Autumn Statement

Bob Blackman Excerpts

Tuesday 29th November 2011 Commons Chamber

[Mr Osborne]

From memory, I think it is going to help 100,000 people, and that is a real boost. With the other housing measures we are taking, including the support for stalled sites—the £400 million package we are providing—we hope that that is going to create several hundred thousand jobs in the construction industry over the period going forward. The 50% right-to-buy discount we are introducing revives one of the most effective social policies of the past few decades—one that the Labour leader recently had to admit had worked and that the Labour party was wrong to oppose. A crucial additional element is that we are going to use the money to build social housing, which is why I think it is a policy appropriate to the modern age.

[Bob Blackman (Harrow East) (Con)]

One of the key inflationary pressures on the cost of housing is the level of housing benefit available, which was scandalously allowed to rise out of all proportion under the previous Government. Will my right hon. Friend confirm that there will be no slackening of controls over housing benefit, so that housing costs can be controlled?

[Mr Osborne]

I can absolutely assure my hon. Friend that we are going ahead with the cap on housing benefit, which is an important part of controlling costs. It is not fair that working people pay taxes to fund the rent for people who live in houses that those working people could never afford out of their salaries. It is quite right to introduce a cap to try to control those costs. Of all the benefits provided under the previous Government, this was one that really went through the roof, so to speak. Dealing with it and controlling it is a very important policy and it is a tragedy that the Labour party opposes the measure and no doubt wants to get rid of it at the next election.

Eurozone Crisis

Bob Blackman Excerpts

Thursday 3rd November 2011 Commons Chamber

[Mr Hoban]

My hon. Friend hits the nail on the head. It is because we took that tough action and are tackling our deficit, and have a credible plan for putting our public spending back on a firm footing, that we have lower interest rates than countries with a lower deficit than ours.

[Bob Blackman (Harrow East) (Con)]

This week we have witnessed the spectacle of the Greek Prime Minister being summoned, like a naughty schoolboy, to President Sarkozy’s study for having the temerity to call a referendum in order to get the support of his people for the proposed austerity measures. Given that our deficit and debt levels are higher than Greece’s, what does my hon. Friend think would be happening if we had adopted the policies of the Opposition?

[Mr Hoban]

I think we would find that our credit rating would be under pressure, as Standard & Poor’s suggested in its report last month, and we know that when credit ratings are downgraded, the natural consequence is higher interest rates, which hits families and businesses and makes recovery harder to achieve.

Summer Adjournment

Bob Blackman Excerpts

Tuesday 19th July 2011 Commons Chamber

[Bob Blackman (Harrow East) (Con)]

I want to draw the House’s attention to increasing concern in my constituency about gang-related crime.

Let me begin by saying that the London borough of Harrow is the second safest borough in London in terms of crime. The police do a brilliant job in apprehending criminals and ensuring that they are processed through the courts and punished accordingly, and they have my huge support. The Mayor of London has increased the number of police officers available to the borough, as well as the number of police community support officers. However, there is a great fear of crime in the area, which has been exacerbated by recent events. It stems from what happened two or three years ago, when Wealdstone was essentially a no-go area after dark because of the gangs in the area. The situation culminated in the stabbing of a young man at a petrol station. I am delighted to say that the police apprehended those responsible and broke the gang, and that those responsible are now in prison, but, of course, gang membership starts at different ages.

The police cracked down in Wealdstone, and that was a tremendous success, but the gangs then moved north into Harrow Weald. A gang has terrorised the local neighbourhood there. There are recorded crimes. On Friday 24 June, nine of the gang’s members were arrested after a young man was stabbed in the street at night. Happily, the young man was not severely injured, but he was badly injured. On Sunday 3 July, there was another incident in which a young man was stabbed. The criminal involved has, we believe, been apprehended, and will be processed.

This is the tip of the iceberg, however. The gang is causing mayhem in the area. Young people on their way to and from school are frequently mugged—relieved of their money and their mobile phones—and are in fear of going about their normal business in daylight hours. We must combat that.

I ask the Minister for one simple action that we promised before the general election, and which I hope will happen. Those who are apprehended carrying knives should face a custodial sentence, regardless of their age. Even if they are under 18, we need to challenge young people and say, “Do not carry knives, because if you do so and you’re apprehended, you’ll face a custodial sentence.”

We must go further, too. We must encourage parents to make sure that young people do not join gangs in the first place, and we must offer alternatives for young people. Just yards away from where this gang is operating, there is a tremendous initiative in Harrow: a joint arrangement between Watford football club, the lottery and Harrow council to open a state-of-the-art youth centre, which will offer an excellent set of facilities for young people. My fear is that parents across Harrow may be discouraged from allowing their children to go to the youth centre because of the activities of this gang. We must take strong action to remove the gang from the streets, so that young people are given positive outcomes for their future development and positive things to do. Over the summer, I hope to see this youth centre, which I shall visit this week, start to come into operation so that we can see a more positive future.

