Equitable Life

John Glen Excerpts

Thursday 21st January 2021 Commons Chamber

[The Economic Secretary to the Treasury (John Glen)]

Let me start, as others have done, by acknowledging the role of my hon. Friend the Member for Harrow East (Bob Blackman), his long-standing work on the issue and his success in securing the debate. I also need to declare an interest, as I did when I responded to the debate on 31 January 2019: my late father was an investor in Equitable Life and, therefore, I am keenly aware of the history and the importance of the issue to all concerned.

As we have heard and grasped again today, this is a complex and technical subject, the history of which has been very well documented over many years. I should also remind Members that the Equitable Life payment scheme closed to new claims over five years ago, so nothing has changed since that previous debate two years ago. Many of the speeches made today have covered the long and sad history of this matter. I do not propose to revisit all of that this afternoon. I do, however, want to remind hon. Members that the Government took more action than any of their predecessors to resolve this issue and committed significantly more funding than any other.

I appreciate that some investors remain disappointed by the steps that we took and would like to see further funds made available, but the Government have been clear and consistent in saying that this issue is closed and no further money will be paid out. This is in line with the ombudsman’s report, which was explicit about having no expectation of the full amount being paid.

[Dr Lewis]

Will the Minister give way?

[John Glen]

I will not, because of time. Indeed, the ombudsman wrote to the APPG to clarify that position. Today, we have heard additional representations on the transparency and accuracy of the payments made by the scheme. I heard very clearly that point from my right hon. Friend and his reference to me during the debate, and I shall respond to that now.

First, the Treasury published the calculation methodology in full in 2011, as well as a simplified explanation to assist members of the scheme who were anxious about how it would work, with worked examples of the calculation. These explain how every payment made by the scheme was calculated. In addition, the Treasury has also incurred actuarial fees well in excess of £100,000, answering the questions reasonably posed by the actuarial representative of the Equitable Members Action Group, in an effort to ensure that there was maximum transparency to that group and to those members who were concerned, but no errors were found in the methodology. The group confirmed to their members that the payments to annuitants were accurate, and all this was set out in detail to the Public Accounts Committee in 2018.

Some hon. Members have spoken about policyholders who have received increased payments from the scheme, but given the closure of the scheme to new claims, I can only assume that these are historical cases. The Treasury is not aware of any corrected payments having been made to policyholders since the scheme closed, but I recognise that it may be helpful to go into some more detail on this point. The most critical determinant of the value of any payment is the input data received from Equitable itself, including payments in, payments out and the type of policy bought. Actuaries checked this data carefully and made any obvious corrections automatically before payments were made. But then the scheme also gave policyholders the opportunity to verify their own input data, which would be a significant driver of any errors, and where an error was found, the scheme corrected it and recalculated the payment. That is likely to have been what happened in specific cases that Members have raised today, and I believe that they show that the system that the scheme established to ensure accurate payments worked well.

The Government have taken significant action to resolve this issue and to balance the expectations of the policyholder with the needs of the taxpayer. The scheme was fully transparent, as I have set out. We published the calculation methodology in full. We made significant resources available to explain it. And we put systems in place to ensure that where there were errors in that input data and, therefore, payments, they were remedied swiftly. I appreciate investors’ desire that the scheme should pay out more, but the Government’s position has always been clear and consistent, both since the original announcement back in 2010 and since the scheme was wound down over five years ago. I am afraid that that position remains and will not change.