have been made to the United Kingdom Government in relation to a position of high commissioner. I am aware of the position in relation to the defence attaché. It would be difficult to conceive of a defence attaché without a military background, and that appointment is understood. I have not heard anything about the other position, but the hon. Lady certainly raises an issue. If reconciliation is to be the watchword of the Sri Lankan Government, every appointment that they make will be looked at in those terms. Accordingly, appointments that are conciliatory and go some way towards remedying the tragedy of the conflict are surely rather better, for them and for the rest of the world, than anything else, but these appointments are a matter for the Sri Lankan Government in the first place.
Mr Stewart Jackson (Peterborough) (Con)
17. What recent assessment he has made of the implications for the UK of Iran’s nuclear programme; and if he will make a statement.
The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
Iran’s nuclear programme threatens global security. Iran continues to develop its programme in defiance of UN Security Council resolutions and with a lack of transparency with the International Atomic Energy Agency, both of which are pillars of the international security framework.
Mr Jackson
At the risk of being repetitious, but for the benefit specifically of the Iranian Government, will the Foreign Secretary confirm that our Government are prepared to meet them at any place, any time in order to resolve peacefully the issue of nuclear proliferation?
Mr Hague
The specific offer on the table is for Baroness Ashton, the EU High Representative, to meet representatives of the Iranian Government on behalf of the E3—Britain, France and Germany—and, indeed, on behalf of the other permanent members of the UN Security Council. Of course, all the countries involved are happy to assist in those negotiations, but that is what we would now like the Iranians to do.
Mr Jim Cunningham (Coventry South) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
His Holiness Pope Benedict will visit the United Kingdom this week, the first such official papal visit to our country and an event of great significance to many people in Britain. It will be a time to celebrate the role of faith groups in our communities and to make common cause with the Holy See on tackling poverty and climate change.
Mr Cunningham
What role is Britain playing in the peace process between the Palestinians and the Israelis? In particular, what is the Foreign Secretary doing to facilitate the delivery of aid to the Palestinians?
Mr Hague
Britain plays an active role in ways that I described in previous questions. In particular, we played an energetic role in encouraging Israelis and Palestinians into those direct talks. We now remain in close touch with what is happening in them—ready to assist in any way—as do so many other European nations.
We are major contributors of aid to Palestinians, and one of our concerns is that there should be a greater flow of goods into Gaza. We welcome the statements that Israel has made, since the Gaza flotilla incident, about improving access to Gaza, but we now want to see that really happen in practice.
Andrea Leadsom (South Northamptonshire) (Con)
T3. Will the Foreign Secretary please outline his plans to reinvigorate the Commonwealth? In particular, bearing in mind the historical links between our many countries, will he support the idea of projects, such as one in my constituency of South Northamptonshire, to twin schools in this country and in Uganda?
Mr Hague
Yes. Such decisions are for each locality, but I strongly welcome them. Part of this Government’s plan is certainly to reinvigorate, as my hon. Friend says, our approach to the Commonwealth, a subject and organisation that was rather neglected under the previous Government, and I am glad to say that the Commonwealth is now convening an eminent persons group—and even more glad to say that my right hon. and learned Friend the Member for Kensington (Sir Malcolm Rifkind) is one member of that group. We look forward to its report early next year, ahead of the Commonwealth Heads of Government meeting in Australia.
David Miliband (South Shields) (Lab)
We have not yet discussed Afghanistan, and, given that 10,000 of our fellow citizens are serving there, it is right that we do so.
The Foreign Secretary has said that he recognises the importance of political reconciliation to end the war in Afghanistan. Does he accept that, almost two months after the conference that he attended in Kabul, Afghan officials are still bickering over who should be in charge of the high peace council that the Foreign Secretary lauded when he came to the House in July? Will he confirm that only a few hundred Taliban fighters have come in from the cold over the last six months? What is the Foreign Secretary going to do to pour drive, energy and effort into an initiative that, as The New York Times rightly said on 12 September, “has badly faltered”?
Mr Hague
The right hon. Gentleman is quite right to raise Afghanistan, which ought to be discussed at every Foreign and Commonwealth Office questions. He is right to refer to the extent of our deployment there and the very hard work that our troops continue to do. I think that he and I agree—I think we are agreed across the Floor of the House—that the political process is of huge importance, as well as the military progress that has been made.
A political reconciliation was what President Karzai received the support of the peace jirga to carry out. It is very important that that should be an Afghan-led process, so the United Kingdom and the United States are very active in supporting the Afghans in leading that process. Has it yet produced results? Well, it has not, but it would be surprising if it had produced results at this stage. The reintegration programme has just begun and the opportunity for political reconciliation now exists. It would be quite wrong to judge the possible outcome of that process from what has happened in just the last few weeks.
Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)
T4. I am sure that the Minister will be aware of—and, like me, very much value—this country’s strong links with the Caribbean. He will also be aware that during the economic downturn the Caribbean has struggled as a result of the effect on its tourist revenue and revenue from its financial services industry. That may well affect the Caribbean’s ability to police the international drugs trade. What steps will the Minister be taking to support the Caribbean in that policing activity, with specific regard to the overseas territories?
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Henry Bellingham)
I am grateful to my hon. Friend for raising that matter as I share his grave concerns about drug trafficking in the Caribbean. A staggering 30% of the cocaine on the UK streets passes through the Caribbean. I am pleased to tell him that the Serious Organised Crime Agency is working with Caribbean countries and our overseas territories on both training and mentoring. It is making very good progress.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
T2. On 2 September, Karel De Gucht, the European Commissioner for Trade, told a Belgian radio station that there was little point in trying to engage in rational argument with Jews and that peace talks between Israelis and Palestinians were doomed to failure because of the power of the Jewish lobby. Is the Foreign Secretary surprised to hear those sentiments and has he heard them before?
Mr Hague
I have not heard them before. I totally disagree with those sentiments. I think that the direct talks between Israelis and Palestinians now represent a genuine opportunity. There is a long way to go, and one should not artificially raise expectations about the results of those talks, but they have begun in a very good atmosphere. If the quote that the hon. Lady gives from the European Commissioner is correct, I flatly disagree with it.
Amber Rudd (Hastings and Rye) (Con)
T5. Does the Foreign Secretary think that there are hopeful signs in the relationship between Kosovo and Serbia? Will he give us an update on the current state of the proposed resolution?
Mr Hague
There are hopeful signs, I am glad to say. I visited Belgrade two weeks ago to ask Serbia to join a common European Union resolution in the UN General Assembly, rather than sponsoring a resolution of its own. The resolution asked the EU High Representative to facilitate practical talks and a constructive dialogue between Serbia and Kosovo. I am glad to say that, because of pressure from across the European Union, Serbia agreed to do that, and the resolution was carried unanimously in the General Assembly last week. At last, there can now be the beginnings of a dialogue between Serbia and Kosovo—an important step to bringing peace and security to the Balkans.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
T7. As the Foreign Secretary will be aware, Chernobyl Children’s Life Line, the UK charity, provides support for child victims of the Chernobyl disaster. One way in which it does that is to bring children to the UK for recuperative breaks, including regularly to my constituency of Kilmarnock and Loudoun. Unfortunately, there increasingly seem to be problems in allowing safe and easy passage for children coming from Ukraine. Will the Minister agree to meet Her Majesty’s ambassador to Ukraine to discuss how some of those issues can be dealt with and ensure that the situation is ameliorated in the near future?
The Minister for Europe (Mr David Lidington)
I am very happy to follow up the concerns expressed by the hon. Lady and to take advice from Her Majesty’s ambassador in the way that she suggests.
Andrew George (St Ives) (LD)
T6. As we heard earlier, many millions of people depend on the BBC’s World Service, which achieves its very impressive and impartial global reach on a budget that is roughly equivalent to that for three and half fighter jets. Will Ministers at least acknowledge the importance of this vital service to the United Kingdom as the comprehensive spending review nears its completion?
Mr Hague
Yes, I completely agree with my hon. Friend—it is an absolutely vital service for the United Kingdom and an absolutely vital service to many parts of the world. I have often spoken about its great value to this country. Of course, in the current situation all parts of the public sector have to be scrutinised for value for money, and the BBC World Service itself believes that it is possible to make economies without necessarily affecting the services it provides. We are looking at that in the comprehensive spending review. However, my hon. Friend will find that I am a very strong supporter of the work of the World Service, so he should not believe some of the wilder rumours that fly around.
Ian Austin (Dudley North) (Lab)
T9. Which of the Prime Minister’s foreign policy achievements is the Foreign Secretary most proud of—belittling Britain’s heroism during the second world war, destabilising the tense relationship between India and Pakistan, or enraging the Israelis by calling Gaza a prison camp?
Mr Hague
I am proud of the fact that wherever the Prime Minister goes he forges very strong relationships with the countries that he and I visit, and they often find his diplomatic good sense, his openness and his ability to talk to people a very refreshing change from his predecessor.
Margot James (Stourbridge) (Con)
T8. With the continuing focus on Afghanistan, we must not be distracted from the other countries where al-Qaeda is reported to be active. To that end, could the Minister update the House on the progress that might have been made with the Friends of Yemen initiative, which Britain is leading?
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)
I am grateful to my hon. Friend for that question. She is absolutely right: Yemen is increasingly important in concerns about counter-terrorism. The Friends of Yemen initiative has been rekindled since the current Government came to office, and there is an important meeting in New York on 24 September. This is a group of nations that has come together in order to support Yemen, recognising that it faces economic and security challenges. The United Kingdom is already doing effective work bilaterally, but we are also working increasingly with other nations to assist on economic reform and political reform and dialogue, and to give continuing support on counter-terrorist activity to ensure that al-Qaeda does not get a grip in that crucial region.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
Is the Foreign Secretary aware that there are still very strong concerns about human rights abuses in Darfur and more widely in Sudan? Would he care to brief the House on the Government’s view of the current situation and what initiatives they might have taken?
Mr Hague
The right hon. Gentleman is absolutely right. We have long-standing concerns about Darfur across the House. One of the things we are doing is to try to ensure that we retain a strong peacekeeping force in Darfur; the withdrawal of any of that threatens to make these problems even worse. We support, of course, the indictment that the International Court of Justice has put forward on the President of Sudan. We are doing a lot of work on the south of Sudan and the prospects for a referendum there, including all the arrangements for that and the controversy and political disputes that it may bring. Our ambassador in Khartoum is well engaged in all these matters, and we will continue to be very vigilant about them.
Philip Davies (Shipley) (Con)
Given the Government’s support for Turkey’s membership of the EU, what assessment have they made of the extra budget contributions the UK will be asked to make, and the additional immigration that there will be into this country, if Turkey joins the EU—or are they in favour of Turkey’s membership of the EU at any price?
Mr Lidington
The issues that my hon. Friend mentions are obviously important ones that would have to be addressed in the course of Turkey’s accession negotiations. However, the fact that Turkey now has an economic growth rate of 5.5% per annum compared with just 1% per annum in the eurozone indicates that Turkey’s membership of the European Union would help to benefit the prosperity of the British people and help, in some measure at least, to assuage the understandable concern that he expresses about migration.
Mr Andy Slaughter (Hammersmith) (Lab)
Palestinian and independent sources estimate that 50,000 settler homes are under construction in East Jerusalem, where the moratorium does not apply, and more than 2,500 in the west bank, where it supposedly does. If the Government believe that the freeze should be extended to East Jerusalem and beyond September, but the Secretary of State is not prepared to go to Israel to say that, what is he doing to ensure that those two things happen?
Mr Hague
The Israeli Government are in no doubt about our views, which I stated at the beginning of Question Time. We regard all settlement in the occupied Palestinian territories as illegal, and we clearly want the moratorium on settlements to continue. No one can be in any doubt that that is the very emphatic view of the United Kingdom, which is regularly expressed to Israeli Ministers, and a view that I believe they will receive from most of the world. I hope that they take heed of it.
Duncan Hames (Chippenham) (LD)
I welcome the Minister’s earlier remarks about political prisoners in Burma. Will he now use his good offices to seek to persuade our EU partners to back United States-United Kingdom calls for a UN commission of inquiry into war crimes and crimes against humanity in Burma?
Mr Bellingham
The UK supports the UN special rapporteur’s call for the UN to consider a commission of inquiry, and we are working to build international support for that and putting a lot of emphasis on it. I am grateful to my hon. Friend for his question.
Ian Paisley (North Antrim) (DUP)
Will the Foreign Secretary take the opportunity to update the House on the kidnapping and unlawful detention of the Israeli soldier Gilad Shalit? What steps can the UK Government take to secure his release?
Mr Hague
Obviously, we are not able directly to secure his release, but that matter is one of the deeply aggravating factors that mean that Gaza remains such an immense international problem. We have called repeatedly for the release of Gilad Shalit and will continue to do so, and the international community will continue to work towards that end. If Hamas and other forces in Gaza were remotely interested in a political settlement and in coming to terms with Israel and the rest of the international community, they would wish to do that.
Mark Pritchard (The Wrekin) (Con)
Turning to Mexico, I congratulate my right hon. Friend the Secretary of State on the British Government’s support for the Mexican Government’s fight against narco-terrorism, human trafficking and drug trafficking. May I encourage him to liaise with the Mexican Congress to ensure that it amends the constitution so that the Mexican police structures are streamlined to become more effective and efficient and provide self-help for Mexico?
Mr Bellingham
I am grateful to my hon. Friend for his question, because we support the Mexican Government’s efforts to combat transnational organised crime. We have done so on a financial basis and also through a number of key law enforcement exchanges and projects.
Andrew Gwynne (Denton and Reddish) (Lab)
Given Iran’s support for organisations such as Hezbollah, what actions are the Government taking to prevent nuclear proliferation across the wider middle east, particularly from Iran into Syria and from Syria into Lebanon?
Mr Hague
As the hon. Gentleman will know, the whole EU has joined in very strong sanctions on Iran, backing up UN Security Council resolution 1929, which imposes obligations on all UN members to take various actions to prevent nuclear proliferation. The powers given under such UN resolutions include responsibilities and powers to interdict suspect shipping, and one or two instances of that have occurred. The UK takes part in that and will encourage other countries to do so. Nuclear proliferation is one of the biggest threats to the future peace of the world, and we take our responsibilities very seriously.
Billy Wright Inquiry
(13 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Northern Ireland (Mr Owen Paterson)
With permission, Mr Speaker, I would like to make a statement. Today I am publishing the report, which I received yesterday, of the Billy Wright inquiry, set up by the previous Government to investigate the death of Billy Wright in the Maze prison on 27 December 1997. I thank Lord MacLean and his panel for their work on the report.
The inquiry was established following the recommendation of Judge Cory that there was sufficient evidence of collusive acts by the Northern Ireland prison authorities to warrant the holding of a public inquiry. The inquiry was asked to determine whether the state facilitated, or attempted to facilitate, Billy Wright’s death, whether acts or omissions by the state were “intentional or negligent”, and “to make recommendations”.
The panel’s conclusions are clear and unequivocal on the central issue of collusion. There was no state collusion in the murder of Billy Wright. The panel finds that
“We were not…persuaded that in any instance there was evidence of collusive acts or collusive conduct.”
However, the panel concludes that
“some…actions did, in our opinion, facilitate his death.”
The report details a number of serious failings prior to Billy Wright’s death. The panel is clear that where failings are identified, they were the result of negligence rather than intentional acts.
The panel criticises specific decisions taken in relation to the prison. Specifically, the panel finds that
“the decision to allocate Billy Wright and the LVF faction to H Block 6 in April 1997 alongside the INLA prisoners was a wrongful act that directly facilitated”
his murder.
The panel also makes a series of criticisms of the management and operational running of the Maze prison at the time. Wrongful omissions identified by the panel included the
“failure…to strengthen the roof defences…failing to ensure that the exercise yards…were secured and checked each night”
and the failure to carry out a “full risk assessment” before the Loyalist Volunteer Force prisoners were returned to H block 6 in October 1997. Overall the panel identified
“a serious failure on the part of the NIPS and its Chief Executive to deal with recognised management problems in HMP Maze in 1997.”
The Cory report covered a number of issues relating to the day of Billy Wright’s murder, including the malfunctioning of a camera and the standing down of a guard in the observation tower. With two exceptions, the panel conclude that
“none of these occurrences facilitated the murder of Billy Wright”.
In relation to Billy Wright being called by name for his visit, as was “the practice”, the panel
“do not draw any sinister conclusion from this fact but conclude that it did assist his murderers”.
The panel also finds that the
“cutting of the hole in the fence alongside A Wing prior to 27 December undoubtedly facilitated the murder of Billy Wright.”
The panel makes a number of conclusions relating to intelligence received prior to Billy Wright’s death, in particular that the Royal Ulster Constabulary’s failure to communicate a key piece of intelligence was a
“wrongful omission which facilitated the death of Billy Wright in a way that was negligent rather than intentional.”
The report is also critical of the failure to disclose, and in some cases the destruction of, documentary evidence by institutions and state agencies. Although the panel finds that the Northern Ireland Prison Service supplied
“the available documentary evidence which allowed the Inquiry to fulfil its Terms of Reference”,
it is clear that files were destroyed, for which the NIPS apologised unreservedly in its submissions to the inquiry. In relation to the Police Service of Northern Ireland, the report notes
“the lack of adequate and effective systems for information management, dissemination and retention with the added element in certain cases of a suspicion that this amounted to deliberate malpractice”.
Those are serious and profound failings. The NIPS has already accepted negligence in the civil proceedings brought by the Wright family in 2002. The prison service told the inquiry in its closing submission that it was a matter of profound regret to the service and its employees that Billy Wright was murdered while in custody. It apologised to the Wright family for any failings that were exploited by the murderers. I reiterate that on behalf of the Government today. There was no collusion. But, as the panel makes clear, Billy Wright was in the
“protective custody of the state”
at the time of his death. Whatever horrendous crimes Billy Wright or the LVF committed, his murder in a high-security prison should never have happened. It was wrong and I am sincerely sorry that failings in the system facilitated his murder.
There are three recommendations in the panel’s report. They cover the retention of prison records, whether any relevant lessons can be learnt for HMP Maghaberry, and whether a process similar to the Patten reforms of the RUC should be established for the Northern Ireland Prison Service. As the House is aware, prisons in Northern Ireland are now in the main a devolved matter. I will meet Justice Minister David Ford on Monday to discuss these recommendations.
It is of course important to recognise the context to Billy Wright’s death and the conditions in the Maze at the time. The circumstances of the Maze were exceptional, with 500 extremely dangerous terrorists belonging to various rival paramilitary organisations housed within the prison. A large number of the prisoners were convicted of the most heinous crimes and, as the Minister who then had responsibility for prisons, Adam Ingram, said in 1998:
“The Maze is unique. There is no other prison anywhere in the democratic world that has such a concentration of terrorist murderers”.
There is no doubt that those charged with running and overseeing the prison faced an incredibly difficult challenge, and for the most part that challenge was met.
The panel acknowledges the
“organisational and personal pressures and the valiant way in which many staff responded.”
Any failings in the management of the Maze identified in this report should not detract from the enormous courage and sacrifice that members of the Northern Ireland Prison Service made during the troubles. Let us not forget that 29 members of that service were killed during the troubles for carrying out their duties. Many more were injured in the line of duty. And as the report states, many of the families of prison officers had
“to move home because of threats made against them.”
Nor should we forget that responsibility for Billy Wright’s death lies with the INLA and the three individuals convicted of his murder. I condemn their crimes absolutely. There was never any justification for the brutal terrorist campaigns that the INLA, the Loyalist Volunteer Force and others waged. I am acutely conscious of the enormous suffering that such terrorists have caused.
The House will be well aware of the controversies over the cost and length of public inquiries in Northern Ireland. This inquiry has cost more than £30 million and lasted more than five years. Our views on these matters are well documented. Let me reiterate to the House, as my right hon. Friend the Prime Minister has done, that there will be no more costly and open-ended public inquiries.
The report is a clear account of the shortcomings in the management and running of the Maze at the time of Billy Wright’s death. His murder should never have happened. But any allegations that the state colluded in this violent killing have now been examined and rejected. I commend this statement to the House.
Mr Shaun Woodward (St Helens South and Whiston) (Lab)
I thank the Secretary of State for an early copy of his statement and join him in paying tribute to the inquiry chairman, Lord MacLean, his panel, the supporting law officers and officials. I also thank the Secretary of State for allowing hon. Members to read the report in advance of his statement.
We join the Secretary of State in putting on record our sincere thanks to the many brave men and women of the Northern Ireland Prison Service, the Royal Ulster Constabulary and the Police Service of Northern Ireland, many of whom gave their lives in the course of the troubles.
This has been an important inquiry. Whatever the context of the troubles, and whatever the crimes Billy Wright had committed—which led to his serving a custodial sentence—nothing should excuse or condone the terrible events two days after Christmas in 1997 that led to his murder while in the protective custody of a high-security prison. I share the Secretary of State’s expression of sorrow for the events and failings that happened.
Although the report addresses some of the so-called irregularities, we note Lord MacLean’s final paragraph:
“To our regret no explanation emerged in the evidence as to how the two firearms were introduced into the prison and put into the hands of his INLA murderers.”
The absence of an explanation is extremely serious. Furthermore, it has potential implications for current security policy in Maghaberry. Is the Secretary of State satisfied that all the lessons on security in prisons have been learned, especially given the events of the past 12 months?
In his recommendations, Lord MacLean observes that in 1997 the Maze was the sole prison in Northern Ireland holding the most dangerous terrorist prisoners. Given that today Maghaberry is the sole maximum security prison, can the Secretary of State tell the House what assessment he has made of the current policy for accommodation?
This inquiry, which, significantly, was converted to be held under the Inquiries Act 2005, and is therefore fundamental evidence of the good faith and efficacy of the Act, is extremely important to the family of Mr Wright. The inquiry needed to determine whether any wrongful act or omission by the prison authorities or other state agencies contributed or led to the murder of Billy Wright—or, as others have put it, whether there was collusion. The inquiry’s conclusion is very clear. Crucially, it was not persuaded by the evidence it was able to obtain
“that in any instance there was evidence of collusive acts or collusive conduct.”
The Secretary of State accepts this, and so do we.
In accepting the inquiry’s firm conclusion that there was no collusion, however, the Secretary of State will have noted Lord MacLean’s concern to qualify Judge Cory’s definition of the word “collusion”, expressing concern at the “wide definition” used by Judge Cory. How does the Secretary of State reconcile these different definitions, especially given the possibility that further inquiries might also qualify the definition, the consequences of which might allow some to draw contradictory interpretations, and even contradictory conclusions?
At Weston Park, the British and Irish Governments agreed to look into the possibility of public inquiries into several cases of alleged collusion. The inquiry into the murder of Pat Finucane has not yet been established. The House will know that when I was Secretary of State for Northern Ireland, we made it clear that it would be in the public interest to make an urgent decision on how to proceed with the Finucane inquiry once, and as soon as, Lord Saville had produce his inquiry.
The Government handled the publication of the Saville inquiry with great dignity, sensitivity and skill. Three months have now passed. In his statement today, the Secretary of State quoted the Prime Minister’s words that there would be no more costly and open-ended public inquiries, but he missed out the qualification that the Prime Minister used in his statement on Lord Saville’s report. So in the light of the Secretary of State’s words today, is he effectively telling the Finucane family that they will not have an inquiry?
The Secretary of State rightly sets great store by the work of the Historical Enquiries Team. However, where we differ is in the belief that the HET can deal with all the problems of the past. He must appreciate from the inquiry published today that the HET would have neither the budget nor the resources to mount an investigation such as the one into Billy Wright’s murder. This inquiry alone would have exhausted the entire budget of the HET, which is now tasked with looking at several thousand unsolved deaths and murders.
That brings us to the nub of the issue. Most of the families of those who died in the troubles simply want to know the circumstances of the deaths of their loved ones, and so bring closure to terrible grief and tragedy. Northern Ireland cannot be held in the grip of its past, but it will not be released from that grip just because the British Government say so. Reconciliation will require a process—and a process for everyone—but one that must recognise that no one size can fit all. Closing down the inquiry route for all, without having established a proper alternative, resourced and adequately funded, would be to take a serious risk with the stability not just of the politics, but of the lasting peace of Northern Ireland. On that, the Secretary of State should be cautious. I urge him to reflect carefully.
Mr Paterson
I thank the shadow Secretary of State for his opening comments. He asked a number of questions. First, on the lessons for prisons, he played a huge part in ensuring that prisons were devolved. It is not for me to make judgments today about the comments in the tribunal’s report. I have a meeting with the devolved Minister, David Ford, on Monday, and I will go through those recommendations with him. The same applies to the right hon. Gentleman’s questions about Maghaberry. There are 70 separated prisoners in Maghaberry at the moment, which is an enormous contrast with the concentration of 500 prisoners in the Maze in 1997. Again, however, if there are lessons to be drawn from today’s report, they are to be drawn by the devolved Minister and those who work under him, and then put into practice.
On collusion, the right hon. Gentleman quite rightly pointed out that there is a contrast between Judge Cory’s definition, which ran to 765 words, and the shorter version, which Lord MacLean came up with. For the benefit of the House, let me read the concise definition of collusion that Lord MacLean came up with in the report:
“For our part we consider that the essence of collusion is an agreement or arrangement between individuals or organisations, including government departments, to achieve an unlawful or improper purpose. The purpose may also be fraudulent or underhand”.
That is a good distillation of what Judge Cory was aiming at. We have to take the definition given by the tribunal in the report, and the report was quite clear: there was no collusion in this case.
The right hon. Gentleman asked about the Finucane case. As with the last time he raised the issue, I have written to the Finucane family. He wrestled with the problem when he was in office, and although I am fully aware of the difficulties and sensitivities associated with the case, it is right that I talk to the family first, before deciding how we proceed further.
The right hon. Gentleman then talked about the past. He quite rightly contrasted the £30 million spent on the one death that we are discussing today and the £34 million that was the original budget, over six years, for the HET, which is looking into 3,268 deaths. My view is that this asymmetrical approach to the past, with an extraordinary intensity of effort put into a small number of cases, is not fair and is invidious. I hope that we will get the same reaction today that we had to Saville—that it was an effort well spent—but for the future, as the right hon. Gentleman knows, there is no consensus on how we handle the past.
The right hon. Gentleman called for submissions reacting to the Eames-Bradley report, which he received in October and which, in fairness to us, we published in the summer. I am listening to parties in this House across the board, and the Minister of State and I are going round Northern Ireland talking to numerous people and groups. Sadly, however, as he saw from those replies to Eames-Bradley, there is just no consensus. It is not for us, as the Westminster Government, to impose one; rather, it is our task to try to find a way forward in close collaboration with local politicians and local groups. That is how we intend to approach the past.
Mr Laurence Robertson (Tewkesbury) (Con)
I, too, thank the Secretary of State for advance sight of his statement and the report. While acknowledging the mistakes that have been made—mistakes that are highlighted in the report—I join him in paying tribute to the many prison officers who have worked against a background that has not been seen on the mainland or in many other countries. Indeed, 29 prison officers lost their lives—28 of them outside the prison, which shows the danger that they faced as they went about their work.
Does the Secretary of State agree that this report, and the Saville report on Bloody Sunday, highlight the waste involved in the years of the troubles, and the waste that terrorism brings in terms of lost lives and wasted opportunities? Does the report not point to the fact that the way forward for Northern Ireland must surely be through peace and democracy?
It is difficult to bring closure when there have been so many deaths in Northern Ireland, but relatives involved with Bloody Sunday, and now those involved with the Billy Wright report, have received some form of closure. There are, however, many crimes, including Omagh, that have not been properly investigated or been the subject of such a report. Will the Secretary of State tell us what he intends to do about that?
Mr Paterson
I thank the Chairman of the Northern Ireland Affairs Committee for his comments, and commend the Committee for the work that it does for Northern Ireland. He is absolutely right to say that the more we go into the details of these cases, the more apparent the traumatic waste of the troubles becomes. We would like to work with him and his Committee as we seek a way forward on handling the past.
On the question of Omagh, I shall be having a meeting with the relatives affected by that appalling atrocity reasonably soon. As I said earlier, it is our intention to talk to as many people as we can over the coming months, to see whether we can find a means of handling the past that attracts broad support. Sadly, however, I am fully conscious that however hard we try, we will not come up with something that pleases everyone.
David Simpson (Upper Bann) (DUP)
I thank the Secretary of State for this report and for his comments today. I want to pay tribute to Mr David Wright, Billy Wright’s father, who is one of my constituents; the family as a whole lived in my constituency. David Wright went the extra mile to try to find the truth of how his son died. No matter what his son was in prison for, he was the responsibility of Her Majesty’s Government and the Northern Ireland Prison Service.
We got the report this morning. It contains 700-odd pages, and even Einstein could not have comprehended it all in the given time. It highlights to me, however, the difficulties that existed at that time in the prison. I pay tribute to the prison officers, who have done a sterling job down through the years, but the senior management of the Prison Service have some questions to answer. Will the Secretary of State tell us what confidence he can give to the people of Northern Ireland in relation to the Prison Service going into the future, and whether any of the senior management who are still alive will pay a price for this?
Mr Paterson
I thank the hon. Gentleman for his comments, and I endorse his feelings for his constituent, Mr David Wright, whom I met a couple of weeks ago. He has battled staunchly to try to find out how his son died. I also echo the hon. Gentleman’s comments, and those of the Chairman of the Select Committee, about those who work in the Prison Service, who were given great praise in the report.
As for the future of the Prison Service, that matter is now in local hands. It is down to the local Justice Minister, who is accountable to the Assembly and sits on the Executive. I will sit with him on Monday and we will go through the very serious failings that have emerged from the report—which are, of course, from another era—and through its recommendations. What happens next, however, is very much down to the local Minister, working with local politicians.
Mark Durkan (Foyle) (SDLP)
I too have met David Wright; unfortunately, I never met Billy Wright, but I too felt David Wright’s pain as a father. I have also met many victims of Billy Wright and the LVF. We remember them today, just as we should remember all the victims of all the terrorism of the INLA, who will have very mixed feelings on a day like today.
The Secretary of State has told us in the statement that the report emphatically rejects the idea of collusion. But does he not agree that that is partly because the report relies on the fact that the word “collusion” was not in the terms of reference for the inquiry and also because it specifically demurred from Judge Cory’s definition of collusion—a definition that was, of course, clearly embraced by the police ombudsman in the recent report about Claudy?
As for the findings, the report identified six wrongful omissions by the Northern Ireland Prison Service, which the panel say facilitated the murder or death of Billy Wright. Three further findings of wrongful omissions were identified that indirectly facilitated his murder, as well as two wrongful acts by the NIPS, one of which is held directly to have facilitated the murder, and one serious failure on the part of the Prison Service and its chief executive, involving a decision with ministerial knowledge, with conclusions attached to that to the effect that wrongful acts or omissions indirectly facilitated the murder. One Maze prison practice was concluded to have assisted the murder; one further prison failure undoubtedly facilitated the murder; and one wrongful omission by the Royal Ulster Constabulary that facilitated the murder was held to be negligent rather than intentional. In relation to the same issue, there was one most unfortunate conclusion against the security service. Yet all that adds up to “no collusion”, so what does it add up to?
Mr Paterson
I am grateful to the hon. Gentleman for his question. I have to remind him that we did not commission this inquiry and we did not set the terms. We received it yesterday afternoon and we have come straight to the House to publish it. The hon. Gentleman quite rightly lists the very severe criticisms of factors that led to the murder of Billy Wright in prison, which were serious failings that should not have happened to any British citizen in protective custody in a high-security prison. I have been open about that and I have sincerely apologised on behalf of the British Government. In fairness to ourselves, we have to take the report as commissioned and as it has been presented to us, and under those terms, the tribunal is quite clear that there has been no intent of collusion and no act that could be regarded as collusive either by commission or omission.
Mr Nigel Dodds (Belfast North) (DUP)
For a citizen to be murdered while in the protective custody of Her Majesty’s Government is shocking and disgraceful. When one considers that that person was murdered as a result of actions and omissions by agencies of the state, it is all the more shocking and disgraceful. Clearly, there are still unanswered questions, not least about how firearms came to be in possession of the killer. As to the missing and destroyed files and documents referred to—they were destroyed by both the PSNI and by the Northern Ireland Prison Service—to what extent is the lack of those documents and files a contributory factor in the inability to get to the truth of what really happened on that day?
Mr Paterson
The right hon. Gentleman makes a very good point—that it is most regrettable that a large number of documents were destroyed. It is wrong, and the report goes into some detail to show that a large amount of documentation was destroyed or lost. The report goes on to say, however, that nothing was found to suggest anything “sinister” in the document destruction. We should not forget that this was an inquiry into whether there was collusion. Did the British state do something deliberate or not do something by omission that led to the murder of Billy Wright? Having looked at more than 30,000 pages and after 152 days of hearings, the inquiry’s conclusion was that there was no collusion. We have to take the report as it has been presented to us.
Ms Margaret Ritchie (South Down) (SDLP)
I thank the Secretary of State for his statement. As my hon. Friend the Member for Foyle (Mark Durkan) has said, none of us should forget the pain and suffering of many people at the hands of paramilitaries in Northern Ireland over the past 35 years. We must never forget the actions, either direct or indirect, of the late Mr Wright, which resulted in the loss of life in the general Portadown-Craigavon area, or his actions in relation to the whole Drumcree crisis. We must also not forget the pain and suffering of his father and his family, because those events resulted in his death, which should never have happened.
Will the Secretary of State outline the advice and recommendations that he will give Minister Ford when he meets him next week, with due reference to a possible commission to produce a root-and-branch review, and to the systemic failure of the management of the Northern Ireland Prison Service? There was no conjunction between policy and operation. Will the right hon. Gentleman also tell us what efforts he will make to assuage the fears of Mrs Finucane and her family, and the Ballymurphy families, who are also suffering at this time and who are seeking truth and justice in relation to the deaths and murders of their loved ones?
Mr Paterson
I wholeheartedly endorse the comments of the hon. Lady and her hon. Friend the Member for Foyle (Mark Durkan). People suffered at the hands of the INLA, the LVF and the Ulster Volunteer Force and I wholeheartedly condemn those who caused that suffering. We should not forget that it was terrorists who caused those deaths.
When I meet the Justice Minister on Monday, I will go through the recommendations in the report. However, they are not for me to impose. That is what devolution is all about. Devolution is in the hands of local Ministers. We will have a thorough and open discussion, because, as the hon. Lady says, the facts involved are shocking, but we should also bear in mind that those facts date from a long time ago, and concern an institution that has long since closed. What I have seen leads me to believe that there is no comparison between the Northern Ireland Prison Service today and the service that struggled to handle the extremely difficult circumstances of holding 500 determined murderers in the Maze.
The hon. Lady asked briefly about the Finucane and Ballymurphy cases. I am due to have meetings with those concerned, and I think it would be wrong for me to jump the gun before I have met them.