Regulatory and Banking Reform

Bob Blackman Excerpts

Thursday 16th June 2011 Commons Chamber

[Mr Hoban]

My hon. Friend makes an absolutely vital point. The failure of the financial regulatory system put in place by the Labour party when in government was hard-wired into the system. It was destined to fail because of the failure to identify a clear match between the people who had the power and those who had the responsibilities for managing financial stability. My hon. Friend is absolutely right. The previous system was destined to fail. We have learned the lessons from that crisis; I am not sure that the Labour party has.

[Bob Blackman (Harrow East) (Con)]

I welcome the statement and the announcements today. However, will my hon. Friend elucidate on the expected time frame for the setting up of the new regulatory bodies? There must be at least a risk that one or more bodies that are being abolished will take their eye off the ball while they are doing their work, and there will be a time frame before the new bodies are set up.

[Mr Hoban]

My hon. Friend makes an important point. We hope that the pre-legislative scrutiny of the Bill will start shortly. It is programmed to take 12 sitting weeks. We want to make sure that the legislation progresses through this House and the other place as quickly as possible and that it is properly scrutinised. We need to make sure that we do not make mistakes in haste that we repent of at leisure. It is also important to recognise that the FSA is starting to adopt the new style of supervision that we would like to see it exercise, and that should give us some comfort that the lessons have been learned and are now being put into practice.

European Summit

Bob Blackman Excerpts

Thursday 24th March 2011 Commons Chamber

[Bob Blackman (Harrow East) (Con)]

When Ireland was in trouble, we helped out. Ministers brought forward a proposal to give a loan to Ireland to help sort out their finances. I appreciate that at the moment there is no proposal to do the same for Portugal, but will the Minister give an assurance that we as a House will be given the opportunity to debate any such proposal that comes forward?

[Mr Hoban]

As I said before, I do not think that it is helpful to engage in unnecessary speculation. However, I would point out to my hon. Friend that this Government have sought to ensure that we keep the House informed on all matters of importance.

Bank Bonuses

Bob Blackman Excerpts

Tuesday 11th January 2011 Commons Chamber

[Mr Osborne]

Less than he was paid in 2009.

[Bob Blackman (Harrow East) (Con)]

Hard-pressed taxpayers in my constituency will rightly be annoyed at the disgraceful deal done by the previous Labour Government. What leverage will my right hon. Friend bring to ensure that bonuses are paid on the basis of bankers’ performance rather than just financial information?

[Mr Osborne]

That is precisely why we are improving the governance around bankers’ pay and remuneration, and why we are changing the system of regulation to replace the failed tripartite system created by the previous Government and voted for by many Opposition Members. We have done more in seven months than they did in 13 years, when they lived off a philosophy that there would be no more boom and bust. We are now picking up the pieces of that failed philosophy.

Oral Answers to Questions

Bob Blackman Excerpts

Tuesday 16th November 2010 Commons Chamber

[Mr Osborne]

As I say, we are doing that because we need to deal with the Budget deficit. I thought it was the policy of the hon. Gentleman’s party that a greater share of the consolidation should be borne by tax rises; I thought that that was now the official policy. It is also clear that the previous Government were planning a VAT rise. Businesses have had plenty of notice of the increase that is coming in in January, and I am sure they will be able to cope in the same way as they coped with the VAT rise at the beginning of this January.

[Bob Blackman (Harrow East) (Con)]

All of us are all too aware of the record deficit and debt that we inherited from the Opposition. Will my right hon. Friend agree to publish a regular scorecard showing how that deficit and the debt are reducing, so that taxpayers and the public sector can see the benefit of the Government’s policies?

[Mr Osborne]

We have created the independent Office for Budget Responsibility so that the fiscal forecasts for the United Kingdom are no longer produced by the Chancellor of the Exchequer and sometimes influenced by the political judgments of the Chancellor of the Exchequer, but instead are done independently.

Equitable Life (Payments) Bill

Bob Blackman Excerpts

Wednesday 10th November 2010 Commons Chamber

[Bob Blackman (Harrow East) (Con)]

I pay tribute to the hon. Members who have spoken to the amendments. I praise our Treasury team, who have done a magnificent job of righting the wrong that was done to Equitable Life policyholders over many years. Opposition Members—there are some exceptions—should hang their heads in shame because of what they did when in government to Equitable Life policyholders. I came to the issue of the damage to policyholders rather late in the process—shortly before the general election. Like others, I was encouraged by my former employer to invest in Equitable Life, but it was a good job that I did not do so, or my view now might be different.

