Equitable Life

I beg to move,

That this House welcomes the Government’s acceptance in full of the Parliamentary Ombudsman’s findings in relation to its maladministration with regard to Equitable Life; notes that the Parliamentary Ombudsman recommended that policy holders should be put back in the position they would have been in had maladministration not occurred; further notes that the overwhelming majority of victims have only received partial compensation compared to the confirmed losses directly attributed to regulatory failures; and calls on the Government to make a commitment to provide full compensation to victims of the scandal with the end of austerity now in sight.

I thank the Backbench Business Committee for allowing us to have this debate, and the Government for finally allowing us to have some time in the Chamber to debate the issues that the Backbench Business Committee wishes to put forward. I declare an interest as co-chairman of the all-party parliamentary group for justice for Equitable Life policyholders. I have held that office ever since I was elected to Parliament in May 2010. I will set out the history of the scandal, the Government’s position to date, the current position on compensation, and what we want on behalf of the victims of the scandal. It is worth recalling that this was a Ponzi scheme. Equitable Life encouraged people to move their life savings into unsustainable pension funds by promising bonuses that could not be delivered. It also paid commission to agents to encourage people to move their savings into these scandalous positions. Ponzi schemes are all very well when money is coming in, but eventually money must be paid out. If the amount of money coming in is unsustainable, the bonuses that are promised to savers cannot be paid.

After almost a decade of operating the scheme, Equitable Life started legal action in 1999 to try to reduce the bonuses; it was unsuccessful in that regard. It then tried to sue its auditors for failing to point out the errors in its scheme. It was unsuccessful in that enterprise, too, and had to pay out more than £30 million in court costs. All that money could have been used to compensate the victims of the scam.

Eventually, the parliamentary ombudsman intervened and took up the case. Her recommendations said that this was the most serious case of maladministration she had ever encountered, and that the people involved were the Government, the regulators and Equitable Life. That is what makes this case unique.

The hon. Gentleman is making a compelling speech. He is right that the situation has been ongoing for a very long time. The parliamentary ombudsman said—I have read some articles on this today—that people still have not yet been fully compensated, and some of them have actually died. We have raised this issue time and time again over the years. My hon. Friend the Member for Leeds North East (Fabian Hamilton), who will speak shortly, has done a hell of a lot of good work on this. I congratulate the hon. Member for Harrow East (Bob Blackman) on securing the debate.

I thank the hon. Gentleman for that intervention. I have no doubt that the co-chairman of the APPG, the hon. Member for Leeds North East (Fabian Hamilton), will make a substantial contribution to this debate. He has been involved in this for more years than he probably cares to remember.

The previous Government promised some degree of compensation to the victims of this horrible scandal. I was a candidate at the 2010 general election, and in the run-up to it, the only pledge that Conservative campaign headquarters asked me to sign was that we would give full compensation to the victims of the Equitable Life scandal. I regard that pledge, which I signed, as one to the electorate and it is something I will honour. I believe that the Conservative party should honour it in full, and I welcome anyone else who will join me.

I am grateful to my hon. Friend for all his hard work and persistence on the issue over many years. A number of my constituents, like his, have been affected by the scandal, but have received merely a fraction of what they are due and what the parliamentary ombudsman ruled they should receive. The Treasury’s reason for that was pressure on the public finances, but now that the public finances are in a better place, does my hon. Friend agree that it is now time to compensate the victims of this scandal properly?

I completely agree, and I will come on to our asks in a few minutes.

When we were elected in 2010 and the coalition Government came to the fore, that Government took action, as is acknowledged in the motion, and I was pleased that they did so. The piece of legislation to provide compensation was almost the first to be put through the House after the election.

I, too, congratulate my hon. Friend on securing this debate. The Government did take some action. My constituents Jean Cooper, Ron Moseley and Tom Graham—Equitable Life victims who have done a lot of work campaigning—have made lots of representations to me. Does my hon. Friend agree that, given the improving public finances, the Government should take on board the argument for full compensation, perhaps phased over time?

I thank my hon. Friend for that intervention. Conveniently, he leads me to my next point.