Mr Jeffrey M. Donaldson (Lagan Valley) (DUP)
The Maze prison, where the murder occurred, is in my constituency. I well recall the events, and the subsequent inquiries and investigation by the police. I am concerned about the fact that the report does not identify how the weapons were brought into the prison. That remains a key issue. All the other failings were important, but it is doubtful whether the murder could have occurred had those weapons not been available to terrorists in what was reputedly the most high-security prison in Europe. I do not think that we can allow the report to pass without further inquiry into how the weapons came to be in the possession of the INLA terrorists.
There will also be doubts in many people’s minds today about the series of events leading up to the murder of Billy Wright. I condemn murder, whether by the LVF or by any other paramilitary or terrorist organisation. My thoughts are, of course, with the victims, but Billy Wright’s family are entitled to know the truth of what happened. In particular, his father, David Wright, is entitled to know what happened to his son. I do not believe that the report gives us that.
There are too many coincidences, too many happenstances, too many things that went wrong all at the same time, all of which contributed to the murder. Many of us are left with more questions than answers in our minds today.
Mr Paterson
I am very sorry that the right hon. Gentleman is not happy with the result of this report, after an investigation by a senior judge and his tribunal with its highly respected panel, and with more than 30,000 pages of evidence having been looked at. Obviously, it is also very regrettable that some of the details have not emerged. How the guns got into H block 6 is still not clear. That highlights one of the sad facts about trying to arrive at a system to look at the past: in some cases we just will not get to those final details. This may be one of those cases. After spending £30 million and following six years of investigation by some of the most experienced lawyers in the western world, we have not got to one of the key details: how the guns were smuggled into the H block. As we look ahead, I am afraid that we are going to have to accept that, in respect of some of these past cases, we simply will never know.
Lady Hermon (North Down) (Ind)
I wonder whether the Secretary of State will address a specific issue that was raised in a local Northern Ireland newspaper this morning. Was there any evidence at all that the RUC or MI5 had prior warning that the INLA intended to murder Billy Wright but failed to take action to prevent the murder? Was there any shred of evidence to support that contention?
Mr Paterson
No, there was no evidence of a clear plan, but there is strong criticism that certain intelligence reports—particularly one in April—were not passed on and that the systems of transmitting data and intelligence were not good enough.
Ian Paisley (North Antrim) (DUP)
I thank the Secretary of State for the statement. Does he not feel incredibly short-changed by this £30-million report that has certainly made lawyers extremely wealthy but has done very little to provide us with any more answers to questions than when this entire sorry saga commenced, and does he agree that if we accept his analysis that we will never actually get to the truth in all of this, all we can conclude about this report is that it is a whitewash?
Mr Paterson
We inherited a series of inquiries commissioned by the previous Government, and as the incoming Government all we can do is face up to them and publish them as swiftly as possible. In respect of this case, the inquiry was set the clear remit of looking into whether the British state colluded. It has run on at considerably more expense and for considerably longer than was originally planned, but we have immediately come forward and presented it to the House in the very narrow window of Parliament sitting for these two weeks in September, and the hon. Gentleman can therefore now read it at length and draw his own conclusions. I think we do have to separate the issue of process from the result, however, and I hope that some people will be reassured by this very detailed investigation of the case.
Jim Shannon (Strangford) (DUP)
The Secretary of State clearly outlined the case, and he will understand the dissatisfaction that we Members from Northern Ireland have about it. The right hon. Member for St Helens South and Whiston (Mr Woodward) and my right hon. Friends the Members for Belfast North (Mr Dodds) and for Lagan Valley (Mr Donaldson) mentioned one of our concerns: the guns problem. If there were no guns in the prison, there would be nobody dead today. Can you, Secretary of State, assure us today that you will carry out a further investigation to find out how those guns were smuggled in? Is it your intention to do that, or are you just going to drop the whole thing today and forget about it?
Mr Speaker
May I very gently say to the hon. Gentleman that it is not my intention to do any of the things to which he referred? I am sure, however, that the Secretary of State will volunteer a response.
Mr Paterson
I thank the hon. Gentleman for his question. I think I have just answered it, however. After £30 million and six years, I am not sure what more can be done, or for how much longer we can carry on looking into an individual case. It is very regrettable that the data to enable us to get to every fine detail of the case may not be available, but we also must recognise that 3,268 deaths are being looked at by the Historical Enquiries Team, and there must be some sense of balance. After a certain amount of time and effort has been expended, we have to accept that certain details may never emerge, but I think that an inquiry lasting six years, involving one of the top lawyers in the country and 30,000 pages of evidence, illustrates that an enormous amount of effort has gone into this case.
Point of Order
(13 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Denis MacShane (Rotherham) (Lab)
On a point of order, Mr Speaker. Sir, if you go out into the corridors around here, you will find closed circuit television cameras being installed in the Central Lobby and other corridors that are normally private to Members. Is this known to you? Some people say that it is just to do with the Pope’s visit, and that is perfectly reasonable, but if that is so, can we be sure that the cameras will be taken down? I love the surveillance society. I am not sure whether the Independent Parliamentary Standards Authority has an investment in making sure that we are all here and that we are going to our restaurants and coming out with the appropriate bills, but I do not like CCTV cameras in this our House of Commons.
Mr Speaker
I am grateful to the right hon. Gentleman for his point of order. I note what he says and am happy to look further into the matter if it is of notable interest to him and to others. In so far as the issue of security is concerned, however, I know that the right hon. Gentleman is an extremely experienced parliamentarian, so he will be aware that matters relating to security are not discussed on the Floor of the House. If there are no further points of order, we will come to the ten-minute rule motion. I call Catherine McKinnell.
Apprenticeships and Skills (Public Procurement Contracts)
(13 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
I beg to move,
That leave be given to bring in a Bill to require certain public procurement contracts let by public authorities to include a commitment by the contractor to provide apprenticeships and skills training; and for connected purposes.
On Friday, I met 19-year-old Chris Haugh, who was starting his last day as an apprentice motor technician at Newcastle international airport in my constituency. He began his placement when he left school at the age of 16 and has earned himself a permanent position, which he started yesterday. During our chat, he described his three years’ training as the best time of his life, and he told me about the fantastic support he had received, the friends he had made and how he is looking forward to taking an active role in bringing on the next apprentice that the team takes on. Chris is one in a line of successful apprentices at Newcastle airport. I also spoke to his senior supervisor, Derek Morgan, who was the first apprentice ever taken on at the airport and he has worked there for more than 40 years.
At opposite stages of their working lives, both those individuals perfectly illustrate the benefits of apprenticeships and the reasons why I want to introduce this Bill. I am hopeful that the ideas I present today will meet with the support of hon. Members. My early-day motion 692 on the issue has been signed by 50 MPs, representing five different parties, and I am certain that the political will exists to tackle this subject. What I am proposing is a small legislative change that would make a big difference to the lives of millions, improving aspirations and offering training and high-quality careers.
The aim of the Bill is to introduce a requirement upon successful bidders for high-value public contracts to demonstrate a firm commitment to skills training and apprenticeships. Guidance published by the Office of Government Commerce in April 2009 aimed to encourage departments to address skills and apprenticeship issues through their procurement policies. The Bill aims to build on those guidelines, ensuring that organisations help to develop skills in their work force through these large-scale public contracts.
The economic case is clear. First, expanding access to apprenticeships will help to bridge the current employment and skills shortfall. That is particularly important in the current financial climate. Because it is the Government who award these prized contracts, they are uniquely placed to ensure that those profiting from public money are giving something back. With an annual expenditure in 2008-09 of £175 billion, public procurement is the ideal tool to encourage organisations to develop their apprenticeship plans.
This is a simple principle that draws strong and broad support. The TUC, Unite, the Federation of Small Businesses and many other groups have all publically stated their support. The FSB in the north-east has told me that it builds upon its work, pushing for the public sector to play a more strategic role in stimulating the growth of apprenticeships. In the words of Frances O’Grady, deputy general secretary of the TUC, these companies must “do their bit.” By their doing their bit, the financial investment required to expand training will be shared by the taxpayer and private firms making profits from public contracts, and that is a significant advantage. Government spending is declining, yet the need for jobs and training is higher than ever. According to Department for Business, Innovation and Skills figures, 240,000 apprenticeships were taken up in 2008-09, which demonstrates the high demand for apprenticeships. However, the current supply of quality apprenticeships is clearly not sufficient to meet demand and that was highlighted this year when BT received 24,000 applications for only 221 places on its apprenticeship programme.
The relatively small cost of training an apprentice can be contrasted with the clear financial benefits to both the firm and the individual over the longer term. A report commissioned by the then Department for Education and Skills in 2007 estimated that the added financial benefit to an apprentice over their lifetime of completing a level 3 apprenticeship is about £105,000 in higher wages and a significantly higher likelihood of employment. A separate report produced in 2008 by Warwick university also showed that the majority of employers recouped the cost of their investment within two to three years. As the report found that apprentices usually stay with the firms that trained them for far longer than that, those employers enjoy access to highly skilled employees who know their business and feel a personal commitment to its success. That improves efficiency and productivity as well as generating non-financial benefits such as increased morale and commitment to the organisation.
By expanding access to apprenticeships we can create a more tailor-made training system in which employers, who know their industries better than anyone, identify the skills that are needed and train their apprentices to suit them. That will lead to less surplus and shortage in the labour market, quicken our return to prosperity and ensure that Britain has the intelligently trained workers that we need for our recovery.
As well as being convinced by the economic case for the Bill, I also have personal experience of how apprenticeships change lives. Aside from meeting inspiring people such as Chris and Derek, I grew up with my grandfather’s building company and had the opportunity to see at first hand the human dimension of what it means for people to get into work. Yesterday, I met up with Tony Hall, who started as an apprentice with my grandfather in 1972. He now runs his own business and his son has just started, at 17, as an apprentice at a stainless steel fabricators—White Bros Ltd—in my constituency. The economic benefits really are only half the story of why this Bill matters.
Being in employment or training does not just mean that a person has a bit more money to spend. It changes the way people view themselves and gives them increased pride and self-esteem. Apprentices are perhaps the best means to tackle the increasing number of people who are not in employment, education or training and we have the perfect opportunity to use apprenticeships to show that in order to be successful, higher education is not a prerequisite, and that equal if not greater rewards can be gained through entering the workplace as an apprentice.
Although companies will be obliged under the Bill to demonstrate a general commitment to providing apprenticeships and training, steps will be taken to ensure that it is always proportionate and continues to guarantee value for money. Small businesses should not be adversely affected by the proposals due to limits on the size of the contract and the number of apprentices required by the Bill. More than this, the stipulation could not be enforced at the expense of discriminating against contractors from other EU states.
Increasing access to training and boosting the availability of apprenticeships are matters on which Labour in government made real strides and so I am pleased to see that they remain declared goals of the coalition Government. I was also pleased to read of the Minister for Further Education, Skills and Lifelong Learning’s praise for apprenticeships during his recent visit to the Nissan car plant in Tyne and Wear. His declaration that “apprenticeships matter” gives, I am sure, hon. Members on both sides of the House great hopes for the direction of future policy in this respect.
There is a widely recognised need to increase apprenticeships and I am convinced that a simple way to do that is for those who profit from public contracts to do their bit. Given the support that has been expressed for the proposal not only in Parliament but by industry groups and trade unions, I ask hon. Members to support the small change brought in by this Bill and to play a part in making a statutory obligation on the public procurement process that will benefit individuals, businesses and the country. It is a long-overdue requirement that will create a comprehensive national apprenticeships programme, central to lower-cost, high-quality skills training in the UK. It is a small change that will make a big difference, and I commend it to the House.
Question put and agreed to.
Ordered,
That Catherine McKinnell, Mr Charles Kennedy, Ms Angela Eagle, John Healey, Tony Lloyd, Jack Dromey, John Cryer, Grahame M. Morris, Mrs Sharon Hodgson, Tony Cunningham, Geraint Davies and Mr Iain Wright present the Bill.
Catherine McKinnell accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 11 February and to be printed (Bill 70).
Equitable Life (Payments) Bill
(13 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Financial Secretary to the Treasury (Mr Mark Hoban)
I beg to move, That the Bill be now read a Second time.
The Government want to see justice for Equitable Life’s policyholders and that is clearly reflected in the actions that we have taken since coming to office. In our programme for government, we pledged to implement the Parliamentary and Health Service Ombudsman’s recommendation to make fair and transparent payments to Equitable Life policyholders. As a constituency MP and as the Financial Secretary to the Treasury, I receive plenty of correspondence on this matter, I have answered a series of parliamentary questions about it and I have had a number of oral representations from colleagues on it, all of which have stressed the need for a fair resolution. I understand the strength of feeling and, given my role in the past five years in opposition and now in government, I hope that hon. Members will recognise my commitment to policyholders.
We need a swift resolution, but, vitally, one that is transparent and fair. I am pleased to report to the House that more progress has been made to address the plight of Equitable Life policyholders during the first few months of the coalition Government than was achieved over the past decade. We have published Sir John Chadwick’s independent report setting out his approach to calculating payments. I commissioned the first bottom-up estimates of losses suffered by policyholders, calculated at each individual stage of Sir John’s methodology, and published those estimates in July.
Dr Julian Lewis (New Forest East) (Con)
As one of the many people who signed the Equitable Life representatives’ pledge before the election, I am very concerned that there should be a fair settlement. Will the Minister comment on the statement by the parliamentary ombudsman in her letter to all MPs of 26 July that
“the Chadwick proposals seem to me to be an unsafe and unsound basis on which to proceed”?
Mr Hoban
My hon. Friend was one of a number of colleagues on both sides of the House, including me, who signed the pledge. I am determined to make sure that we honour the pledge and that justice is delivered to Equitable Life policyholders. I met the ombudsman yesterday to discuss her letter and her comments on Sir John’s report. That is one of a number of representations that I have received about the report. I shall talk about the others in more detail later, but let me say that the starting point of Sir John’s work is a basis for calculating external relative loss. That is the first such basis that has been proposed to us and we need to look at how it could work as a basis for calculating the losses. I am determined to make sure that in deciding the loss figure we should take into account all the representations that have been received, including those of the parliamentary ombudsman.
Dr Lewis
My hon. Friend is extremely generous in giving way a second time. Does he accept that whatever calculations are done, any outcome that results in only a small fraction of the relative loss being made good to the policyholders would be deemed unacceptable by the policyholders, and dishonourable behaviour by those of us who signed that pledge in good faith?
Mr Speaker
Order. Let the Minister develop the point. He will give way when he is ready. There is much competition on that front.
Mr Hoban
Before Opposition Members get to their feet, they should think about what happened over the past decade. The bill for the taxpayer would have been much less if rather than waiting till now, the matter had been resolved under the last Government. They had 10 years to resolve it. Nothing happened until the present Government took power.
Mr John Redwood (Wokingham) (Con)
I welcome the swift move to put right the injustice about which the Opposition did nothing for more than a decade. To reassure colleagues, will my hon. Friend confirm that there will be a discussion between the Chief Secretary representing the taxpayers, and himself or some other Minister representing the Equitable Life policyholders? There needs to be a balance and we look forward to a sensible balance being struck.
Mr Hoban
My right hon. Friend makes an important point. There are two decisions to be taken. One is on the loss figure and the other is on the amount of compensation that the taxpayer can afford to pay. It is right that those decisions are made in the context of the spending review. That decision will be announced on 20 October.
Mr Dave Watts (St Helens North) (Lab)
Is not the point made by his right hon. and hon. Friends this: when on the Government Benches we accepted the recommendations in principle—[Laughter.] Both the Liberals and the Tories in opposition gave policyholders the impression that they would be far more generous. Are they not now going back on their word which they gave before the general election?
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.
Tim Farron (Westmorland and Lonsdale) (LD)
Without speculating what proportion of the £5 billion estimated losses will be compensated, does the Minister agree that, whatever payment is announced today, the Government will recognise that it is merely a first down-payment on returning the losses to policyholders, with a view to further payments being made in future years?
Mr Hoban
A number of hon. Friends have made that point, and a number of representations made to me put an alternative point of view—that what policyholders would like is rapid resolution and a swift payment scheme to bring closure to the matter. The spending review is to cover the lifetime of this Parliament, and the figure that is settled upon should reflect the coalition’s commitment to resolving the issue once and for all.
Philip Davies (Shipley) (Con)
Nobody is keener than me for the Government to save money and get the finances back on track, and I am happy to meet my hon. Friend to give him some of my ideas about how we can do that. However, I hope that the Government, having made commitments to people while in opposition, will not use the argument that there is no money in order not to pay a fair settlement. After all, we all knew that there was no money when we were in opposition.
Mr Hoban
That is why, when the ombudsman published her report, we highlighted her recommendation that we need to consider the impact on the public purse of any compensation scheme. We made that point when she published her report, and it was in the Opposition day motions on which we voted prior to the election. It has been a consistent strand in our policy to recognise the impact on the public purse of this compensation pot.
Mr David Davis (Haltemprice and Howden) (Con)
I take the noise from Opposition Members with a great pinch of salt, given the way in which they behaved.
My hon. Friend rightly cited the ombudsman, and in the central recommendation of her report she set the following criterion:
“The aim of such a scheme should be to put those people who have suffered a relative loss back into the position that they would have been in had the maladministration not occurred.”
Does my hon. Friend believe that he can get there—or close?
Mr Hoban
That is not a matter for me to decide; it is part of the spending review. However, I remind my right hon. Friend what the ombudsman also said. In paragraph 9.38 of her report’s summary, she said:
“I am acutely conscious of the potential scale of what I have recommended and that acceptance of my central recommendation might entail opportunity costs elsewhere through the diversion of resources.”
She recognised the potential impact on public spending of her recommendations, and that public interest is a relevant consideration, stating that:
“it is appropriate to consider the potential impact on the public purse of any payment of compensation in this case.”
I therefore point out to my right hon. and hon. Friends, who rightly put great store by the ombudsman’s work, that her recommendations are strongly qualified by the question of affordability, and we need to bear that in mind. Of course, it would have been far easier if the matter had been resolved when she published her report in July 2008, rather than having to wait until now.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
I thank the Minister for, at last, giving way. I have been a Member for some time and longer than he has, so I can tell him that this was an issue before 1997. The Conservatives, at that time in government, refused to pay any compensation to the Equitable Life pensioners. Under the terms that they now suggest, they will cut about £5 billion of the compensation that the ombudsman recommended for payment, but I heard the Minister in Westminster Hall say on many occasions that they, in government, would pay the pensioners in full. Why have they changed?
Mr Hoban
The hon. Gentleman should really direct his anger at his own Front Benchers, who for years blocked the investigation of Equitable Life by the ombudsman, who tried to delay her report and who took six months to respond to her findings. The real culprits are on the Opposition Front Bench, not on the Government Benches.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
The Minister, in his opening remarks, spoke of justice. Where does justice lie—at 10% of losses, 100% of losses or some random figure in between?
Mr Bernard Jenkin (Harwich and North Essex) (Con)
My hon. Friend will know that the Public Administration Committee, which I now chair, issued in the previous Parliament two reports on the subject, and unless we make progress discussing the Bill itself, it seems that much of this debate will turn on what exactly the ombudsman meant in her report. May I advise my hon. Friend and, indeed, the House that my Committee intends to hold a further inquiry as soon as the House returns in October in order to elucidate the exact differences between the ombudsman’s recommendations, Sir John Chadwick’s report and what the Government’s view may be at that time? We will issue a report on what we believe the ombudsman actually intended, and I hope that the Government will honour that interpretation.
Mr Hoban
I would be delighted to appear in front of the Committee to give the Government’s view. It is important that there should be scrutiny through the Public Administration Committee. My hon. Friend was right to highlight the work done by the previous Committee; I particularly commend the former Chair, Dr Tony Wright, who did a great deal, with other Committee members, to keep the issue in the public debate. They published two reports that were very critical of the previous Government. I am happy to take part in that process.
Esther McVey (Wirral West) (Con)
The fact that this matter has not been resolved for so long is an absolute disgrace, and I congratulate the coalition on the fact that it will deal with it so swiftly. It is vital that the compensation given should be suitable and satisfactory to all the victims of Equitable Life. Going forward and looking at the bigger picture, we need to consider pensions as a whole. What does this issue say about how far the general public can have faith in any pension scheme?
Mr Hoban
Indeed; my hon. Friend makes an important point. I would like to say two things in response to her. First, any compensation has to be fair to both the policyholders and the taxpayers who will foot the bill. No one else will foot the bill—no one involved, such as the previous management of Equitable Life, will pick up the tab. The taxpayer will foot the bill. We need to make sure that compensation is fair for the taxpayer and policyholders.
Secondly, my hon. Friend is right to highlight the issue of how we ensure that there is confidence for investors and savers in insurance and long-term saving in the future. That is one of the reasons why my right hon. Friend the Chancellor announced in June that we are going to reform financial regulation and set up a new consumer protection markets authority. That will strengthen the regulatory regime in this country.
We also need to make sure that we help improve financial capability for savers, so that they can understand some of the issues around the products that they take out. That is why we have proposed an annual financial health check, which will help savers understand some of those issues.
Nadhim Zahawi (Stratford-on-Avon) (Con)
As we have heard, many of us have signed the Equitable Members Action Group pledge. There is a wide gap between what Sir John Chadwick and the ombudsman are saying. Does the Minister agree that it is our duty to bridge that gap in a satisfactory way? Otherwise, all the good will that he has achieved in the past few weeks will be spent and the victims of Equitable Life will end up feeling hard done by.
Andrea Leadsom (South Northamptonshire) (Con)
I, too, congratulate the Government on getting to this issue so quickly, in line with the promise that we made before the general election. Will the Minister comment on the case of two of my constituents who between them had an annuity of about £11,000 a year? It is now worth roughly £4,000 a year and will continue to reduce; that is a loss of more than 55%. I should be grateful for the Minister’s comments on what I am to say to them.
Mr Hoban
I am not familiar with the policies held by every single Equitable Life policyholder. There are 1 million policyholders with 1.5 million policies, and 30 million policy transactions went through during the period concerned. That is why it is important that Towers Watson, which has provided actuarial advice to the Treasury, should look at the calculation of losses.
I suspect that my hon. Friend’s constituents may be part of one group for whom there is a great deal of sympathy. They are the so-called “trapped annuitants”—people who bought with-profits annuities policies. I have raised that topic with Towers Watson, to try to understand the losses that people in that category of policyholder have suffered, so we can understand the right approach in terms of compensation. Many people from that group believe that they have suffered quite significant losses, and we need to ensure whether that is the case. At the moment, I am trying to do some more work to establish that.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
The hon. Gentleman knows that I have spoken up for Equitable Life members represented on both sides of the Chamber. One of the issues that concerns everyone is speed—when people are going to get some money paid out. I do not expect him to give a specific day, week or month, but can he give some indication of when policyholders might expect to see payments beginning? I suggested in an intervention a few weeks ago that it might be well into 2011; what does he think would be a reasonable time scale?
Albert Owen
The hon. Gentleman may recall that when he made his statement to the House I asked him about an appeals procedure. Once a payment is recommended and the person does not agree with it, what kind of mechanism will be in place for appeals? Will it be independent? Will the Bill give a time scale indicating the length of time for the appeals procedure so that people can be clear about that?
Mr Hoban
The appeals mechanism is not in the Bill. However, I took on board the point that hon. Gentleman made during the statement about the need for an appeals mechanism, and I have raised that with my officials. I agree, too, that it is important that any appeal is dealt with quickly, but of course that requires co-operation both on the part of the person making the appeal and the body adjudicating on the appeal. Part of the problem that we all face is that we are talking about premiums that were paid back in the early ’90s, so clearly for some of those making appeals there may be an issue about the availability of paperwork and documentation. I am very mindful of that point, and we will pursue it.
Mr Hoban
I would like to make a little progress. I have been very generous in taking interventions from Members on both sides of the House, and I will take a few more in due course.
We will announce in next month’s spending review how much we can afford to pay to policyholders. We have established an independent commission to assess how best to allocate compensation to policyholders, and we have announced our goal of making the first payments towards the middle of next year. Today’s Bill is another step on the long road to a fair resolution of this situation.
The independent commission has already started its work, and the chairman, Brian Pomeroy, recently invited all interested parties to submit their views. That invitation extends to Members in all parts of the House; I know that many people have strong opinions on how compensation should be paid to policyholders once the final amount has been determined. I am keen that the commission should work as quickly as possible and that its establishment should not unduly delay payments beginning to be made to policyholders. However, the independence of the design of the payments scheme is a key matter of concern to policyholders, especially to the Equitable Members Action Group, so it is important to guarantee transparency and openness. It is therefore right to give the commission the remit to do this work.
I am also mindful of the fact that we need a tight timetable—one that gives enough time to consider all the issues properly but recognises that many policyholders are elderly and should not be required to wait a minute longer than is necessary for justice. Today, we have taken the opportunity to take another important step forwards to achieving resolution. The Bill authorises the Treasury to incur expenditure and make payments to those adversely affected by the then Government’s maladministration of the regulation of the Equitable Life Assurance Society. This is why, regardless of how a future scheme will look, passing the Bill today is vital to enable payments to be made. I should make it clear that the Bill does not set the maximum amount that can be paid or dictate the design of the scheme, but simply gives the power to the Treasury to make those payments.
Mr Hoban
If I may continue a little more about the Bill, I will take more interventions shortly.
The Bill allows for payments made to policyholders to be disregarded for certain purposes, including making them tax-free in the hands of the recipients. The Government will also be able to consider what effect the payments might have on individuals’ eligibility for certain types of means-tested state funding support, particularly tax credits, and how that might be mitigated. A final decision has yet to be made on whether those powers will be used, but it is sensible to include them in the Bill so that any arguments can be taken into consideration. It is essential that we take every action to avoid the scheme becoming unnecessarily complex.
Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)
I welcome the fact that the Bill places no restraint on the level of compensation. I wish to reinforce the point that, to restore confidence in the market, there has to be a fair resolution. Is the Financial Secretary still open to submissions on the level of compensation in the run-up to the comprehensive spending review, and is it still possible for people to make points that will influence that level?
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
As the Financial Secretary has just said, and as the explanatory memorandum makes clear, under the Bill eligibility for some state-funded, means-tested support may be affected by compensation payments. Will he confirm whether any Equitable Life policyholder who receives a compensation payment and who is currently on housing benefit, disability living allowance or income support might be affected in that way?
Mr Hoban
The Bill provides for matters within the remit of the Treasury. My understanding is that the Department for Work and Pensions has the power to take into account the impact of compensation on other means-tested benefits, and we will discuss with it how the matter can best be dealt with.
Nicola Blackwood (Oxford West and Abingdon) (Con)
I welcome the swift action that the Financial Secretary has taken, which puts the actions of the previous Government to shame. I particularly welcome the inclusion in the commission’s terms of reference of the estates of deceased policyholders, as that goes some small way to making up for the suffering of the more than 30,000 Equitable victims who died waiting for a Government who will bring them justice. Will there be an opportunity to debate in the House the decision on quantum that he will reach in the CSR?
Mr Hoban
I will have discussions about parliamentary scrutiny with the Leader of the House. Indeed, the Deputy Leader of the House is in his place on the Treasury Bench and will have heard my hon. Friend. A range of decisions will be made as part of the CSR, and Equitable will need to be taken into account along with other matters. The inquiry of the Public Administration Committee, chaired by my hon. Friend the Member for Harwich and North Essex (Mr Jenkin), will also provide an opportunity for parliamentary scrutiny.
Dan Byles (North Warwickshire) (Con)
I am grateful to the Financial Secretary for his generosity in giving way on this important topic. When it comes to identifying the affordability of any compensation scheme, does my hon. Friend agree that it is important to recognise the potential long-term cost to the taxpayer of a collapse in confidence in private pension provision and in people’s ability to save for their future?
Mr Hoban
That is an important point, but we also need to consider other factors such as the general state of the public finances and the other demands on public money in the spending review. We must also recognise that the Government have decided to introduce radical reform of financial regulation and to improve the regulation of retail financial services through the establishment of the consumer protection and markets authority. We can take a range of measures to help restore long-term confidence in savings, and people will have confidence in saving for the future if they recognise that the economy is on a stable footing, that we have got public spending under control and that we are tackling the deficit and keeping interest rates reasonable for as long as possible.
Charlie Elphicke (Dover) (Con)
I understand my hon. Friend’s desire to get full and final closure, but the consensus at a packed public meeting of my constituents in Dover and Deal was that it would be better to have staged payments over a number of years if affordability was a problem right now. Will he consider that very seriously?
Mr Hoban
I discussed that idea, but I received a strong representation from Equitable Life advising against it, because of the complexity that might be attached to staged payments. Some have suggested that we make payments into people’s pension funds, but some of the key criteria for judging the payments scheme will be simplicity, speed and transparency. People will be concerned that a series of small payments over a long period will not necessarily meet the simplicity, speed and transparency criteria against which a payments scheme ought to be judged.
Toby Perkins (Chesterfield) (Lab)
Will the Minister acknowledge that the broad range of issues that he now says he will take into consideration were entirely absent from his discussions in the run-up to the election or in the coalition agreement, which states that the coalition Government will implement the Parliamentary and Health Service Ombudsman’s recommendation? People in the Equitable Members Action Group will be extremely disappointed with the Minister’s tone when they compare it with the tone he took in the run-up to the election.
Mr Hoban
It is a bit rich for Labour Back Benchers to complain, when the Labour Government had a chance to resolve the matter but failed to do so. The hon. Gentleman should explain to Equitable Life policyholders in his constituency why his colleagues failed to take the action necessary to resolve the problem when they were in government.
Mr Hoban
I shall come to that in a minute, but the Bill simply gives the Treasury the powers to make the payments. It is right that the Treasury takes those powers, but it needs to do so now so that we can move on to the procurement process and identify who will make the payments.
Sajid Javid (Bromsgrove) (Con)
I am sure that my hon. Friend is as shocked as I am that, in five months, this Government have achieved more than the previous one did in 10 years? I welcome the Treasury’s swift action. The matter is extremely complex, as he said, not least because a number of financial regulators were involved during Equitable Life’s problems and because of the problems associated with the life insurance industry in general. Will he assure the House that, unlike the previous Government, we will not hide behind that complexity in trying to bring justice to Equitable Life policyholders?
Mr Hoban
That is why we are keen to ensure that we have a scheme that is simple, swift and transparent. That is important and it is the basis of the pledge that we signed. I was unsurprised that the Government made so much progress in the first five months because I have been following this issue for some time. What surprised me was how little progress our predecessors made.
Mr Hoban
I want to make progress because I am conscious that there is an eight-minute limit on Back Benchers’ speeches, and clearly many Members on both sides of the House are interested in the debate.
Once we receive the independent commission’s report, I plan to publish a document, early next year, showing clearly how the scheme will function. The ombudsman envisaged that any system of payments would need to be independent, simple and transparent. I agree with that thinking and I have tried to ensure that our approach meets those criteria. On independence, the Government have established the Independent Commission on Equitable Life Payments to advise on the design of the scheme; to ensure simplicity, we will ensure that the future system of payments is as straightforward as possible to avoid any undue burdens being placed on policyholders; and, on transparency, we have published Sir John Chadwick’s report, the actuarial advice from Towers Watson and representations made to Sir John. Interested parties therefore have access to information when making their representations.
In the spirit of transparency, I shall update the House on wider matters relating to Equitable Life and payments to its policyholders. It is worth reminding hon. Members that one outcome of Sir John’s work is that it enabled us to produce the first bottom-up assessment of relative loss, which we did by comparing the performance of Equitable’s policies against those of comparator companies. There are some reservations on the detail, but there appears to be some broad agreement on the general approach of comparing Equitable Life’s performance with that of a basket of comparator companies. I recognise that a number of Sir John’s recommendations were contentious, including his view that the majority of policyholders had to make the same investment decisions irrespective of maladministration, but I stress that Sir John’s review is just one of the tools at our disposal in looking to fix an incredibly complex problem.
Mr Edward Timpson (Crewe and Nantwich) (Con)
My hon. Friend mentioned the work of the actuary and the advice given to Sir John Chadwick to formulate his report, but, given the transparency that my hon. Friend is trying to bring to this matter, has he considered publishing the actuary’s calculations?
Mr Hoban
My hon. Friend makes an important point about transparency. The actuarial advice gives a clear demonstration of the methodology used by the actuaries, but 30 million premium transactions had to be compared with a basket of comparable companies from 1992 to the end of 2009. The publication of the model at that level of detail would not aid transparency. It would be more likely to confuse, given the complexity of the calculations. However, we have ensured that EMAG and ELTA—Equitable Life Trapped Annuitants—have had an opportunity to meet Towers Watson, the actuaries, to go through the calculations. Towers Watson has provided examples of its calculations so that the mechanics can be understood.
Stephen Timms (East Ham) (Lab)
The ombudsman states in her letter to every hon. Member that because the Government have fully accepted her recommendations Sir John Chadwick’s approach is no longer relevant. Why does the Financial Secretary disagree with her on that point?
Mr Hoban
It goes back to what the previous Government were prepared to accept. Sir John’s report is based on the terms of reference that the right hon. Gentleman’s colleagues gave him, which dealt with the accepted findings. Of course, the previous Government did not accept all the ombudsman’s findings, but that decision was overturned in the courts. It is important to recognise that the first stage—the calculation of external relative loss—is not dependent on the accepted findings because it covers the findings of Equitable Life as a whole across the period. The issue of the accepted findings becomes especially important when Sir John assesses what would have happened if Equitable Life had been regulated properly. The reconstruction of Equitable Life’s financial accounts was based on the accepted findings of the previous Government. The problem is that as we get further and further away from the calculation of external relative loss, what the previous Government accepted and did not accept becomes much more relevant to the calculation of compensation. That is one of the factors that we need to take into account when we assess the final level of loss.
Ms Gisela Stuart
The Financial Secretary has just mentioned 1992, so it is clear that this issue goes back not just to the Labour Government but to the previous Tory Government. All Equitable pensioners want a resolution as quickly as possible and they will be disappointed by this slanging match. I have a simple question: what did the parliamentary ombudsman say to him yesterday when they met? Was she satisfied with his proposals, and what did he say to her?
Mr Hoban
The ombudsman’s letter is clear. She said that she welcomed much of the Government’s approach, including the appointment of an independent commission, the publication of a clear timetable for the beginning of payments to those affected and our commitment to consider representations on the best way forward. I do not feel that I can give the House the outcome of a private meeting, but the ombudsman reiterated her findings, which were set out in the report that she published in July 2008 and which the previous Government sat on for six months before responding. She will also have the opportunity to make her views known when the Public Administration Committee works on this. I just want to do all that I can to ensure that the recommendations published by the ombudsman in July 2008 are honoured, and that is the task that we have to achieve.
Mr Andrew Tyrie (Chichester) (Con)
Does my hon. Friend accept that the six-month delay to which he alludes is just the tip of the iceberg? We faced years of delaying tactics, not least a calculated attempt to try to prevent the parliamentary ombudsman from even producing a report.