I remind hon. Members about the pledge that we made before the election: 380 MPs agreed to press for proper compensation for victims by swift, simple, transparent and fair payment schemes, as recommended by the ombudsman; and we agreed that we would all join the all-party group on justice for Equitable Life policyholders. I agree with the pledge, which I signed, and I have honoured every element of it. A large number of colleagues have not joined the all-party group that I have the privilege of co-chairing, and I encourage them to do so even if latterly.

I want to concentrate on three aspects of the amendments. The first is the moral duty that we owe to people who relied on advice and on the system of the regulator, the Government and Equitable Life. There was a major scandal, because those three bodies connived to swindle people out of their money. That is a sad indictment of what happened, and that is what set Equitable Life aside from all other aspects of the pension industry. We must demonstrate to people, especially young people, that it is worth investing in their future. If young people do not do so, there will be a sad and sorry state of affairs in this country. There is a clear moral duty.

The second issue is the amount of money that is due in compensation. I am delighted that the Treasury accepted that the ombudsman’s recommendation of £4.26 billion was the right amount to which policyholders were entitled. The debate today is not about money, but the Treasury team has come to a view that because of the economic circumstances only £1.5 billion is affordable. It has also had regard to the ombudsman’s report, which said clearly that relative loss must be taken into account. The Treasury team must have done some calculations to reach the figure of £1.5 billion, and I trust that the Minister will tell us in his reply today how that figure was arrived at. The reduction from £4.26 billion to £1.5 billion is dramatic, and he must respond to our points.

[Claire Perry (Devizes) (Con)]

My hon. Friend eloquently sets out the outrage that many of us feel, having signed the pledge. Does he agree that our Government, unlike the previous Government, have reached a speedy conclusion, as a result of which more people in the claimant group will receive compensation before there are further deaths? I agree with my hon. Friend about transparency and I, too, would support a motion to set out exactly how the calculations were made, in the spirit of our Government’s commitment to greater transparency in all financial matters.

[Bob Blackman]

I thank my hon. Friend for her intervention. The issues are complex, and the more one reads about and understands the scandal, the more difficult it becomes to resolve it. The Government in their wisdom have set out a compensation scheme that will continue for many years. The £1.5 billion is not a one-off payment that will go into a fund this year and end the matter. It will be spread over many years, and it will extend into the next Parliament.

[Mr Hoban]

May I clarify the fact that those who receive compensation and are not with-profits policyholders will receive a one-off payment during this Parliament? Only with-profits annuitants will have their payments spread over the rest of their lives.

[Bob Blackman]

I thank the Minister for his intervention. I was going to refer to that while I was responding to the intervention from my hon. Friend the Member for Devizes (Claire Perry). The clear issue now is justice for the people in the worst possible position—the trapped annuitants. I applaud the Government for honouring the pledge that 37,000 people who have been trapped as a result of the scandal will receive 100% compensation. I strongly support and endorse that.

We have a problem, however, and amendment 1 attempts to address it. The amendment has cross-party support; we must be seen to be acting not just as a party but as parliamentarians overseeing the Executive. The problem is that if someone took out a policy on a particular day, they would receive no compensation at all, even though the maladministration was taking place at the time; whereas someone who took out a policy on the following day would get 100% compensation. There are always difficulties when arbitrary dates are set, but that is neither fair nor reasonable.

I believe that we should set aside the date and review all the trapped annuitants to ensure that they get fair and proper compensation. The Chadwick report has been rubbished by EMAG, and by Members on both sides of the House, but even Chadwick proposed a scheme that would have compensated those trapped annuitants whose policies were taken out before the cut-off date.

[Mr Marcus Jones (Nuneaton) (Con)]

When my hon. Friend signed the EMAG pledge, as many hon. Members across the House have done, did he believe that we would end up leaving out about 10,000 pre-1992 annuitants from the compensation scheme?

[Bob Blackman]

I and all the others who are new to the House signed the pledge in the belief that, if we were elected, we would compensate everyone who had suffered as a result of the maladministration, rather than taking an arbitrary position to compensate some and not others. I have heard heart-rending stories from my constituents and from people all over the country who are now living on desperately low pensions, having expected much larger ones, and we have a very strong moral duty to all those people. We throw that away at our peril.

[Dr Sarah Wollaston (Totnes) (Con)]

This is not just a question of fairness. Many of those individuals are older and very vulnerable indeed. The letters that I have received make the point that those people are living on very low incomes at a very vulnerable time of their lives, and they have already suffered from the effects of inflation. I agree with my hon. Friend that we should talk about this as parliamentarians, not on a party political basis.

[Bob Blackman]

My hon. Friend clearly demonstrates that we are talking about the oldest and most vulnerable people, and that they have been dealt with in a most disgraceful way following this scandal. We have a moral duty to compensate them.

