Cable, Kramer, Barrett, Rogerson and Burt on Equitable Life (Twickenham & Richmond Liberal Democrats)

Cable, Kramer, Barrett, Rogerson and Burt on Equitable Life

October 24, 2009 5:23 PM

• [Oct 21] Vincent Cable: ' . . THE human concern derives from the fact that there are roughly 1 million Equitable Life policyholders . . Many of those people have suffered large losses-up to half of their pension. Of those 1 million, about 30,000 have died since the original collapse of the company. Since the ombudsman reported on the subject, about 6,000 have died, and every day that passes before justice is obtained another 15 die. '

I beg to move: That this House notes that the Parliamentary Ombudsman has taken the unusual step of using powers under the 1967 Act to present Parliament with a further and final report on Equitable Life; also notes that the Public Administration Select Committee's Sixth Report, Justice denied? The Government's response to the Ombudsman's report on Equitable Life, concluded that the Government response to the Parliamentary Ombudsman's report was inadequate as a remedy for injustice; recognises the vital role the Ombudsman plays in public life; 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; notes the outcome of the Judicial Review announced on 15 October extending the period for compensation claims back to 1991; welcomes the formation of the All-Party Group on Justice for Equitable Life Policyholders; and notes with regret its necessary formation and the fact that over 30,000 people have already died waiting for a just resolution to this saga.

I have no interest to declare. Indeed, I am not only moving this motion for disinterested reasons, but moving it on behalf of more than my own party-although we feel strongly about it. Members in all parts of the House have taken up the cause of Equitable Life policyholders, and in fact the basis of this motion is early-day motion 1423, which has been signed by the remarkably large number of 337 Members, including 113 of the Government party. This motion should therefore have widespread all-party support, and the only amendment to it that has been tabled is a purely factual one; it notes that a judicial review has taken place, but makes no comment or judgment on the outcome.

There is a lot of detail-legal, actuarial and other kinds-in this argument and we shall be plunged into it before long, but I want to start by setting out the broad principles that underlie the motion. From our point of view, there are two essential concerns. One of them is a human concern-a concern for human welfare and the individuals who have lost from this disaster-and the other is a constitutional concern. The human concern derives from the fact that there are roughly 1 million Equitable Life policyholders. About 400,000 policies are still managed by Equitable Life, while the other 600,000 are managed by other insurance companies. Many of those people have suffered large losses-up to half of their pension. Of those 1 million, about 30,000 have died since the original collapse of the company. Since the ombudsman reported on the subject, about 6,000 have died, and every day that passes before justice is obtained another 15 die. That summarises, in rather graphic terms, the consequences of leaving justice unremedied.

The constitutional issue is as follows. We have an ombudsman, and it is not a Government quango. It is a parliamentary institution-it was set up by Parliament and it reports to Parliament on our behalf. The authority of the ombudsman is clearly at stake. Those of us who have tabled this motion have done so to ask the Government to implement the ombudsman's recommendations; that is essentially the basis of it. The Government have, either in spirit or in substance, so far declined to do so.

We need to remember just how important this issue of the authority of the ombudsman is. Many people do not attach great respect to this House-we can understand why that is the case in recent months. The ombudsman is a parliamentary institution that is central to our constitution. It says, "Whatever you think about your MP or other MPs, there is a body you can go to that is independent of Government. If you have been wronged through maladministration in Government or a quango, this independent authority will investigate the matter without partiality and will help you to achieve justice through compensation, where necessary." If the authority of the ombudsman is defied by the Government in this major case, we will lose the credibility of a major institution of the country. That is what is at stake.

918

Oliver Letwin (West Dorset, Conservative)

I declare an indirect personal interest.

Does the hon. Gentleman agree that this goes beyond the argument he is making, in that there is literally no point in having an ombudsman unless Governments make it a principle that they will obey what the ombudsman recommends?

919

Vincent Cable: The right hon. Gentleman is right; as this is such an important case-it is the biggest that the ombudsman has taken on-if the ombudsman's authority is simply flouted, that makes the ombudsman redundant. I might go further than him by asking the following: if the institutions of Parliament are flouted, what is the purpose of Parliament? That is a fundamental question.