Mr Hoban
Indeed, and it was the work of my hon. Friend, who was characteristically modest in his intervention, that found a way in which the ombudsman could publish her second report into Equitable Life. Had he not found the way through, we would not be in this position today, so the House and policyholders owe him a debt of gratitude for getting us to this position.
My hon. Friend is absolutely right that the previous Government did everything they could to avoid a second ombudsman’s inquiry into Equitable Life. The Penrose report, published in 2004, demonstrated that there had been regulatory failure at Equitable Life over a decade covering both Governments—I have no problem accepting that. However, the previous Government could have acted in 2004, but instead they dug their heels in—and here we are in 2010 with policyholders still waiting for justice.
Mel Stride (Central Devon) (Con)
My hon. Friend was talking about the delays in the response to the ombudsman’s report in April 2008. Does he not also recognise, as we all do, I think, on the Government Benches, that the response of the then Chief Secretary to the Treasury was to start talking about those disproportionately affected by the saga but still without setting any time scale for compensation?
Mr Hoban
Indeed, and we have tried to bring to this matter a time scale and a sense of purpose and pace in resolving it. Of course, had it been resolved earlier, the compensation bill would have been cheaper and the pain suffered by Equitable Life policyholders far less. The previous Government dragged their feet, and we have to pay the price.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
May I congratulate my hon. Friend on the progress he has made, given the complexities he alluded to of the time scale and the size of the calculations he has to make? He has already said that the commission will start work and first payments should be made to valid claimants next June. However, can he give any idea of the timetable by which all valid claimants, unless there is an appeal or other court procedure, might expect to receive a payment?
Mr Hoban
I cannot give that commitment yet, and we will not be able to do so until we see the scheme proposed by the independent commission. However, I am clear in my own mind that the time between the first and the last payments needs to be as short as possible, because these policyholders demand justice quickly—and that is what I am keen to deliver.
Mr Hoban
I want to press on.
On the progress that has been made, I should say that the letter produced by Towers Watson this July gave an estimate of losses, looking at comparable performance up until the end of 2007, and it has been working on a further detailed estimate over the summer to bring those numbers up to date—to the end of 2009—which should enable us to present a much more robust estimate of loss next year.
A number of hon. Members have mentioned the ombudsman. I have outlined the comments in her letter. We discussed with her yesterday her concerns about Sir John’s advice, and I have noted those concerns, but I reiterate to Members on both sides of the House that the ombudsman’s report set out some clear parameters for compensation. She talked about compensation and relative loss, but I reiterate that she was very mindful of the issue of affordability—and I refer to the paragraphs in her report that she highlighted. That has underpinned our response to this matter from the moment she published her report in July 2008.
In my statement on 22 July, I set out the next steps towards resolution, confirming that we would respond to the report and determine the value of the compensation as part of the spending review, and inviting interested parties to submit their representations to help inform the next stage of the process. I have received a number of representations and would like to thank everyone who has taken part in this process. We have met the board of the Equitable Members Action Group, which from the beginning has campaigned vigorously on behalf of policyholders, as well as the society itself and representatives of the Equitable Life Trapped Annuitants group. Their views are helping to inform the decisions that the Government are taking on Equitable Life in the run-up to the spending review.
As I said in opening, we have tried to be as open as possible in this process. We have sought to involve all interested parties to ensure that when a solution is reached it is fair to everyone, both policyholders and taxpayers. I personally want to see a swift end to this matter, so that policyholders who have waited in financial purgatory for so many years can receive the payments that are rightfully theirs. Although there is some way to go before we reach a final resolution, I believe that this Government have made more progress since May than our predecessors did from the time when the problems at Equitable Life first came to light over a decade ago.
The Bill before us today is a key milestone on the road to resolving those long-standing issues. It is a clear sign of the Government’s commitment to those who have suffered losses owing to the maladministration of regulating Equitable Life. Policyholders have waited over a decade for justice. Passing this important Bill is essential to achieving justice for them, so I commend it to the House.
Stephen Timms (East Ham) (Lab)
We very much welcome the fact that the Bill is before the House, and we shall not oppose it today. We will want to table amendments to the Bill in Committee, and this afternoon I will set out those that we have in mind. I hope that they will be widely welcomed across the House and that the Government will feel able to accept them.
However, let me first respond to the Minister’s speech. I have not previously spoken in the House on the subject of Equitable Life, so I have been able to come at the issue fresh. Let me begin by acknowledging the extent of the hardship and anxiety that all too many people have endured as a result of the failure of Equitable Life and the long process since. I want also to associate myself with the expressions of apology already made by my right hon. Friends for the contributions to that failure of successive Governments. Unlike me, the Minister has made numerous speeches in the House and elsewhere on the subject—many of them made while in opposition—but he is now the Minister. He is now supposed to be making decisions. Today, as the Prime Minister likes to say, the rubber hits the road, but the Government seem more interested in the lay-by. They have not yet made those decisions. Four months after this Government were elected and almost two months after the publication of Sir John Chadwick’s report, Equitable Life savers are still no nearer to knowing what payments they will receive.
Indeed, things are worse than that. It appears that the Minister, now safely elected, proposes to do precisely the opposite of what he said before the election that he would do. Not just he, but every Treasury Minister, signed the pledge drawn up by the Equitable Members Action Group, whose indefatigable campaigning he was right to draw attention to, and which will have won the respect of every Member. The Prime Minister, the Deputy Prime Minister and the Chancellor all signed the pledge, which committed each signatory to
“vote to set up a swift, simple, transparent and fair payment scheme—independent of government—as recommended by the Parliamentary Ombudsman.”
The previous Government took the view, which I share, that there are practical problems with the ombudsman’s recommendation. That is why we commissioned Sir John Chadwick to advise on a practical scheme. However, for EMAG, the position is clear: the ombudsman is right, the Chadwick recommendations are not. That is the issue that the Minister has failed to resolve.
Mr Andrew Love (Edmonton) (Lab/Co-op)
My constituent Mr Peter Waller—not a Labour supporter—wrote to me following the statement made to the House previously to say:
“Already, the Coalition government…are…showing shameful disregard to us, after so many Conservative and Lib Dem members signed a pre-election statement that we would get fair justice.”
Does that not sum up what this Government have done?
Stephen Timms
My hon. Friend is absolutely right. EMAG today is very angry indeed. When the Prime Minister, the Deputy Prime Minister, the Chancellor, every Treasury Minister, and the great majority of Government Members signed that pledge, EMAG thought that they meant it. Over the next couple of months, the Ministers and their hon. Friends behind them are going to find a lot of their constituents saying exactly what my hon. Friend’s constituent said, and wanting to know why Government Members have reneged on their pledge. They will have a great deal of explaining to do.
Miss Anne Begg (Aberdeen South) (Lab)
The previous Government made reparations for a number of historical injustices during their time in office, including compensation for the miners and for the fishermen involved in the cod war, and the financial assistance scheme. We hoped that all those processes would be simple and straightforward, but none turned out that way. Indeed, the Government had to revisit a couple of them on more than one occasion. Equitable Life is a far more complex case than any of them, however, and it was always going to be difficult, if not impossible, to come up with a scheme that was simple, transparent and fair. We hope that the Government will be able to do that, but it is going to be very difficult indeed.
Stephen Timms
My hon. Friend is right. This has been a difficult task, and that is why it has taken such a long time to get to this stage. We all hope that the matter will be quickly resolved, but it is now becoming clear that the coalition is not going to deliver. All those nods and smiles before the election, and all those pledges earnestly signed, are not worth the candle. The truth is that both the coalition parties led EMAG up the garden path. They will not deliver what they promised. It is flagrant: EMAG delivered votes at the election, but now that the election is safely over, it can be ditched.
Nadhim Zahawi
I note that the shadow Minister opened his speech by saying that he had not spoken before on the subject of the anxiety of the victims and policyholders. Does he think that their anxiety was added to by the fact that, on 3 December 2008, the then Prime Minister told the House that there would be a statement on this matter before Christmas, but that that statement was not forthcoming?
Stephen Timms
If I remember correctly, there was a statement in January 2009 in response to the ombudsman’s report.
Precisely the people who promised the earth before the election have now decided to sell EMAG down the river. It is a breathtaking breach of trust.
Geoffrey Clifton-Brown
Is this not a bit rich, coming from the right hon. Gentleman, for whom I have a great deal of respect? He had 13 years in which to sort this problem out. He obfuscated the ombudsman not once but twice, and then refused to implement the ombudsman’s ruling. This whole issue could have been resolved by now. We need not have been debating it today if his Government had just got on and done it.
Stephen Timms
I think I am right in saying that the hon. Gentleman was one of those who signed the pledge. He will now need to work extremely hard to persuade his hon. Friends on the Front Bench to deliver what he and so many of his hon. Friends have signed up to.
Stephen Timms
I am afraid that my hon. Friend is absolutely right. We got some process today, and that is it.
Jesse Norman (Hereford and South Herefordshire) (Con)
Does the House share my sense of bewilderment that the right hon. Gentleman should be asking us to apologise for five months of action, when he has done nothing for 10 years? Can he give us a quantification of the cost to Equitable Life policyholders of the past five years of Labour’s failed activity, given that a deal could have been done in 2004 but was not?
Stephen Timms
My advice to the hon. Gentleman and the great majority of his hon. Friends is turn his fire on those on his own Front Bench and ask them to deliver the pledge that so many of them signed up to. At the moment, we are heading towards the prospect of that not being delivered.
Mr Jenkin
The Public Administration Committee will have to smooth these troubled waters, and I want to be clear about what the right hon. Gentleman is inviting the Government to do. Sir John Chadwick reported that
“the Terms of Reference require me to limit my considerations to those Findings that have been made by the Ombudsman and accepted by the Government”,
so what he could recommend was thereby limited. Is the right hon. Gentleman now inviting the Government to ditch the report that his Government commissioned?
Stephen Timms
No, the position we are in now is that there are two quite different ways forward. One was recommended by the ombudsman. The previous Government saw some serious difficulties in that approach, so called on Sir John Chadwick to give advice. The Government now need to choose which of those two options they intend to follow. Their difficulty is that every Treasury Minister—including all those I have mentioned—has pledged to adopt the ombudsman’s approach. The Government are currently saying both that they accept the ombudsman’s recommendation in full, and that Sir John Chadwick’s report is a building block for what is going to happen. Nobody knows what that means, however, as it is trying to ride two horses, when what is required is a decision.
Charlie Elphicke
As a member of the Select Committee on Public Administration, I know that we will take evidence from the ombudsman in due course. Can the right hon. Gentleman help me and the House by explaining what in his mind’s eye were the “serious difficulties” with the ombudsman’s report that he mentioned?
Stephen Timms
I will come to that in a few moments. There are some serious problems with the complexity of the procedure recommended. That is why, I think, the Government have realised that what they said before the election will not be honoured.
Stephen Timms
Our policy is to proceed in the way we set out before the election—on the basis of what we promised our constituents on this matter—and to take forward what my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) committed to: that when Sir John Chadwick’s report was submitted in May, within two weeks of publication he would publish the Government’s proposed scheme, including a timetable. Where we are now, four months later, is that nobody knows what the scheme is. There is a fundamental inconsistency in what the Financial Secretary is telling the House. Is he with the ombudsman or Sir John Chadwick? Nobody has any idea.
Stephen Timms
My right hon. Friend the Member for Birmingham, Hodge Hill set out before the election the process that we would adopt, which remains our view of the right way forward. What I have no idea about is what the right hon. Gentleman intends to do. We wait with great interest to find out.
Stephen Timms
Let me make a little progress and then I will gladly give way again.
I want to go back over the events of the period since 1990. The problems of Equitable Life occurred between 1990 and 2001. Lord Penrose concluded that it was principally the society’s own actions that precipitated its downfall in the summer of 2000, but that regulatory system failures were secondary factors. The view of the previous Government, and my own, is that any scheme of payments needs to reflect that. Regulatory factors certainly did contribute: for example, a reinsurance treaty entered into by Equitable Life did not justify the credit that the company’s regulatory returns took for it in 1998 to 2001, so the returns gave a misleading picture of the society’s regulatory solvency position. Equitable Life’s regulatory returns in 1990 to 1996 gave a misleading impression and should have been queried by the public bodies with regulatory responsibility at the time—but they were not.
I have referred to the clear apology to policyholders given by my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper) when she was Chief Secretary in January 2009 on behalf of the public bodies and successive Governments responsible for the regulation of Equitable Life for the maladministration that took place. My right hon. Friend the present shadow Chief Secretary did the same. I have yet to hear, however, any apology from Conservative Members for the shambolic system of financial services regulation that preceded the establishment of the Financial Services Authority. As many will remember, we had numerous little regulators of differing characters and sometimes overlapping powers. The deregulated financial markets of the early 1990s made a great deal of money for some, but, as we are reflecting on today, brought misery to many others. That was when, under the Tory watch, things started to go very badly wrong at Equitable Life.
Mr Rob Wilson (Reading East) (Con)
May I remind the right hon. Gentleman what the former Chief Secretary said when she was in charge of this matter? She said that she would compensate only policyholders who had suffered disproportionately. There was no timetable for that compensation, and there was no explanation of what “disproportionately” meant. Is it still the view of the right hon. Gentleman’s party that policyholders should be means-tested?
Stephen Timms
My right hon. Friend the Member for Birmingham, Hodge Hill made it clear before the election that he thought that that was entirely inappropriate, so the answer to that question is no.
Parliament has recognised for many years that it is not generally appropriate for the taxpayer to pay compensation even when there is regulatory failure. The responsibility to minimise risks and prevent problems from occurring in a particular financial institution lies first and foremost with the people who own and run it. The Financial Services and Markets Act 2000 reaffirmed the long-standing exemption of financial regulators from liability for negligence in the courts. There would be serious repercussions for the taxpayer, and for the relationship between Government and financial markets, if the taxpayer were to provide a remedy for all losses every time the regulator failed to prevent a financial institution from getting into trouble.
Dr Sarah Wollaston (Totnes) (Con)
Does the right hon. Gentleman feel that the emptiness of the Opposition Benches represents a lack of interest in trapped annuitants, or merely shame? I assure him that the fact that the Benches on this side of the House are so full represents a strength of opinion that we wish to express to our Minister on behalf of members of Equitable Life.
Stephen Timms
I wish the hon. Lady success. I believe that she is one of those who signed the pledge, and I am sure that she will be training her fire on Ministers. As I have said—and as EMAG has made crystal clear—we are currently heading for the breaking of that pledge.
Dr Julian Lewis
Does the shadow Minister feel that people who made dodgy investments in Icelandic banks are more worthy of compensation than people who trusted the Government and the regulatory authorities over Equitable Life?
Stephen Timms
I am not sure which investors the hon. Gentleman is thinking of, but I think it essential for us now to move quickly to a scheme. We need a timetable, and we need the details of a scheme, so that this long-standing matter can be resolved.
Toby Perkins
Many former Equitable Life policyholders who have spoken to me unquestionably felt that both previous Governments had been too slow to act. They will be very surprised by the extent to which Members who signed that pledge now apparently welcome proposals that are so far removed from what the Conservative and Liberal Democrat parties promised in the run-up to the election.
Stephen Timms
My hon. Friend is absolutely right. There is what I would describe as incandescence on the part of those who have been affected, because promises so clearly made to them before the election are not being fulfilled now.
Stephen Timms
I am going to make a little headway before I give way again.
I have spoken about the ombudsman’s proposals. Sir John Chadwick was asked to advise on a simpler scheme design. Before the election, the present Minister said that he accepted the ombudsman’s proposal. The present Prime Minister, Deputy Prime Minister and Chancellor all signed the EMAG pledge. However, in his report, published in July, Sir John referred to
“the obvious impracticability—if not impossibility—of determining these questions on an individual basis”.
The previous Government favoured his approach as a practical solution, but now the Minister says that it is one of the building blocks of a solution.
Stephen Timms
I will make a little more progress, and then I will gladly give way again.
The ombudsman spotted a contradiction, and wrote to every member in July making that clear. She said:
“In the light of the new Government’s commitment to implement that recommendation… the approach embodied in the Chadwick report has thus been overtaken by events and cannot provide a basis for the implementation of my recommendation.”
In opposition, the Minister and his right hon. Friends could promise the earth, but now that they are in government their promises are worthless.
Nicky Morgan (Loughborough) (Con)
The right hon. Gentleman has not yet mentioned the impact on the public purse. He does talk, however, about how incandescent former policyholders are. They are incandescent about the fact that compensation has been delayed for so long and that the last Government left the economy in such a mess, and as a result the ombudsman has had to say that compensation will have to be limited because of the effect on the public purse. How will Opposition Members explain that to policyholders?
Stephen Timms
If the hon. Lady had suggested that the words she has just uttered should have been inserted into the pledge before it was signed by so many Members on the Government Benches she would be on stronger ground, but she and many others gave the impression they were signing up to it in full. Indeed, they did sign the pledge as it stood, without those caveats, so it is no good their now coming back and saying, “We didn’t quite mean what EMAG thought we meant when we signed that pledge.” Therefore, this is the situation: the ombudsman says her proposal and Chadwick are irreconcilable, EMAG backs the ombudsman, and the Minister said before the election that is what he would deliver, but now he says the opposite.
Mr Weir
I am listening with interest to the right hon. Gentleman’s comments. As I understand it, the Labour party’s position is that it still supports Sir John Chadwick’s work. If that is the case, can the right hon. Gentleman confirm that Labour would support whatever compensation package Sir John comes up with, or would it follow the coalition and put an arbitrary cap on that?
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.
Mr Love
If I were Brian Pomeroy or a member of the independent commission listening to today’s debate I would be confused, especially by the Minister’s contribution, because he is trying to support both the ombudsman’s report in principle and major parts of Chadwick’s report. What is absolutely clear from the debate so far is that the response from Front-Bench Members to all questions about what the compensation pot will be is that the needs of taxpayers must be taken into account. Does that not fundamentally contradict what they were saying before the election?
Stephen Timms
Yes, it does. Of course it is absolutely right that the needs of taxpayers must be considered, but Government Members signed the pledge that made no reference to that, which is why they have got themselves into such serious trouble.
Mr Jim Cunningham (Coventry South) (Lab)
Is not the fact of the matter that Members who are now in government knew what the economic situation was when they were campaigning in the general election, yet still signed those pledges?
Stephen Timms
That is precisely what happened.
I just wish to tell the House the main amendments that we will table in Committee. I hope that the first will meet no opposition, because it directly picks up on a point in the EMAG pledge. It will require that the payments scheme be independent of government. The Bill does not say that, but our view is that it should; indeed, the Minister has confirmed that he intends it to be independent.
The Minister made a slightly puzzling point in his statement to the House on 22 July, when he said:
The ombudsman…concluded that the design of the scheme should be independent of the Government.”—[Official Report, 22 July 2010; Vol. 514, c. 577.]
That is of course true, but the ombudsman concluded that the scheme itself should be independent—that is the point that should be in the Bill, and it is crystal clear in the EMAG pledge. We will doubtless see lots of wriggling by those on the Benches opposite about exactly what was meant by the phrase “proper compensation” in the pledge once the figures are announced on 20 October; many Members will explain that they did not think it meant what EMAG members think it meant. But on scheme independence there is no wriggle room in the pledge, so we will table an amendment to make that a requirement.
Sajid Javid
I am grateful that the right hon. Gentleman started his speech by saying that his party would not oppose the Bill this evening. Many victims of the scandal will wonder why his party did not propose a similar Bill when it had the opportunity to do so. My question is a specific one; I am asking him to make something clear for the benefit of everyone watching this debate tonight. His party commissioned the Chadwick report and set the terms of reference. Chadwick said that his final loss figure is £400 million to £500 million. Does the right hon. Gentleman’s party accept that amount or not?
Stephen Timms
Our intention, as I have said on a number of occasions, would have been to proceed on the basis that my right hon. Friend the Member for Birmingham, Hodge Hill set out before the election. He did not set out an amount, but he did set out a process, and we would have published within two weeks of the submission of the Chadwick report the timetable for the payments and the scheme itself.
Stephen Timms
I am going to make a little more progress.
Secondly, as we heard in an intervention that I welcome, we need there to be a clear appeals mechanism that is also independent of government. I believe that the Minister indicated that he was reflecting on an amendment to that effect. The Bill as it stands does not establish such a mechanism, and one should be put in place, because it is certainly necessary. If the Government do not table an amendment to do that, we shall.
Mr David Burrowes (Enfield, Southgate) (Con)
For the benefit of my constituents, I want to establish where the Opposition sit on this matter. I understand that one of their critiques of the Government is that they have not responded more quickly to the Chadwick report. Is it right to say that had the Opposition been in government they would, within two weeks, have accepted the Chadwick report and proceeded on the “unsafe and unsound basis” that the ombudsman criticises? Which side of the fence does the right hon. Gentleman think that policyholders would sit? Would they wish to proceed with the Opposition—within two weeks on the Chadwick proposal—or to take account, as the Government are doing, not simply of Chadwick but of wider views?
Stephen Timms
The hon. Gentleman’s difficulty is that a very large number of EMAG members feel that, under the basis that is emerging compared with the one that they were concerned about in the past, they are going to end up in an extremely similar position; they do not see that any progress has been made. That is why they are so angry about having been sold down the river, after so many people signed their pledge.
Stephen Timms
I just want to run through the amendments that we want to table. Our third amendment will relate to the fact that the Bill does not say anything about the timing of the payments. As we have established in this debate, that is a crucial point. We will therefore table an amendment to require that either payments should start by a specified date or the Government should publish a report to explain why not. Our view is that that too should be in the Bill.
Our fourth amendment will pick up another important point in the EMAG pledge. Those who signed it committed themselves to vote for
“a swift, simple, transparent and fair payment scheme”.
To enable the House to ensure that those criteria are met, we will table an amendment to include in the Bill a power to make regulations establishing the criteria for the scheme by the affirmative procedure. In that way, Members of the House and of the other place can consider the scheme before it takes effect and satisfy themselves that the criteria that Ministers signed up to in that pledge are delivered. We think it important that the House itself should have the opportunity to consider and debate the scheme. In that way, we can deliver that aspect of the pledge even though other aspects of it will not be delivered.
I have made it clear that we will support the Bill. We are still, I am afraid, a long way from having the scheme that Equitable Life members want. This has been a long-running and distressing saga and the Bill is a significant step, albeit one that still requires some improvement. On this side of the House, we look forward to arguing for those improvements so that those who have had to wait so long for help will at last receive it.
Madam Deputy Speaker (Dawn Primarolo)
Order. I remind hon. Members that Mr Speaker has set a time limit of eight minutes for Back-Bench speakers. There are so many people who want to speak that I ask all hon. Members to help their colleagues wherever possible by speaking for less than eight minutes. We will have to consider progress in the debate later this evening, and whether everyone will get in. I also remind Members who feel that as they might not have a chance to speak they will therefore make an intervention, that the intervention should be brief, not a substitute for the speech that would otherwise have been made. I call Mr Bernard Jenkin.
Madam Deputy Speaker
Mr Jenkin does not wish to speak, even though his name is on the list. In that case, I call Mr Alan Reid.
Mr Alan Reid (Argyll and Bute) (LD)
I welcome the Bill because it gives the Treasury statutory authority to make payments to Equitable Life policyholders. Those policyholders have waited a very long time to receive compensation for the injustices of which they have been victims. It is now more than nine years since the value of their policies was drastically cut. Sadly, many have since died and more die every day. I therefore welcome the speed at which the new Government have moved, which contrasts sharply with the snail’s pace at which the previous Government made progress.
It has been clear since Lord Penrose published his report in 2004 that there was regulatory failure. The regulatory regime was not properly resourced. Natural justice indicates that policyholders should be compensated for the losses they suffered as a result of that regulatory failure.
In the six years since Penrose, we have had two reports from the parliamentary ombudsman. Those reports were well named. The ombudsman’s first report, which was published in July 2008, was entitled, “Equitable Life: a decade of regulatory failure”. That was followed in May 2009 by another report entitled, “Injustice unremedied”.
I want to draw the House’s attention to the coalition agreement, which states:
“We will implement the Parliamentary and Health Ombudsman’s recommendation to make fair and transparent payments to Equitable Life policy holders, through an independent payment scheme, for their relative loss as a consequence of regulatory failure.”
The key phrases in that agreement are an “independent payment scheme” and “relative loss”, and that as recommended by the ombudsman. I also draw the House’s attention to paragraph 7 of the second report:
“Accordingly, I explained that the aim of such a compensation scheme should be to restore anyone who had suffered a greater loss, relative to that which they would have suffered had they invested in a comparable scheme with another company, to the position they would have been in had no maladministration occurred.”
So the coalition agreement commits the Government to compensating for the “relative loss” suffered by the policyholders.
After years of delay, the previous Government commissioned the Chadwick report, but Sir John Chadwick’s remit was flawed because he was allowed to consider only those parts of the ombudsman’s findings that had been accepted by the previous Government. The ombudsman wrote to MPs on 26 July, saying that the Chadwick proposals were an
“unsafe and unsound basis on which to proceed.”
Bearing in mind the ombudsman’s report and the coalition agreement, I urge the Government not to require the independent payment commission, through its terms of reference, to have regard to Chadwick’s report because it has been so clearly discredited.
The Chadwick report uses a series of dubious calculations to cut the proposed compensation to about a tenth of the relative losses that were estimated by Towers Watson, which had been commissioned by the Treasury to calculate the losses suffered by policyholders. Chadwick makes many dubious claims, the most ridiculous of which is his estimate that even if the regulatory regime had done its job, about 75% to 80% of Equitable Life investors would still have ignored the regulator and put their savings into an obviously failing company. I find that assertion completely incredible. Sir John then used that figure to reduce the compensation payments by between 75% and 80%. I hope that the independent payments commission will conduct its own analysis, because I am sure that it will find that that figure is completely ridiculous. Because of the flawed Chadwick remit, the Government should delete all references to that report from the independent commission’s terms of reference.
The ombudsman recommended that it was appropriate to consider the potential impact on the public purse of any compensation payment. That has always been a part of her reports, but I urge the Government, when they consider that recommendation, to bear in mind that Governments always want people to save and invest for their retirement. If people lose confidence in regulators, they simply will not save and invest for their retirement, and that will cost Governments more in the long run. People are not going to save or invest if they cannot be convinced that they will be compensated fairly if a future regulatory regime fails in the way that the past one did.
The Bill paves the way for a compensation scheme that policyholders have waited for nine years to see. The scheme can be made affordable by spreading payments over several years, as proposed by EMAG. The coalition agreement sets out the principles that should be followed: there should be an independent scheme and there should be fair and transparent payments for relative loss as a consequence of the regulatory failure. As long as those principles are followed, the surviving Equitable Life policyholders will at long last see justice done.
Frank Dobson (Holborn and St Pancras) (Lab)
I support the Bill because it will enable Equitable Life policyholders to start getting paid. Those people put their savings into what was Britain’s oldest and, as far as they were concerned, most reputable savings institution. They were not like the people who put their savings into outfits offering dubious and extraordinary returns, such as those who decided to chance their savings with the Icelandic banks. The Equitable policyholders are in their current position through absolutely no fault of their own.
So who was at fault? First, clearly, the people who were running Equitable Life were at fault. I do not think that anyone is going to dispute that. Secondly, the House of Lords was at fault in its judgment in the case of the guaranteed annuity rate beneficiaries. When it reached its decision, it knew what the consequences were likely to be for Equitable Life and other policyholders who would not benefit from that judgment. Rather ironically, the House of Lords showed no sense of what was equitable and not a grain of common sense. It decided that it would award justice to one small group of people, almost automatically resulting in injustice for a much larger group. In view of the dubiety of certain organisations with which people put their savings, we need to look at the law to see whether we can enable the courts to come to what might be described as an adjudication rather than a judgment, where a judgment in favour of one group of innocent people might be very damaging to another group of innocent people. The Treasury, the Financial Services Authority and others were clearly at fault. Nobody can deny that, but at the time that the first ombudsman’s report came out, I believed she was wrong as well. In my judgment, her judgment did not give enough weight to the primary shortcomings and primary fault of Equitable Life, and attributed too much fault to the regulators.
Clearly, the Government were at fault in their response to that report. It was understandable that they did not fancy the establishment of the principle that people could seek compensation from a regulator. That is not an unsound concern on the part of a Government, who might not want to be subjected to all sorts of court actions—for example, when somebody decides that the police have failed to prevent burglaries in their area and seeks to bring a case against them. The financial services industry is keen always to blame regulators, as it has done in a big way.
Things changed at the time of the credit crunch. All questions about protecting the taxpayer fell away. All the old restraints fell away. The banking and savings industry, run by people of infinite greed and stupidity, was so hopeless that it was decided on both sides of the House that not only the people who had put their savings in them, but the institutions themselves, were entitled to be bailed out. From that moment on, I was convinced that had the Equitable Life issue arisen in 2007, 2008 or 2009, there would have been no doubt: we would all have agreed that the people who had lost their money should be properly compensated, and by the taxpayer. That is what we now have to do if we are to give people a sense of security in their pensions and savings.
Dr Andrew Murrison (South West Wiltshire) (Con)
Will the right hon. Gentleman give way?
Frank Dobson
No, I do not want to. We must get on.
As my right hon. Friend the Member for East Ham (Stephen Timms) said, the Conservatives and Liberal Democrats attacked the Labour Government—as far as I was concerned, quite rightly—and said in opposition that they strongly supported the ombudsman’s recommendations. I do not recall my opponents at the last election getting up and saying, “Well, there were a few caveats in the ombudsman’s report,” and I doubt whether that crossed Tory or Lib Dem lips anywhere else in the country.
Before, during and after the general election, the two parties that now form the Government thrice promised that the ombudsman’s report would be implemented, and they had better get on with it. However, their form of getting on with it is to establish yet another commission. That may work swiftly; I do not know. I have a question which I hope the Minister will answer. If the commission comes up with a scheme that EMAG does not like, will he send it back to the commission and insist that it comes up with a scheme acceptable to EMAG? I am happy to give way to him if he would like to contribute to the debate.
Once everyone has been paid, the situation is still not sorted out. We need to look closely at better regulation of those who are taking in people’s savings. We need to look at the regulatory system to see whether that can be strengthened in various ways. Finally, as I suggested, we need to change the law so that in circumstances like those that originally arose in Equitable Life, the courts can adjudicate between two innocent parties, not help one lot and hammer the other.
Fiona Bruce (Congleton) (Con)
It is an honour to make my maiden speech as Member of Parliament for Congleton. I recognise that I have much to learn as I succeed Ann Winterton who, over 27 years, conscientiously, consistently and courageously represented the interests and values of its people. I will endeavour to do the same, at least in my commitment to my constituents. My length of tenure I leave to them!
It is also a privilege to follow Ann in another respect. She served as chairman of the all-party parliamentary pro-life group. I am honoured to be its vice-chairman. I believe that no insignificant person has ever been born.
The market town of Congleton today has its origins as a northern mill town. I grew up largely in a terraced house in another northern mill town, Burnley, where my grandmother started weaving in the cotton mill as a girl, my father wore clogs at school and much of the life rawly depicted in William Woodruff’s book, “The Road to Nab End”, was for them a reality. But education, aspiration and determination, and the support of a loving family and strong local community, all of which I witnessed and benefited from as a child, and which inform my engagement in politics today, were key to my family’s circumstances changing for the better. For all that, I am grateful.
My constituency comprises not just the town of Congleton, but Alsager, Middlewich and Sandbach, interspersed with lovely Cheshire countryside and close-knit villages like Holmes Chapel and Goostrey. Many features make it attractive for locals and tourists alike—indeed, I staycationed there this summer, enjoying the ancient town of Sandbach with Saxon crosses in its cobbled square; the lovingly maintained centuries-old black and white timbered National Trust property, Little Moreton Hall; the world-famous Jodrell Bank telescope; and the canals of the Cheshire ring, formerly industrial, conveying salt and pottery, now populated with prettily coloured narrowboats. I have enjoyed winter “Snowdrop Walks” through Rode Hall’s woods, a brisk hike up the hill, The Cloud, to watch Easter day’s sunrise, the Green Flag award-winning Brereton Heath country park, and a summer stroll beside the boats on Astbury Mere.
Do visit! But not just for the loveliness of the area. What makes Congleton for me the most wonderful constituency to serve is something else. It is its people—friendly, unaffected and unassuming. No one could have welcomed me more warmly as their new MP. I am most appreciative. The people of Congleton constituency have an outstanding commitment to community and family life. Voluntary organisations flourish. Support for the brave men of the Mercian Regiment is active and heartfelt.
Yet today these Cheshire towns face substantial challenges and change—a loss of traditional industries; farmers facing economic and bureaucratic challenges; insufficient jobs for youngsters meaning that they have to move away to work; challenges for the independent retailer on the high street; skills shortages in areas such as manufacturing and engineering; and a disproportionately higher than average older population to care for.
Yet are the good people of Congleton complaining or holding pity parties? No! Quite the opposite! They are pluckily rising to these challenges, actively looking at how, together, we can respond to them, and saying, “For such a time as this, we are not part of the problem. We are part of the solution.”
Employers, such as Convert2Green, Ideal and Siemens are saying, “If we cannot find the skills, we will train them.” East Cheshire chamber of commerce is organising advice on topics as diverse as export licences and shop doctors. Local traders’ groups such as STAR—Sandbach Traders and Retailers—and Alsager chamber of trade are developing new ways to promote business and local produce, like farmers markets. The Congleton Partnership and Middlewich Vision are determinedly championing vibrant community life. Enthusiastic residents are giving time in Clean Teams, Milton Gardens, Rotary and Holmes Chapel Village Volunteers. Farmers like the Riddells are investing in technology while also diversifying into hospitality. Cheshire East council members and officers are open to talks with innovative community groups, such as Plus Dane and Crossroads Care, about how best to care for our elderly, whilst recognising that supporting families who care is, where possible, the best solution of all. We have town clerks—Jonathan Williams, Terry Fitton, Ann Banks and Brian Hogan—with real hearts for their towns and a pride in their heritage and excitement about their future; and we have inspirational head teachers for whom their community role is much more than a job. Several local newspapers flourish, defiant in the face of today’s media challenges, promoting local life and values. They include the Sandbach and Middlewich edition of the Crewe Chronicle, the Middlewich Guardian, The Sentinel and The Congleton Chronicle, in which the eagle-eyed Mr Grumpy ensures that we laugh at ourselves weekly. Hats off, too, to that paper’s young reporter who, rightly affronted, took up with me the case of a young girl who, through the local job centre, was offered employment involving sex work. A few weeks later we saw this Government change the regulations, banning that practice nationwide.