Going back to the points made by my hon. Friend the Member for Cardiff North (Jonathan Evans), it is clear that when the bonuses that were attached early in the process are taken into account, some policyholders might not receive a penny piece in compensation. We need to recognise that, but there is an 18-month gap between the cut-off dates. A large number of the retired people who had taken out annuities could not adjust them once they had purchased them, and they are now trapped in that position. That is why we have a moral duty to compensate them.

[Nadhim Zahawi]

What action would my hon. Friend recommend? My hon. Friend the Member for Cardiff North mentioned the possibility of people being judged to have received too much. Should we take that money away from them? The malpractice took place in 1991, and we should be talking about 1991, not about 1992 or about an open-ended process.

[Bob Blackman]

Clearly, if exorbitant bonuses were attached to certain policies, the policyholders would not be due compensation and they would not receive a penny piece. Remember, we are talking about compensation. We cannot take money off policyholders who have been receiving pensions. Parliament just cannot do that; it would be a retrograde tax and therefore unacceptable. Those who are due compensation should receive it, but those who are not due any would not receive any, and if they have benefited in the meantime, well, that is fine and dandy for them.

[Jonathan Evans]

In regard to the morality of the issue, I agree with many of my hon. Friend’s arguments. My concern, however, relates to the practicalities involved when people are policyholders with other companies. Many of them had large bonuses from the 1980s onwards, but get hardly any at all nowadays. We have to take account of this when we look at their asset share, compared with everyone else in the pool in a with-profits system. That is why many people believe that there is no future for with-profits business nowadays.

[Bob Blackman]

The independent commission will need to look at the relative loss that individual policyholders have experienced as a result of the maladministration. If annuitants took out policies well before the maladministration took place, there would be no relative loss, and they would receive no compensation. The nub of the issue is that we want the review to be independent, so that we can all look the policyholders in the eye and say that we have honoured our pledge to ensure that they were treated properly, and properly compensated. Under the Bill as it is drafted, we cannot do that because of the arbitrary cut-off date.

[Harriett Baldwin (West Worcestershire) (Con)]

My hon. Friend is obviously extremely knowledgeable on this subject. Does he agree that this is perhaps not so much a question of a specific date as of whether or not a policyholder was trapped? If they are trapped, there is absolutely nothing they can do about it.

[Bob Blackman]

That is clearly where our moral duty arises. If policyholders are trapped and cannot adjust their position, they are unable to rectify the damage that has been done.

I want to speak briefly to amendment 7. The Government have accepted that £4.26 billion should be the full amount available to policyholders, 37,000 of whom will receive 100% compensation. That clearly involves a huge amount of money, which will come out of the £1.5 billion. The policyholders who are not trapped annuitants would therefore get something like 15% of the compensation due to them, which seems pretty unfair and unreasonable. We should set up a commission to devise a payment scheme, then look at the results. Instead, £1.5 billion has now been set aside, and an independent commission will set up the mechanism for distributing that money. That could have very serious consequences indeed.

Parliament has a problem in this regard. I applaud the Government for moving swiftly to settle this matter once and for all, but we are setting up a method for distributing the money and creating expectations out there. About 1.4 million policyholders have been affected by the scandal, and 37,000 will receive full compensation while 10,000 will not get a penny. That leaves rather a lot of policyholders among whom to divide a relatively small amount of money. When the Minister responds to the debate, I trust that he will be able to set out how the calculations were made, so that we can be clear about them.

Amendment 7 would allow us to review the position in five years’ time, when the economy has recovered and the benefits of this Government are clear for all to see, and to top up the compensation further for those people who will be retiring in five, 10, 15 or 25 years’ time. We also have a moral duty to honour our pledge to those people. This is one of those cases in which we have set out to do something in the proper way, and I applaud those on the Treasury Bench for moving swiftly to bring the matter to a conclusion so that payments can be made as soon as possible, but we must ensure that we fulfil our moral duty to those policyholders.

[Mr Alan Reid (Argyll and Bute) (LD)]

I start by putting firmly on the record my belief that the Government have implemented the parliamentary ombudsman’s report and have honoured the pledges made before the election. It was always part of the parliamentary ombudsman’s report that this would be a political decision for the Government to make, taking the public finances into account when they set the cap. The Government have set the cap at £1.5 billion. I wish it could have been more, and I hope that it will be possible to revisit this in future when the public finances are in a better state.

I have sympathy for amendment 1, but let me state my understanding of how it would work in practice. It does not alter the cap that has already been set, so if the pre-September 1992 with-profits annuitants were to be compensated to the same level as the post-September 1992 with-profits annuitants, there would be less for the latter group of people. If the cap remains the same, and the amendment does not alter the cap, giving more to some people would mean giving less to others. I ask the Financial Secretary and the hon. Member for Leeds North East (Mr Hamilton) who moved the amendment to comment on that when they respond.