919

Lembit Öpik (Montgomeryshire, Liberal Democrat): Does my hon. Friend agree that the general public, including the 1,000 or so people in Montgomeryshire who lost money through Equitable Life, simply do not understand how this Government can resist what seems like an act of natural justice, namely following the guidance of the ombudsman? My constituents do not follow Parliament closely, but they feel that they are being treated unjustly on a matter that could be easily corrected in just the way that my hon. Friend has outlined.

919

Vincent Cable: Well, it can be and, indeed, it should be. Let me try to anticipate the Government's concerns. In addition to the two broad principles that I have sketched out-the human concerns and the constitutional concerns-a third issue arises: money and finance. There is common ground on the fact that that must be relevant when we are talking about large amounts of compensation, but we have crossed a bridge in the sense that the ombudsman has accepted that the public purse is a factor that must be borne in mind in compensation awards and the Government have accepted, through their ex gratia payments proposal, that there has to be compensation. The principle that there is an issue to address has been accepted on both sides. We are now united on the broad principle that finance is a factor, but that the Government agree that there must be public expenditure. We are arguing about how that mechanism will be introduced.

Let us consider where the debate has reached in the past year. Our view, in moving this motion, is that the principles under which the ombudsman's findings must be implemented must include, as she said, an "independent" process, which means a tribunal-like process independent of the Government and independent of the Treasury. The Government's view is that compensation should be decided through a process led by, determined by and ultimately decided by the Government-the Treasury. That is now the fundamental distinction. In a way, that explains the heart of the constitutional problem: if the Government decide how we remedy a fault of theirs, wherein lies the independence of the ombudsman? That independence simply disappears.

919

David Heath (Somerton & Frome, Liberal Democrat): Does not the fault with the Government's position extend rather further than that? Not only have they ignored the findings of the ombudsman and refused to accept them, but they have engaged in an exercise of foot-dragging, procrastination and temporising. They have done everything possible to prevent this matter from being dealt with properly and to prevent these people from getting the justice that they deserve. Is that not the indictment against the Government in this case?

920

Vincent Cable: Indeed, and I now propose to take my hon. Friend through this nine-year journey, the end of which we hope we are finally approaching. Let me turn to one aspect of this tension between the two approaches to resolving the compensation-the Government-led versus the tribunal-led. I note that the Government amendment contains the remarkable phrase that their scheme

"is administratively quicker and simpler to deliver".

The idea that after 10 years the Government are invoking speed as the basis for their case would have Sir Humphrey gasping with admiration at the Treasury's abilities in this matter.

920

Steve Webb (Northavon, Liberal Democrat): Just before my hon. Friend starts his nine-year journey, may I ask whether he also accepts that there is a second difference between our position and that of the Government? This is not simply about how much cash the Government are going to give as opposed to how much we think they should give, because the Government, by partially rejecting the ombudsman's finding, have excluded some categories of loss and some categories of policyholder altogether. Therefore, even if they suddenly decided to become more generous in cash terms, they would already have precluded a set of people whom the ombudsman rightly thinks, as do we, have suffered injustice.

920

Vincent Cable: My colleague is right. Of course, following the judicial review, some of those categories are now included; I understood the statement that the Minister made yesterday to say that the Government have accepted that specific change. So, there is wider coverage than there was before, but we remain with the fundamental division.

920

Greg Mulholland (Leeds North West, Liberal Democrat): My hon. Friend has discussed the cost of compensation, but does he agree that it is high time that the Government told this House and the taxpayer how much has been spent on evading justice over the past 10 years? It is time for the Minister to tell this House that figure today, which I suspect is very large.

920

Vincent Cable: I had not thought of that angle, but it is a good one. I am sure that if we were to add together the legal fees and the opportunity cost of Treasury officials' time, we would be talking about many millions.

921

Andrew Murrison (Shadow Minister, Defence; Westbury, Conservative)

Does the hon. Gentleman accept the principle that justice can be means-tested? It seems that the tribunal will have to grapple with that. If that principle is accepted, what on earth will the Government say to those who do not make the cut?