Strong community leaders abound: Stephen Hodgkinson, helping the homeless, indebted and addicted—a hero in his home town; Matthew and Christine Wright, supporting the “Special Treasures” disabled children’s group; Ian Bishop and Julia Brumby, initiating “Street Pastors” to get alongside youngsters on the street at night; and David Page, gently inspiring and encouraging people to rebuild together after their community hall burned down.
Individuals like those may never hold elected office, but they are motivated by nothing more—and nothing less—than the desire to make a positive difference, often while facing challenges themselves. They understand that creating a society worth living in, and of which we can all be proud, involves not so much what we can get, as what we can give.
Throughout the country today, people are asking, “What is the Big Society?” I say, “Come to Congleton! It is already here!”
I have highlighted, in this my maiden speech, the importance of personal responsibility, but I do not deny the need for a Government safety net to protect the most vulnerable or those suffering injustice. Equitable Life investors in my constituency took personal responsibility for their provision and were failed by the very Government regulator which should have protected them. They include people such as Stan Nin, a stoic Sandbach resident aged 80, who has lost the benefit of some £350,000 and cannot now even afford to run a car, let alone have a holiday. We cannot compound injustice on injustice; we must pay proper compensation, and do so soon as a priority to older trapped annuitants such as Mr Nin.
Mr Mike Weir (Angus) (SNP)
I am pleased to follow the maiden speech of the hon. Member for Congleton (Fiona Bruce). Ann Winterton will be a very difficult act to follow, but I am sure that the hon. Lady will be a fine representative of the people of Congleton in years to come.
On the Bill, the Scottish National party and Plaid Cymru have always supported the campaign to bring justice to the victims of Equitable Life. I am clearly pleased that we have before the House a Bill that will bring compensation a little closer, and we will support its Second Reading. The real problem, however, is that it simply sets up a mechanism for which a scheme can be introduced, presumably, through secondary legislation. I tackled the Minister on the question of whether the scheme would be debated on the Floor of the House, but I received no answer. Given the significance of the matter, it is important that it comes to the Floor of the House so that we can have a good look at the proposal.
Given the further fact that the independent commission is not due to report until early next year, it appears that the victims of Equitable Life will have to wait another year or so before they know what, if anything, they will receive in compensation. That is also a problem, as members still do not know the specifics of the scheme. The huge concern of my affected constituents is that recent Government statements point to a watered-down scheme that is not that different from what the previous Labour Government proposed, except for the innovation of an overall cap on payments. That proposal will cause fear among many victims because if that cap is imposed, it will heap injustice upon the great injustices that those people have already suffered.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Does my hon. Friend agree that it is essential that the scheme rules out the Chadwick report’s proposal of a payment cap for each policyholder, which would limit compensation to between only £400 million and £500 million?
Mr Weir
The policyholders are entitled to due compensation, and I shall address that point in a moment.
I remind Government Members that the coalition agreement clearly states:
“We will implement the Parliamentary and Health Ombudsman’s recommendation to make fair and transparent payments to Equitable Life policy holders, through an independent payment scheme, for their relative loss as a consequence of regulatory failure.”
Will the Minister tell us how that statement can be reconciled with the letter that the ombudsman has sent to all Members, in which, referring to Sir John Chadwick’s recommendations, she states:
“I also explained to him the basis on which I had come to my conclusions and what my recommendation for compensation involved. I am very disappointed therefore to discover that Sir John has explicitly rejected those explanations and that assistance and has substituted his own interpretation of these matters without seeking my further comments.”
That is a fairly damning indictment of what is now proposed. I stated in the previous debate on the matter that the failure to support our own ombudsman brought great shame on the previous Parliament, but, if we do not act now to re-establish trust in the system and listen to what our own independent ombudsman says, it will bring shame on this Parliament as well.
Prior to the election the Conservatives were clear in their view, and in March the motion before Members specifically stated that the House
“calls on the Government to set a clear timetable for implementing the Ombudsman’s recommendations and remedying the injustice suffered by policyholders.”
Regrettably, that does not seem to be what is now proposed; the new Government seem to have pretty much jettisoned the ombudsman’s recommendations and adopted the process that the previous Labour Administration were putting in place—a system that the Conservatives roundly condemned prior to the election.
I do not quite share the indignation of Labour Members on this matter, because, if one reads carefully the speech given in the March debate from the now Minister, one discovers that the seeds of the current situation were already sown. He stated:
“The hon. Gentleman refers to the bill for compensation, but no one knows how big that will be. That figure will be part of the outcome of the process that the Government launched back in January last year. He will know, from reading the ombudsman’s report, that her recommendations on compensation had two important caveats—that payments to policyholders should reflect relative loss but that the impact of any compensation bill on the public purse should be borne in mind.”—[Official Report, 16 March 2010; Vol. 507, c. 744.]
It seems to me, however, that only the second part of that statement is now the overriding consideration, and that the question of the amount of compensation has little to do with relative loss, being concerned purely with the perceived state of the public finances. We have moved on from means-testing the victims to means-testing the Government before deciding the level of compensation.
The problem with that approach is that it sets a very dangerous precedent. The Government, through the regulator, were responsible for what happened at Equitable Life, and the maladministration that occurred led directly to the losses suffered by the policyholders. However, the Government are effectively going to cap the amount of compensation at what they think that they can afford and, worse still, as part of a comprehensive spending review that is expected to impose swingeing cuts on all Departments.
I wonder how I would get on if I drove my car into a Porsche, causing many thousands of pounds worth of damage, and said “Sorry for your loss, but I can only afford to pay a small proportion of the damage.” I suspect that any court in the land would give me very short shrift. It is a principle well established that those who have caused the damage are due to make recompense. That principle appears to have been watered down in the case of Equitable Life policyholders, and, as the right hon. Member for Holborn and St Pancras (Frank Dobson) said, that is not the case for other victims of financial circumstances.
In previous speeches, the Minister has praised the Equitable Members Action Group for its excellent work in keeping the matter in the public eye, and rightly so. Given that, we should take on board the very real concerns about what is now proposed. The group has made clear its concerns in three main areas, including the continued reliance on the Chadwick process, the remit of which was devised by the previous Government and clearly intended to minimise payouts. Indeed, the previous Administration did not accept many of the ombudsman’s findings, coming up instead with a system of ex gratia payments to which many of us objected at the time. We in the SNP and Plaid Cymru supported Liberals and Tories in that objection. The important point is that the basis on which Sir John Chadwick was carrying out his work was that adopted by the previous Government. I remind Government Members that they supported the recommendations of the ombudsman in their manifestos and the coalition agreement.
The losses are to be calculated by the Treasury and not by the independent commission, and indeed the very basis on which that is to happen is moving from the relative loss identified by the ombudsman to an absolute loss method adopted by Chadwick. That reiterates the importance of debating the terms of the scheme on the Floor of the House. Furthermore, the commission is left with the unenviable task of distributing inadequate compensation, having had no say in calculating the true losses.
The policyholders of Equitable Life were treated shamefully by the previous Government. In opposition, the coalition parties promised to take action, but unless they tackle the concerns raised by policyholders and the ombudsman, this issue will continue to undermine the standing of this Parliament, faith in our ombudsman service and, as was pointed out, the continuing faith of all our constituents in saving for their futures; they might not be assured that their savings will be protected when investing with apparently reputable companies.
I urge Ministers, even at this late stage, to address these issues and come forward with a scheme that will bring this sad debacle to a just end. We should be given the opportunity to debate the scheme on the Floor of the House, so that we can be assured, and we can assure our constituents, that everything possible is being done for the unfortunate victims.
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.
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.
Mr Fabian Hamilton (Leeds North East) (Lab)
Before I start, I have an apology to make to the House. Owing to a prior, long-standing commitment, I shall not be present at the winding-up speeches and the conclusion of the debate.
Like so many Members on both sides of the House, I have tried over the past few years to champion the cause of my constituents who have suffered—through no fault of their own—because of a catastrophic failure of regulation by the Government of a previously sound and trusted financial institution. I do not want to rehearse yet again the history of how that failure, which has blighted so many lives, came to pass. I am pleased to see that this afternoon we are debating the Second Reading of a Bill that will pave the way for compensation, now long overdue, to be paid to long-suffering Equitable policyholders, especially the trapped annuitants.
Since my Adjournment debate on 24 June 2009, I have spoken in the House without fear or favour on behalf of so many who did not have a voice of their own. I have also spoken in this House to put the case that is so well presented by the Equitable Members Action Group, or EMAG.
I dare say that I have not made myself very popular with my Labour colleagues and friends who, until 6 May, were members of the Government. Sometimes, however, even politicians have to put personal ambition aside and embrace an important principle. Never more so than in this case; the question is one of a moral obligation to a group of people who not only wanted to provide for their own retirement but were actively encouraged to do so by the Governments—both Conservative and Labour—of the day.
Therefore the only people who are important in today’s debate are those who have already waited more than nine years for recompense and are still waiting. I am thinking of constituents such as Mrs Ivy Robinson, who lives in Roundhay in my constituency of Leeds North East. She contributed all her working life to save for a personal pension, which promised to give her just over £400 a month, but she is now having to manage on less than £180 because of the failure of Equitable.
As we have heard time and again in debates in this House and elsewhere, the vast majority of Equitable policyholders are not rich people, but ordinary folk who simply tried to be careful with their hard-earned money in order to ensure a comfortable retirement. The average investment was only £45,000—enough to yield, according to EMAG’s calculations, just £300 a month. They have been badly let down.
Ann Abraham, the parliamentary ombudsman, could not have been clearer in her recommendations and has spoken out on many occasions to tell the Government what was necessary to put right the wrongs caused by Equitable. The Government have largely ignored her sound advice. The former Chair of the Public Administration Committee, Tony Wright, already quoted this afternoon although no longer a Member of the House, was outspoken during the last Parliament in his support for Equitable Life policyholders. In part of the introduction to his Committee’s report to the House in December 2008 he stated:
“Over the last eight years many of those members and their families have suffered great anxiety as policy values were cut and pension payments reduced. Many are no longer alive, and will be unable to benefit personally from any compensation. We share both a deep sense of frustration and continuing outrage that the situation has remained unresolved for so long.”
The then Conservative Opposition were vocal in their support for Equitable policyholders, as were many Labour and Liberal Democrat Members, and in October 2009 the Conservatives used an Opposition day debate to raise the issue once again in the House. They did so again in March this year, shortly before Dissolution. I spoke in both those debates and have been consistent in my support for the moral obligation that we owe those who have suffered and continue to suffer. In November 2009, EMAG organised a rally in Westminster Methodist central hall, which was very well attended and at which the Financial Secretary and I spoke, among many others.
On 24 February this year, the former—now shadow—Chief Secretary to the Treasury attended a meeting of the all-party group on Equitable Life in one of the Committee Rooms upstairs, together with Sir John Chadwick and around 90 Members of this House. In 13 years, I have never seen so many MPs attend an all-party group. What a shame the room was far too small and everyone was squeezed in with standing room only, just like the underground during the rush hour. Sir John attempted to justify his terms of reference—for which he was not responsible, of course—and tried to answer questions about his forthcoming interim report during some very angry questioning by Members. However, as my right hon. Friend the shadow Financial Secretary said, in July the ombudsman wrote to every Member about the Chadwick process, making it clear that
“Sir John’s terms of reference included the rejection or qualification by the previous Government of many of my findings of maladministration and injustice and the rejection of my recommendation. In the light of the new Government’s commitment to implement that recommendation in full, the approach embodied in the Chadwick report has thus been overtaken by events and cannot provide a basis for the implementation of the recommendation.”
So now we come to the Bill. It is of course fairly innocuous, as it tries to pave the way for a scheme of compensation as yet unpublished; that is why Labour Members are not opposing it today. I support my right hon. Friend’s suggested amendments, which I believe will go much further towards the delivery of a compensation scheme for policyholders, especially trapped annuitants, who have waited for so long. Unlike him, however, I have never supported the Chadwick process, and I am in complete agreement with the parliamentary ombudsman, who says, again in her letter of 26 July, that
“the Chadwick proposals seem to me to be an unsafe and unsound basis on which to proceed.”
While I have always been determined to try and ensure that this issue is lifted above crude party politics, I have to admit to being very uncomfortable at the EMAG rally last November when the hon. Member for Fareham (Mr Hoban), now the Minister, made a scathing attack on the then Labour Government. In the spirit of cross-party support for the victims of Equitable’s failure, I have always refrained from attacking the Conservatives, so let me simply say that I am disappointed that the Chadwick process continued after pledges were made to abandon it, especially in the light of the ombudsman’s criticisms. I am also upset that a ceiling of roughly 10% of estimated losses has been placed on any compensation scheme. This appears to go against the EMAG pledge that many right hon. and hon. Members—including, I believe, the entire Government Front-Bench team—signed before the election, and which committed each signatory to
“vote to set up a swift, simple, transparent and fair payment scheme—independent of Government—as recommended by the Parliamentary Ombudsman.”
We are not there yet by any means. This Bill might be a building block, but it is only Lego-sized at the moment. I hope that the Government will think carefully and adopt the helpful Labour amendments very quickly in order to show our constituents that, at last, Parliament means to right this wrong.
Stephen Lloyd (Eastbourne) (LD)
I, too, congratulate the hon. Member for Congleton (Fiona Bruce) on her maiden speech. In the spirit of fairness, I also pay tribute to the right hon. Member for Holborn and St Pancras (Frank Dobson) and the hon. Member for Leeds North East (Mr Hamilton). Much of their approach to this issue showed that there is an element of fairness among Labour Members, and I appreciate that.
We all know why we are here today, and we all know the financial constraints that we are facing. I should like to concentrate on three key proposals on how we can bring proper and fair closure to this whole lamentable episode. The first issue is regulation. Clearly, Members on both sides of the House recognise that regulation completely failed. To an extent, that gives us a very strong moral case. Irrespective of the financial challenges the country faces, the comprehensive failure of the regulators was so shocking that it should provide enough impetus for our coalition Government to go the extra mile to ensure that Equitable members receive the appropriate compensation.
I had a meeting with EMAG yesterday, and one of its representatives told me that—I cannot vouch for whether this is absolutely true—because the regulators apparently knew a good few years before the company hit the buffers that its financial model was in such a poor state, they withdrew their pensions from the Equitable Life package. If that is true, it is absolutely disgraceful. It demonstrates what an atrocious job they did and emphasises that there is a very strong moral case for the payment of fair and appropriate compensation, irrespective of the financial challenges we face.
The second issue, which has been raised by several speakers—I concur, and I hope that my hon. Friend the Minister is taking this on board—is about staged payments. We all recognise the financial problems that the country faces—I will not bang on about Labour’s responsibility for that—and EMAG does too. I implore my hon. Friend to look favourably on the staged payment process—first, so that payments can be made immediately for people in the most desperate need; we all agree that that is essential. Equally, the advantage of making staged payments over the next 10 years, as EMAG accepts, is that it will be much more cost-effective and should allow the Treasury to manage fairer payments without causing too much grief to the Exchequer.
Thirdly, I urge my hon. Friend the Member for Chichester (Mr Tyrie), who is Chair of the Treasury Committee—he is no longer in the Chamber—and my hon. Friend the Member for Harwich and North Essex (Mr Jenkin), who is Chair of the Public Administration Committee, to invite the ombudsman to give evidence to their Committees, because her report, in its detail and expertise, completely blows the Chadwick report out of the water. That would, I hope, inform those Select Committees to the extent that they would be able to give a report to the Government that carried a considerable amount of weight.
In conclusion—I am determined to keep my contribution short because many of my colleagues want to speak; I hope that the Deputy Speaker will remember that when I next stand up to try to speak—we now have an opportunity to right a grave injustice. It is a grim situation. In Eastbourne, I have probably received more than 200 letters from people who have been affected. We are not talking about wealthy people; these are people who have scrimped and saved for most of their lives and through no fault of their own, and through the shocking irresponsibility of the regulator throughout the ’90s, have ended up in a desperate state. There is a profound moral duty to resolve the situation as quickly as possible. I welcome the coalition Government’s determination to honour their commitment. I am confident, because I am one of nature’s optimists, that it will involve a higher sum than EMAG may fear; and if it is done over a staged process, it may even be a lot closer to what we all want and consider to be right.
Gordon Banks (Ochil and South Perthshire) (Lab)
I will also try to keep my remarks brief.
First, I associate myself fully with the remarks of my hon. Friend the Member for Leeds North East (Mr Hamilton). I look forward to seeing the amendments proposed by my right hon. Friend the Member for East Ham (Stephen Timms) as the Bill moves into Committee. This is such an important issue to the people who have been affected by it, and we do need a solution, but I worry that the solution we will get from the Government will bear no likeness to what they promised or intimated when they were in opposition.
In terms of the number of representations from constituents, this is the biggest matter that I have dealt with since coming to this place. It is certainly the longest running issue for me, and many other Members will have had it on their plates for much longer than I have. However, we should think about those who lost their money. They have had worry and hardship from the start, and what is the solution? To my constituents who are affected, it is the implementation of the ombudsman’s recommendations. Let us be honest: if we were personally affected, that is what we would want. It was what my constituents wanted from the last Government and what they expect from the current one.
The tone of the communications that I am receiving from my constituents is changing from blaming the Labour Government to blaming the Conservative party, the Liberal Democrats and the coalition Government. In reality, the blame game is not really productive, as the events of the past decade have shown. We all know that the problem and its causes have spanned different Governments, and that there have been failures by all parties. I worry that we are being set up for another failure, and I do not want that to happen to my constituents.
Gordon Banks
No, I will not.
Like other Members, I want the Government to have their moral hat on. Forgetting about the failings of the past, this is their opportunity to do right by those who have lost out, and their action should be moral, not party political. Ministers can stand up to Treasury officials and do what is right.
We have heard a lot today about the £5 billion price tag, but let us be clear that it is not £5 billion this year or next. As Members on both sides of the House have said, it could be spread over several years, or possibly decades. It does us as parliamentarians no good to throw telephone number-like figures around to frighten people into believing that we cannot do anything. We need to help the trapped annuitants who are locked into their losses.
I wish to address a point that Members from all parties have made. Many of the people affected are not rich. They span all walks of life, and they were doing the right thing by investing for their future. We need a commitment to help those people now, and we need costs to be allocated so that we understand the annual cost over, say, 10 years. However, we also need to be aware that about a third of the 1.5 million people affected had invested all their future in Equitable. Some of those people have lost their homes and cars, and with them their dignity, and we should take the opportunity to restore that dignity. As I have said, my constituents feel that despite their hopes, nothing has changed with the change in Government.
Gordon Banks
No, I will not.
The situation has been a shock to my constituents and a disappointment to hon. Members of all parties, as we have heard from them. I am concerned that the Treasury is going to impose a limit, in the hundreds of millions of pounds, that will not address the problem, fulfil our moral obligation or improve the hopes and ambitions of many of my constituents. Will the Government confirm whether reports that the Treasury has already set aside money are accurate? If so, how much money and why that amount? Will that be the lot, and who will it be for? We hear a lot about a fair solution, and that is what we need, not just a fair process.
Some will ask why people continued to invest in a failing company. The problem was that there was nothing to cause investors concern. Perhaps if they had known what regulators knew—or should have known—and what Equitable Life itself knew, the situation would have been different, but they did not. That is the crux of the need for fairness.
This is an enabling Bill, and as such I have no problem with it, but we do not know what it enables. The water is murky. What will happen to trapped annuitants, including those who are still in work and will retire in future? What happened to the belief that the Conservatives would sort out the problem, and what has happened to bring the coalition around to embracing Chadwick in some way? The Government do not necessarily accept Chadwick, but they are preparing their information based on Chadwick’s £500 million figure. I ask the Financial Secretary to do all he can to make the Government’s position clear, because it is not clear to me, and judging from my mailbag it is not clear to my constituents. When he was in opposition he implied that he would sort out the mess, but now he is creating his own mess.
Perhaps I can leave Ministers with a few questions to ponder. Do the Government still accept the parliamentary ombudsman’s recommendation, and do they accept her belief that the Chadwick advice cannot mesh with her recommendations? How will she be consulted about the Government’s proposals, and as others have asked, when will the House have the opportunity to debate the Government’s approach to compensation? Finally, and most importantly, when will the Financial Secretary stand up to Treasury officials and do in government what he promised to do in opposition?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Before I call the next speaker, may I say that a lot of Members wish to speak? If they try to take less time than they had envisaged, I will be able to get through as many of them as possible. I believe that is part of the reason why Members are not giving way.
Rehman Chishti (Gillingham and Rainham) (Con)
Knowing that time is of the essence, I will apply the principle that brevity is a virtue and not a vice. Before I begin, I congratulate my hon. Friend the Member for Congleton (Fiona Bruce) on an absolutely super speech.
I very much welcome the Bill. Policyholders in my constituency were pushed from pillar to post by the Labour Government, and they had to get a judicial review. Even after that, the then Government would not accept responsibility. I welcome the current Government’s intention to gain justice for policyholders and the fact that, within five months of their coming into government, there is a plan for redress for policyholders in my constituency and the country more widely.
I welcome the fact that the Bill does not predetermine the amount of compensation to be paid. I urge the independent commission to implement the parliamentary ombudsman’s findings dated 28 July 2008, which recommended a scheme providing fair compensation to remedy any relative loss suffered by policyholders. Equally, however, when setting the compensation level we must take into account the financial situation in which we find ourselves as a result of the Labour Government’s mismanagement. The same report by the ombudsman stated that it was
“appropriate to consider the potential impact on the public purse of any payment of compensation”.
I share the concern of the ombudsman and policyholders about the Chadwick report, because it does not enable fair and transparent compensation.
I welcome the Bill and the fact that the Government are setting up an independent commission to oversee the design and delivery of the compensation scheme. I also welcome the fact that policyholders will start to recover and receive compensation by the middle of next year or sooner. Finally, I congratulate the Financial Secretary and the Treasury on bringing forward the Bill so swiftly.
Ms Margaret Ritchie (South Down) (SDLP)
I, too, congratulate the hon. Member for Congleton (Fiona Bruce) on making her maiden speech. She has a hard act to follow in Ann Widdecombe, and I hope that she will follow in her footsteps, if not her dance steps.
As you know, Mr Deputy Speaker, I represent a constituency in Northern Ireland. Like other hon. Members, I have been written to by many constituents, particularly elderly ones, about the unresolved, inexplicable and inordinate delay in bringing forward payments in a fair and equitable manner for Equitable Life policyholders. They are very proud people, many of whom are entrepreneurs in industrious communities. Some are farmers or bin men, and they represent a wide cross-section of the local population. Many of them are still waiting for the matter to be resolved, having waited a considerable time already.
I wish to make it absolutely clear that, in the majority of cases, those who invested in Equitable Life were not in the high income brackets. I can certainly say that on behalf of my constituents who were affected. In the majority of cases, their investment in Equitable Life over many years was itself a struggle to meet, but their sense of responsibility drove them to make that commitment to their future. I fear that when we talk of investors, it is all too easy to think about those in receipt of large pensions. We are talking about people in the lower and middle income brackets. Many of our constituents who are affected are farmers, fishermen, small business men, dinner ladies and librarians—and the list goes on. During their working lives, those pensioners contributed much to society for the minimum return.
There is a clear need to resolve the issue. Much forensic work has been done, including the reports of the ombudsman and Sir John Chadwick. However, we thought we had a resolution. On 11 May, the coalition Government issued a statement in which they agreed to implement the ombudsman’s recommendation to make fair and transparent payments to Equitable Life members, but sadly that has not happened. Hon. Members are now aware that such “fair payments” will be based not on the guidelines set out by the parliamentary ombudsman, but on those set out by Sir John Chadwick, which the Bill seems to follow.
The previous Government’s appointment of Sir John Chadwick was an attempt to devise a system of limited ex gratia payments, which would be made only to those who were disproportionately affected. The coalition Government appear to be continuing down that road, as we understand that the independent payments commission will abide by Chadwick’s proposals. Victims will receive less than 10% of their losses, and the total sum that the commission is working to repay will be a meagre £400 million, in the face of estimates by the Treasury’s own actuaries of much greater losses.
I caution the coalition Government against going down that route, not only on the grounds of the independent parliamentary ombudsman’s recommendation and fairness for the many investors who have been left quite desperate, but on the grounds of what is right and proper at the heart of government. The handling of the Equitable Life issue by the previous Government and the coalition strikes at the heart of democracy and at the question of how the Government treat many people.
Alun Cairns
I certainly accept the hon. Lady’s criticisms of the previous Administration, but does she accept that the coalition Government’s prioritising the Bill early in this Parliament demonstrates some sort of commitment? However, I recognise the need for greater negotiation with EMAG to reach an appropriate settlement.
Ms Ritchie
It would have been much better for the coalition Government to implement the ombudsman’s recommendations. That would have been much more democratic and it would have reflected the needs of all our constituents.
Sammy Wilson (East Antrim) (DUP)
Does the hon. Lady accept that although the coalition Government have been quick to introduce a Bill that enables payments to be made, the level of payment is equally important to our constituents, as is the commitment, which was made by both parties in the coalition before they entered government, to implementing the ombudsman’s report?
Ms Ritchie
I could not agree more with the hon. Gentleman. That is exactly right, and it is the kernel of the letters that I have received from my constituents. They want this matter resolved by amendments to the Bill to reflect what was said in the original ombudsman’s report.
The parliamentary ombudsman’s report is independent and transparent, but it is being overruled by a Government-directed report that results in less favourable terms for investors. Such injustice at the heart of successive Governments is a great slight on our democracy. I urge the Government, at this late hour—perhaps it is not too late—to make amendments so that the Bill reflects clearly the ombudsman’s report. Such amendments would show that we are truly earnest about helping some of the most beleaguered members of our society.
Priti Patel (Witham) (Con)
I pay tribute to my hon. Friend the Member for Congleton (Fiona Bruce) for her outstanding maiden speech, and for the beautiful tour of her scenic constituency.
Right hon. and hon. Members have a big responsibility to deliver a fair resolution to policyholders who have been affected by this scandal of maladministration by the regulators. As we have heard, when in opposition, Conservatives and Liberal Democrats quite rightly pursued and scrutinised the previous Government, and sought to hold them to account for neglecting Equitable Life victims and for failing to establish a long-overdue compensation scheme. We rightly acted in victims’ interests to support them as the previous Government dithered, delayed and dragged their heels. Disgracefully, as we have heard, they left many policyholders to pass away, unable to receive the justice that they deserved. That applies to a number of families in my constituency. By contrast, we are passionately committed to delivering a fair, transparent and independent payment scheme for the losses that people incurred because of that dreadful regulatory failure. Obviously, the Bill is a strong, positive measure and a step in the right direction.
It is important to remember that Equitable Life policyholders did exactly the right thing. They chose to save for their retirement so that they could have a decent quality of life in their later years. One of my constituents wrote to let me know of a loss of something like £130,000 as a result of being forced to buy an annuity. There are some maths involved, but the loss works out at around £80,000 per year, which is a substantial amount of money to anyone, but particularly to a pensioner trying to make ends meet in this day and age. He is more than frustrated; he is desperate beyond belief to find out the next steps and what, effectively, he will get. Another of my constituents has had to rethink their plans for retirement off the back of their losses, and I could reel off a list of more than 100 names of constituents who have contacted me on this matter.
Priti Patel
I will not, if my hon. Friend does not mind.
The 1.5 million policyholders affected and their families desperately need certainty, finality and, frankly, closure on this lamentable situation. Although policyholders in my constituency broadly welcome the Government’s decision and their commitment to begin making payments through the independent scheme next year, it is understandable that, owing to the actions of the previous Government, they remain sceptical. They have many probing questions for the Minister and the Government, as many colleagues in the House will recognise.
Transparency in the scheme is of course essential—the Minister referred to that—and although payments will begin next year, my constituents want to know when the process of making payments to all affected policyholders will be completed, as we have heard from other hon. Members. Let us be realistic. Processing payments is a challenging task made all the more arduous by the delays caused by the previous Government and the atrocious financial situation that we face, which we constantly hear about, but that is why it is important that all policyholders have their cases resolved promptly, in addition to receiving payments as soon as possible.
Where policyholders are not fully compensated for their losses, it is important that they are given clear reasons why not, and that they have an opportunity to restate their case when that is an option. I should welcome clarification from the Minister on any appeals process for policyholders who feel that an initial award by the independent commission is unfair to them.
The scheme will also need to address the implications for tax, tax credits, other benefits and means-tested benefits. Frankly, in view of the bureaucracy associated with Her Majesty’s Revenue and Customs and the current crisis of HMRC demanding money back from hard-pressed taxpayers and pensioners, policyholders in my constituency are genuinely concerned that although they might receive some compensation, they might also get a letter from HMRC demanding money back. After a decade-long struggle to receive justice and payment, the last thing that those policyholders need is a letter on the doorstep from a heavy-handed bureaucrat demanding money back.
Lives have been ruined and it is scandalous that, two and a half years after the ombudsman reported, six years after Penrose and almost a decade after the whole scandal came to light, justice has yet to be delivered. It is right that the Government should tackle the issue and the Bill is a great step forward. Fairly compensating those who have lost out has to be a priority for the Government. Having seen the shambles of the previous Government, I welcome this Government’s commitment to policyholders. The Bill is an absolute must and is long overdue.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
I add my congratulations to the hon. Member for Congleton (Fiona Bruce) on her maiden speech. I know that she has Scottish roots and she is already proving to be an assiduous member of the Scottish Affairs Committee.
Before being elected to this House in May I met Equitable Life policyholders from my constituency. I am indebted to Richard Cox, the local EMAG regional co-ordinator, for bringing me up to speed on the issue and the background to the Bill. I did not immediately sign the pledge to support EMAG, because I wanted to ensure that if I signed I would be able to carry through my commitment. Having met those affected and read the numerous reports on the issue, I judged that there is an indisputable moral obligation to compensate the Equitable Life policyholders, so I signed the pledge in the knowledge that I would be judged later by my actions and follow-through.
In today’s debate Members on both sides of the House have said that there are areas on which we can agree and build consensus. We all seem to agree that a compensation scheme is important and must happen. The differences between us appear to be the vehicle for compensation, the amount, the timetable for delivery and the payments. As I listened to the debate, I could not help wondering whether some of the exchanges would be seen as not especially helpful by those who want us to unite and find a way forward to helping those who have been affected by this issue. Some of the to-ing and fro-ing across the Chamber may make for a bit of sport and entertainment, but it does not move the debate on. I hope that we will be able to make progress in further contributions.
I do not have any difficulty with the principle of the Bill in that it will enable a payment scheme to be put in place for policyholders, but I do have reservations about the nature of the Bill, as I always do with Bills that do not contain much detail. It is all very well to lay down the general direction, but the Bill fails to answer several key questions to which those affected have long sought answers. For example, the Bill does not set out who will be entitled to what under the compensation payments scheme, but that is the essence of the issue. Despite all the numerous reports, inquiries and legal actions, the Bill empowers the Treasury to make payments, but gives no details. I regret that that is a pattern in the Bills introduced by this Government. The lack of detail also puts some of us in a difficult position. We want the compensation scheme to be put in place as quickly as possible, but we are reluctant to support a Bill that does not actually outline the detail of that scheme.
It is worth quoting the coalition agreement on this issue:
“We will implement the Parliamentary and Health Ombudsman’s recommendation to make fair and transparent payments to Equitable Life policy holders, through an independent payment scheme, for their relative loss as a consequence of regulatory failure.”
There were no ifs and buts in that statement, but we now seem to hear some maybes about what might happen in the future. I urge the Minister to ensure that not only the design of the scheme but its operation is independent of Government, and that is why I welcome the amendment we propose to table.
In the end, not this House but those who voted for the coalition partners will judge whether they have met their promises. Some of those who have brought their concerns to me would not naturally support my politics, but it has become increasingly apparent that while they may not have agreed with the previous Government’s position, they at least knew what it was. Their problem now is that they feel let down, because they were given a clear commitment and now the Government are rolling back on that.
Chris Skidmore (Kingswood) (Con)
Will the hon. Lady explain the previous Government’s position and whether she agreed with it? As far as I am concerned, the House will vote tonight for compensation for the victims of a scandal—the people who waited 10 years under her Government and never got a penny.
Cathy Jamieson
I would point out gently to the hon. Gentleman that that is exactly the kind of intervention that people in my constituency do not find helpful. What they do find helpful is that we now have a Bill—albeit with some flaws—and I hope that the hon. Gentleman will support our amendments to it. It is important that we take this issue forward and resolve the matter speedily—
Cathy Jamieson
It is no use the hon. Gentleman making interventions from a sedentary position when I am genuinely trying to point out areas where we can build consensus.
I hope that the Economic Secretary will address a couple of points. First, do the Government believe that it is their moral duty to compensate policyholders by choosing the issue of relative loss over absolute loss? Secondly, I hope that she will give consideration to the points made today about some compensation payments being made early. I heard what the Financial Secretary said about the need to put a scheme in place swiftly, but that is unlikely to produce any results until next year. Many of my constituents are anxious for some interim payment to be made by the end of this year and I hope that the Government will give some thought to that.
As other hon. Members have said, the Bill raises broader issues. It is clear that hard-working, decent and honest people who tried to do the right thing and provide for their families and their retirements have lost out. I hope that we will keep that in mind as we move forward with this Bill and in the debates to come.
Mr Robin Walker (Worcester) (Con)
I add my congratulations to my hon. Friend the Member for Congleton (Fiona Bruce) on her excellent maiden speech. In a spirit of fairness, I recognise that some Opposition Members have spoken passionately on this issue and gone against their Front Bench. It is unfortunate that Labour Front Benchers remain committed to the previous Government’s position of not awarding adequate compensation to victims of this scandal.
I do not want to take too much of the House’s valuable time as I am well aware of the many hon. Members who wish to add their views on this subject and raise the concerns of their constituents.
I wish to declare an interest, as set out in the Register of Members’ Financial Interests, as I do some consultancy work with Finsbury Ltd, where I worked before my election to Parliament, which provides advice to the current management team at Equitable Life. But the interest for which I speak today is not corporate, but rather that of my constituents who were affected by this scandal and the basic concept of fairness, which is so key to this debate and this Government.
I do not intend to retell the stories of the countless constituents who have written to me, many of them those trapped annuitants worst hit by the scandal. They worked hard, did the right thing and put money away for the future. They were let down by poor management, dreadful regulation and a Government who did not care. I will not repeat the details of those cases as the House is already well aware of the need for justice. More than half of hon. Members signed the EMAG pledge during the general election and it is only appropriate that this subject should see such rapid progress early in the life of the new coalition Government.
Fairness was put at the heart of the coalition’s programme for government and it is fairness that must remain at the heart of our approach to Equitable Life. I welcome, as the parliamentary ombudsman has welcomed, the clear focus, energy and rapid progress that the new Government have brought to this issue. I support the Bill entirely because it will enable compensation that is long overdue.
Alongside EMAG, I warmly welcome the appointment of an independent commission to allocate compensation, and the fact that within months we will know the extent of that compensation. It is tragic that so many Equitable Life members were allowed to die under the previous Government without compensation, and it will be a great achievement of the coalition that their heirs, as well as living members, will be compensated.