I want to press the Government on why they have chosen the date of September 1992. As other hon. Members have said, the maladministration started in June 1991. Penrose found that when the Equitable Life Assurance Society’s board papers were sent to the Government Actuary’s Department on 11 June 1991, there was information in those papers showing that the society was not in a good position. Had the Government Actuary’s Department publicised that information at that time, investors would have been deterred from investing in the society. There is a strong argument for saying that the date should be not September 1992 but June 1991.

On 30 July 1992, in an internal briefing, the Government Actuary’s Department described the society as being one of the

“companies on whom we have been keeping a close watch for a number of years”

and said that Equitable Life remained a company “which caused serious concern”. There was evidence in July 1992—in fact, before July 1992—that the Government Actuary’s Department was aware that Equitable Life had problems. Surely that should have been made public and investors should have been deterred. In his response, will the Minister clarify why the date of September 1992 was chosen, because it certainly seems to me that an earlier date—say June 1991 or possibly even earlier—would have been more appropriate?

--- Later in debate ---

[Mr Hoban]

Let me continue.

We are excluding that group of people because they took out policies before any maladministration could have affected their investment decision. Therefore, to echo my hon. Friend the Member for Cardiff North, they suffered no relative loss.

[Bob Blackman]

But will the Minister answer the moral issue? At the time when people were making investment decisions, and taking out these policies, the regulatory failure was going on. As they became victims of that regulatory failure, surely we have a moral duty to compensate them.

[Mr Hoban]

When people made the decision on the information available to them, the relevant information was not in the public domain, and would not have affected their investment decision until September 1992. That is a clear, logical, sensible starting point, based on principles and on the ombudsman’s findings, for the maladministration, and that is the point from which we should calculate relative loss for policyholders.

--- Later in debate ---

[Chris Leslie]

I shall speak to amendments 3 and 4, which stand in my name and the names of my hon. Friends. Amendment 3 would enshrine in the Bill the fact that the design and administration of any payments scheme should be independent of Government. It is pretty straightforward and simple—in fact, it would be difficult for it to be more straightforward and simple—but we think it important to try to encourage the Government to enshrine in the Bill the Minister’s pronouncements so far that the design of the compensation scheme should be independent of Government. That is an extremely important point, especially as it was part of the conclusions drawn by the parliamentary ombudsman herself.

The Minister has asked the independent commission, chaired by Brian Pomeroy, to report by the end of January, but there is too much wiggle room for the Minister then to take those recommendations and bring the design and the administration of the subsequent payments scheme in-house within the Treasury. I see no clear reason why the Bill does not contain clarity on the next steps forward, particularly in relation to the daunting task of creating a payments scheme to cover upwards of 1 million policyholders not falling into the 100% compensated with-profit annuitant category.

Many other policyholders are still sceptical of the Government’s intentions and EMAG, which is the body representing many of those policyholders, is voicing its discontent with those who, before the election, signed up to their pledge to create “fair and transparent” payment schemes, which they now attack as akin to asking 1 million people—to quote the words of EMAG’s Paul Braithwaite—to

“share a pack of Smarties”.

Obviously, EMAG is making its point in its own particular way, but clearly there is some doubt and some cynicism about the approach that the Minister is taking. I am sure, having heard what he has had to say before, that he indeed wants a level of independence in the payments scheme as far as possible, but I do not understand why that commitment has not been included in the legislation. That would seem to me to be the best way forward.

Amendment 4 seeks to tackle the issue of any appeals procedure that might be necessary for policyholders in the compensation scheme. We suggest that no later than three months after the commencement of the Bill the Treasury be required to spell out quite how that appeals procedure would operate for the policyholders who are not content with the judgments made in the compensation scheme that eventually ensues. Several hon. Members argued for an appeals procedure on Second Reading on 14 September—my hon. Friend the Member for Ynys Môn (Albert Owen) among them—and it was also raised by my right hon. Friend the Member for East Ham (Stephen Timms).

In that debate, the Minister stated that he had raised the issue with his officials but that there were clear problems. He said he would pursue it, so the purpose of the amendment is to find out whether he has had the opportunity to do so and what the appeals process will look like. I certainly expect that there will be complexity, not just in the payment scheme but in any subsequent individual appeals adjudication, and that could be quite difficult to imagine at this stage. However, it needs clarification given the route that the Minister has chosen, moving away from the ex gratia model in the Chadwick methodology and instead accepting the ombudsman’s approach to compensation.

I was glad that the Minister said there were components of the Chadwick methodology that he favoured bringing into any compensation scheme—specifically that there would be no burden of proof on individual policyholders to show that they had been misled by the regulatory returns. That would certainly make the scheme simpler. Will the Minister take this opportunity to tell us whether the independent payments commission will eventually metamorphose into an authority for administering the payments? If so, will it be asked to design an appeals system, or is it the Treasury’s intention to undertake that part of the design?

