Kramer, Browne and Burstow quiz Byrne on Equitable Life

• [Jul 21]: Susan Kramer (Richmond Park, Liberal Democrat) (Urgent Question): ' . . FINALLY, given that more than 300 Members have signed the early-day motion tabled by my hon. Friend Dr. Cable on Equitable Life issues, will the Minister consider giving the House the opportunity for a debate in Government time and the opportunity to vote?'

To ask the Chancellor of the Exchequer if he will make a statement on the parliamentary ombudsman's follow-up report on Equitable Life and to clarify the work of Sir John Chadwick on a payment scheme.

Liam Byrne (Chief Secretary, HM Treasury; Birmingham, Hodge Hill, Labour): I am very grateful to you, Mr. Speaker, for granting me the opportunity to answer questions on Equitable Life today. A week or two ago, I promised the House a short statement, by way of update before the recess, and I laid that statement this morning. I do not intend to read it out as it is there for hon. and right hon. Members to consider. I know that time is short this afternoon, Mr. Speaker and that you will want to maximise the opportunities for questions, so let me limit my opening remarks to these.

First, the Government are grateful to the ombudsman for her report. Secondly, in many areas we agreed with her conclusions of maladministration. In four key areas, we agreed with her findings that injustice had followed. We departed from the ombudsman in her recommendation for a compensation scheme across the board and we set out cogent reasons for that. They are being challenged by judicial review today, so my remarks on that question will be rather limited this afternoon; but-this is the crucial but-we believe an ex gratia scheme must be set up to help those who have suffered hardship as a result of the injustice that we believe was perpetrated. We have asked Sir John Chadwick to make recommendations on that question urgently, but he must first pin down who has lost what. He will set out his next steps in August and, if you would oblige me Mr. Speaker, I would be very happy to update the House on its return.

Susan Kramer: The Minister will be very aware that Equitable Life policyholders have been quite dismayed, having heard the ombudsman's judgment that the injustice will not be remedied whatever the outcome of the work yet to be done by Sir John Chadwick-referring to the injustice due to maladministration. Will the right hon. Gentleman review the remit given to Sir John Chadwick?

The Minister will also be aware that EMAG-the Equitable Life Members Action Group-and many other Equitable Life policyholders have not given evidence and testimony to Sir John Chadwick, because they have lost confidence in his proposals since they saw his document on the Equitable Life ex gratia payment scheme in June. Again, will the Minister review the remit he has given Sir John?

In his statement today the Minister referred to a report by Sir John in August, but the statement included no mention of a timetable, which the many elderly members of the various Equitable Life organisations are desperate to see. He also mentioned that Sir John is speaking with interested parties, but is he aware that Sir John has refused to meet the all-party parliamentary group on justice for Equitable Life shareholders, with a membership now of 130? Will he advise Sir John to reconsider his decision and find some other venue to meet Members of Parliament? Finally, given that more than 300 Members have signed the early-day motion tabled by my hon. Friend Dr. Cable on Equitable Life issues, will the Minister consider giving the House the opportunity for a debate in Government time and the opportunity to vote?

Liam Byrne: Let me deal first with the central question about the difference between compensation schemes, as proposed by the ombudsman, and our conclusion that an ex gratia scheme would be more appropriate.

The ombudsman made 10 findings and went on to say that a number of injustices resulted. When we looked through those findings, we came to the conclusion that in nine out of the 10 findings, we could accept wholly or in part her conclusion that there was maladministration. In four of those areas, which I think were significant, we accepted that injustice followed.

Two consequences follow from that position. The first is that we departed from the ombudsman in her conclusion that a compensation scheme should be put in place, because we do not think the taxpayer should be the compensator of last resort. We think that would have perverse consequences, and it is a principle on which the House has voted in the past. Secondly, it would be irrational for the Government to propose a compensation scheme across the board for charges of maladministration or injustice that we did not accept.

I know that when the ombudsman came before the Public Administration Committee on 21 January-my hon. Friends will correct me if I have the date slightly wrong-she said that she would almost rather the Government accepted her recommendations and then did nothing to provide compensation. I do not think that that is the right approach. There are findings that we have accepted. There are charges of maladministration that we have accepted. Further, there are charges of injustice that we have accepted. We also believe there will be people who have suffered and are suffering hardship-in some cases extreme hardship-as a result of that. That is why it is essential for us to set up an ex gratia payment scheme.

The ombudsman did not have the chance to go into the vital question of who lost what. That is the first piece of work that we have asked Sir John to consider. I do not think it is possible to get an ex gratia scheme in place and operating justly until we have understood who has lost what. Obviously, there are hundreds of thousands of policyholders-

John Bercow (Speaker): Order. May I interrupt the Chief Secretary? I very much appreciate, as the whole House will, that he is attempting to respond comprehensively, but we have a time limit for this exchange and I want to get in as many Back-Bench Members as possible.

• . . Jeremy Browne (Taunton, Liberal Democrat): After the ombudsman published the report with the damning title, "Equitable Life: a decade of regulatory failure", the Government's response has been characterised by foot dragging. They missed the deadline to respond by the end of 2008, as initially promised. Sir John Chadwick has been non-communicative with Members and others, but meanwhile policyholders are dying every day while the Government are still deciding to pick and choose the ombudsman's recommendations. The Minister may think that today represents some progress, but does he not share my concern that his statement was littered with equivocation, and talked of "a further document", an "interim report", a statement of his approach, and a list of "the specific issues". Will policyholders not be worried that that is further delay and prevarication? If the Government thought that the situation was as good as the Minister claimed, would he not, instead of sneaking it out in written form, have come to the House of his own volition and made a statement this afternoon?

Liam Byrne: There have been three debates on Equitable Life and the Government's response to the ombudsman this year, and we had a good debate during oral questions a week or two ago. I return to the basic argument that I have presented this afternoon: if we think an ex gratia scheme should be set up, to ensure that money under that scheme goes to the people who have been hardest hit, the first piece of work that we must do is to understand who has lost what. Until we do so, it is difficult to get up and running an ex gratia scheme that will operate justly. Surely, that must be the objective of right hon. and hon. Members. Sir John has an enormous amount of work to do to go through the information that has been passed to him by Equitable Life. A number of right hon. and hon. Members have made representations, and he is moving quickly. He is publishing reports in quick succession to make sure that the maximum amount of information is available to policyholders and so that they can see and comment on the direction in which his mind is moving.

• . . Paul Burstow (Sutton & Cheam, Liberal Democrat): Time is definitely of the essence when it comes to getting the matter resolved. On the Minister's point about dealing with hardship, will he tell us today whether means-testing will play any part in the ex gratia payment scheme?

Liam Byrne: At this stage I would not prejudge the design of the scheme that Sir John has been asked to come back with.

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