I cannot argue against any part of the Bill, but I want to take the opportunity to urge the Government to do even better than they have done already. Labour’s shameful record extended not only to failures of regulation, to trying to avoid the issue for almost a decade, and to failing to act on the parliamentary ombudsman’s report when they had it, but to second-guessing that report in a way that was ruled unlawful and to trying to wriggle out of paying fair compensation. The basis on which they did so must not become the basis of compensation today. In that context, I welcome the Minister’s acceptance that elements of Chadwick are highly contentious, and I hope that he will act on that view.
The Government must ensure that, as the ombudsman recommended, people are fairly compensated for their relative losses. We are pledged to do so. Although I can understand why people who were let down for so long by the previous Government are wary of expecting fair treatment from any Government, I expect confidently that this one will show greater resolve for justice. I welcome the Minister’s hard work on this subject, and I look forward with hope to hearing fair compensation being announced in next month’s spending review.
It is a tragedy that Labour’s failure to act sooner means that the debts they bequeathed us have to be taken into account. It is a tragedy, but one that the parliamentary ombudsman rightly acknowledged was always a possibility. The Equitable Life victims I speak to understand that, and they will also understand that, as the ombudsman recommended, the Government must take account of the impact on the public purse and their own fiscal situation in deciding the quantum of payment. In this unprecedented fiscal crisis, it would be wrong for the Government to put the compensation of one set of people, no matter how badly treated, before all else, because now, more than ever, we must adhere to the concept of fairness.
I urge the House to continue to progress this issue with all its might and with all speed possible, and to ensure that those constituents of mine affected by this tragedy can say that this Government, unlike their predecessor, were fair to them.
Jim Shannon (Strangford) (DUP)
I thank you, Mr Deputy Speaker, for allowing me to say some words in favour of the Bill, and I congratulate the hon. Member for Congleton (Fiona Bruce) on a very good maiden speech. The spirit of her predecessor certainly lives in her, and I wish her well in the Chamber.
A society is judged very much on how it treats its young and vulnerable, on how it looks after and cares for the elderly and on how the young are given opportunities. I hope, therefore, that no one is judging us in the Chamber by the standard we have set in the treatment of Equitable Life members, because if they are, they will be sorely disappointed. This debate has continued without redress, at least until now, and with no help from this place, at least until now, and EMAG estimates that about 32,000 policyholders have died since its campaign for compensation began—a stark figure already mentioned today—with members continuing to die at a rate of about 100 per week. Those are stark facts when we realise that these are people’s lives we are talking about.
By the time this scheme starts paying out next year, 13,000 more members will have passed away, bringing to 43,000 the total number of people who have struggled more than is fair or judicious because no solution could be reached or help given by the Government when it was needed. I am glad, therefore, that today’s legislative change is passing through the Chamber, and I look forward to further contributions when the programme goes forward.
I have some concerns, however, about the quantum. Everyone seems to be in favour of the process, but we have not been able to identify the percentage. I have been contacted by Equitable Life members, including a gentleman who is terminally ill—this sort of situation will be replicated across the whole United Kingdom—and is desperate to receive the money so that his wife will be able to live comfortably. Surely, this is the very thing that we should be trying to do; this is the whole purpose behind pension schemes and Governments encouraging people to invest in private pension schemes.
I stand here on behalf of that terminally ill gentleman and others like him. I could do nothing else, because my job as an MP is to fight on behalf of those who come to me. That is what we are here to do, and I urge that a reasonable solution be agreed today, so that people can receive their compensation in time for it to make a positive difference to their lives. I have constituents who were paid half of what they expected on the commencement of their pensions in 1992, when petrol was about 40p a litre. It is now three times that, and the pensions are worth half their value. That is an indication of where their pension schemes are and of how Equitable Life members are losing out. Lives have been severely affected, and it is our duty in this place to redress the balance as much as we can.
Sammy Wilson
Does my hon. Friend accept that it is the duty of the Government to take this matter forward, especially given that when in opposition and during the election the Conservative party pledged to implement the parliamentary ombudsman’s report and recommendations, which for most people meant not a small fraction of their relative loss but substantial payments?
Jim Shannon
My hon. Friend must have read my mind. The parliamentary ombudsman’s report describes the Equitable Life situation as a decade of regulatory failure, and her second recommendation is that the Government should set up and fund a compensation scheme with the aim of putting people who have suffered a relative loss back into the position they were in before maladministration occurred.
The issue facing us is the percentage of the value of the Equitable Life schemes. A report commissioned by the previous Government suggested that policyholders lost up to £4.8 billion in this debacle and proposed that they should receive a package of about £400 million. However, there is no guarantee of that figure, which has been bandied about by many. They are not new figures, and I am sure that some here could repeat them in their sleep, especially the Financial Secretary to the Treasury, who has been reminded of them several times in letters from constituents of mine, forwarded through my office, yet they bear repetition so that all here will be under no illusion about the situation.
I remind hon. Members that this is not merely a number-crunching game that we are playing; we are playing with the quality of people’s lives, and it is essential that the Bill be subject to any decision reached. In July, the Financial Secretary said in the House:
“Consistent with the ombudsman's recommendation, Sir John has advised that relative loss for an individual policyholder should be capped at the absolute loss they suffered.”—[Official Report, 22 July 2010; Vol. 514, c. 577.]
Yet I remind the Financial Secretary that when he was a shadow Treasury Minister he wanted to ensure compensation for injustice. I ask that this be done and that we compensate for the injustice that all those people have suffered over years of unnecessary struggle.
I agree wholeheartedly with Chris Wiscarson, chief executive of Equitable Life, when he said:
“Let’s not make Equitable policyholders victims three times over. First, at the hands of the regulators, as so clearly articulated by the parliamentary ombudsman”—
as colleague have indicated—
“second, at the hands of the Labour government who failed to bring closure over a decade; and now third, compensation that will be decimated if Sir John Chadwick's advice, meant for the Labour government and slated by the ombudsman, is used.”
I am aware of the financial position. We all know that we have to make hard decisions over the next few years about how the money will be spent. We are not running away from that. Indeed, I am fighting against reductions in grants that mean that Northern Ireland Housing Executive constituents are living with damp in their homes; that worthy disability living allowance recipients are being stripped of their support; and that roads are ruining cars because there is no money to fix them. I see all of that, and everybody else sees it, but I accept that we must take into account the fact that the money is unavailable. However, to compensate Equitable Life members with 10% of their investments is scandalous and can never be acceptable.
Today, it is my desire, and that of many in the House, that reasonableness be made the basis of any decision.
Heather Wheeler
I wonder whether the hon. Gentleman is in the same position as I am. I have a family of constituents—two generations—affected by this problem, and the desperation of those who write to, e-mail and meet me in my constituency is phenomenal. Has he found that in his constituency too?
Jim Shannon
Yes, it is replicated, right across the United Kingdom, for families, individuals and others. Indeed, there is sometimes a whole string of people affected, including people with different jobs. It does not matter what their jobs are: they can be fishermen owning their own boats or bin men collecting bins and getting rid of the rubbish. Those are the ups and downs—the highs to the lows, and everywhere in between—so the hon. Lady is absolutely right: everyone is affected.
What really worries me is that those who are affected have reached the golden age of retirement, when their mortgage has been paid off and when they know that they do not need to work any more or slog their guts out—if I can use that terminology in this House—but have time to enjoy the finer things, such as laughter and joy with their families. The terrible, horrendous situation in which they find themselves has stripped too many of our pensioners of their joy and placed on their shoulders both financial worry and a burden that should be long behind them. Today is the day for us to shoulder some of that load and burden, and to help them along life’s road. That is our purpose as MPs in this House. Today is the day for us to step up to the mark and reset the balance for those who have waited for help for some 10 years. Today is the day for action. Let it be the right action.
I finish with a quotation from a letter from one of the many people who wrote to me:
“I, like many others, in fairness expect and deserve compensation, as recommended by the Parliamentary Ombudsman and promised by the coalition Government, and not a figure based on the Chadwick advice, which the ombudsman himself described as an unsafe and unsound basis on which to proceed”.
With that in mind, I would urge hon. Members to support the legislative change and the amendments that will arise from it. In my book, Mr Deputy Speaker, that is worth fighting for.
Andrew Bingham (High Peak) (Con)
I am conscious that many Equitable Life policyholders will be watching this debate this evening. Consequently, it is worth reiterating that the purpose of the Bill is to facilitate and enable the making of payments to those who have been affected. That is a fact of which we on the Government Benches can be proud. In just four months we have progressed more than the Labour party managed in 10 years. I am also pleased to hear that all parties will support the Bill this evening—although we should not be too self-congratulatory just yet.
Equitable Life members will be greatly heartened to learn that payments now seem to be imminent, but they are equally concerned about the likely level of those payments. I, along with many others, signed the EMAG pledge before the general election. Many Government Members are in the Chamber this evening because we signed that pledge, and because we are determined to prove our intention to try to honour it in the best way we can.
Bob Stewart (Beckenham) (Con)
When we gave that pledge, we gave our word. It is difficult for all of us who signed the pledge not to give Equitable Life members—often people who will have put in their life’s savings—fair, decent treatment and a proper compensation package. Does my hon. Friend agree with that?
Andrew Bingham
I do agree with that; indeed, that is the point that I am making. We signed the pledge and we are here to try to deliver on it. However, as we try to deal with the economic carnage left to us by the Labour party, the fact that we always said—I think that this was the exact phrase—that whatever scheme was put in place would be subject to the impact on the public purse has become a more stringent condition and more restricting than we ever believed possible.
It is a crying shame that the Labour party did not deal with the issue earlier, before—to quote the right hon. Member for Birmingham, Hodge Hill (Mr Byrne)—there was “no money left”. Had the previous Government done so, it would have been easier to make a more generous and just settlement. The decent thing at the right time would have saved so much pain and heartache for so many of my constituents in the High Peak and so many constituents of fellow Members. We find ourselves in a position where we wish to honour our promise—our pledge—yet we are hampered in our efforts by the rashness of our predecessors.
I am conscious that many of my colleagues wish to speak in this debate. In accordance with your earlier wishes, Mr Deputy Speaker, I am determined to be extremely brief. However, I would ask the Minister to remember the pledge that we all signed. EMAG and the Equitable Life members are realists. They understand the difficulty that we face, given the economic carnage, as I have described it. They find it difficult to accept the recommendations of the Chadwick report. I would therefore ask that when the comprehensive spending review is complete, Equitable Life should be given a special place.
The Minister has my sympathy as he tries to perform this most difficult of balancing acts—but I have to tell him that most of the sympathy goes to my constituents in the High Peak, so let us not implement Chadwick without serious thought. I know that we want to expedite full and final payment swiftly. However, if a way could be found to increase payments, even if it meant spreading them across a longer period—albeit in a way that ensured that the administration costs did not eat up huge amounts of whatever funds were available—I feel that that could be made acceptable to Equitable Life people, who have waited too long for what I hope will not be too little.
Parliament has undergone a difficult year for its reputation. This Bill gives us a chance to start salvaging that reputation, but if we get it wrong, we will drive it further into the dust.
Yasmin Qureshi (Bolton South East) (Lab)
I congratulate the hon. Member for Congleton (Fiona Bruce) on making her maiden speech. As a fellow north-west MP, I am sure that we will work well in future for the betterment of the north-west region.
Mindful of what you said earlier, Mr Deputy Speaker, I will keep my speech short. I shall not go into the history of Equitable Life, because everyone in the Chamber is aware of the history, nor shall I go into the merits or demerits of Sir John Chadwick’s report or the ombudsman’s report. I want to talk about my constituent, Mr Barri Sharrat, who was made redundant by his company and whose pension was moved to an Equitable Life policy, which was to be his main source of income on retiring. Mr Sharrat put his trust and faith, along with years of savings, into the hands of Equitable Life to build a secure retirement. I want Mr Sharrat and millions like him to be compensated.
I agree with the ombudsman’s view that people should be put in a position similar to that which they would have been in had Equitable Life not collapsed. I welcome the Bill and would urge the Government not to short-change the people on a promise that they made before the general election. However, I am afraid that the argument about money just does not carry any weight, because before the general election there were many debates about the country’s finances. Therefore, the level of debt was well known to everyone. Knowing that information, Members who are now in government made a promise that they would honour the ombudsman’s recommendation. I would ask them to continue to honour that promise, and then all those present who have taken a sanctimonious approach to the issue can be properly sanctimonious about it.
I urge the Government to make the Bill fair and effective. To make the legislation effective, they should put the independence of the compensation scheme on a statutory basis. There should be an independent appeal process, and a timetable—a short one—for making payments should be set out. The criteria by which compensation is to be paid should be made clear and simple. Again, I urge the Government to accept the ombudsman’s recommendation that people should be put into the position that they would have been in had Equitable Life not gone bust.
Yasmin Qureshi
I have actually finished, but the hon. Gentleman may intervene.
Mel Stride
I just wanted to say that it is my understanding that the ombudsman’s report contains the recommendation that the public finances should be taken into account when coming up with the final compensation to be paid.
Yasmin Qureshi
The public finances may be taken into account, but it is my understanding that the Bill proposes to go along with Sir John Chadwick’s proposal, which was not a very good one. As my hon. Friend the Member for Ochil and South Perthshire (Gordon Banks) said, the compensation does not have paid in the next few months or even the next year; it can be spaced out over five years or perhaps even 10 years, so that people can be given the compensation that they deserve. As has been said, the ombudsman has made a recommendation, but it is for us here in Parliament to do right by our constituents, and that means going back and giving the appropriate level of compensation.
Karen Lumley (Redditch) (Con)
I, too, pay tribute to my hon. Friend the Member for Congleton (Fiona Bruce) for her maiden speech. I have heard many great maiden speeches since I arrived here, and I shall now be adding Congleton to my long list of places to visit in the UK.
My colleagues have made a great many points today, so I shall be extremely brief. I, too, signed the Equitable Life pledge before the election, because I believed that the Equitable Life policyholders needed to be compensated. I am therefore delighted to see that we are moving towards a swift resolution for them. They had to wait more than 10 years under the previous Administration, when there was money in the pot to pay them, although the will to do so was obviously not there.
Like other hon. Members, I have had many letters from my constituents on this matter, and as a result I had a meeting with them in Redditch on Friday night. Let me tell the House that there was standing room only. Emotions were running high and I have to say that it was a pretty uncomfortable hour. I listened to some heartbreaking stories, including that of a constituent who had put not only his and his wife’s money into Equitable Life but that of his 15 employees too. I just cannot tell the House how bad he felt. I left that meeting feeling angry that my constituents have had to wait more than 10 years for justice, and I think that the previous Government should be ashamed of themselves for not dealing with this matter earlier.
But we are where we are. I want to say to the Minister that those people have suffered enough and, while I am grateful to him for settling the issue as soon as possible, I urge him, during his difficult negotiations in the Treasury regarding the spending review, to look closely at the compensation package that my constituents will receive. In these difficult times, I urge him to remember the pledge that most of us on this side of the House signed.
I will support the Bill tonight, but I hope that the Minister has listened carefully to what Members on both sides of the House have said about the fairness of the compensation scheme. Our constituents will await with interest the outcome of the spending review on 20 October.
Nia Griffith (Llanelli) (Lab)
I am grateful for the opportunity to take part in the debate today, and I certainly want to support the Bill, because we do not want to do anything to delay the payments. The important thing now is to get those payments made as quickly as possible to the many ordinary hard-working people who made sacrifices in order to put money away in a scheme that they trusted to provide for them in later life. Those people were thinking ahead; they were the responsible citizens who had no intention of having to rely on the state. They continue to worry, however, and to suffer hardship, because they fear that there will be still more delays. They are also worried by the mention of a cap being placed on the funding of the payments. Most importantly, those people do not want smokescreens, spurious justifications or complicated explanations. They simply want the Government to take notice of the ombudsman’s letter of 26 July and move as swiftly as possible to making proper payments. They want those payments to be realistic, not just a sop; they want them to be made in the spirit of the ombudsman’s report.
I am very concerned by the fact that the Minister spoke today of linking the amount to be paid out to Equitable Life victims with the comprehensive spending review. That would be totally unacceptable. We know that the issue of Equitable Life has gone on for some years now, and it should not be arbitrarily subject to a review that is to take place in a few weeks’ time. Opposition Members are committed to seeing Equitable Life victims receive proper payments that reflect their losses. Anyone listening to what both the coalition parties said before the election would have thought that they too were committed to making proper payments. Indeed, they were vying with us to say that they would be more generous than we would. To state that the payments will now be subject to spending review cuts of perhaps 25% is absolutely disgraceful. What would have been a £100 payment could now be only £75. Frankly, that seems to me next to dishonest. Equitable Life victims were not responsible for the banking crisis, and they certainly do not deserve to be penalised by the slash-and- burn policies of the present Government, whom respected economists are now suggesting might send us into a double-dip recession.
Gordon Birtwistle (Burnley) (LD)
The hon. Lady says that she is keen to see the payments made to the Equitable Life policyholders. Will she tell us how much Labour would have paid out if it had been in control?
Nia Griffith
What is important now is to move on and get those payments made. The worry is that these smokescreens are putting people off, and the policyholders will not see any money at all. They want to see actual payments.
The policyholders are also worried about tax and benefit loss. I am pleased to see clause 1(3) in the Bill, but it is far too loosely worded. It gives the Treasury the power to disregard payments to Equitable Life victims when assessing their tax liability or their entitlement to means-tested benefits, but I would like to see a much more strongly worded provision, as well as a genuine awareness among Ministers that any payment will be disregarded.
Nia Griffith
I would like to continue for a moment, because I want to explain what I have understood from the speech made by the Financial Secretary to the Treasury today.
I was perturbed by what the Minister said. Far from giving any assurance that there would be a disregard for tax and benefit purposes, he said that the Department for Work and Pensions would sort these matters out in the usual way. That will set alarm bells ringing, as anyone who has lost benefit, pound for pound, as a result of receiving a payout will confirm. Equitable Life victims, having waited all these years, could end up receiving their payment only to lose the equivalent amount in benefits or additional tax. We need assurances from Treasury and DWP Ministers alike that insult will not be added to injury in that way.
Gavin Williamson
It is incredibly interesting listening to the hon. Lady’s speech, but surely she ought to hang her head in shame at the actions of the Labour Government, who continually betrayed Equitable Life policyholders. Will she apologise for the Labour Government’s failure to act?
Nia Griffith
If the hon. Gentleman had been here under the previous Government, and been a regular attender at business questions, he would have known that the timetable for the Equitable Life programme was raised again and again. I can assure him that I made many representations to our Ministers to ask them to speed up the process. It was a complex process and there were enormous difficulties; there was also an enormous amount to read. That is why it took the ombudsman so long to produce the report in the first place. I can assure the hon. Gentleman that an enormous amount of good work was done, and that we would not be where we are now if we had not put in that work before the general election.
We need assurances from the Treasury and the DWP that people will not lose out in the way that I have described. People are worried because the suggestion of a cap is being bandied about, and because the figures might be cut again in the comprehensive spending review. If they were then to lose money through a clawback of tax or benefits, it would be an absolute disgrace. It would also affect the most vulnerable people in particular.
Another worry about the Bill is that it contains no mention of a proper appeals mechanism. The Minister made a few encouraging remarks about appeals, but there are no details in the Bill. I call on him to consult policyholders about that mechanism, and to publish the relevant details as soon as possible. We want to see the settlements made as soon as possible, but we also want to see an appeals mechanism that can hear appeals quickly and fairly. The last thing we want is for Equitable Life victims, who have already waited far too long, to have to wait in a queue for their appeal to be heard.
Amendments have been proposed by those on our Front Bench, including my right hon. Friend the Member for East Ham (Stephen Timms). One relates to timing, which is crucial. We must have a specific start date so that we know when the victims are going to get their proper payments. We also need a scheme that will be totally independent of the Government. There is also an amendment that provides for hon. Members to vote on the scheme, to ensure that it is swift, simple, transparent and fair. That is vital if we are to have the trust of the public that this is a genuinely fair scheme, not one that has been cooked up in a back room and that will be cut and cut again in order to meet some overriding demand from the Chancellor. I look forward to debating the Bill more thoroughly in Committee. I very much hope that we will have the opportunity to table our amendments, and that they will be well supported by hon. Members on both sides.
David Rutley (Macclesfield) (Con)
Thank you for giving me the chance to speak in this important debate, Mr Deputy Speaker. I, too, congratulate my hon. Friend and neighbour, the Member for Congleton (Fiona Bruce), on her excellent maiden speech. I can assure the House that she has replaced Lady Ann Winterton—not Ann Widdecombe, as was asserted earlier—who is a real legend in this party. I would also like to join my hon. Friends in congratulating the Financial Secretary on the sheer speed and pace at which he is seeking to address the urgent matters before us. I knew him for many years before I came to the House and I would have expected nothing less than the positive approach that he is taking.
The story of Equitable Life policyholders is without doubt a tragic one. I believe it was my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) who suggested that it was like a Shakespearean tragedy. Well, I am half Danish and am more familiar with some of the Viking sagas. What the policyholders have been through would fit well into any epic tale. It is like the famous Njáls saga with its series of gruesome feuds. Similarly, today’s story involves hardship and heroic campaigning—in this case by EMAG—but this tale is now in desperate need of a fitting conclusion.
I have not followed this case as long as other longer-serving Members, and I do not claim to have the same level of expertise on all the details that they possess. What is clear, however, is that maladministration has occurred, policyholders have suffered and compensation is due. It is absolutely right that this new coalition Government should respond, as they will. Sadly, the issue is yet another part of Labour’s lamentable legacy—this time, not the cost of the record budget deficit, but the price of an unmet moral obligation that needed to be addressed.
I am sure that hon. Members will agree that policyholders have shown real courage and that EMAG has conducted a hard-fought and professional campaign. Like many other Members, I have met affected policyholders in my advice surgeries. I have heard about the hardships they had to endure. I have received well-argued letters and e-mails setting out their case both during the general election campaign and now as the Member for Macclesfield. It is the strength of their case and their campaign that has encouraged me to learn more about the situation, to sign the EMAG pledge, as many of us have, and actively to stand up for their cause. What I am even more proud of is the fact that the strength of their argument won the attention it deserved from the Conservative Front-Bench team and the Liberal Democrats’ leadership before the general election. I am delighted that, working together, the new coalition Government have honoured their commitment and urgently brought this legislation before the House.
I welcome the Bill. It provides parliamentary authority for the payments schedule and scheme. It is a vital step, which I am sure will be widely welcomed on both sides of the House, as it has been welcomed today, but policyholders in Macclesfield and throughout the country want answers to important outstanding questions. How much will be paid? How should the scheme be designed, and how will it be administered? These questions now need to be fully addressed to ensure that policyholders get the best possible outcomes for their cases.
On the size of the payment, it is, sadly, a reality that in this challenging economic climate, the level of compensation will have to take into account the demands on the public purse. Like others who have said it repeatedly today, I urge the Financial Secretary to continue to consider the views of the parliamentary ombudsman in determining the final figure.
Andrew Bridgen (North West Leicestershire) (Con)
Does my hon. Friend agree that the majority of Members and the majority of the public out on the streets will not believe that a 10% payout even on a £5 billion liability is either a fair or equitable result for policyholders?
David Rutley
My hon. Friend makes an excellent point. It is vital for Ministers to take that into consideration and find the right level of payment in this difficult situation.
I also urge the Financial Secretary to continue to take a transparent approach to explaining the rationale used to calculate the final compensation figures. Such transparency is critical and I am sure that my hon. Friend will agree that it should not be allowed to get lost in the detail of the wider spending review as it gets reported.
I also congratulate my hon. Friend on creating an independent commission to advise on the allocation and the design of the payment scheme. It is another positive step forward and—like many others, I am sure—I am pleased to hear that the Select Committee on Public Administration will fully review the commission’s conclusion when it reports in January. It is a vital step.
I am keen to seek further assurances from my hon. Friend that his officials will provide the necessary action for the administration of the scheme when payments are made in the middle of next year. Given the likelihood of a large number of appeals, this will not be a simple task. The scheme must be designed to accommodate the needs of these particular policyholders, whose average age is, I think, 78. It must be clearly communicated—not just on websites or via e-mails, but via well-written, high-standard communications and effective, well-manned telephone contact centres.
As I have discussed with the Financial Secretary, the administrator must learn from the launches of other Government schemes. Many will remember the agonies associated with the Rural Payments Agency and, more recently, HMRC’s problems with new PAYE systems, which are fresh in our minds. We need to ensure that the Equitable Life scheme does not become another example of the administrative chaos that was the trademark of the previous Government.
Frankly, I am disappointed not to have heard an apology from Labour Members, but I am not surprised, as they have failed to apologise for the huge budget deficit and now it is the turn of Equitable Life policyholders. It is all part of a depressing pattern of denial.
I conclude by congratulating the Financial Secretary once again on the speed with which he has tackled this long-running saga. I hope that in addressing the concerns of the policyholders, he will help those in real need and—just as at the end of Njáls saga—bring about a meaningful reconciliation. It is what the policyholders deserve after the epic trials they have had to endure.
Sheila Gilmore (Edinburgh East) (Lab)
Thank you, Mr Deputy Speaker, for giving me the opportunity to speak in the debate. As a new Member, I have come to this issue afresh as a result of the contact I have had with the victims of this situation. I know that my predecessor also took up their cause. I have to say that, having read through as many of the reports as I could—they are certainly extremely lengthy and extremely difficult—I have come to the conclusion that the previous Government were wrong in their approach. I think they took the wrong road and I am not afraid to say so.
Clearly, the management of Equitable Life were also culpable, and it is highly regrettable that we are in a situation where that organisation is not in a position to compensate its customers who were so badly let down by its practices. It is equally clear, however, that there was maladministration and regulatory failure throughout the 1990s. Before we get into too much point scoring on the issue, that was obviously on the watch of Governments both Conservative and Labour.
What my constituents are now asking me—having read the Minister’s statements in July, which concerned them greatly; I am sure they are no clearer today—is whether the Government are using the Chadwick calculations, which reduce compensation for loss by 90%, with a possible further reduction following the spending review. Is that what is being followed or not? I am no clearer about that today, so I cannot answer that question for them. If it is to be followed, that is not what EMAG has been fighting for or what EMAG understood to be the position promised by both constituent parts of this coalition Government.
It is highly convenient for the Minister to hide behind what has become this Government’s theme tune—everything has to come second to deficit reduction, which is all the fault of the previous Government. It is too easy to sing that song continually, so I am going to take this opportunity—briefly, in view of what Mr Deputy Speaker has said—to say that we do not accept that statement of the situation. In our view, we are not deficit deniers. The last Government took steps to stimulate the economy and save our banks from collapse—something that at least one part of the coalition Government accepted at the time was the right thing to do, and several times said so. As a result, yes, when we left office, there was a deficit; equally, however, unemployment was considerably lower than had originally been predicted when the recession began. The deficit was actually reducing under the Labour Government.
We believe that the current Government’s plans are wrong, that they place recovery at risk, and that it is not necessary to reduce the deficit at such breakneck speed. That may seem to constitute a diversion from the debate, but I think it important to restate it, because the Minister and many other speakers on the Government Benches have raised the subject of the financial position.
Gavin Barwell (Croydon Central) (Con)
Did not the ombudsman recommend that the compensation scheme should take account of the state of the public finances? My constituents tell me that that they are happy to accept reductions that are in line with other reductions in public expenditure, but what are completely unacceptable are the reductions envisaged by Chadwick, which go far beyond that.
Sheila Gilmore
I agree. The people who have come to see me have said much the same. They have spoken of the possibility of staged payments and discussed how that arrangement could be affordable, but they have made it clear that what they do not accept is Chadwick.
At least one intervention and, I think, some speeches from the Government Benches have suggested that the Government will go beyond Chadwick and take wider issues into account, which suggests more than the £500 million or thereabouts mentioned by Chadwick. If that is so, I am not sure why it is still necessary to talk constantly about the spending review. Does not discussing the review all the time, and hinting that the Chadwick recommendations will be followed, suggest that there will be less rather than more? We need to know the answer to that question.
During the election campaign, having considered the matter and read a number of documents—I have read many more since—I pledged support for EMAG. I would have held hard to that support had my party still been in power, and if it were in power I would be saying the same thing now. However, I have questions to ask. What compensation is being promised? Is it simply the £400 million to £500 million mentioned by Chadwick, and if it is not, will it be more or less? Blaming the last Government may make for good political knockabout, but it leaves those who have suffered loss little the wiser. We and they need some real answers, and we need to work together.
Zac Goldsmith (Richmond Park) (Con)
There is not a lot to be said that has not been said already, so I will keep it brief.
I support legislation that will give the Treasury the authority it needs to make the appropriate payments to policyholders, and I welcome the speed with which the Government have sought to right what I think we all now agree is a profound wrong. However, the Government will be judged on the basis of their final settlement. My plea is simply for that settlement to be set at a level that honours both the letter and the spirit of the commitment that the coalition has made to policyholders. I do not think anyone expects full compensation at this point, but whatever reductions are made should be broadly in line with those affecting other areas of spending. If the Chadwick proposals are followed, that will emphatically not be the case.
In the run-up to the general election, I was asked by hundreds of constituents for reassurance about the Conservative party’s position. I was able to deliver that reassurance via a pledge which I know many of my colleagues have also signed. On the back of that pledge, a number of people—I do not know how many—voted Conservative for the very first time. So, as my hon. Friend the Minister considers the level of compensation, I simply ask him to remember the promises that we made before the election. I believe that that would not only restore people’s faith in saving for their retirement, but restore their faith in political promises.
Mark Durkan (Foyle) (SDLP)
When it was said in the Bible that the stone that the builders rejected had become the cornerstone, that was intended to be a positive statement. In this instance, however, although parties and Members on both sides of the House agreed that Sir John Chadwick’s proposals were wrong, flawed and grossly inadequate, those very proposals have become what the Government are telling us is a building block on the basis of which these matters can be resolved.
We should bear in mind that, according to what we have been told by the parliamentary ombudsman, that building block is unsafe and unsound. We as a House have a duty to have regard to the various pledges that we, as parties and as individuals, made in the course of the election, and also to what the parliamentary ombudsman has said—and we should bear in mind that this is a parliamentary ombudsman.
Not only have the Equitable Life policyholders been left suffocating with frustration, but their problem continues, and they are increasingly seething with cynicism. Rather than a Parliament that will clearly fix the problem, we still have parties that are simply in the business of fixing the blame, but people want to see a real resolution. I am pleased that we have a Bill before us, but it provides the bare chassis of the vehicle that will be needed to solve this problem. Other Members have said that they do not disagree with much of it, but that is because there is not much in it: it is basic enabling legislation.
If the Bill were on offer from a pension company or indeed from anyone else, we would be asking, “Where is the prospectus? Where are the key details? What have we to rely on? What does any of this signify, other than a vague, general promise in a very slim brochure?” That is all that we have here. I acknowledge that following the long indifference that we received from those on the Treasury Bench for so many years we at least have something—which is welcome—but the move from long indifference to inadequacy is not something for Equitable Life policyholders to celebrate when they are still languishing in injustice and uncertainty.
Let us, here in the House, have fewer party-political spats about what one Government did and what another Government are doing, and stop patting each other on the back. Let us remember that the collective political process is indicted by our failure to resolve this problem. The policyholders have seen one Parliament after another. Are we able to act on the basis of the clear recommendations and findings of a parliamentary ombudsman? The policyholders saw a Parliament and Government with the ability to bail out banks, call people in quickly, merge banks, find all sorts of taxpayers’ money and go to the markets for money to solve the problem, because we did not want systemic failure in the financial system.
We need to ensure not just that there is confidence in the financial system, but that we underpin confidence in the future of the pensions system and regimes that will also have to be revised. Members on both sides of the House must make certain that we underpin that confidence by resolving the Equitable Life issue in the terms in which we all promised to resolve it, and to which the ombudsman has drawn attention. Yes, there will be issues about pressure on the public purse, which is why we must consider what the profile of the relief will be over time; but let us not pretend that offering a mere fraction or token of compensation accords in any way with fairness, transparency or justice.
Let us stop babbling about the reputation of this Government and that Government, and do something to restore the reputation of politics and the House by using the Bill to demand further commitments from the Government. Let us establish that they intend to follow it up with clear, detailed provisions that will be not just credible to us, but honest to victims of the ongoing crisis.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Hon. Members really must exercise some brevity. I want to ensure that all Members have an opportunity to speak, because I know how important it is to their constituents that they make their mark. Please let us see what we can do.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
I will do my very best to keep my speech brief, Mr Deputy Speaker.
It is an indication of the depth and strength of feeling that this scandal has created that so many Members wish to speak about it. There is no doubt that it is a scandal. Equitable Life behaved very badly. It hid its debts, it expanded too rapidly, and it had no visible means of support. Ultimately, those actions left my constituents and many other people throughout the country with reduced pensions, and with losses running into many thousands of pounds.
I think it fair to say that no one would have invested in Equitable Life had they known what was happening. The shame is that it has taken so long—nearly a decade—for us to reach a point at which we are actually going to do something about it. I welcome the Bill, I welcome the actions of the new coalition Government, I welcome the establishment of the independent commission that will report in January, and I welcome the stated aim to start making payments by the middle of next year. Those payments, however, must be fair as well as swift. I am glad that, after a decade of delay and prevarication, we are actually going to do something, and I think that all Members on both sides of the House agree that it is time to act.
Given that constituents have contacted me on this issue, I have obviously looked closely into it, and I must congratulate EMAG on all the work it has done in keeping the issue alive and at the forefront. I have spoken to its members and read its briefings, and I find myself in general agreement with its views. Like many other Members, I signed the EMAG pledge during the election, and I was happy to do so because I felt both that its members had a valid case for compensation and that that had been widely recognised. The real issue now boils down to money, therefore: how much compensation will be made available? Therein lies the problem, of course. We are doing the right thing here today, but we must continue to do the right thing.
I wish to make three points: first, we must be honest; secondly, we must be realistic; and thirdly, we must be compassionate. We must be honest about the level of losses Equitable Life members have suffered. We have had two reports, one from our own ombudsman—we have heard about the £4 billion or £5 billion identified in it—and one from Chadwick, estimating the sum owed at approximately one tenth of that amount. That is a 800% to 1,000% discrepancy. How is that possible? We heard from our own ombudsman earlier in the summer that she thought that was an unsafe and unsound basis on which to continue, and I agree.
In common with many Members, I campaigned during the election on a platform of honesty and realism. We must therefore be realistic and accept that we face extraordinary financial challenges, which were left to us by the previous Government, but we must not use that as an excuse not to do the right thing nor recognise what is the right thing to do. I agree with my hon. Friend the Minister that we must balance the needs of the policyholders with the needs of the taxpayer, but I think we should recognise the full losses that have been suffered before deciding what is affordable.