Perhaps the Minister could say whether he sees any parallels with the appeals system set up when the former Department of Trade and Industry introduced an appeals mechanism in respect of the ill-health complaints about what was then known as vibration white finger. He will remember that a series of complex compensation payments were made in those cases, but an appeals system was set up that had a route into a judicial process and eventually to the High Court. If some policyholders might become involved in a judicial process, it would be useful to have clarity about whether the same will happen.

Will the Minister also confirm not only, as I think he said, that the administrative costs of operating the compensation programme will be separate from the compensation fund, but that any appeals costs will also be separate from the compensation fund? I am sure that the Committee will welcome any clarification of the Government’s intentions, and in the meantime we felt that the amendment was a reasonable device to ensure that those answers are forthcoming.

[Bob Blackman]

I shall speak to new clause 1, which I tabled, but I made a long speech on the earlier group of amendments and I do not want to repeat all the points I made then.

We need to make the whole process clear, transparent and independent of Government so that the money that has been set aside to compensate the victims of this scandal is seen to be distributed so that they receive their due compensation in a manner that is independent of the Treasury. The dead hand of Treasury officials should not mean that the scheme is designed in a particular way. I do not necessarily need to press the new clause, but I seek assurances from the Minister that we have a full, independent, transparent way to compensate the victims, who have been so badly treated over the past 10 years.

--- Later in debate ---

[Mr Hoban]

There is no requirement in the Bill to lay the scheme as a statutory instrument, but I shall ensure that when the scheme design is produced, it is laid before the House and there is an opportunity to scrutinise it.

The hon. Gentleman asked a question about the cost of administration and the cost of the appeals mechanism, and he was right to recollect that I said previously that the cost of administration would be separate from the compensation pot. That is still the case, and it goes without saying that the cost of the appeals mechanism will also be separate from the compensation pot. We want the money that is set aside for compensation to be used for compensation.

[Bob Blackman]

I am grateful to the Minister for outlining the appeals process, which, in this complex and complicated arrangement, will be important. Will he elucidate further on the effect of the time frame of the appeals process? What would happen if, for example, an individual policyholder or set of policyholders, who felt that they had been wronged and not received the compensation that they were due, went through the process and that led to a breach of the cap? If they were suddenly compensated with a lot more money than had already been allocated, how would that be dealt with?

[Mr Hoban]

In that situation, there would be two aspects: first, the design that the payment scheme had applied; and secondly, the data that were available to the policyholder. The scheme will be designed in such a way that it does not breach the cap, so it would be possible to appeal only if the data were incorrect. The data that will be used to calculate the compensation will come from a database supplied by Equitable Life, and I hope that its data are of a high standard, so that those situations do not occur.

From the details given today, the Government have been considering very carefully the design of the appeals procedure, and we will publish details of the procedure, along with other aspects of the scheme, ahead of the time that amendment 4 proposes. So in light of that we believe that the amendment is not necessary.

Let me turn to amendment 6, which is in my name. The delivery of the Equitable Life payments scheme is an important matter, and since we took office we have made huge strides towards finding a resolution to the Equitable Life issue. However, we are aware that, for many policyholders, the issue will continue until they finally receive the money. As such, it is important that we find the right delivery partner to help us do that. Having given the matter careful consideration and looked at a range of options, our preferred option is to use NS&I, to deliver the scheme.

Officials have held many meetings with NS&I to find out not only whether it is capable of carrying out that important task, but the processes by which delivery could be carried out. There are many factors that make NS&I an appropriate delivery partner for the scheme. One of the most obvious and important is capability. As part of its everyday functions, NS&I makes millions of payments to customers every month. It has processes and infrastructure in place and experience of carrying out the functions that the scheme will require.

The need for value for money in the delivery of the scheme is also important. We are all aware that, in a climate where we have had to make difficult decisions about where to make cuts, the Government must look for ways of making the cost of delivering the scheme reasonable. Using NS&I will allow us to draw upon existing Government relationships and contracts, and I am satisfied that NS&I can provide a good delivery mechanism by which we can start making payments in line with our stated ambition of the middle of next year.

--- Later in debate ---

[Chris Leslie]

The amendment is intended to draw out more information specifically about the timing of the compensation payment scheme that the Financial Secretary envisages. In particular, we wish to ensure that the Treasury will lay before Parliament details of the timing and planned dates for payments no later than three months after the commencement of the Act.

We know that this long saga has involved many raised hopes, which have often been dashed. Although there were very good reasons for the last Government’s detailed consideration of complex issues, I accept in hindsight that decisions could and should have been taken more quickly and handled better. There were sound reasons why Ministers took a different approach to that of the Government today, but we are where we are, as the saying goes, and I wish to the ask the Financial Secretary a few questions about how the matter will progress from here onwards.

