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Equitable Life

I will try to make your task a little easier, Mr. Deputy Speaker. I had the privilege of introducing a debate on this subject on 21 October 2009, when I set out in considerable detail the Liberal Democrats' views on how the problem should be dealt with, and I do not need to rehearse those arguments and the history again. There is a fair degree of consensus, which was summed up by early-day motion 1423 in the last Session. The motion was signed by 351 Members, from all parties, which I believe is the largest support for any such motion. On my quick arithmetic, that means that 70 per cent. of Members who are not on the Government payroll supported it. A considerable amount of work has been done since by the all-party group to reinforce that. I shall first discuss the practical issues raised by the exchanges between the hon. Member for Fareham (Mr. Hoban) and the Chief Secretary. Since October, as the Chadwick process has ground on—we have now had the third interim report—and in the past few days, there has been a breakdown in the relationship with the policyholders group, which has consistently defended the interests of policyholders throughout the process. Initially, it worked in a constructive and positive way with Sir John Chadwick despite having reservations about how the process was being conducted, but that relationship has now broken down. I do not believe that the Minister addressed that problem. I have two suggestions for the Minister. First, nobody is suggesting that we now go back and throw the work of the Chadwick commission into the waste-paper basket and start all over again. To be fair, as the hon. Member for Fareham said, we are where we are and we have to operate from the current position. The legitimate concern of policyholders is the lack of independence in the process and the role of the auditors, which I believe are appointed and paid for by the Treasury. If there were greater confidence that that process was genuinely independent, much of the lost confidence could be restored. Will the Minister consider how independent auditors who have the confidence of the policyholders can be introduced to the process, perhaps alongside those already designated by the Treasury, to bring the policyholders group back on board in the process? We can argue whether it would have been better to have gone down the tribunal route than the ombudsman report route, but the policyholders group vehemently denies that matters are as complicated as the Minister made out. We can go over the history, but—given where we are—the key need is to establish the independence and integrity of the process. Confidence has broken down, and we need to find a simple way in which that can be remedied. The other issue that has arisen—and it is an immediate and practical one—is that of interim payments. All three of my colleagues who have intervened—my hon. Friends the Members for Cheltenham (Martin Horwood), for Richmond Park (Susan Kramer) and for Solihull (Lorely Burt)—made that point, and I heard the Minister's reply. I can understand the theoretical problem—that the interim payments might collectively be greater than a cap that might be imposed—but it is a rather academic objection. We are, after all, talking about a narrow category of people whom we all agree should be compensated—the trapped annuitants and the late entrants. Nobody is now disputing that. It also concerns a modest part of the compensation to which they will ultimately be entitled. So it is not clear why this relatively modest but rapid intervention of making interim payments should hit the financial ceiling, unless the Government envisage a ceiling that is ridiculously and unreasonably low. I hope that the Government will take a fresh look at the interim payment issue, because the objection advanced is not very credible. If those two steps could be taken—a greater degree of independence in the auditing process, which is very complex and which no hon. Member is equipped to deal with technically, to restore the confidence of the policyholders, and the introduction of an interim payments scheme—much of the current suspicion about what is happening would be defused, and we would be back on track. That is the substantive point that I wish to make, but I shall briefly summarise the two overriding concerns that Members have expressed throughout the debate. The first is the cumulative delay. We can argue about whether a particular step was reasonable or not, but it is the cumulative impact of a decade of delay that has caused so much anxiety and anger. The second is the integrity of the ombudsman process and our responsibility as a House for upholding the ombudsman's authority. On the first issue, it is worth—without going into the long and sordid history—recalling the milestones in this decade-long process. We had the four years to Penrose, who indeed criticised the delays in establishing his report. Then there were the three years to the ombudsman's report and then the 18-month delay in the publication of the ombudsman's report through the Maxwellisation stage, followed by the Government's response, which was not satisfactory. Then came the ombudsman's response to the Government, then the various challenges, including judicial review and the Public Administration Committee's report. Then we had the six-month delay until the Chadwick process got under way, and the next series of steps that we are now encountering. Any one of those delays could be excused and explained, but the cumulative effect of the Treasury foot-dragging is great ill-will and is the reason why Members on both sides of the House keep returning to this issue. It is also why the 1 million people affected by this issue are so frustrated. The second overriding issue is the authority of the ombudsman. It is worth recalling that 351 of us said, when we signed the early-day motion, that this House""reaffirms the duty of Parliament to support the office of the Ombudsman; believes the Government should accept the recommendations of the Ombudsman on compensating policyholders who have suffered loss"." We can argue about whether the ombudsman's process was the best, but its principles were clear, and one of them was that compensation was right, and that it should take place according to the principle of remedies: we are not talking about arbitrary compensation with figures plucked from the sky, but about a carefully thought out procedure. The ombudsman also made the specific recommendation of an independent tribunal-like process. We know that the Government have rejected that, but the key point was independence, and that is what is lacking from the present proceedings. We then had talk about "rapid", "transparent" and "simple" solutions to compensation, but again, we have not had "rapid", we probably have not had "transparent", and we certainly have not had "simple". The question is: how do we get past that stage? I will leave the Minister with the thought that introducing an independent element into the actuarial process at this stage may restore some of the confidence that has been lost. If the Government are now willing to look at interim payments through the Chadwick process, that would go some way—probably a limited way, but some way at least—to stemming the anger and frustration that a lot of policyholders feel.