Iain Stewart (Milton Keynes South) (Con)
My hon. Friend is making a very powerful argument. One way in which we may be able to square this circle is by splitting up the Equitable victims between those who require swift payment as they are suffering real financial hardship now and other policyholders who have suffered losses but for whom an immediate payment is not necessary. I should declare an interest in that I am one such policyholder as, God willing, I have 30 years of working life ahead of me. We could consider the situation of policyholders such as me outwith the current spending review period.
Stephen Metcalfe
I accept that point—indeed, funnily enough, I was just about to make it. One way we could make this situation more affordable is by splitting up the sums to be paid over the coming years. This Bill presents the opportunity to be a building block in the process of rebuilding trust in politics, because I think we can accept the losses and the ombudsman’s recommendation, but we can also then work out how to stagger the funding of the compensation. There is a sense of realism about the fact that the compensation will have to be scaled back in line with what is affordable, but we should start from a point that reflects the true losses and perhaps then, as has been said, scale back in line with the cuts being experienced by other Departments across government.
Finally, we must be compassionate. I know that my right hon. and hon. Friends share my concern for all those who have been let down by the events at Equitable Life and by the actions—or, rather, inactions—of the previous Government, and I know that my Front-Bench colleagues will want to do all they can to support all of our constituents who have lost so much because of how Equitable Life conducted its business. I acknowledge that we as a nation face the most challenging financial situation since the war, but if we are to share the pain equally at this time of austerity, we must recognise that many who invested in Equitable Life have already been suffering that pain for many years and that they have pinned their hope for justice on this new progressive and equitable coalition.
As a matter of principle, we owe it to those people to do what is right. We said we would do it, so now we must. Obviously, I will support the Bill wholeheartedly, but on behalf of my constituents I ask the Treasury to play fair and find the necessary funds to make good what has become a decade-long travesty.
Penny Mordaunt (Portsmouth North) (Con)
May I first offer my congratulations to my hon. Friend the Member for Congleton (Fiona Bruce) on her excellent speech in this important debate? I also want to congratulate the Minister on the progress he has made, and the speed with which he has been dealing with this issue; that is much appreciated. I also thank him for the time he has spent on discussion and correspondence with me and my constituents.
I want briefly to make four points. The first of them is about the independence of, and support for, the independent payments commission. There is much concern among EMAG members about the terms of reference for the panel and the inappropriate inclusion of Chadwick’s work as the central building block. Can the Minister reassure the House that he has not accepted Chadwick and that the panel will have wide scope in its deliberations? Can he also confirm what resources will be available to the panel, what independent actuarial advice it will receive, and whether he expects its members to appear before a Select Committee of this House?
Secondly, will the Minister insist on an administrative cap? If so, what level of cap is he minded to call for, or will that be entirely for the panel to decide?
Thirdly, I turn to the issue of the pot of money, which will be announced later in the year. That goes to the heart of this matter. I deeply regret that that is being resolved now, rather than at a time when the country had deeper pockets, and I know that the Minister will want to do everything he can to put right this injustice. I press him to ensure that no stone is left unturned in that respect, and I also want to be reassured that he is considering where other funds may be found. For example, I have learned from a Library paper prepared for the 2007 Pensions Bill of the right hon. Member for Birkenhead (Mr Field) that there is still about £1 billion available in unclaimed insurance and pension accounts—so-called widows and orphans accounts—aside from that which has already been repatriated or given over to social enterprise funding. The public purse currently has no claim on those funds and there is no definition of what constitutes a dead account in respect of them, but that could be remedied. I know the Minister appreciates what we all want to see happen, and also that we all want it to happen quickly. We, in turn, appreciate the difficult circumstances in which this has to be done, so let us give ourselves every option and opportunity to do the right thing.
Finally, I want to pay tribute to a constituent of mine, Brian Aitchison, and EMAG for all their hard work. In my dealings with them they have been constructive, courteous and very pragmatic. They have a sophisticated view of this situation. They are very clear in what they are asking for; they are very clear about why they do not have it yet; they are very clear about why it will not be easy to deliver; and they are very clear about where the fault lies. The last Labour Government are responsible for these poor public finances and the delay in Equitable Life members getting justice. It is this coalition Government who must put both those things right.
Mel Stride (Central Devon) (Con)
Like many other Members who have spoken this evening, I welcome the Bill. It is timely—it has certainly not come before time—and I congratulate the Financial Secretary on introducing it so early in the life of this Government.
I too signed the EMAG pledge to stand up for fair and appropriate compensation, and like many other Members, I too have had many individuals in my constituency come to me in a terrible state because of what has happened to their pensions and their future as a consequence of maladministration and regulatory failure. For each one of those individuals that is a tragedy, but when we consider that 1 million policyholders and 1.5 million policies are involved, we see that it is not a tragedy; it is a national catastrophe, because it hits saving. We have now come out of one of the worst recessions in modern times—one of the worst since the second world war—and one of the things we must now do as a nation is get back into the habit of saving. Nothing in the previous Government’s approach to the Equitable Life saga has done anything to encourage that habit.
I have sat through most of today’s debate and I have been disappointed and slightly irritated by the synthetic anger from Labour Members—I felt that particularly at the beginning of the debate. They have suggested that in some way we have been responsible for the delays and for the fact that these payouts are not happening more quickly, but we know of the previous Government’s attitude and approach to Penrose, of how they obfuscated on the second parliamentary ombudsman’s report and of the, in my opinion, cynical way in which they set up Chadwick to report after the general election so that it would be us who would be standing in this Chamber addressing these issues as we are today.
Neil Parish (Tiverton and Honiton) (Con)
I thank my hon. Friend for the powerful points that he is making. May I reinforce the fact that this is about the message we send to all those who are saving for their old age in order to give themselves a good quality of life? If we do not sort out the Equitable Life situation, it will send exactly the wrong message to hard-working people. I congratulate the coalition Government on having the political will to sort it out, given that the previous Labour Government had no such will. In fact, they used taxpayers’ money to fight policyholders. I urge our Front-Bench team to get this sorted.
Mel Stride
I thank my hon. Friend for making a very important point, with which I entirely agree. I welcome the coalition’s commitments on several important matters, and they must not be overlooked in all the discussion about what the final payout is. The first is that there will be no means-testing. As we know, means-testing, when applied appropriately, can often provide resources to those who are most needy, but in this instance it will do nothing other than to punish those who have acted responsibly and have saved, putting something away for their future.
I too am very pleased that the Financial Secretary has stated that the estates of the 30,000 people who have died since this saga began will benefit through this scheme. I also welcome the transparency that has been proposed and the independent commission, which is so important in terms of designing and administering the scheme. I am happy that it will report so early in 2011, in time to make payments for the middle of next year. I am also particularly pleased that Brian Pomeroy has been appointed to that independent commission and that that was acceptable to EMAG.
I do not believe that interim payments should be made, because I accept what the Financial Secretary has said—I think he talked about this in his statement to this House on 22 July—about how that would overly complicate matters. What hon. Members must now concentrate on is making sure that we hit the end date—a final point at which justice is done in this matter.
Many hon. Members have also rightly recognised the complexity of the task facing the independent commission in deciding on the payments and administering them. We are talking about 30 million pension transactions over the period that we are considering. I urge the Financial Secretary to ensure that he does everything possible to ensure that no delay now occurs as a result of that task.
As we know, the Bill is enabling legislation—it is not designed to determine the final payout. That is part of the comprehensive spending review, and the report back to this House will be made on 20 October. EMAG suggests that £5 billion should be the amount. Chadwick’s remit was distinctly different from that of the parliamentary ombudsman, and because of the assumptions that he made about the proportion of people who were likely to have invested in Equitable Life, irrespective of the maladministration—in other words, if they had known of it at the time—he is perhaps looking at 10% of that figure.
We should not dismiss the Chadwick report’s methodology and much of the hard work that was done, which took more than a year to put together in that report. However, I agree with this statement made by the Financial Secretary:
“I am aware that some of his findings will be contentious”.—[Official Report, 22 July 2010; Vol. 514, c. 577.]
Furthermore, I contend that they will be more than that if they result in 10% payouts; they will be wholly unacceptable.
I have been impressed by one aspect of today’s debate, which is that members of EMAG have sat patiently watching our debate; I recognise one of the gentlemen in the Public Gallery at the moment. We owe it to them—we owe it to the individual policyholders—to do the right thing. We have a moral duty to them and we have a national imperative in terms of re-establishing the trust between government and people, which hangs on the decision that the Financial Secretary will take later this year.
Andrew Percy (Brigg and Goole) (Con)
I know that this issue is important to so many Members, so I shall keep my comments as brief as possible. The one thing I have learned in my short time in Parliament is that those who speak for the longest time often do not have the most to say.
It is sign of this issue’s importance that the Government Benches have been so full throughout this debate. I accept what the hon. Member for Foyle (Mark Durkan) said about this being a human tragedy. It affects the many individuals who have been to see me in my constituency about this issue over the past few months, many of whom are now very elderly. I recall going to see an elderly couple in Thealby, which is one of the small villages in my constituency, who were desperate as a result of this situation, and that is when I took the decision to sign the pledge. In a few minutes’ time, I shall say a little about what my understanding is of the pledge I signed.
This is not a political issue—or it should not be one—but I would like to respond to one or two things that have been said today because they deserve a response. I begin by welcoming the action that the coalition Government have taken, thus far, on the matter. Amazingly, we have heard criticism today from Labour Members about the speed of action on the part of the Government, despite the fact that we have been in government for only a few months and they had many more years to do something about this. What I could not quite understand was what exactly they have been arguing for today. They cannot have it both ways; they cannot dismiss the ombudsman’s report and then berate Members on the Government Benches who signed the pledge for apparently now breaking it.
It takes some neck for the Labour Front Benchers to suggest that, and they had very little to say about what they propose as an alternative when they were directly questioned on what pot of money they think should be available for compensation. We heard no figure from them, just lots of words that were not a direct response to the question. That is why those on the Government Benches will take no lectures from the Labour party, which had the opportunity, when the public finances were in a much better state, to do something about this appalling tragedy; no lectures from the Opposition will carry any weight either here or outside with our constituents, who know that they were ignored for the past 13 years by a Government who did not seem to take a great deal of interest in this matter.
I fully support the Bill, as everybody does, simply as a mechanism for starting those compensation payments, but I wish to say something about my understanding of the pledge that I signed. It was not a pledge for 10% or, probably, for 20% compensation; it was a pledge for substantial compensation for those who have suffered this tragedy. I understood it to mean that there should be proper and full compensation, while taking into account, of course, the fact that there are great pressures on the public finances. Nobody denies that, but if there is to be any top-slicing or hair-splitting of the compensation—I say this in the strongest possible terms to the Minister—many on this side of the House will not accept a 90%, 80% or 70% cut in it. That level is not what we told constituents about in the run-up to the election; people in my constituency were not left with that impression. Many in Brigg and Goole, and across east Yorkshire and north Lincolnshire, voted for me because of the pledge that my party went into the election on. I urge the Minister to consider some of the opportunities that have been proposed, including the possibility to defer or stage some of the compensation over a number of years. I am confident in the pledge that I signed, and I look forward to the Government coming up with a figure that I hope will compensate my constituents, and those of other hon. Members, properly and fairly.
Mr Deputy Speaker (Mr Nigel Evans)
I thank the hon. Member for taking much less time than he could have done. Everybody can see how many Members are standing and everybody can do the maths. We want to get as many contributions in as possible, so I ask hon. Members to show great discipline.
George Freeman (Mid Norfolk) (Con)
Let me add my name to the list of those congratulating my hon. Friend the Member for Congleton (Fiona Bruce) on her fine maiden speech.
It is an understatement to say that this is a complex and difficult issue. I think that we all recognise the reasons for that complexity, not least the difficulties that Equitable Life had with its guaranteed annuity product and issues to do with regulation and jurisdiction, compensation, mismanagement and delay. I welcome the speeches of Members from all parties who have talked straightforwardly about those difficulties.
In many ways, this is a story of our times. It is a story of boom and bust—the very boom and bust that the former Prime Minister promised us he had abolished. It ill behoves some Opposition Members to leap on the moral high horse after not dealing with this matter for so long and leaving us with the crisis in public finances that makes it so difficult to deal with. In this issue, above all, we are all in this together.
I welcome the coalition’s commitment to dealing with this matter so quickly. I welcome the transparency of the process and I sincerely welcome the Minister’s deep personal commitment to trying to resolve this issue as fairly as possible. I appreciate the complexity and the challenge of finding a fair settlement when we have inherited, in the words of the former Chief Secretary, no money.
As someone who signed the pledge in good faith, I urge the Minister, in considering the Government’s proposal, to recognise that this is not just about money. It is about something much more important. It is about trust—trust in our savings industry and its regulation; trust in Government; trust in this coalition’s commitment to financial responsibility and compassion; trust in the idea of the covenant between the generations, which sits at the heart of the big society; and trust in this Parliament and its commitment to do the right thing. I ask the Minister, as he considers the Government’s response, to explore any method he can to soften the blow—in particular the solution proposed by EMAG of offering some choice to those victims who want to take short-term compensation and to those who prefer to wait. In due course, when the Government’s finances return to rude health—as I have no doubt they will—some might choose to take a better return later.
The people have placed their trust in us; I am happy tonight to place my trust in the Minister and the Government and to support the Bill, in the expectation in good faith of a genuinely fair solution.
David Mowat (Warrington South) (Con)
Let me add my congratulations to my neighbour in Cheshire and in London, my hon. Friend the Member for Congleton (Fiona Bruce), on her excellent maiden speech.
Like everybody else, I support the Bill and I applaud our Front Benchers for moving so quickly to get this sorted out. I am disappointed, however, that we appear to be nailing our colours fairly firmly to the mast of Chadwick. The report is discredited, and in the course of my speech I shall try to explain why I see a difference between the £4.5 billion referred to by the ombudsman and the amount of about a tenth of that talked about by Chadwick, as well as why Chadwick is wrong.
It is central to our understanding of this issue that we know why Chadwick was wrong and where the methodology was flawed. The sum of £4.5 billion is a lot of money. Roughly speaking, it is the cost of two aircraft carriers. Just because it is a lot of money, however, does not mean that we should not do the right thing in sorting out this matter. In particular, we should honour the commitments—both implied and explicit—that we made in the run-up to the election in respect of those people who have invested in Equitable Life.
I want to make three points over and above my point about methodology and Chadwick. First, there is a group of people who have been particularly ill served by what has happened: the with-profit annuitants. I urge Ministers to consider making interim payments to them, because they have been severely hit. I do not accept the argument that doing so would affect the time scale of the rest of the payments. I do not think that that is true.
Secondly, I urge Ministers to make the process simple when the payments are coming out. Let us not allow civil servants to convince us to build computer systems that would apply tens of thousands of transactions to tens of thousands of policies, ending up with the complexity that we saw in the Department for Environment, Food and Rural Affairs and the delay in farming payments. This can be simple, because we are making broad-brush assumptions about the amount that we pay out in the first place. To go into spurious accuracy in how we allocate that among different fundholders is just wrong.
Thirdly, we should honour the commitment by next summer. It is quite important in the context of the Bill that we know when payments will be finished and not just when they will start.
Fourthly, we should look again at the adjustment that Chadwick has made. The reason that £4.5 billion became a tenth of that was that Chadwick said that in his view 80% of the policyholders who were informed—had regulation been done adequately—that this was a basket-case company would continue to invest in Equitable Life and that as a consequence, there was no regulatory failure in respect of those people. By applying that figure of 80%, £4.5 billion becomes pretty close to the sorts of amounts that we appear to be talking about. He said 80%; I say 50%. Somebody else says 30%. That figure is a question of judgment; there is no methodology. However, when we consider other financial crises, other runs on banks and other countries, the figure of 80% does not appear to stack up.
I have had a go at applying a more reasonable number to the ombudsman’s figure. It is reasonable that, having done all that, we should make an allowance for the spending position in which we find ourselves. I do not think that EMAG has a problem with that. However, when reasonable assumptions are applied to the ombudsman’s starting point, it is very hard not to come up with a number that is a considerable multiple of the number that Chadwick talked about. I cannot get one that is much lower than about £2 billion, which, as those of us who are doing our arithmetic will know, still lets us have one aircraft carrier.
May I make one final plea to those on the Front Bench? Can we stop benchmarking ourselves against the Opposition? That is a very low bar indeed. We must benchmark ourselves against what is right and against the expectations we raised when we were fighting the last election. It is not enough simply to do more than the Opposition.
Peter Aldous (Waveney) (Con)
Like most Members—I should probably say all Members—I have received many letters from constituents who have been let down by the regulatory system and who are worried that they will not receive fair compensation for the losses that they have incurred. Several of them are struggling to keep their heads above water.
I place a lot of weight on the ombudsman’s recommendations and findings. In her letter to MPs of 26 July, she sets out five requirements for a fair settlement: independence, transparency, simplicity, speed, and potential impact on the public purse. Those need to be the guiding lights to a fair and just outcome. My hon. Friend the Financial Secretary to the Treasury is to be commended for the speed at which he has moved to resolve the matter. He has established an independent commission to come up with proposals for the design of the compensation scheme and he has committed to starting to make payments in the first half of 2011. That said, there are still issues to be addressed and it is those issues that worry and concern my constituents and the group that represents them.
I appreciate that today we are not deciding and voting on the level of compensation and that that will be determined at the comprehensive spending review in October. However, what is said today is a barometer of the mood of this House and must be taken into account when the level of compensation is decided. Let me refer back to the Minister’s statement in July. For me, there is an inexplicable quantum leap from the relative loss of £4.8 billion to Sir John Chadwick’s total payment of between £475 million and £600 million. Those latter figures are way too low. I must dispute Sir John’s opinion that the majority of policyholders would have made the same investment decision irrespective of maladministration. That flies in the face of the evidence and of what my constituents are telling me.
On the way forward and complying with the ombudsman’s recommendations I would make two suggestions. First, to achieve a fair settlement, the Government must review Sir John’s suggested settlement figure and it must be crystal clear, simple and transparent how the eventual figure was reached. Yes, there is a need to consider the impact on the public purse, but any allowance must be fully explained and easily understood. Secondly, I request that the independent commission overseeing the design and delivery of the compensation scheme consider a framework that ensures prompt payment as soon as possible in the new year to the eldest policyholders and those in the most need. Thereafter, there should be further waves of payment depending on policyholders’ proximity to retirement and relative exposure. EMAG has proposed how such a scheme could work and I am sure that Equitable Life would work with the commission to ensure that such a scheme would be fair to all and would recognise individual hardship.
My hon. Friend the Financial Secretary has made a lot of progress in the past four months. He has hit the ground running in his new role, but the Government need to go that extra mile to achieve the fair and just outcome that the ombudsman recommended and that so many of us—myself included—signed up to.
Tessa Munt (Wells) (LD)
In common with other Members, I have a number of people in my constituency who have sent me letters and several hundred who have sent me e-mails about this matter. I want to make a few comments that might be helpful. The independent commission has a chair in Brian Pomeroy who is an EMAG nomination, and I am sure that EMAG will be happy about that. It is ludicrous to suggest—I refer to an earlier comment—that January is a long time to wait to have a report back from that group, because that is very speedy action in the relative scheme of things, and payment shortly thereafter would be welcomed by those members.
On 22 July, the Minister set out the terms of reference when he introduced the Bill. Those terms of reference referred only to Towers Watson’s figures and Sir John Chadwick’s report, but Sir John’s report is just one view and in some ways sets a lower range for the compensation; I wonder why there was no reference to the parliamentary ombudsman’s report. I share the concerns of Equitable Life policyholders in this regard, and I have checked the Treasury website. I want to make two points about that.
First, there is a slight omission on the website regarding what was said on 11 May in the new Conservative-Lib Dem coalition agreement. The agreement contained a pledge to
“implement the Parliamentary and Health Ombudsman’s recommendation to make fair and transparent payments”
but on the Treasury website that phrase is missing.
Secondly, the Treasury website refers to a large number of documents, including Ministers’ oral statements, written statements, answers to questions and press notices, as well as the Bill, explanatory notes, an assessment, a memorandum, various letters, advice, the terms of reference and Sir John Chadwick’s report. That report refers people on the Treasury website to Sir John Chadwick’s website, and I wonder why the parliamentary ombudsman’s report, which is entitled “Equitable Life” is not included among the documents of reference. It would be fair to people to include it on that website.
There is a case for having some categories of Equitable Life victims. There are people in emergency situations—those in most need and the families of those who have died who are in very dire straits—and there are people who need to be dealt with urgently, such as the elderly and those who have lost a lot in relative terms, whereas those who might have lost in part or who are still to retire in years to come can clearly be dealt with at a different time. I hope that, with the moves that are to be made on 20 October and with the way in which the whole programme of deficit reduction will roll out over the next few years, we will then be in a position to deal with those who do not have urgent cases, such as those who are still to retire.
Many victims are affronted and offended by the fact that the regulator seems to have removed most of its pension funds in June 2008. That adds to the question of public confidence in the regulator and affects those who wish to save for the future.
An Opposition Member said earlier that we should have no regard whatever to the comprehensive spending review as a background to payments made under the Equitable Life scheme, but that is a ludicrous suggestion. If we ignore the financial situation in which we find ourselves, we will be committing exactly the same crime as Equitable Life did originally, which got us to the current position. The parliamentary ombudsman’s comments about the “potential scale” of her recommendations need to be set against that background, and what is done has to be affordable. It was suggested earlier that we could look at what the ombudsman said and apply a reduction of 25%—or possibly 40%, depending on what comes out on 20 October. That is not a silly suggestion; perhaps it should be in scale. I am sure that EMAG would understand that the Government have said that everyone must be treated equally and fairly, that everyone will take the pain except the least well-off and that that might apply to this scheme as well.
It is absolutely right that we should try to be fair. The dictionary definition of “equitable” includes words such as fair, just, even-handed, unbiased, reasonable and impartial. We should deliver what Equitable Life and, most critically, the regulator did not deliver. I do not believe that Equitable Life victims are asking for anything unreasonable; they do not want an unreasonable advantage or to make a profit. They have been let down very significantly on two occasions—first by the company and secondly by the regulator—and I would hate to be part of a Government who let them down a third time.
Chris Williamson (Derby North) (Lab)
Like other hon. Members present, I have been lobbied by a considerable number of constituents. Let me be clear: had Labour won the general election, we would by now be implementing the Chadwick recommendations and people would be receiving payments. What I find so irritating is the extraordinarily cynical, pre-election tactics that were adopted by the Conservative and Liberal Democrat parties in an attempt to garner additional support. It is no good Government Members referring to the country’s financial situation and using the comprehensive spending review as cover for their inaction, because when they signed up to those pledges, they knew very well what the financial situation was. That simply will not wash.
The Opposition have been accused of showing “synthetic anger” and I have heard Government Members congratulate their Front Benchers, including the Minister. Members have said how they trust the Minister and their Front-Bench team. Before the election, one of the most vociferous cheerleaders of the pledge to pay a more generous settlement to the Equitable pension holders was the Minister himself, who regrettably is not in his seat.
I call on Members on the Government Benches to look at the Bill before us. It is extremely thin, and some Members’ contributions seemed to recognise that fact. It is clear from the terms of the Bill that the Government are dragging their feet on the issue. There is no detail on the criteria for payments, there will be no independent appeal process, and there is no timetable for payments.
Only yesterday I received a letter from EMAG, which stated:
“EMAG welcomes legislation to enable payments to Equitable Life sufferers.
However, EMAG is alarmed about the following:
The continuing reliance by the Treasury on Sir John Chadwick’s advice, despite the clear view of the Ombudsman that it is ‘an unsafe and unsound basis on which to proceed’.
There is a mismatch between the formal acceptance of all the ombudsman’s recommendations by the new government and the Treasury’s dogged determination to ignore the PO and build upon Chadwick’s advice, seemingly to provide a phony justification for derisory payments.
The lack of a proper comprehensive assessment of ‘relative losses’ based on all of the PO’s findings.
The inappropriate inclusion of Chadwick’s work as the central building block in the terms of reference for the independent payment commission.”
Chris Williamson
There is not time to give way as I want other Members to have an opportunity to speak.
That is hardly a ringing endorsement of the Government’s position, is it? A lot of crocodile tears are being shed this evening. We heard many exaggerated promises in opposition, but the Government are significantly under-delivering now that they are in power. Given the commitments that were made by the Minister and other Front Benchers, as well as virtually all the Back Benchers, they have a moral obligation to do more than they have done so far.
It is a poor show to have misled the political parties and misled people into thinking that they would receive more than they will. As I said, had Labour won the election, people would at least now be receiving some payments. We still do not know when people will receive any payment as a result of the Bill.
Anne Marie Morris (Newton Abbot) (Con)
I think I speak for Members on the Government Benches in refuting a number of statements made by the hon. Member for Derby North (Chris Williamson). It is not entirely correct to say that we have been dragging our feet. Compared with what the Opposition did in government, we have made considerable progress, which has been well documented. As for the hon. Gentleman’s contention about the state of the kitty, it is a wonderful idea to think that, when in opposition, we knew what was in the piggy bank. When we arrived and cracked open the piggy bank, it was very empty.
Equitable Life is a tragic episode and we in government have a huge responsibility to everybody in this country to get the outcome right. This is an issue not just of money, but of human tragedy. Like other Members, I pay tribute to EMAG. It has been phenomenal in persistently putting forward the cause of its members. I am pleased to say that it has helped a number of constituents in Newton Abbot make their case very powerfully.
Across the House, we all agree that compensation must and will be paid, but, as a number of Members have mentioned, there are two key issues. First, how are we to calculate the loss? Secondly, what framework can we put in place to ensure that when the loss has been calculated people are properly compensated? Tonight, many of the contributions have been about money, and fewer about the framework. I pay credit to the Financial Secretary for the thought that has been put into smoothing the way, once the figures have been sorted out, to ensure that that framework is in place.
The fact that we will be able to give tax exemptions is important. If people received payouts, only to be hit by a big bill from the tax man, that would be unacceptable. I am pleased that there is a provision to disregard from means-tested benefits the amounts that are ultimately paid out. That is to be commended.
On the loss, however, we must calculate two things, the first of which is the relative loss. Given that so many tortuous arguments have been put by so many people, it is important that we have time to get the calculation right. I should like the Financial Secretary to confirm that no fixed amount or limit will be set tonight, and that the money resolution will be left without any amount or limit.
On the calculation of that relative loss, I, like several colleagues, commend to the Government the ombudsman’s recommendations, which are absolutely on point. I am sure that the independent commission will give them a favourable run, too, but I share the concerns of Government Members about Chadwick’s proposals, which seem to have missed the point. If we calculate the ultimate payment on that basis, we will not do justice or live up to the pledges that we all made in good faith at the election.
Guto Bebb (Aberconwy) (Con)
I am grateful for the opportunity to follow on from that point. A constituent of mine has argued that the Equitable Life saga questions the credibility of both the legal and financial systems, and I tend to agree, but in the same way I do feel very strongly that if we base the compensation scheme on Chadwick’s proposals, there will be a question mark over the credibility of many Members who made commitments during the general election campaign, including, dare I say it, many Government Members. Does my hon. Friend agree?
Anne Marie Morris
I thank my hon. Friend for that charming intervention and most certainly agree. He makes a very good point.
Having worked out the right figure to pay, we must consider the second issue with regard to loss: how much money is it right, fair and proper to deduct when we get to the spending review? We have an obligation not just to Equitable Life members, but to the taxpayers of this country. I wish we were not where we are, but the piggy bank was empty. Nevertheless, I absolutely agree with previous speakers, because, if Front Benchers come out with the figure of 10%, I for one will be horrified, as that is not adequate compensation. We must be very careful to look at those figures in great detail and at the concept of fairness: what is the fair and right thing to do?
Finally, I am delighted that we are moving ahead with the issue quickly, because one concern of mine is that some of my constituents are now in their late 70s, so we need to sort this out for them, their children and their grandchildren. I am therefore pleased that we shall do so quickly, at the front end of next year.
Mr Deputy Speaker
Order. I thank Members for getting their messages across while showing time discipline.
Steve Baker (Wycombe) (Con)
I wonder whether the hon. Member for Derby North (Chris Williamson) has been listening to the same debate as I have. I hope that his constituents do not read his speech in isolation, because in the debate to which I have been listening Government Back Benchers have made it absolutely crystal clear that they will stand up for the members of Equitable Life.
I support this short, technical Bill, but I should like to make some wider points. I endorse many remarks that previous contributors have made, but I disagree on a couple of minor points. Those points are on the margins but, in the long term, absolutely vital, so I hope that Members will bear with me.
One key point is that the state manufactured the problem, or at least manufactured it to the extent that it is with us today: the state enabled Equitable Life to continue to attract new business when it should have folded. If I have understood correctly what I have been told, I should note that if Equitable Life had folded at the first opportunity, a smaller number of policyholders would have received 90% of their due, many years ago. Instead, state action means that very large numbers of people today are concerned about receiving much less, many years after the fact.
In government we have been handed a situation in which there is no doubt that the state must compensate Equitable Life policyholders, and it must do so honourably. That is what many of us signed up to in good faith, even though we knew that the cupboard was bare. The simple fact is that a fair sum must be found.
However, we should not pretend—as, I am afraid, Equitable Life’s own briefing note does—that by paying a demonstrably fair level of compensation, the Government would, at a stroke, restore people’s faith in saving for their retirement. This is a difficult point, but I should like to make it anyway. It is vital for the future that we reaffirm that the Government have nothing to give without first taking it. The state can only tax, borrow or debase the currency. It can only transfer wealth; it cannot create it. In the case of Equitable Life, the state has shown itself incompetent to supervise pension funds and incompetent to clean up the mess that it makes. It also turns out that the state is incompetent to run pension funds.
In my speech on 22 June, I cited “A Bankruptcy Foretold”, a paper by the Institute of Economic Affairs that set out the true scale of the national debt. I am afraid that the numbers have been updated over the summer, as the Office for National Statistics released some further figures. Writing on the IEA’s website, the author, a Mr Nick Silver, who is an accomplished actuary, points out that the state now owes, including pension liabilities, a staggering £6.5 trillion. To save Members from reaching for their calculators, I should say that full compensation for Equitable Life victims would amount to one tenth of 1% of our current national debt, including pension liabilities.
Having considered the assumptions about how that pension liability might be met, Mr Silver writes:
“Looked at this way, the UK is effectively an enormous unfunded and effectively bankrupt pension scheme, with a large speculative holding in some banks and a sideline in running a small island state off the northern coast of France.”
Perhaps he exaggerates, but having read his paper I am afraid I must suggest that he does not. That is what we have been reduced to.
We must see the Equitable Life situation in context—and it works both ways. Government Members know that the billions add up, but I am afraid that we are getting to a point at which the trillions are adding up. In the short term, we must absolutely deal with this problem; we must maintain our honour and help the members of Equitable Life.
It turns out that the state is not competent to supervise pension funds or run them. Bearing in mind the events surrounding the banking system, other Members might agree that we can fairly say that the state is not competent to supervise financial services at all. I believe that we need sound financial law, not arbitrary intervention by regulators. I am happy to say that tomorrow my hon. Friend the Member for Clacton (Mr Carswell) and I will introduce a Bill that will begin to indicate the right direction of travel.
In this Parliament, we must deliver an honourable settlement for Equitable Life policyholders. There is absolutely no doubt that we are under an obligation to do so. But let us not pretend that wealth transfers can encourage saving or that the Government have an inexhaustible horn of plenty from which to insure everyone’s risks at the expense of everyone else. If we are truly to honour our constituents, we must face the world as it is, and together construct a more hopeful future, in which the Government cease to trample the forces of social co-operation thereby manufacturing problems greater than those that they face.
In the meantime, it is clear from what we have heard today that if the Government give EMAG members a haircut of very much more than 30% to 40%, the Government will have a very rough ride.
Graham Evans (Weaver Vale) (Con)
First, I congratulate my hon. Friend the Member for Congleton (Fiona Bruce) on her maiden speech. As a Macclesfield man, I thought I knew everything there was to know about Congleton, but I certainly learned a thing or two from her thoughtful and informative contribution.
I start by declaring an interest. As a former policyholder in Equitable Life, I have held a keen and personal interest in the matter for a long time. I am pleased to have the opportunity to speak in this debate and would like to take the chance to talk about the human element to this saga. When immersing oneself in this subject, it is all too easy to get caught up in the highly technical details of legal complexity, maladministration and commercial misjudgment, but it is very important to remember that it involves real pain for real people. Since being elected, I do not think a single day has gone by without my receiving one letter or e-mail from constituents who have been affected by the failure of Equitable Life. I recently had one lady in my constituency surgery crying while telling me about the difficulties she had faced owing to this mess—crying out of worry, despair and sheer frustration at the length of this debacle, which felt like it was going to drag on for ever. I share her frustration. It has been nearly 10 years since Equitable Life policies were cut in value, leading to pension reductions of sometimes up to a third. For 10 years, 1.5 million people have been waiting for compensation. Some have even died waiting; as we heard earlier, approximately 30,000 have done so. Is it any wonder that faith in our politics has fallen to an all-time low over the past decade?
Who are the people who have been waiting? We are not talking about the über-wealthy, nor are we talking about the reckless investors. The 1.5 million victims of the failure of Equitable Life are ordinary people. They did the right thing, putting money aside and trying to save for their future. I am certain that all Members of this House can agree that we should be encouraging a return to a savings culture in this country. I would submit that the falling confidence in our pensions system and the endless delays in resolving the Equitable tragedy are not entirely unconnected. It is only right that policyholders are given justice, and as soon as possible. Failure to do so would only further undermine confidence in pensions saving. For that reason, I welcome this Bill and give it my full support.
The contrast between the actions of this Government and the previous one could not be sharper. While Labour did its best to drag its feet and dither, the new Government have worked swiftly and shown that they will honour the commitments made in opposition. This Bill does not mark the end of the Equitable Life story, but it is, at long last, putting that end in sight. I am very encouraged that Ministers are clear that there is much more to do and are committed to seeing a fair outcome for all. It is absolutely right that they have taken time to reflect on Sir John Chadwick’s report and have sought the views of others.
For an issue as complicated as this, it is pleasing that the Bill is short and simple—for a simple man such as me—in giving the Treasury powers to make compensation payments to policyholders without pre-determining the level of compensation that should be paid. This should have been done years ago. If Labour had not spent its years in government endlessly delaying, it would have saved hundreds of thousands of people a great deal of anguish, and compensation could have been awarded in a less difficult economic period. Unfortunately, the previous Government used an absurd argument for not establishing a compensation scheme on the basis of their general responsibility to taxpayers. If one were to accept that argument, then surely compensation could never be paid in any circumstances when a public body was found to be responsible for financial loss and injustice—or perhaps compensation could be paid if the financial loss were relatively small and insignificant. Clearly, such arguments are ridiculous.
