Equitable Life (Payments) Bill

Fabian Hamilton Excerpts

Tuesday 14th September 2010 Commons Chamber

[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.