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Equitable Life

I start by thanking the Chief Secretary for reiterating the apology given by his predecessor, my right hon. Friend the Member for Pontefract and Castleford (Yvette Cooper), which was certainly a good start. Earlier, the hon. Member for Reigate (Mr. Blunt), who is no longer present in the Chamber, said in an intervention that policyholders should be able to come forward and apply for compensation against criteria and for a sum of money determined by this House. That was reiterated, in a way, by my hon. Friend the Member for Cannock Chase (Dr. Wright), who said—many of us agree with him—that we are talking about a matter for the whole House. It is a matter that should be discussed without partisan interest, but for the interests of our constituents only, as the hon. Member for Richmond Park (Susan Kramer) has said. I was interested in the contribution made by the shadow Chief Secretary, the hon. Member for Fareham (Mr. Hoban). He said in his conclusion that the subject of this debate is not a partisan issue. I agree with that: it is not a partisan issue, and I hope that the parties here will not make it a party political issue for their own gain. It is something that the public look to this House as a whole, and that our constituents look to us as individuals, to put right. On 24 June, I had an Adjournment debate in Westminster Hall. I was subsequently asked to stand as the joint chairman of the all-party group on justice for Equitable Life policyholders, which I agreed to do. There are many officers here today, from all parts of the House, who support that group and its principle of justice for those policyholders. I do not want to repeat the remarks that I made on 24 June, but I want to draw out some important points from that speech, to remind hon. Members and those on the Government Front Bench exactly why we are holding this debate. I am sorry that this debate is being held in Opposition time, as many hon. Members have said, because that has certain implications for the way in which Members vote. I said on 24 June that I did not want simply to repeat the words that had been said in previous debates. I wanted to try to bring to the House some of the experiences of my constituents to remind us why we are debating the issue yet again, and to try to persuade the Government to agree to the recommendations contained in the parliamentary ombudsman’s original report, "Equitable Life: a decade of regulatory failure", which was published in July 2008. As we know, after the publication of Ann Abraham’s report, the Public Administration Committee produced a report entitled "Justice delayed", on 11 December 2008. On 5 May this year, the parliamentary ombudsman published a further report, "Injustice unremedied", which has been referred to on a number of occasions. There is no shortage of reports, just a shortage of justice for those who through no fault of their own have suffered huge losses in their life’s savings, accrued over years of hard work. That surely cannot be right. Like many other hon. Members who until recently knew little about how all that had come about, I was not very sympathetic at first. However, as the hon. Member for Richmond Park has said, as much as the world’s oldest mutual insurance company had overstretched itself and as much as the real issue was poor regulation, I became more and more concerned about what my constituents were telling me. I suspect that that experience has been echoed throughout the House and that there is not one Member who has not received correspondence from constituents about Equitable Life. The Public Administration Committee said in the introduction to its December 2008 report:""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,"" as has been said,""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 parliamentary ombudsman’s second report, "Injustice unremedied: the Government’s response on Equitable Life", is scathing about the inaction on her initial recommendations from July 2008. Indeed, she said in that report:""I was deeply disappointed that the Government chose to reject many of the findings that I had made, when I was acting independently,"" as my hon. Friend the Member for Cannock Chase pointed out,""on behalf of Parliament and after a detailed and exhaustive investigation."" I said that I would take a little of the House’s time in highlighting some of the cases that have been brought to my attention by constituents. I want to concentrate on one case only, which I am sure will ring a bell with many Members. This particular lady, Mrs. H of north Leeds, told me that her modest income of £200 a month was reduced overnight to less than £100, although she now receives about £120. She is 83 years old. She was dependent on that £200 each month, so when it was initially reduced by more than half, she found it hard to cope financially. It was only the help from her ex-husband that kept her going. However, she still struggles every month, owing to the continued shortfall of income. Why, then, is the regulator to blame? We have heard a number of views on that this afternoon. Surely investors must have understood that their investments could decrease as well as increase. How could Equitable Life maintain a rate of return and a guaranteed annuity rate beyond those of any competitor in the market? Those are the questions that Ann Abraham addressed in her initial report of July 2008, which took four years to complete. Her answers are at the heart of the anger expressed by investors through the Equitable members action group. At the core of the problem is the fact that Equitable simply could not meet its obligations—obligations that it had made for itself, because it had made no provision for guarantees against low interest rates on policies issued before 1988. We know also that, following the House of Lords ruling in July 2000, the society stopped taking new business in December of that year, which effectively spelled the end for Equitable. More than 1 million policyholders found that they faced cuts in their bonuses and annuities, which caused a huge loss of income—income on which many of those small investors depended. After all, the average investment for the 500,000 individual policyholders was just £45,000, which even at its height yielded no more than £300 a month, according to EMAG. As has been pointed out, we in this country, along with many countries in the western world, have a growing problem: the problem of an ageing population that needs to be encouraged to make greater provision for its retirement and old age, as the state will simply not have sufficient resources to provide enough money in statutory pension payments. That is a controversial issue and a source of great debate. The problem will only become worse as the years pass and the proportion of younger people in work declines in relation to those in retirement. It is already clear that my generation—those in their mid-50s—will have to work longer before retirement, whichever party wins the next general election. However, unless we can save more and see our savings grow securely, there will be little confidence that there is any point in saving at all. I believe—many other Members have also expressed this view—that the Equitable Life scandal has severely reduced the confidence that the people of this country have in the principle of saving for retirement.