I am aware that table 3 in the spending review document, on page 12, sets out the phasing of the total finance set aside as being £520 million in 2011-12, £315 million in 2012-13, £210 million in 2013-14 and finally £100 million in 2014-15. As the explanatory notes to the Bill state, that comes to a total of £1.1 billion that has been set aside for this spending review period. Clearly there is a discrepancy with the £1.5 billion figure that we have been talking about, which presumably goes beyond the spending review period. I have a number of questions for the Financial Secretary, and I hope that he will expand upon the details.

First, on what basis have those figures been arrived at? Do they represent the expected phasing of payments, or are administrative costs included, for example, distorting the apparently higher first-year figure set out in the spending review document? I presume that the administration costs have to be set out somewhere in the budgetary figures. If so, will the Financial Secretary clarify his intentions? I do not want policyholders to labour under the misapprehension that they will necessarily receive the bulk of their compensation up front, as those figures might suggest.

At what stage will the timing and phasing of payments become clear? Does the Financial Secretary expect that the independent commission will set out those details early on, and will there be any opportunity to enshrine the timing of those arrangements in law, perhaps through regulations, even though they will be designed independently of Ministers? In other words, will the commission come back to Parliament and say, “This is how we are going proceed”?

There have been reports that three tranches of payments are expected over a four-year period. Can the Financial Secretary clarify whether that expectation is broadly reasonable for the policyholders involved? The Government are clearly about to hand over many of the arrangements to the independent commission and to National Savings & Investment, but it is still important that we know the broad parameters that they will use. That is the purpose of the amendment—we are seeking a public commitment and transparency about the timing of the payments.

[Bob Blackman]

I rise to support amendment 8. I do not want to go over all the ground that we covered in debating the previous amendments, but the purpose of the amendment is precisely what we talked about earlier. Hon. Members intervened to say, “Let’s get this done. Let’s get it over with and ensure that policyholders are properly compensated as quickly as possible.”

It is clear that trapped annuitants will receive their compensation in staged payments over the life of their pensions. However, we get into complex territory again when discussing the other policyholders and the difference between with-profits and other annuities. As I understand it—I hope that the Financial Secretary will clarify this—tranches will be paid out over the life of the comprehensive spending review period. The third tranche will be paid only in 2013, which still leaves some £500 million to be paid out in the next comprehensive spending review period. As we understand it, this will be a long-drawn out affair, so perhaps we can have further clarification on the issue.

--- Later in debate ---

[Bob Blackman]

I am privileged to follow my co-chair of the all-party group that is seeking justice for the policyholders who were so wrongfully treated by the previous Government. We can see where interest in supporting the policyholders lies. It is on the coalition Government Benches. Sadly, with the exception of those hon. Members who are present, there is a total lack of interest among Opposition Members in listening to or participating in the debate. That is typical of what has gone on for the past 10 years. It is not fair to compare a potential failure to regulate with the fact of conniving with the regulator and the company to prevent people from receiving compensation. That is precisely what the previous Government did.

I congratulate the Treasury team on taking swift, firm and transparent action to ensure that we can pay swiftly those who have been wronged. That is not being done as quickly as I would like, but we have to go through the mechanisms of government and legislation. We must make sure that the people who have been so badly wronged are compensated properly, and that that process is fair and is seen to be independent of Government.

The debate that we had this afternoon in Committee clarified a number of issues. I trust that the people who are watching from home, thinking about how much money they will receive and when they will receive it, will be more satisfied that the Government and the Treasury team have taken on board the lobbying and the actions undertaken by Members, primarily on the Government Benches, to make sure that the scheme is put in place as swiftly as possible and pays the maximum possible.

We should remember that the Bill will enable the Treasury to pay the money out as swiftly as possible. It does not deal with the sums that are due to be paid out, although the Government accept completely the ombudsman’s view that the compensation would be £4.6 billion if the public purse had permitted that. That is massively different from what Chadwick recommended.

[Nadhim Zahawi]

Does my hon. Friend agree that if the previous Government had acted, and acted sooner, more compensation would have been payable to the victims?

[Bob Blackman]

If the Labour Government had acted when they should have done, £1.5 billion would have represented 100% compensation for everyone that had been so badly wronged. However, the dragging of feet over the past 10 years means that we are in the parlous state in which, ever day, people who should be due their compensation are dying and every day that we delay means that, sadly, more people will not receive their compensation.

[James Morris]

Many Members have talked about the moral imperative behind sorting out the situation, but does my hon. Friend agree that moral intervention requires practical Government action, which is what we are seeing today?

