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Equitable Life

March 16, 2010

Equitable Life

Mr. Mark Field (Cities of London and Westminster) (Con): I am waiting to hear the Latin tag, and I shall try to get hold of my hon. Friend the Member for Banbury (Tony Baldry) to find out exactly what it was. The sorry tale of what happened in Equitable Life is well documented and, depressingly, was accurately catalogued by the hon. Member for Twickenham (Dr. Cable). It has also been picked over by the House on countless occasions, and I think that we all feel a sense of deep disappointment and frustration that we are gathered here yet again to press for the Government to honour their duties to Equitable Life policyholders.

It is with great sadness that in preparing this speech, I realised that I first spoke in this place about the debacle in November 2002 after the publication of the Penrose report. I said: “I fear that we shall need to debate the matter again in the months and years ahead”.-[ Official Report, 27 November 2002; Vol. 395, c. 73WH.] I did not anticipate that there would be an eight-year delay.

The Government’s caution, delay and penny-pinching approach to doing the right thing by Equitable Life policyholders stands in stark contrast to the way in which they have showered taxpayers’ cash on other groups in the past decade. To be honest, I have a nasty feeling that they consider middle-class folk who have diligently saved to provide a comfortable retirement as “them”, not “us”. If the gross negligence that has been established at Equitable Life had taken place at the Easington colliery welfare fund, I cannot help but believe that something would already have been done by the Government.

As a result, it is with unfortunate cynicism that I greet the news that Sir John Chadwick is now committed to giving his final report on Equitable Life in May, with the Government offering to respond to him within two weeks of that. Given that we all know that that is likely to be after a general election, I fear that the Government are once again playing politics with the lives of many of my constituents by extending the hope of a resolution but ducking the responsibility of its enactment.

Policyholders may be forgiven for not having much faith in this latest round bearing fruit, either. After all, the ombudsman published her report on Equitable Life back in July 2008, but it was not until January the following year that the Government finally responded, after which their partial rejection of her findings was overturned by the High Court. Many now suspect that Sir John’s review is little more than a Treasury stitch-up that seeks to negate the four years of work by the ombudsman. Paul Braithwaite, the general secretary of EMAG, has been mentioned a number of times during the debate. As he says: “The Treasury is attempting to retry the case, using actuarial sophistry to distort the figures. . . The logical conclusion of this sham process is that the Government will deny all obligation to compensate policyholders for the damage done by serial maladministration and only paltry discretionary payments will be made on the basis of charity, not justice”.

I know from the desperate letters that I get from constituents that policyholders would be grateful even for the smallest of concessions, such as a time scale for delivery following Sir John’s final report, even if that means that they would not receive compensation payments until, say, the end of 2011. Indeed, given the sad history of this shambles, my constituents and those across the nation who have been affected by Equitable Life’s downfall have learned to be realistic. People no longer have any expectation that they will get a share of the proposed £4 billion windfall, yet so long as indecision remains regarding the formula by which to calculate compensation payments, the Government have decided that the safest option is inaction.

In the current state of limbo, people are worrying themselves sick. Let us never forget that although pensions may be a highly technical matter-I accept that the report is very detailed and needs to be properly analysed-the problems surrounding Equitable Life and other pension schemes are human. As my hon. Friend the Member for Banbury (Tony Baldry) rightly pointed out, policyholders are dying as we wait for this sorry saga to be tied up. Surely it is not beyond the wit of man for us to be putting together an interim payment for those hapless folk.

I have spoken before in the House about some of the policyholders in my constituency who are affected by these terrible delays, but I believe it is worth touching on a few again, simply to reiterate to Ministers the suffering that the hesitation is causing.

Mr. MacDermott of Motcomb street in Belgravia wrote to me before, saying: “I cannot claim poverty but I can safely say that at 77, I might well have been happily retired rather than continuing working so as to provide for my wife and two university-aged children.” He is now 80 and sees no sign of change or resolution of the issue.

Mrs. Valerie Walsh of Bedfordbury in Covent Garden said to me: “If I had received my full pension pot I would not now be struggling just above the poverty line.” Because she earns a relatively modest amount, it is impossible for her to claim any of the housing help and benefits that are available to many other pensioners in the district where she lives.

Most of the people who have lost out do not have the option of returning to the workplace to make their way in life. They are often in their 60s, 70s or even 80s and the Equitable Life money was the most important part of what should have been a relatively relaxed and quiet retirement. They have been denied that. They have been denied justice, and with ever more delays, many will be denied ever seeing any of the money.

Other Members have spoken about the wider issues, which I shall deal with in conclusion.

We would be foolish to underestimate the ongoing damage to confidence in the pensions industry that is being caused by the failure to draw a line under the Equitable Life affair. The breaking down of conventional middle-class job security has made ever more important the concept of trust in personal and company pension schemes. Until its collapse, Equitable Life was widely regarded as the jewel in the crown of the retirement providers, but the failure of the regulator to intervene in the affair showed that existing rules to protect the consumer from unreasonable risks were not enforced. We can go through the catalogue of events. The FSA should have taken its role more seriously when it was the regulator and engendered a culture of collective responsibility that would have ensured universal public confidence.

I am worried for the future. We all know that it will be the next generation of taxpayers who pay for the borrowing that is taking place now. We are spending £4 for every £3 that we raise in tax this year, purely for consumption. There is no investment involved in that. Future generations will have to pay the bill for our national profligacy. That makes it even more crucial that in the decades ahead the youngsters of today-the middle-aged folk of tomorrow, who will become pensioners themselves-have enough faith in the financial system to put their hard-earned cash into a savings pot for the future. Unfortunately, it is an indictment of the Government that those who had already taken responsibility for their own destinies by investing in Equitable Life have been treated with such contempt.