I am pleased that such arguments are over and that, even in a time of deeply constrained finances, the Government are working to bring justice for many of my constituents who are policyholders. The Bill is an essential measure in bringing about this justice, and I am delighted to support it.
Simon Hart (Carmarthen West and South Pembrokeshire) (Con)
I think that several things have struck us during the course of this debate. First, we have heard about the sheer volume of decent people who seem to have been affected by this crisis over time. Then there is the well-measured, sensible and proportionate campaign organised by EMAG, which perhaps sometimes stands apart from those conducted by other pressure groups.
We have all been struck by the political reaction. For the sake of the record, the Conservative party was clear about its intentions in its manifesto, the coalition was clear about its intentions in its agreement, and the Government have been swift in their action. Whatever we may say about that action, they have at least been swift in putting their commitment in place as soon as they possibly could. Needless to say, there is a “but”, which is that the devil remains in the detail of the payments—and those are not under proper discussion tonight, for very good reasons.
Financial institutions, it seems, are no longer trusted. Young people do not know where to go and older people do not know who to trust, so it falls to all of us to ensure that confidence is restored. Resolving that problem was a moral dilemma, rather than a financial one, for the previous Government, and it is for the current Government too. EMAG has made a series of sensible proposals, rightly pointing out that a staggered system of repayments could work and that those in the greatest need should be considered separately from others. Even Equitable Life itself has made it quite clear what it expects a basic minimum to be.
The ombudsman has said that the level of compensation should reflect the state of the public finances. In this debate, a number of Members have raised one eyebrow, and some two, at that proposal, and I have a lot of sympathy with them. Equitable Life members across Britain all recognised that there was a risk attached to what they invested all those years ago. However, they will reasonably feel unfairly penalised if we use the public purse argument to bypass our moral obligations—especially, to be snide for a moment, when we are happily talking about spending a hundred million quid on a referendum on the alternative vote. Such things put us in a rather difficult situation when it comes to retaining the moral high ground. I agree entirely with my hon. Friend the Member for Mid Norfolk (George Freeman)—who, sadly, is no longer in his place—about the importance of the next stages of the process.
Claire Perry (Devizes) (Con)
I understand the pressure of time, but I wish to come in on that point. All of us are here for the debate because we signed a pledge and stood up for a group of people in our constituencies who we felt had been let down and betrayed by the last Administration. I urge the ministerial team to think creatively at a time of great pressure on the public finances, and particularly to consider making payments free of tax, or paid out from a fund over a period of time. The recommendations as proposed, or at least as trailed, are simply insufficient. We know that some of the best minds in the country are working in the Treasury, so let us get them to work on this very problem.
Simon Hart
That is a useful contribution. I was about to restate a point made by my hon. Friend the Member for Mid Norfolk, which reinforces the intervention by my hon. Friend the Member for Devizes (Claire Perry). The next stages are important not just for those who have struggled over the past 10 years and for the families of those who have died while waiting for justice, but for restoring the confidence of the current and future investors whom we are trying to persuade to act responsibly in their fiscal affairs. Perhaps what has not come up so much in the debate is that they are important also for the credibility of Members and of this Parliament. That was perhaps where my hon. Friend’s intervention was leading. We must not and cannot let people down now with a lame excuse about the state of the public finances today, because the problem goes far deeper than that.
A number of Members have quoted submissions from their constituents, and I should like to refer to an e-mail from Jerry Roberson of St Clears, in Carmarthen, a constituent of mine, who wrote:
“I’m afraid this business further undermines my confidence in politicians and if justice isn’t done on this issue I don’t see I will ever want to cast a vote in a General Election ever again.”
That is an important message, and we need to take it in isolation from the technical aspects of the debate. The very credibility of Members of all parties, of the Government and of this building depends on how we deal with such issues.
The Financial Secretary has made significant progress, and I support the Bill. The matter has been dealt with as quickly as it possibly could have been, and the suggestions by Opposition Members that a delay has somehow been deliberately imposed seem an absurd rewriting of history. I cannot understand how, in all conscience, they can make such observations, given what several thousand people and their families have been through as a consequence of an inactive decade. The Financial Secretary has made progress, and we should support him. I naively and optimistically suggest that it is the moral obligation of all parties and all Members to put our party political interests aside just for one moment, to ensure that we can bring the problem to a fair and sensible conclusion. The Government do not pretend that the Bill is anything other than the first part of that process.
James Morris (Halesowen and Rowley Regis) (Con)
Like other hon. Members, I welcome the Government’s recent announcement and their timetable. Second Reading of the Bill tonight would be a significant step forward. However, as others have acknowledged, this has been a long saga that has tested the patience of all concerned.
The reports and analyses of the past decade are voluminous, and the saga has come to resemble a Dickensian tale that would not be out of place in a novel like “Bleak House”. I recognise that there are important questions—they have been debated in the House this evening—about the relative merits of the ombudsman versus Chadwick, and I, too, have reservations about key recommendations of the Chadwick report, but at the heart of the matter is morality. As the Public Administration Committee report of March 2009 said in response to the then Government’s response to the ombudsman’s reports, there is a clear moral dimension. The Committee said that it was morally indefensible for the Government to accept maladministration by public bodies without taking the necessary action to right those wrongs. We need to bear that message—that moral dimension—in mind as we debate this important Bill and this sorry saga, and we must not forget it.
Like other hon. Members, I have spoken to many of my constituents, and I know the human cost of this debacle. People who have worked hard and done the right thing have seen their dreams of retirement go down the drain. We cannot walk away from our moral duty to those people. That is why it is our duty to provide fair and appropriate compensation for them.
As other hon. Members have pointed out, there are wider policy implications. As my hon. Friend the Member for Mid Norfolk (George Freeman) remarked, we need to build trust in our pension system, which has been tarnished principally by the Equitable Life debacle. We need a successful resolution to the matter. That would help not only to compensate Equitable Life policyholders, but to restore trust in our financial services industry. I welcome the Bill and the Government’s early decisions, but we cannot afford further delay. We need to do our duty to the people who have lost out in the Equitable Life debacle.
Mr Marcus Jones (Nuneaton) (Con)
I shall try to be brief to assist my hon. Friends who wish to speak. I have received more constituency correspondence on Equitable Life than on any other issue, and there are well over 200 people in the local EMAG.
I congratulate my hon. Friend the Financial Secretary to the Treasury on achieving more progress in no more than a few weeks than the previous Government achieved in more than a decade. Had they dealt with the problem when the country was not mired in the debt that they left us with, the disaffected policyholders in my constituency would doubtless have received their compensation by now and would be far better off for it. We need to bear it in mind that the previous Government seemed to have an aversion to making decisions, including on Equitable Life, so I commend my hon. Friend for retrieving Equitable Life from the long grass into which it had been so uncaringly kicked.
I must take the hon. Member for Derby North (Chris Williamson) to task for his comments. Perversely, he said that a Labour Government would have sorted the issue out by now and adopted the Chadwick report, and that Equitable Life members would have been very happy. He then turned that on its head, and said that the Chadwick report was flawed, and that EMAG did not like it. That shows the interest that Labour Members have in Equitable Life, and why Labour did not resolve the problem when it was in government.
The Bill is extremely important because it will allow the Treasury to make payments and deal with the tax treatment and consequences of those payments. I speak on behalf of my constituents in Nuneaton, who have become very disaffected as a result of this issue. The Bill does not do all that they seek tonight. It does not set the level of payments that will be made, which will be done in the comprehensive spending review next month. I will support the Bill tonight, but I wish to put over the concerns that I share with my constituents about this issue. They are still greatly sceptical and they suspect that the Government—like the previous Government—are not listening. We need to ensure that we are listening, because while we have the Chadwick report, we must also take into full account the ombudsman’s comments and the concerns of EMAG, which has made an interesting, important and strong case for proper compensation.
It is important for the payment scheme to be independent, and I welcome that. The level of compensation is the most contentious issue and we should do what we can to listen to the suggestions being made about the taxation of the payments and the possibility of deferred payments. This is a bitter pill that my constituents and others have to swallow, and we should try to sweeten it as much as we can.
I implore the Financial Secretary and his colleagues to consider the wider implications of the compensation package. We have to recognise that confidence in savings and investments is at an historic low—not helped by the previous Government, who shot our private pension system to smithereens in their 13 years. We need to ensure that we protect people who work hard, save for their retirement and do not wish to rely on the state. As people in my constituency have pointed out, if we do not get this right now, we will show people that hard work and doing the right thing for themselves does not pay and that they will have only the same level of income in retirement as people who did not do the right thing. We have to show that we are the party that supports those hard-working people and, in the next few weeks, we should commit to ensuring that Equitable Life members get the compensation that they truly deserve. That would help to restore confidence in our pension system.
Gordon Henderson (Sittingbourne and Sheppey) (Con)
Several hon. Members have suggested today that the Equitable Life scandal—and a scandal it was—is complicated, but for me it is actually quite simple. It is about fairness to a group of people who were badly let down by the regulatory failures of their Government. I went into the recent general election supporting a Conservative manifesto that made a promise to Equitable Life policyholders in my constituency. It said:
“We must not let the mis-selling of financial products put people off saving. We will implement the Ombudsman’s recommendation to make fair and transparent payments to Equitable Life policy holders, through an independent payment scheme, for their relative loss as a consequence of regulatory failure.”
I wish to take this opportunity to assure policyholders in my constituency that I for one do not intend to go back on that election pledge.
Most people accept that Equitable Life policyholders were the subject of Government maladministration, and that is certainly the view of the ombudsman, Ann Abraham. There is some dispute on all sides, however, about the level of compensation that should be paid to policyholders. Sir John Chadwick’s report established that the relative loss suffered by Equitable Life amounted to between £4 billion and £4.8 billion, and the Financial Secretary, in his statement to the House this July, supported that figure. However, Sir John then used a series of convoluted calculations and speculative assumptions that allowed him to suggest a cap on the total amount of compensation that should be paid. He then went on to reduce that cap figure to just 10% of the relative loss figure that he himself originally calculated.
One of Sir John’s most telling assumptions was that the majority of policyholders would have invested in Equitable Life irrespective of maladministration. That is a very big assumption that cannot be proved or disproved, but any rational person would consider such a lemming-like approach by investors as highly unlikely. I am simply not convinced by Sir John’s arguments and I dismiss them out of hand, as do the Equitable Life policyholders in my constituency.
Like many Members, I have been in touch with many of those policyholders, and all they want is fairness, because they are fair-minded people. However, they are not stupid people, and they recognise that in these times of austerity even they must shoulder some of the burden needed to bring down the country’s massive debt mountain. To ask them to accept a reduction of 90% in their compensation, however, is not only unfair but, as has been mentioned by other Members, immoral.
In the current economic climate, however, it would be right and proper to ask Equitable Life policyholders to accept a cut in compensation in line with those being proposed for Whitehall Departments. If departmental budgets are cut by 20% or 25%, as we are being led to believe, I am willing to support a similar reduction in the assumed total of Equitable Life’s relative loss, which would mean a compensation package of between £3.6 billion and £3.8 billion. If anything other than a formula based on a figure in that region is proposed, I will be forced to vote against the Government when the figure for compensation is debated.
Nicola Blackwood (Oxford West and Abingdon) (Con)
I am grateful to have the opportunity to speak in this debate. At the outset, I would like to pay tribute to the many EMAG members and Equitable victims who have contacted me urging me to participate in this debate, and to those, including many Members on both sides of the House, who have campaigned so selflessly and for so long for justice for the thousands of Equitable victims in Oxford West and Abingdon and across the country.
As a fellow EMAG pledge signatory, I welcome the swift action that the Financial Secretary has taken in bringing this Bill before the House. In particular, I know that the many Equitable victims who live in my constituency—more than 3,000, according to EMAG—will welcome the commitment to an urgent and transparent timetable for payments. More than 30,000 policyholders have already died waiting for their Government to deliver them justice. For their dependants and the policyholders that remain, certainty and speed are imperative.
Nevertheless, since my Westminster Hall debate on the subject on 20 July and the Minister’s statement on 22 July, a number of concerns have been raised with myself and colleagues by Equitable victims, and I would like to raise some of those concerns today. First, my constituents tell me they are uncertain about the current status of Sir John Chadwick’s advice. In the Financial Secretary’s remarks on 22 July, he stated that as he understood that certain aspects of the report were contentious, he had not yet accepted Sir John’s report and would be receiving representations on its content.
The Financial Secretary stated today that he has had a number of meetings with Equitable Life, EMAG and the ombudsman since then. However, paragraph 3 of the terms of reference of the independent payments commission states:
“The Commission will have regard to the work undertaken by Sir John Chadwick on the methodology for calculating relative loss and base its allocation to policyholders on the relative loss figures provided to HM Treasury by Towers Watson.”
Will the Minister please clarify whether the Treasury has indeed decided to accept the report and whether there will still be an opportunity for Equitable victims and others to attempt to influence that decision? In particular, will she explain why, if the report is not yet Government policy, the independent payments commission should have been directed to have regard to it and to the Towers Watson calculations that arise from it?
Secondly, I know that the Bill does not predetermine the amount of compensation or to whom it will be paid, but I would like to take this opportunity to applaud the decision to include in the commission’s terms of reference a direction to take account of the estates of the deceased policyholders. Many Equitable victims in my constituency have welcomed that and feel that it goes a little way towards recognising the suffering of those who died waiting for justice.
I am happy to support the Bill this evening, as I believe that acting quickly to set up a compensation scheme for victims is of the utmost importance, but I am also aware that it does not address the elephant in the room: the final compensation amount. Equitable victims in my constituency have informed me that they are uncertain about to whom they should put their concerns about the final figure and how it will be calculated. There has been endless press speculation on the subject, some of it very heated. I know that the Minister will not be drawn into a debate on the final amount in advance of the comprehensive spending review, but I would like to press her to bring the decision on the quantum to the House as an oral statement, so that Members such as myself who have received extensive representations from constituents will have the opportunity to raise those concerns effectively. I fully support the principle that the amount of compensation allocated to Equitable victims must be affordable in the wider context of the public purse, but I share the concern of many in the House about some of the figures that are being bandied about. Given the sensitivity of the issue, I feel that Members should have the opportunity to debate that decision.
Mr Dominic Raab (Esher and Walton) (Con)
Like my hon. Friend, I welcome the transparency and the finality provided by the Bill. However, like her constituents, none of the victims in my constituency will regard it as justice if compensation is just one tenth of the relative loss. Does she agree that we need a debate not just about the overall package, but about the quantum, the timing of the compensation and the tax status? All those issues need to be looked at creatively, and the pressure on the public finances make that debate more, not less important.
Nicola Blackwood
I agree with many of those points. It would be helpful if we could have some clarification about the future opportunities for Members to contribute to the debate, as it will continue and we will continue to receive significant representations.
I am conscious that the process of compensating Equitable victims and designing a scheme that campaigners can support must be done in the context of the previous Administration’s record of delay and obfuscation—a record that has left Equitable victims with completely shattered confidence both in the Treasury and in politicians to deliver any kind of justice at all. I will not go into the details of the previous Government’s attempts to put roadblock after roadblock in the way of the Equitable victims. I am sure that everyone here is sadly familiar not only with that tale but with the morbid accusations that it led to: that the Treasury made a cold-hearted calculation that the longer it dallied, the more Equitable members would die—at a rate, I believe, of about 15 a day.
I know that the Minister is well aware that the victims of Equitable Life, who have been treated so shabbily for so long, need to see that despite their fears, not all politicians will betray them. I know that I am only one of many who have emphasised the appalling toll that this scandal and the decade-long battle for justice have had on our constituents. That is why I believe it is so important to have a process that is as transparent as possible, so that Equitable victims can be reassured that their Government are acting in good faith.
This issue is just one area where the coalition Government must try to rebuild the trust broken by the last Government’s failures to take responsibility for their actions, but it is one that has ramifications that go far beyond the victims. If we get it right, it will communicate effectively and clearly that this Government will act in the interests of those who do the right thing and save for the future. At a time when public confidence in politics and politicians is at an all-time low, if we get this right, it will demonstrate clearly and effectively that this Administration will deliver in government what we promised in opposition.
Charlie Elphicke (Dover) (Con)
I, too, would like to congratulate my hon. Friend the Member for Congleton (Fiona Bruce) on her excellent maiden speech. I have subsequently spent much of the debate dreaming of Sandbach.
I recently held a public meeting in east Kent for my constituents in Dover and Deal, alongside my hon. Friend the Member for South Thanet (Laura Sandys) and her constituents in Sandwich, Ramsgate, Broadstairs and other parts of her constituency. It was a lively meeting, and I undertook to report to the House the representations that were made to us. There were three clear positions that the Equitable Life victims wanted me to communicate.
The first was that the Chadwick report is not a sound basis for compensation, and that the contributory negligence concept implicit in it is entirely rejected. The second was that the ombudsman’s recommendations should be implemented, even if over a number of years with staged payments. The third was that payments should commence as soon as possible. For my part, I would like to say how sorry I am that the victims have been treated so badly for so long. I welcome the Bill, the compensation scheme and the action that is being taken.
Guy Opperman
Does my hon. Friend agree that, in these circumstances, an oral debate and a staggered system of intervention are two of the best ways ahead?
Charlie Elphicke
I absolutely agree with my hon. Friend. More than that, I urge Ministers to consider carefully a more generous compensation scheme than that recommended by the Chadwick report. I also urge them to consider making staged payments over some years, given the current pressure on the public finances as the nation today stands pretty much bankrupt. I hope that Ministers will give those points careful consideration when they bring forward the detail of the compensation package.
Bob Blackman (Harrow East) (Con)
I should also like to place on record my congratulations to my hon. Friend the Member for Congleton (Fiona Bruce). I have to confess that, as I listened to her speech, I looked at my road map, having driven through her constituency on many occasions, trying to avoid the traffic on the M6.
We should also congratulate Opposition Members who stood up to the previous Government and said that they were wrong to prevent the policyholders of Equitable Life from receiving just compensation. I also congratulate the right hon. Member for East Ham (Stephen Timms), who was left in isolation today, without the other members of his Front-Bench team who, under the Labour Government, made the decision to defend the indefensible—namely, 10 years of inaction and putting roadblocks in the way of the policyholders to prevent them from receiving their just compensation.
There are four players in this mix. First, there are the Equitable Life policyholders. They invested for their future and set aside money for their old age. They took a small risk, thinking that they would receive their just rewards in the long term. In normal circumstances, I would maintain that the public purse cannot bail out private investors, but this is a unique position, because those Equitable Life policyholders believed that the Government and the regulator were acting properly. It took court action and the ombudsman’s report to drag out the fact that the reverse was the case. It is right that the policyholders should be compensated in the way that has been proposed.
Members of Parliament are also players, seeking to act as advocates for the policyholders who have been so badly treated. We all want to see just and proper compensation for those policyholders. Treasury Ministers are players, too, and they will have to deal with the politics, and with the financial chaos that the coalition Government have inherited. Finally, we have the Treasury, which will try to minimise the amount of money paid out, in order to safeguard the public purse.
I congratulate the Financial Secretary on taking prompt and appropriate action. He could, presumably, have stopped the Chadwick report in its tracks. However, that would have set us back at least a year, while we sought another approach. Instead, he allowed it to come to fruition. It is quite clear that members of EMAG and MPs of all parties, but particularly Government Members, are unhappy with the Chadwick approach and believe that his report is fundamentally flawed. The resulting issue is whether we are to adopt the approach of Chadwick or of the ombudsman—or some hybrid approach to deal with the disgrace that has happened.
We also have to deal with the fact that policyholders had a range of policies, which means that a range of people are involved. Many complex negotiations and calculations have to be undertaken. Sadly, some policyholders are deceased. For them, whatever we do, it is too late. We should and must compensate their spouses, however, while ensuring that the survivors receive proper and due compensation. That is only right and just.
Angie Bray (Ealing Central and Acton) (Con)
Does my hon. Friend agree that at a time when we want to encourage people to become savers again, it is vital to be seen to support these people and do what we can to help them through what turned out to be an absolute disaster? We must send out the right message—that we are here to support savers and that we want to do the right thing by them. Is that not the best way to help get people back to feeling secure in making savings?
Bob Blackman
I could not agree more with my hon. Friend.
There is a second set of policyholders within Equitable Life, whom I believe are critical—the people who have reached retirement age and are dependent on this income. Telling them that they will not receive any compensation until next summer is a disgrace. We have to do something more quickly to honour those people in their latter years so that they are properly compensated now, not when they are at death’s door. I ask the Treasury team to look urgently at that matter.
Other sets of policyholders will have many years to go before they retire. They can be compensated in many years’ time—with top-ups to their pension pots, for example, or in different ways. On these crucial issues, I hope that the Front-Bench team will confirm in the winding-up speeches what is going be done.
First, I believe we need an appeal process—not relating to the amount of money people receive, but to the structure of the scheme and where people will fit into it so that the payments can be made. That will be a complex area. I doubt very much whether everyone will be completely satisfied with the amount of money they eventually receive, so we really need an appeal process. I would welcome further confirmation from the Front-Bench team that they are considering how to deal with that.
Secondly, there is the issue of the total amount of money to be given to Equitable Life policyholders. It is quite clear from the estimates and all the reports that we are talking about something in the order of between £4.5 billion and £5 billion. I would like to see some recognition, for the benefit of EMAG members, that that is the total sum of money they are due. I think they all live in the real world; they know the financial mess the country is in, as bequeathed by the Labour Government. They will listen when it is explained that the number—whatever it is—needs to be adjusted down as part of the comprehensive spending review.
I have a real fear, however, that if we hear that number as part of the comprehensive spending review, people will start comparing the amount of money justly given in compensation to Equitable Life policyholders with, say, the amount that is being given to education, for schools, to hospitals, universities or old people’s homes. Then we will face the problem of priority. I think everyone recognises that difficult choices lie ahead, but if we can get it recognised that the right sum is something in the order of £4.5 billion to £5 billion, it will be possible for policyholders to recognise that that will not be the full compensation that they will receive—but the right sort of signals will have been sent.
We also need to be clear on the acceptability of the Chadwick report and its methodology. We have heard tonight—every Member is of the same view—that the problem with the Chadwick report is that its methodology is flawed and that the total cap on the money is unacceptable. Let us hear that the Front-Bench team are going to sweep it away and that the figures involved will be taken into account, but will not be the be-all and end-all of the process. Then EMAG could feel that tonight was a good night for its members and we could feel confident in the future.
Mr Deputy Speaker (Mr Nigel Evans)
Order. The winding-up speeches will begin at 9.30. I ask the two remaining speakers to divide the remaining time between them.
Julian Sturdy (York Outer) (Con)
Thank you for calling me, Mr Deputy Speaker. I will try to be brief.
The sorry tale of the Equitable Life debacle has been raised on the Floor of the House on countless occasions over the past decade, and impressive words have been spoken, but it is real action that policyholders seek. In my view, the last Administration’s failure to deal with Equitable Life was one of their most inexcusable errors.
Quite simply, Labour’s abject decision plainly to ignore its duties to Equitable Life policyholders should not be forgotten. It is utterly shameful that the Labour Government literally waited for people to die rather than implementing the ombudsman’s findings back in 2008, when they were, in essence, found guilty of maladministration. It is because of that rather bleak reality that those on this side of the House can be proud that the coalition Government have moved so quickly to introduce a Bill that finally provides the authority for a payments scheme. There is a stark contrast between the last Government and the new Government in that respect.
We must start making progress now, but policyholders could be forgiven for continuing to doubt whether payments will come to fruition any time soon, and it is on that specific point that I want to concentrate during the last couple of minutes of my time. On 17 July 2008, the parliamentary ombudsman, Ann Abraham, published a damning report which clearly advised Ministers to set up a compensation scheme for policyholders. Among the ombudsman’s proposals was a recommendation for an independent payment scheme. I welcome the fact that a commission is now up and running, but I am concerned about the time scales set out by the Financial Secretary when he made his statement on Equitable Life in July. I fear that by allowing the commission to report back in January 2011, the Government have unintentionally created too much of an additional delay, particularly given the age of some policyholders. Furthermore, it is in everyone’s interests for actual payments to be made with all due haste. Again, the current mid-2011 target is simply too far away for many affected investors.
I strongly urge the Government to do all that they can to bring forward the deadlines, and to ensure that policyholders do not have to wait a day longer than is absolutely necessary.
Andrea Leadsom (South Northamptonshire) (Con)
I am very conscious that I have only two minutes in which to speak. Let me begin by adding to the voices of many who have expressed their sorrow that this has happened. For so many years since the early 1990s there has been an injustice needing to be rectified. I pay tribute to the Government for their determination to do just that, in short order, and in particular for their commitment to a transparent, independent and clearly timetabled process.
Those developments are extremely positive, and I am very proud of them. Nevertheless, like many other Members, I have many constituents who are in dire straits as a result of the loss of their Equitable Life annuities, and I believe that we must take every possible step to put that right. I am well aware that we have been left in an impossible position by the last Government, with an economy that is on its knees and no money to spend in a discretionary way, and that the need to take into account the impact on the public purse is therefore very great. I have no doubt that some tough decisions will have to be made in the comprehensive spending review.
So much has already been said about justice and the need to put things right for Equitable Life policyholders that I do not need to add to it, but as a banker myself, I want to stress the importance of encouraging people to save. The last Government managed to destroy what was one of the best pension schemes in Europe, which was very strong and is now very weak. Not enough people in this country are saving for their pensions. We need to encourage people to have the confidence to save for their retirement, and that has never been more important than it is now.
I urge Ministers to take account of the fact that the country will be watching the results of this debate about compensation for Equitable Life policyholders, and will be expecting justice to be seen to be done.
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
This has been a most interesting debate with very important contributions from many hon. Members. The hon. Member for Congleton (Fiona Bruce) made an excellent maiden speech. She gave a poetic description of the beauty of her constituency and, just for a second, all of us who heard her were transported back up to the north. She made the people of her constituency sound almost as good as the people of Harrow West. It was a pleasure to listen to her speech.
My right hon. Friend the Member for Holborn and St Pancras (Frank Dobson) and my hon. Friends the Members for Leeds North East (Mr Hamilton), for Ochil and South Perthshire (Gordon Banks), for Kilmarnock and Loudoun (Cathy Jamieson), for Bolton South East (Yasmin Qureshi), for Llanelli (Nia Griffith), for Derby North (Chris Williamson), for Edinburgh East (Sheila Gilmore) and for Foyle (Mark Durkan) all made strong speeches on behalf of their constituents. It would be remiss of me not to take this opportunity to praise in particular the contribution of my hon. Friend the Member for Leeds North East in jointly chairing the all-party group on Equitable Life policyholders. My right hon. Friend the Member for Holborn and St Pancras made the telling point that his general election opponents—like, I suspect, the opponents of all Opposition Members—did not mention any caveats when they signed the Equitable Life pledge in the run-up to 6 May.
To be fair, we also heard passionate speeches on behalf of their constituents from the hon. Members for Argyll and Bute (Mr Reid), for Angus (Mr Weir), for Chatham and Aylesford (Tracey Crouch), for Eastbourne (Stephen Lloyd), for Gillingham and Rainham (Rehman Chishti), for South Down (Ms Ritchie), for Witham (Priti Patel), for Worcester (Mr Walker), for Strangford (Jim Shannon), for High Peak (Andrew Bingham), for Redditch (Karen Lumley), for Macclesfield (David Rutley), for Richmond Park (Zac Goldsmith), for South Basildon and East Thurrock (Stephen Metcalfe), for Portsmouth North (Penny Mordaunt), for Central Devon (Mel Stride), for Brigg and Goole (Andrew Percy), for Mid Norfolk (George Freeman), for Warrington South (David Mowat), for Waveney (Peter Aldous), for Wells (Tessa Munt), for Newton Abbot (Anne Marie Morris), for Wycombe (Steve Baker), for Weaver Vale (Graham Evans), for Carmarthen West and South Pembrokeshire (Simon Hart), for Halesowen and Rowley Regis (James Morris), for Nuneaton (Mr Jones), for Sittingbourne and Sheppey (Gordon Henderson), for Oxford West and Abingdon (Nicola Blackwood), for Dover (Charlie Elphicke), for Harrow East (Bob Blackman), who is my constituency neighbour, for York Outer (Julian Sturdy) and for South Northamptonshire (Andrea Leadsom).
It was striking how much concern was expressed by those on both sides of the House about the lack of clarity in the Government’s position, with every Member noting the very big gap between the Chadwick approach and the ombudsman’s approach—albeit, I accept, that some did so very directly, while others did so with some sound and fury directed at those on the Opposition Benches. Members also noted the very different impression that Equitable Life policyholders are getting about the stance of Government Front-Bench Members now and that which they adopted before the general election.
As my right hon. Friend the Member for East Ham (Stephen Timms) said, we welcome the Bill and we will not oppose it, but we will seek to amend it in Committee, and we will want to probe the Government’s plans further. The Bill provides no detail on the criteria under which payments will be made, so we are no further forward in knowing what Equitable Life policyholders will get. No provision has been made for the independence of the compensation scheme to be established on a statutory basis. The Bill does nothing to ensure an independent appeal process for those who feel they have been unfairly treated—a point made by my hon. Friends the Members for Llanelli and for Ynys Môn (Albert Owen) and the hon. Member for Harrow East. There is also still no clear timetable governing when payments are to be made. The Bill makes no mention of the work of the independent commission. We will want to explore further in Committee how the commission is working.
I recognise that there are two serious tensions between the Treasury and the Department for Work and Pensions, but I was surprised to learn that the Financial Secretary has not resolved whether means-tested benefits will be affected by any compensation that Equitable Life policyholders on such support receive. Equitable Life policyholders on such means-tested support will now be worried that they will be hit by coming benefit cuts and then hit again because of any compensation they might get. I hope that when the Economic Secretary replies she is able to offer some further clarity, and we will certainly want to explore this matter in Committee.
What was most striking about the Financial Secretary’s opening speech was the absence of any effort to resolve the lack of clarity about whether he favours Sir John Chadwick’s approach or the ombudsman’s approach. The manifestos of the Conservatives and their Liberal Democrat partners, and also the coalition agreement document, appeared to be clear. The Conservative party said:
“We will implement the Ombudsman’s recommendation”
So the ombudsman’s recommendation was clearly mentioned there, and it was referenced yet again in the coalition agreement document, which committed both parties to “implement” the parliamentary “Ombudsman’s recommendation”. Even though the parliamentary ombudsman has been crystal clear in her profound disagreement with what Sir John Chadwick has recommended, the Minister notably did not clear up whether he agreed with her assessment of the Chadwick proposals as
“an unsafe and unsound basis on which to proceed.”
We now have a clear assessment of the estimated scale of relative loss, yet clear hints have also been given that the total payout will be very much less than those estimates. EMAG, which was rightly praised by those on both sides of the House, for the skill and persistence with which it has campaigned on this issue, invited candidates to sign its pledge and
“support and vote for proper compensation”.
Crucially, it said that that was to be as
“recommended by the Parliamentary Ombudsman.”
As my right hon. Friend the Member for East Ham said, every Treasury Minister signed that pledge and every one of them would have known then that they were committing themselves to a far higher figure than the sums now being suggested as a result of Sir John Chadwick’s conclusions.
In case there were any doubts, EMAG went out of its way, in the run-up to the election, to sweep away the possibility of confusion by making it very clear that it did not accept Sir John Chadwick’s work and wanted candidates to champion the ombudsman’s approach, which offered very different financial costs and scheme details from those that Sir John’s work would produce. Like the Grand Old Duke of York, the parties opposite have marched the Equitable Life victims up the hill only, once the election was over, to march them promptly back down again. Their hopes and expectations so cunningly built up before the election have been crushed in an exercise that, by any definition, looks breathtakingly cynical.
Charlie Elphicke
Speaking of breathtaking cynicism, it ill behoves the shadow Minister to offer thruppence and criticise others who offer sixpence or more.
Mr Thomas
I recognise the hon. Gentleman’s difficulty. He signed the pledge—he confirmed that in his speech—but because of the actions of his Front-Bench team he is going to be embarrassed in front of his constituents. I suggest that he, along with some of his colleagues, needs to put urgent pressure on his Front-Bench team.
As my hon. Friend the Member for Central Ayrshire (Mr Donohoe) pointed out in his intervention, what has also been telling in this debate has been the Conservatives’ unwillingness to take any real responsibility for the failure of regulation surrounding Equitable Life. The Penrose report made it clear that a significant part of the regulatory failure occurred before 1997. Indeed, proposals were put to Conservative Ministers before 1997 that would have updated life insurance regulation, both domestically and within Europe, yet those Ministers either did not think that they were a high priority or argued against reform. A light-touch, low-intervention culture existed in which regulators were poorly resourced or simply not up to the job, so it is hardly surprising that the ombudsman herself, in charting regulatory failure, should set out in July 2008 10 findings of fact relating to regulatory failure, five of which related to events prior to the start of the Labour Government in 1997.
As my right hon. Friend the Member for East Ham has noted, the Government of whom we were members issued a clear apology to Equitable Life policyholders, and I associate myself with those remarks. However, there has yet to be any apology for the mess that passed for financial services regulation under the Conservative party’s last watch.
Andrew Percy
While we are in the spirit of apology, will the hon. Gentleman, from that Dispatch Box, apologise to my constituents for not providing them with a single penny of compensation before his Government got voted out in May?
Mr Thomas
I think that the hon. Gentleman should have been listening to my earlier remarks, but I recognise the difficulty that he has, along with that of many of his constituents. He marched his constituents up the hill, promising them great sums of money in compensation, and it is now becoming clear that his Front Benchers will not deliver on that commitment. The hon. Gentleman should start to put a bit of pressure on his colleagues. Perhaps he will join us in supporting the amendments we will seek to table to improve the Bill further.
Mr Thomas
I say gently to the hon. Gentleman that rather than looking back, we need to look forward. The hon. Gentleman, who serves as Chair of the Select Committee on the Treasury, will, I hope, work with his hon. Friend the Chair of the Select Committee on Public Administration to hold those on his Front Bench to account.
Even though Lord Penrose concluded that regulatory system failures were secondary to the society’s own behaviour as a cause of its problems, the last Government, rightly in my view, recognised that many policyholders had been disproportionately affected. The ombudsman suggested a scheme with a case-by-case review that considered 30 million investment decisions by 1.5 million people, but that would have taken an estimated 4,000 staff years to resolve. That is the scheme to which the Conservative party committed in its manifesto. Case-by-case comparison for policyholders was not something that we thought was practicable.
Sir John Chadwick has proposed a simpler arrangement. If Government Members are now accepting the fundamentals of Sir John’s approach, they should at least be honest with the ombudsman and, crucially, with the hundreds of members of the Equitable Members Action Group and with this House. Is it not the truth that the parties on the Government Benches knowingly allowed members of EMAG to believe that they were opposed to Sir John Chadwick’s work and that they wanted a far greater sum to be available for compensation? In reality, yet another manifesto commitment is being ignored and yet another group of electors is having to come to terms with the fact that, despite what they were led to believe that Government Members wanted, their Front Benchers now have no commitment to the original pledge and no intention of following it through.