[Bob Blackman]

Indeed. That is the clear duty of the coalition Government, and that is why I wholeheartedly praise the Treasury team for demonstrating such action.

There has been no greater issue than the tax treatment of the compensation that is due, and I congratulate once again the Treasury on that measure, because it will add to the compensation. Many people sitting at home will have been calculating their compensation less the amount of tax that they regularly pay. Now they know that they will receive a far bigger tax-free income, and that is something else of which we can be proud.

I would have much preferred more money to be provided. Would not we all? But would not we all rather be in a position whereby the Treasury was not almost bankrupt and we had not been left with a massive deficit? The all-party group will continue to ensure that, in this process, the Treasury will be able to communicate with all parliamentarians, and EMAG will be able to lobby to ensure that, when individuals begin to receive their payments, which will be the acid test, they feel satisfied that the wrong that has been done to them has been compensated. That is something of which we would all be proud. We can take great pride in the fact that the process is happening quickly, with purpose and transparency, and that the pledge that we all signed is being honoured. Some people may say, “It is not being honoured in full,” but it is, and clearly the economic circumstances of the day dictate what we can do.

As I said in an earlier intervention, we should revisit the position in five years’ time when the economy will have recovered and we will be in a much stronger position because of the coalition Government’s decisions. There may be a case then for reconsidering whether the people who took out policies but will not retire for five, 10, 15, even 25 years should receive a top-up. That is a reasonable proposal, and it is sensible for the coalition Government to consider it.

I commend the Bill to the House. I support it 101%, and the Treasury team are to be congratulated not only on what they have done, but on the clear answers that they have given to the points that have been made as we have considered the Bill in detail.

Comprehensive Spending Review

Bob Blackman Excerpts

Thursday 28th October 2010 Commons Chamber

[Bob Blackman (Harrow East) (Con)]

I congratulate the Chancellor and his team on beginning the process of righting what has been wrong for the past 13 years. After those 13 years, we find ourselves in circumstances in which, for many people, it is better to be on benefit than to be in work. I listened earlier for a word of apology for the record deficit that the Labour party had created, and for any plan it might suggest to get us out of it or even suggestions of cuts that it would make in public expenditure. We are still waiting for the answers.

I shall confine my remarks to two aspects of the CSR. The first is reform of the benefits system. We have heard much from Opposition Members, and from people outside the House, about housing benefit, which is one of the benefits that need fundamental reform. It is horrendously complicated. It is paid on a daily basis, with tapers which mean that if people obtain work they immediately lose the benefit. It has therefore become a positive disincentive to work. The principle that we are adopting as a Government is that it should always be better to work than to receive benefits. I strongly support the cap and, indeed, the gradual withdrawal of housing benefit from people who refuse to work.

We must also ensure that there are job opportunities in the private sector, and opportunities for people to be trained to take those jobs. I support the Work programme that the Government are implementing, because it will bring about a fundamental change in British society that we all want to see.

It is currently proposed that the housing benefit cap should apply to people paying £20,000 a year in rent. That is £35,000 in pre-tax income. Given the other benefits that claimants are likely to have accrued, they would have to earn a salary of about £50,000 before they would replace their lost benefit income. If that is not an incentive not to work, I do not know what is. We must change the whole philosophy of housing benefit, and the basis of its operation.

A system that taxes people with one hand and gives them benefits with the other cannot be right. It is far better to lift people out of taxation—as this Government have done—and give them more of their own money to spend as they wish than to tax them and give them benefits at the same time. We have an opportunity to simplify the whole process. I strongly support such action, and I hope that we will move rapidly to a form of universal benefits rather than the horrendously complicated arrangements that existed under the last Labour Government. I trust that they were the last ever Labour Government.

I applaud this Government for their prompt and firm action to settle the Equitable Life dispute once and for all. For 10 years the Labour Government prevented Equitable Life policyholders from receiving the compensation that was due to them, which was a disgraceful way to behave. I especially applaud what has been done to reward trapped annuitants who desperately need the money now. I urge Ministers to get on with that job as quickly as possible so that we can pay retired people who are living in relative poverty as a result of the Labour Government’s actions.

The Government have accepted that the proper compensation due to all the policyholders is some £4.26 billion. The £1.5 billion goes some way towards that. Many of those policyholders are still working; they will be working for 10, 20 or possibly 25 years more. They need support and help, too. I ask that, as the economic times get better, improvements come, we create more jobs and the economy recovers, our Treasury colleagues consider putting more money into those policyholders, so that they are properly rewarded for the pain that they have gone through under the last Labour Government. That is only right and just. I trust that we will see that happen in the not-too-distant future.

Equitable Life (Payments) Bill

Bob Blackman Excerpts

Tuesday 14th September 2010 Commons Chamber

[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.

[Several hon. Members]

rose—