In the comprehensive spending review on 20 October 2010, the former Chancellor of the Exchequer, George Osborne—I do not always agree with him these days, but I certainly did at the time—remarked, in relation to Sir John Chadwick’s report:

“I accept the findings of the parliamentary ombudsman in full.”—[Official Report, 20 October 2010; Vol. 516, c. 960.]—

He did not say “partially”; it was not hedged in any way. He went on to talk about the relative losses and the amount of money, and said that the fair amount of funding at the time was £1.5 billion because of the state of the public finances.

In the financial statement on 20 March 2013, George Osborne went further and said that compensation should be provided to people who were not covered by the law—namely, the pre-’92 trapped annuitants. He said:

“We are not doing this because we are legally obliged to; we are doing it because, quite simply, it is the right thing to do.”—[Official Report, 20 March 2013; Vol. 500, c. 941.]

I agree completely.

In the financial statement on 8 July 2015, George Osborne stated:

“We are also going to use the remaining funds available in our Equitable Life payment scheme, as it closes, to double the support that we give to those policyholders on pension credit who need this extra help most.”—[Official Report, 8 July 2015; Vol. 598, c. 333.]

Does my hon. Friend agree that not only is it the right thing to do for these victims, but it is the right thing to do to show faith and confidence in the system and for all those who want to provide for themselves in old age? Over 2,000 of my constituents were affected by this.

My hon. Friend is absolutely right. This is a debt of honour, and we owe it to those victims who did the right thing. They saved for their old age and now they suffer consequences.

Does my hon. Friend agree that if the Treasury was owed money by other people its attitude would be very different? It is amazing what the Government can find money for when it needs to. As my hon. Friend said, this is a pledge that this party has made over many years, and I support him in the campaign he has superbly led over many years. Does he agree that the Treasury should now do the right thing, as they promised to do all those years ago, as he has pointed out?

I thank my hon. Friend for that intervention. I am not a Treasury Minister, so unfortunately I am not in a position to honour that pledge, but I look forward to my hon. Friend the Economic Secretary giving us some good news this afternoon.

I thank my hon. Friend, particularly in helping all my constituents. Does he agree that the failure to pay these moneys out over the last couple of years, particularly at the time of the financial crash when the banks and building societies were bailed out, sends out the terrible message that we will look after corporations, but we do not look after our constituents?

That is a serious point. During the financial crash, the view was taken that we could not afford or allow a situation in which the banks and other institutions failed. Indeed, the position of the Government successively has been that Equitable Life was too big an organisation to allow to fail. Had it failed when it was basically trading insolvently, the Government would have needed to pick up the total cost for all those victims of the scandal.

I congratulate the hon. Gentleman and my hon. Friend the Member for Leeds North East (Fabian Hamilton) on the work that they do in the all-party parliamentary group, of which I am a member. Today provides a perfect example of how political will can transmit into effective action. We have read the stories about MPs being offered resources for their constituencies to support the withdrawal agreement; does that not show that when there is the political will, the money can be found?

Thus far my constituency has not been offered any additional funds for my voting for anything—that is not the basis on which I vote in this House—but I can understand the hon. Gentleman’s concern.

Many of my constituents who have been affected by the Equitable Life issue regard the APPG as their only voice in not only this place, but the country. Does the hon. Gentleman agree that the failure to compensate the Equitable Life victims not only has a hugely detrimental effect on their lives, with their not be able to retire in the comfort that they deserve, as they thought they would, but also affects faith in this House and in the pensions system at a time when people are living longer and need to be doing more to prepare for retirement?

It is clearly a view that people are not saving in the way in which they used to. Young people are being discouraged from saving as a result of what they see as the scandals that took place.

I join others in commending my hon. Friend on the extraordinary campaign that he has led. Does he agree that not only is this a debt of honour, but that the Treasury can take comfort from the unique circumstances of the case in terms of the fault that was found with the Government and other regulators to know that this would not open the floodgates? The matter stands on its own terms, and the Government can do the proper thing of compensating people without fearing that that will have some enormous knock-on effect.