The Economic Secretary to the Treasury (Justine Greening)
In closing this important debate, I want to thank all Members who have participated. This has been a passionate debate, and I pay tribute in particular to the maiden speech of my hon. Friend the Member for Congleton (Fiona Bruce). I thought she did a fantastic job. She was right that she has some special shoes to fill, but we got a flavour from her tonight that showed that she will fill those shoes very ably. I congratulate her on that maiden speech.
There have been 43 speakers in today’s debate, the overwhelming majority of whom sit on the Government Benches. Most Opposition Members realise that their Government thoroughly let down the members of Equitable Life, and we agree with that. We think that this saga has gone on for way too long. It has affected all our constituents, including my own.
We managed to get out of those on the Opposition Front Bench that—I think—they support the findings of the Chadwick report. If they disagree with that, perhaps they would like to intervene. It is quite important to make the point about how much they would have been willing to pay out as compensation to Equitable Life policyholders. We can take it from their silence that the Chadwick report was commissioned by the previous Government and is now accepted by Labour’s Front Benchers in opposition. It shows that, in spite of the warm words, within two weeks of getting the Chadwick report they would have been quite happy to set up payments much lower than many members of EMAG were hoping for. It is fair to put that into context: that followed 13 years of zero payments from the previous Government.
We have decided to take a different approach, which has been guided by three core principles: fairness, swiftness and transparency. In fact, my hon. Friends the Members for Sittingbourne and Sheppey (Gordon Henderson), for Worcester (Mr Walker), for Wycombe (Steve Baker) and for Macclesfield (David Rutley), as well as the hon. Member for Llanelli (Nia Griffith), all mentioned those principles, which we share. Indeed, my hon. Friend the Member for Oxford West and Abingdon (Nicola Blackwood) made a speech about the need for transparency, and we agree with that. That is why we have tried to make the process as transparent as possible—to make sure that all the interested parties know what is driving the process and so that they have the opportunity to contribute towards our thinking.
Since coming to office, the coalition Government have clearly shown that reaching a resolution for Equitable Life policyholders is a real priority. I assure hon. Members on both sides of the House who seem to be under the impression that there is some delay—those of us who have been in the House for a longer time have been working alongside our Equitable Life constituents who have suffered losses for many years now—that this delay is to make sure that there is no more delay. We are going through this process to ensure that the payments we are able to make are fair and transparent and so that there is some genuine compensation for the people who have suffered.
In our programme for government, we pledged to
“implement the Parliamentary and Health Ombudsman’s recommendation to make fair and transparent payments to Equitable Life policy holders”,
and we have already taken the first steps towards honouring that pledge. We have established the Independent Commission on Equitable Life Payments, which is assessing the best way of allocating payments to policyholders. For those Members who asked how payments will be allocated, let me be clear: the independent commission will report in January on its assessment of the best and fairest way of allocating payments, including, as the hon. Member for Strangford (Jim Shannon) mentioned, to the relatives of people who are now deceased. It is one of the greatest tragedies of this whole saga that some people simply did not live to get their compensation payments, but this Government will make sure that their families nevertheless get redress.
In spite of what we have just heard from the Opposition spokesman, we are introducing a fundamental part of the process by which we can make compensation payments. The Equitable Life (Payments) Bill—that title would have been something of an oxymoron under the previous Government—was announced as part of the Queen’s Speech and we can all welcome it as a key step along the path towards making the payments that have not been made for the past decade under the previous Government.
Several Members, including the hon. Member for Angus (Mr Weir), have talked about having a clear timetable, so let me be absolutely clear: we want to start making the first payments to policyholders by the middle of next year. Today is all about having the chance to take a further step towards reaching a resolution. Our passing the Bill will enable policyholders to receive payments irrespective of decisions about exactly how the future scheme will look or the value of payments made.
I remind hon. Members across the House that the setting up of an independent commission was a key point in the ombudsman’s report. I think we all recognise that that independence is critical and we need to allow the independent commission to get on with its work, to consider the various representations, including the Chadwick report, and to decide how best we can ensure that payments are fair. There are many different views about these difficult issues and, although those key issues are not the subject of the Bill, they are important when deciding how we should progress.
Members across the House have raised a number of important issues which I will try briefly to address in the time that is left. First, let me reiterate the timetable and the next steps. As I have said, the independent commission has started its work. My hon. Friend the Financial Secretary, who should be congratulated on the pace at which he has brought forward the various steps we are taking, will provide a response to Sir John Chadwick’s report at the time of the spending review on 20 October. At that stage, it will also become clear how much it will be affordable to put into the scheme. The commission will then look at how it will all work and it has been asked to report at the end of January. Following that, we will set about putting its recommendations into action. As I have said, our ambition is to have made the first payments by the middle of 2011.
Frank Dobson
I gave the Minister’s colleague the opportunity to answer this question: will the Government proceed with the scheme put forward by the commission if EMAG says it should be rejected?
Justine Greening
I know that my hon. Friend the Financial Secretary has met representatives of EMAG over the past few days. EMAG will have the chance over the coming weeks to make representations to the commission about what it considers the fairest way to allocate payments. The independent commission must be independent of everybody and must be allowed to get on with its job. That is what we propose to let it do. We should not prejudge it. We should allow it to proceed with the work that has been set out. As I said, the approach recommended by the ombudsman in her report was that the setting up of the scheme should be looked at independently. We have decided to follow her recommendation. It is important that that should now happen.
Members asked about an appeals process. That is a fair question. We are still considering the details of how such a process might work. I am sure that the independent commission will also consider how that could become part of the process. The key requirement is that any appeals process is independent of the initial assessment of an individual’s claim.
One of the other issues that has come up is why we have not put more detail about the scheme in the Bill. Although that it a fair question, it prejudges what the independent commission might propose. As I have said a number of times, we need to allow it to get on with its work so that it can propose the design of the scheme. It is wrong to prejudge that by baking into legislation steps that the commission may consider unnecessary.
Mr Weir
When the Minister was introducing the Bill, I asked him whether the details of the scheme would be debated on the Floor of the House. Those details are important. We all understand that this is an enabling Bill, but we must have the opportunity to examine the scheme in more detail.
Justine Greening
We will make sure that when the document from the independent commission is published and the final proposal emerges for how the scheme should work, Parliament will get the chance to hold the Government to account for it. We will consider the best way for that to happen. There is no doubt that today was a good opportunity for Members across the House to air their views on the key aspects of any scheme. I encourage them to continue doing that. One of the questions that we heard from those on the Government Benches was how Members could continue to be part of the process of reaching a resolution. I urge Members to continue to have their say and to represent their constituents in the way that many did so passionately today.
On the issue of delayed payments, aiming to make an interim payment and a more substantial payment at a later date would prolong the process unnecessarily. What we need to do now is reach a solution for the Equitable Life policyholders who have suffered, so that they know where they stand and get full redress according to what we are able to pay them. Spreading payments over many years would greatly increase complexity, not to mention administration costs. It might also leave most policyholders in limbo about how much they would receive in financial settlement.
Many Members are concerned about the delays that have already occurred. We want to minimise the time before which people know what their final settlement will be, not least because, as we have heard from across the House, many Equitable Life policyholders are dying while they wait for that to happen.
It was fair to make the point about tax and welfare, and we have included the relevant clause in the Bill precisely because we want to look at how we might handle the tax situation in relation to any future compensation payments to Equitable Life policyholders. We have included it precisely to give ourselves some flexibility. I have no doubt that Opposition Front Benchers will want to return to the matter and debate it in Committee, and we will be very happy to hear what further remarks they have to make. However, in order really to provide some reassurance, I must say that we have structured the Bill as we have because we do not want any legislative impediments to making the settlement that we want to make. With this Bill, we have tried to ensure that we have the powers that we may need, so that we do not suddenly reach the point at which an issue arises and find out that we have to return to the Chamber to secure further powers that further waste time. We have decided to get on with the matter.
A number of Members, including the hon. Member for Leeds North East (Mr Hamilton), who I cannot see in his seat, and my hon. Friend the Member for Halesowen and Rowley Regis (James Morris), talked about a moral obligation to make payments, and we agree that now is the time to take action. We very much hope that over the coming weeks we will secure cross-party support, and I am pleased that the Opposition will not divide the House tonight. That would have been a real mistake and a continuing tragedy for Equitable Life policyholders.
Inside Parliament and outside, the Government are committed to continuing their programme of extensive engagement on the issues that have been raised in today’s debate, and on the issues that we know we will have to address if we are to reach a fair resolution.
As I wrap up this debate, I should like to highlight the work of the various action groups that have campaigned vigorously on behalf of policyholders, in particular the members of the Equitable Members Action Group and the Equitable Life Trapped Annuitants who have played their role in ensuring that some of the worst affected policyholders have had their voices heard. The Government have held meetings with representatives of both parties and are now carefully considering their views as part of the wider resolution process. We know that we need to get the matter right, and I want to stress that at this point no final decisions have been made about the size of the future scheme. We want to continue to gather the views of a wide range of parties before any plans are set in stone.
I know that Members from all parts of the House have a great deal of respect for the parliamentary ombudsman; we heard that in today’s debate. My hon. Friend the Financial Secretary met her this week to discuss the issues, and her input has been vital. We recognise her concerns and share her desire to achieve a resolution that is fair for policyholders and for the taxpayer. The resolution must not only achieve justice for policyholders but, as the ombudsman herself pointed out,
“consider the potential impact on the public purse of any payment of compensation…and…the opportunity costs elsewhere through the diversion of resources.”
There are many important conversations to be had about how the scheme will operate, and about the size of the payments that will be made to policyholders, but there is no doubt that policyholders have waited too long for a conclusion to the saga, so I for one do not want to see the process unnecessarily extended, and nor do the coalition Government. We take the maladministration of Equitable Life very seriously; we have highlighted in our programme for government that resolving the issue is a real priority; and we have taken a number of steps towards achieving a resolution. By passing the Bill, the House can now show how important it regards the issue, and that its Members recognise the need to act swiftly on the matter.
I fully sympathise with the plight of policyholders, who have waited for more than a decade for justice, but justice will be achieved only by passing this important piece of legislation, so I commend the Bill to the House.
Question put and agreed to.
Bill accordingly read a Second time.
Equitable Life (payments) Bill (Programme)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Equitable Life (Payments) Bill:
Committal
1. The Bill shall be committed to a Committee of the whole House.
Proceedings in Committee, on consideration and on Third Reading
2. Proceedings in Committee, any proceedings on consideration and proceedings on Third Reading shall be completed at one day’s sitting.
3. Proceedings in Committee and any proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
4. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion one hour after the commencement of those proceedings or at the moment of interruption on that day, whichever is earlier.
5. Standing Order No. 83B (Programming committees) shall not apply to proceedings on the Bill in Committee and on consideration and Third Reading.—(Miss Chloe Smith.)
Question agreed to.
Equitable Life (Payments) Bill (Money)
Queen’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Equitable Life (Payments) Bill, it is expedient to authorise the payment out of money provided by Parliament of any expenditure incurred by the Treasury or a government department by virtue of the Act.—(Miss Chloe Smith.)
Question agreed to.
House of Commons Commission
(13 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Leader of the House of Commons (Sir George Young)
I beg to move,
That Nick Harvey be discharged and Sir Paul Beresford and John Thurso be appointed as members of the House of Commons Commission under the House of Commons (Administration) Act 1978.
This is a routine motion to change the membership of the House of Commons Commission, which is a statutory body established by the House of Commons (Administration) Act 1978. It is, in effect, the governing body of the House of Commons. Its responsibilities are set out in its annual report, which I encourage all right hon. and hon. Members to read, as it is an invaluable source of information about the strategic management of the House.
As you know, Mr Speaker, the membership of the Commission includes two ex officio members—you and me—and one member nominated by the Leader of the Opposition who is, by convention, the shadow Leader of the House, whom I welcome to the debate this evening. The Commission also consists of three Back Benchers appointed by the House. They are currently the hon. Member for Middlesbrough (Sir Stuart Bell) and my hon. Friend the Member for North Devon (Nick Harvey). David Maclean, who served on the Commission from 2005 until the election, ceased to be a member automatically when he retired from the House at the election.
Taking up a ministerial position does not automatically lead a member of the Commission to vacate their office, so the motion discharges my hon. Friend the Member for North Devon, who is now Minister of State for the Armed Forces. I am sure that the whole House will join me in thanking the outgoing members of the Commission for their work on its behalf.
Both David Maclean and my hon. Friend served through the challenging recent events surrounding our expenses, but they also played their part in many more positive developments. The implementation of the Tebbit review, which involved a fundamental restructuring of the House of Commons service, has been one of the Commission’s biggest achievements in recent years. But the Commission has also made significant achievements in other areas, such as promoting greater awareness of the House’s environmental impact, establishing the House’s equality scheme, developing a 25-year estate strategy, introducing new broadcasting arrangements and, this month, opening the new nursery.
If the motion is agreed, the outgoing members will be succeeded by my hon. Friend the Member for Mole Valley (Sir Paul Beresford) and my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso), who chairs the Finance and Services Committee. Both have served their parties in government or opposition and both have wide-ranging experience of serving on Select Committees of the House, both as a member and as Chair.
I am sure that the House will have the greatest confidence in the wisdom and experience that both Members will bring to the deliberations of the House of Commons Commission and the Members Estimate Committee, given that membership of one flows from the other. I look forward to working with both of them and I commend the motion to the House.
Ms Rosie Winterton (Doncaster Central) (Lab)
I, too, pay tribute to the work of the hon. Member for North Devon (Nick Harvey) and the former right hon. Member for Penrith and The Border on the House of Commons Commission. Both served for five years on the Commission under two Speakers. The hon. Member for North Devon was not only a highly respected member of the Commission but was its spokesperson on the Floor of the House, a role that he fulfilled with great aplomb. We congratulate him on his appointment as Minister for the Armed Forces.
The former right hon. Member for Penrith and The Border was also an assiduous member of the Commission, bringing to bear his experience as a former Chief Whip. He retired from the House at the election but leaves behind his fine House of Commons reputation. He will be missed on the Commission.
I should like to thank the longest-serving member of the Commission, my hon. Friend the Member for Middlesbrough (Sir Stuart Bell), for his ongoing commitment and dedication. The Leader of the House clearly set out the achievements of the House of Commons Commission in recent years and I welcome the appointment of the hon. Members for Mole Valley (Sir Paul Beresford) and for Caithness, Sutherland and Easter Ross (John Thurso), who are to serve on the Commission. I am sure that the whole House will join me in wishing them well in the important role of ensuring the smooth running of the House.
Peter Bottomley (Worthing West) (Con)
I join the right hon. Member for Doncaster Central (Ms Winterton) in paying tribute to—I have no idea whether he is right honourable, but if he is not he certainly should be—the Member for Middlesbrough (Sir Stuart Bell), and in thanking David Maclean for the service he has given. I say to my right hon. Friend the Leader of the House, and to you, Mr Speaker: thank you for the role you fulfil.
I do not know whether the Commission has much to do with the Independent Parliamentary Standards Authority, but IPSA deserves to have as much support as possible in getting right its role. I shall not talk now about its responsibilities, but I would say that IPSA was set up because the House and the Commission—
Mr Speaker
Order. The subject of IPSA has precisely nothing—repeat, nothing—to do with the terms of the motion. I therefore know that the hon. Gentleman will not seek to dilate on the matter but will confine himself to the specifics of the motion.
Peter Bottomley
I thought, Mr Speaker, that I had left IPSA behind in the wake of my introductory remarks, and I intend not to refer to it again.
The point I was going to make is that the holder of your office, Mr Speaker, and the holders of other offices, failed to support Elizabeth Filkin when she was Parliamentary Commissioner for Standards.
Mr Speaker
Order. I am afraid that, although the hon. Gentleman has tried, the second go was no better than the first. The matter has absolutely nothing to do with the terms of the motion, on which I hope the hon. Gentleman will focus the remainder of his remarks.
Peter Bottomley
If the House of Commons Commission has no role in relation to the Parliamentary Commissioner for Standards, I am misguided.
Mr Speaker
Order. Let me help the hon. Gentleman. I made no such observation or suggestion whatsoever. The issue is not the sphere of competence of the Commission but the substance of the motion that Members are supposed to be debating.
Peter Bottomley
In welcoming the proposed appointment of my hon. Friend the Member for Mole Valley (Sir Paul Beresford) and the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso), I express the wish that my confidence is not misplaced, as it sadly might have been in the past. If we expect the Commission to be able to defy, on occasion, the wishes of this House and support the work of those who work with the Commission and alongside it, we will be able to praise them not just in advance of their appointment but after their service as well.
I make this point without anticipating contradiction: had we done better in the past, those who take on the responsibility of being part of the Commission would have had, and will have, an easier job than they have had. In the days when I was defending the holder of a different office, most of the House asked why I was doing it. The reason was that the Speaker, the Leader of the House and others have responsibility for considering issues on their merits, and I expect that those appointed to the Commission will do the same.
The fact that there may have been failures in the past was not a big surprise, because some in high authority did not give the backing they should have done. I hope that if any member of the Commission finds that they are in a similar position in future, they will say, openly, “It may be a minority interest, but those who serve in this House have got to be prepared to be unpopular, to defy convention at times, and to remind those who serve this House that virtually every page in “Erskine May” is there because something has happened for the first time.” If anyone rolls out the historic negative, saying, “You can’t do this in a new way because nobody’s done it that way before”, they should read the pages of “Erskine May”—not just the present edition but those from the past as well.
I wish honourable service to those who have joined the Commission, and I praise those who have been part of it. Let us never again find that when MPs are investigated, members of the Commission, whether in that position or in their other positions, fail to back those who ask for a higher standard of behaviour within this House. I say that, I think, without contradiction this time.
Mr Speaker
Now that the motion has been agreed and Mr Nick Harvey has been discharged, and in the light of the very welcome remarks of the Leader of the House and the shadow Leader of the House, I should like to record my heartfelt thanks to Nick Harvey for his five years’ service on the Commission and the Members Estimate Committee, and especially for acting as Commission spokesman throughout that time, as well as for his work on the 2008 review of allowances. In addition, I should like warmly to thank the former Member for Penrith and the Border, David Maclean. He was appointed to the Commission on 1 November 2005, replacing Sir Patrick Cormack, and he served until the end of the last Parliament. We appreciate the work of Mr Harvey and of David Maclean.
Business without Debate
(13 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text
Youth Employment (Wirral)
(13 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Alison McGovern (Wirral South) (Lab)
Thank you, Mr Speaker, for giving me the opportunity to raise this issue of importance to my constituency in my first Adjournment debate. I should like to say a few words about young people’s employment opportunities in Wirral. Specifically, I will highlight the success of the Wirral apprenticeship scheme, touch on some wider employment issues and finally consider the numbers involved and the problem that we face in the supply of employment opportunities.
I begin by highlighting the great success of the Wirral apprenticeship scheme. Wirral council, in partnership with Connexions and Jobcentre Plus, has done an excellent job of increasing the number of apprenticeships and, most importantly, helping young people to apply for them. It has used working neighbourhood funds to support local businesses in hiring 167 young people in everything from dairy farming to jewellery design. Nearly half those young people were not already in employment, education or training, or were at risk of drifting on to the dole, which none of us wants to see.
There were two elements to the scheme. First, the council committed funding for a member of staff for 18 months if a business would commit to employing them for two years. The second, and I believe more important, part of the scheme related to recruitment support and how the council went about finding the businesses to take part and the young people to be employed by them. I pay tribute to Viv Stafford, Mel Campbell and the team at Wirral council, who worked proactively with young people and employers so that businesses were supported all along the way and young people were able to gain confidence prior to their work interview. Their priority was young people at risk of becoming a burden on the state and businesses with little existing experience of apprenticeships or of hiring young people.
Overall, the scheme resulted in not only more apprenticeships and young people who were work-ready to take up the opportunities available, but in employers gaining the confidence to offer young people more work experience. Rather than just apprenticeships per se, employers also offered work placements. I feel that the programme ought to be replicated across the country. We have real expertise in Wirral, and we can help ensure that this generation of young people does not end up missing out on the chance of success. I ask the Minister whether he supports local government playing such a leading role, and what the Government can do to back up councils that want to take that approach. My lesson from Wirral is that a cross-partnership approach involving all the responsible agencies is needed, no matter which bit of the state they are involved in. I should like to know what he thinks about that approach.
To move on from the Wirral apprenticeship scheme, there are wider issues to consider in young people accessing employment. The future jobs fund, which ensured that young people had continuity on their CVs, is now gone, and young people without work experience face a very tough labour market. My job is not to stand here and whinge on behalf of Merseyside—I will never do that. However, historic facts about our area mean that the employment picture there can be more fragile than elsewhere. It is therefore all the more important for us that Connexions, working with schools, can assist and advise young people on getting good-quality work experience placements, as well as training and mentoring. Young people need independent advice, but teachers do not always have the time to get up to speed with how the labour market has moved on. That independent advice is important.
Businesses, too, have a responsibility. They must show commitment to the next generation. When I became an MP, I went around and talked to lots of businesses in my community on how they felt about that. Thankfully, Wirral businesses told me that they absolutely want to make such a commitment. Invest Wirral has a fantastic business support team that is committed to connecting businesses with all the Government help that is available and with help from other sources. However, that depends on our local authority having the resources to provide that support. It is under great pressure given the budget cuts that are being handed down, as is all state funding.
As a side point, we should not let the media off the hook. Sometimes, there is great pressure on young people to succeed at A-levels and go straight on to a university degree, whether or not that is right for them. I would like the media more often to celebrate successful apprentices and young people who are in business. Academic success is important, but it should not be prioritised for media coverage every year at results time at the expense of all other forms of success among our young people. The more we celebrate the diversity of our young people, the more confident they will be, and we know how important self-esteem and confidence are when it comes to people achieving their hopes.
Will the Minister give me more information on what the Department for Work and Pensions and other Departments plan to do to support young people to gain work opportunities, including, but not only, apprenticeships? Will the Government support the recruitment process? I am sure he will give me a positive answer to this question: will he commit, with all Ministers, to talking up the achievements of our young people?
We know that, in part, this is a numbers game. We had a good opportunity to discuss the national apprenticeships scheme in Westminster Hall, when the fact that there are simply not enough apprenticeships out there for the people who want them was brought to light very clearly.
Esther McVey (Wirral West) (Con)
The hon. Lady and I are on opposite sides of the House, but our constituencies are next to each other, and on this matter we stand side by side. We both talk very passionately about youth unemployment and apprenticeships, and she will no doubt know that I am taking on an apprentice. However, Labour’s legacy is dire. Labour brought about the highest number of young people aged between 18 and 24 not earning or learning—the proportion is nearly 20%. Although I agree with her rhetoric, the evidence of what Labour did in reality is somewhat lacking. Will she join me in welcoming the new Government’s allocation of £600 million for programmes to support unemployed young people and £150 million for 50,000 apprenticeships?
Alison McGovern
The hon. Lady raises a few questions, but she and I stand side by side in ensuring that there are enough opportunities for apprenticeships—I agree with her up to that point. I understand what she says, but I invite her to come with me to visit Age Concern Wirral, which uses the future jobs fund to employ young people to do very important work in caring for those with Alzheimer’s. Those young people were getting continuity on their CVs, so that once the economy picked up, they would be work-ready and ready to look for opportunities. The Government’s first act was to take that away, which is having a real impact. I agree with her in many ways, but I obviously cannot agree with her about the previous Government’s record.
Julie Hilling (Bolton West) (Lab)
I am grateful to my hon. Friend for initiating this debate, which is important to the future of our young people. Does she agree that we have just faced an enormous global recession that has put young people out of work and made life very difficult for them, and that one of the challenges that we face is finding enough employers to take on apprentices? We therefore badly need the Government to encourage employers to take on apprentices whenever possible.
Alison McGovern
I agree with my hon. Friend. It is, sadly, rare to be inspired by a local authority officer, but I was totally inspired by our team in Wirral, which has taken employers in the area on a journey. Employers with no history of working with young people or taking on apprentices have become so confident in the scheme that they are fully funding their apprentices. We need to spread that approach across the country, and I hope that the Minister will say more about how we could do that.
There are not enough work opportunities for young people whereby they can train on the job. The Government have said that they will increase the number of opportunities, but we need truly additional funding, not just a re-badging of existing training schemes. Unless there are more opportunities for young people—and business has a role to play in this as much as Government—we will see great frustration and, ultimately, more young people on the dole. That is my real concern. That would damage not only any attempt to reduce the budget deficit, but those young people for years to come. Labour markets demonstrate hysteresis—they have memory. If a place has suffered unemployment in the past it is more likely to continue to do so, and that lowers the skills and the confidence of the people. Merseyside has worked hard, and will continue to do so, to combat the worst effects of the 1980s, some of which we still feel, but not continuing the increase in apprenticeships and work opportunities for young people will set us back and we will feel the effects for many years to come. People in my constituency do not want austerity economics: they want investment in our young people.
I would be grateful if the Minister explained how the Government will increase the number of work opportunities in the UK and, specifically, how that will affect Wirral and the Merseyside travel-to-work area.
The Minister of State, Department for Work and Pensions (Chris Grayling)
I congratulate the hon. Member for Wirral South (Alison McGovern) on securing her first Adjournment debate on a subject that is a matter of concern across the House. I share her concerns about Wirral and Merseyside. In the previous Parliament I was the shadow Minister with responsibility for building knowledge, understanding and ties between my party and the people, businesses and communities of Merseyside, and I also spent time in Wirral supporting my hon. Friend the Member for Wirral West (Esther McVey).
The hon. Lady mentioned the 1980s, but it is not what happened 30 years ago that defines the present moment. What defines the present moment is the failed inheritance from the previous Government. They had 13 years of unprecedented economic growth, and they spent billions of pounds on welfare programmes, but the number of people on out-of-work benefits—in Merseyside and elsewhere—remained stubbornly high. They failed to get people off benefits and into work. That failure matters now, when we are dealing with the cyclical impact of a recession, because we have to deal not only with those who have lost their jobs as a result of the recession and those who are entering the jobs market for the first time, but a huge block of people who have been on benefits for year after year. It makes the challenge that we face—of getting as many of our citizens into work as possible—much bigger than it should have been.
The hon. Lady is right to say that Wirral, and Merseyside as a whole, have suffered from the recession. In Wirral the Swiss food company Givaudan has closed, with the loss of 150 jobs, and jobs have been lost in other parts of Merseyside, leading to real pressures on the community, as in other parts of the country. We have to create an economic environment in which businesses can grow, develop and create sustainable jobs for the future, and I am confident about Merseyside in that respect.
If people spend a lot of time in Liverpool and around Merseyside, they quickly recognise what a wealth of enterprise, ideas and knowledge there is in and around the region that can be harnessed very effectively to create the opportunities of the future. There is a really dynamic spirit coming out of the universities in Liverpool. I have seen some great young businesses in the area, and I am confident that we can create the right environment there—an environment in which we charge less for employers who take on their first few employees; in which we cut the national insurance they pay; in which businesses pay less in corporation tax; in which we seek to reduce the burden of regulation; in which there are fewer health and safety regulations that cost small businesses; and in which we try to simplify the environment for businesses to work in.
In that kind of environment people will say, “Yes, I can do it. I can start a business. I can start to create jobs.” That way we can start to deal with the big problem that the hon. Lady rightly pointed out with unemployed young people. Last year there were 5,500 unemployed 16 to 24-year-olds in the Wirral—an unemployment rate that has stayed stubbornly high—but that is not simply down to the current recession. The level of young people not in employment, education or training has remained stubbornly high throughout the past 13 years, and is higher now than it was in 1997. We really have to change that.
The hon. Lady referred to the future jobs fund. Many of the employment programmes we inherited from the previous Government were not effective. I understand the motivation for the future jobs fund, but we found it to be a scheme that cost a substantial amount of money and generated temporary jobs in and around the public sector, but did not create the kind of long-term opportunities for young people that would give them skills to last a career. Frankly, we felt that we could do better. However, she is wrong to say that we simply came in and scrapped the future jobs fund. We did not. Future jobs fund jobs are still being created today. However, we have said that we will phase out the scheme and put in place a number of measures next year, including the introduction of our single Work programme, about which I will talk more in a moment.
My hon. Friend the Member for Wirral West is right about the Government’s decision to deliver 50,000 extra apprenticeships. An apprenticeship is a much better way of giving somebody long-term skill opportunities than putting them into a temporary placement as the future jobs fund would.
Mrs Mary Glindon (North Tyneside) (Lab)
The Secretary of State is talking about apprenticeships, which are fantastic for the young people who have the confidence and ability to engage with them. However, the future jobs fund helped some young people who were nowhere near ready to be apprentices and who needed that extra lift. Without that, a whole layer of young people will be put on the scrap heap. That is the difference. What he is talking about is fantastic, but he has to consider what the future jobs fund did to help young people whose situation did not allow them to take up an apprenticeship—people who were not apprenticeship-ready.
Chris Grayling
Let us be clear: the hon. Lady is absolutely right to say that we are dealing with very real issues for young people, and one certainly finds that in and around Merseyside. I have spent a lot of time with voluntary sector groups working with young people who have some pretty difficult circumstances in their lives. The reality is that many people from those difficult backgrounds emerge from school and struggle to enter the workplace, having not developed skills in school and having fallen behind for a variety of reasons. We have to get to grips with that.
That is one reason why this Administration are pressing ahead with the pupil premium. Hon. Members will know that often young people fall behind during early years development, at the age of one, two and three, and then get to school already behind their peers, never catch up and end up leaving school without basic levels of literacy and numeracy. That is one reason why we are putting the pupil premium into some of our most challenged schools—so that we can try to help some of those young people to catch up.
The hon. Member for North Tyneside (Mrs Glindon) is right to say that we have to do more preparatory work for young people to get into the work place, and that will be one of the key aims of the single Work programme. On the one hand, we are looking to build skills, which the apprenticeships programme is certainly designed to help achieve. However, the Work programme is the most important part of what we are trying to do. It will be introduced next year and will take over from existing programmes, some of which—such as pathways to work, which was highlighted by the Public Accounts Committee this week— have not worked, and others of which, such as the future jobs fund, we judged were not delivering value for money, given the high cost and the nature of the employment provided.
I am keen to see the creation of an environment in which we have specialist organisations working with people of all ages—including young people, who have precisely the kind of challenges to which the hon. Lady referred—by helping them to move into the workplace, build up their confidence, develop an understanding of what they need to get into work, establish work placements for the first time, build up work experience and make the jump into the workplace. That is the nature of the single Work programme.
Alison McGovern
Can the Minister say specifically how that differs from the new deal for young people? It sounds like revisionism to me—as though no good was ever done before—whereas in fact the figures in Wirral show that we have half as many unemployed people now as we did in the previous recession, which is the proper comparison. It would therefore be helpful if the Minister could say how his programme will differ from the excellent new deal.
Chris Grayling
The big problem that we had with the new deals was that they were effectively programmes designed in Whitehall. The standard new deal format was 13 weeks in a classroom, with relatively little financial focus on outcomes or whether people got into work at the end. It was very much about the Government paying for placements. The placements happened, but as for the outcomes of the different new deals—yes, they got some people into work, but the number who stayed in work was disappointingly low. One of the big differences with the Work programme is that it will not simply be about getting people into work, but will be about sustaining them in employment.
In particular, where young people come from the kind of difficult background that the hon. Member for North Tyneside described, the programme will not be about just getting them through the first days of work; it will be about helping them to stay there and overcome some of the hurdles that they face in the workplace, including some of the cultural aspects of working life that they do not expect. Having mentors sitting alongside them in the workplace is an extremely important part of what we are seeking to do.
I am expecting to have specialist providers serving the Wirral and Merseyside whose job it will be to work with unemployed young people, as well as those of other ages, not only helping them to find those first opportunities to gain work experience, develop interview skills and understand how to put together a CV, but going out and working with employers, match-making young people with the opportunities that are out there. As the hon. Lady will know, there are quite a large number of vacancies out there, but often a jobseeker will not know how to go about finding those opportunities. The skills brought by professional providers working with people with the potential to get into work, so that we match them with the right opportunities, are fundamental.
We should set that against our plans for the skills system. We are currently consulting on how the further education and skills system can be developed to respond effectively to the skills gaps that we need to address. We want to give training providers greater freedom to target provision to meet local needs, alongside giving colleges and other providers greater local autonomy to say, “This is what we need in our area,” ensuring greater provision of apprenticeships and putting in place the Work programme, which will be both local and national. The programme will be a national scheme, but the responsibility for delivery in each area will be devolved to a provider in a local community who will be specifically mandated to work with organisations in the voluntary sector and organisations such as Wirral council.
Indeed, I very much want to see local authorities participating locally in the work that is done, working with the providers and sometimes doing the work themselves. What we will end up with is local partnerships collaborating to match individuals with employment opportunities and to overcome the hurdles that often exist between the two. Although we face tough and straitened times—I will be absolutely frank and say that, as an Administration, we will not be able to do all the things that we would like to do—we need to make that investment in skills development and deliver those apprenticeships.
Esther McVey
As my right hon. Friend would like to see that work, let me invite him, as a good friend of Merseyside, to come up to Wirral and see our apprenticeship scheme in action.
Chris Grayling
I would be very happy to do that at some point. I am always happy to revisit Merseyside. There are some great people there, and it is a great community. Liverpool is a magnificent city. I know that my hon. Friend the Member for Wirral West and the hon. Member for Wirral South represent important constituencies that are also nice places to live in and to represent, and I would be delighted to come and see some of the work being done there at some point.
I share the aspiration of the hon. Member for Wirral South to ensure that as many young people as possible can find work, although there will undoubtedly be times when she and her colleagues disagree with me and my colleagues about the means that we are using to try to achieve that. We certainly face tough and challenging times financially, and that will make it more difficult to do all the things that we would like to do. At the end of the day, however, we all share that aspiration. I do not want to see large numbers of people whose lives are wasting away while they are stranded at home on benefits, doing nothing.
We need to make changes to the welfare state to improve the incentives to work. We also need to give people an extra push, particularly when they have been out of the workplace for a long time or have never worked. Such people can build up problems with their confidence, and they are often uncertain about how to get into the workplace and how to go about getting a job. We have to help them to overcome that. We all want the same thing. I want to see as many people as possible of all ages, but particularly young people, in work in thriving businesses in an enterprise culture that we have created, in which businesses are growing and developing, and emerging from our universities, and in which companies are coming into the UK to invest and create jobs. If we can create that dynamic business environment, provide investment in skills and deliver really effective back-to-work support for those who are struggling to get work, we shall be able to achieve the goals that the hon. Lady rightly sets for her constituents and for those of all right hon. and hon. Members across the House.
Question put and agreed to.