921

Vincent Cable: Well, indeed; I believe that the hon. Gentleman is referring to the concept of disproportional effects, which the Government have introduced. None of us fully understands what it means. I do not think that the arbitrator whom the Government have appointed understands what it means either because, as far as we can tell, in his initial report he has not tried to engage with that extremely difficult issue, which many of us thought was introduced simply to evade the issue of compensation.

921

Brian Binley (Northampton South, Conservative)

Does the hon. Gentleman agree with the many constituents of mine who are horrified that this Government have denied them justice by refusing to set a timetable for payment and, specifically, by not defining what "disproportionality of suffering" actually means? Does he further agree that the Minister should set people's minds at rest on those two issues today? If he does not do so, would we be right to say that the Government are deliberately waiting for more of these people to die?

921

Vincent Cable: That is a very emotive way of putting it but, in essence, the hon. Gentleman is right. That is the fact of the matter because, as I said in my introduction, every day that passes another 15 of those people die; it is a sadness that many of them will never see justice.

921

Patrick Hall (Bedford, Labour): rose-

921

Vincent Cable: I am sure that hon. Members are anxious to hear me get on with the history, but I shall take one further intervention now.

921

Patrick Hall (Bedford, Labour): It is important that, at this stage, the hon. Gentleman makes it clear what he understands the compensation to refer to. I am one of the signatories of early-day motion 1423, which refers to the compensation recommended by the ombudsman. Does he agree that the ombudsman was talking about the relative loss arising from the acknowledged maladministration and not that element of loss arising from the vagaries of the market?

921

Vincent Cable: Yes, that is right; it has been clear from the beginning that we are talking about relative losses. It is clear that nobody-neither the action group nor anybody else-is suggesting that wider definition.

Let me return briefly to the beginning of these events. I do so not simply for the sake of it, but because a large number of hon. Members were not in this place when the original crisis broke. Having checked this, I believe that only one member of the Government Treasury team, the Financial Secretary, and one member of the Conservative Front-Bench team, Mr. Hammond, were Members at that time. We have been around this for a long time and a lot of people have come into the story at different stages, so it is worth remembering where it started.

Equitable Life collapsed, in effect, in 2000. The first debate in this House, which was introduced by Richard Ottaway, was held at the end of that year. It is worth returning to that debate, because many of the arguments that we are rehearsing today were set out clearly and well on that occasion. In particular, the whole principle of compensation was discussed at that time, because it was clear to those of us who had been following events at Equitable Life that there was an issue of maladministration to address. The company had been declaring large bonuses far in excess of its profits or underlying resources for some years, such that the actuary responsible for it was subsequently fired by his professional body. The company had a guarantee of annuities that assumed a continuing high level of inflation, which was described at the time as mathematically brilliant but economically illiterate. The question was raised, even then, as to how it could possibly have been that the Government Actuary's Department and the Department of Trade and Industry, which were overseeing the matter, did not spot the problem.

So, there was a prima facie case of maladministration. I recall asking the Minister at the time whether, if there had been maladministration, there would be compensation. I asked that question because the Prime Minister made his political reputation-a long time ago-as an Opposition spokesman arguing the case for the Barlow Clowes investors, who were compensated after maladministration. The answer I received from the Minister was that once the ombudsman had made a recommendation, we could proceed to compensation. We have been waiting ever since for that debate to be resolved.

921

Norman Lamb (North Norfolk, Liberal Democrat): Does my hon. Friend recall the Penrose report, which gave a clear indication of maladministration that, at the time, was entirely rejected by the Government?

922

Vincent Cable: Yes, and that was the second step in the process. We had several years before Penrose finally reported in 2004. Lord Penrose described the delays, even at that stage-remember, this was five years ago-as "iniquitous and unfair". Indeed, he found a combination of failures of policy, which are not examples of maladministration, and of maladministration and recommended that the matter be passed to the ombudsman, which is what happened. The matter was referred to the ombudsman, and my hon. Friend Norman Lamb and I participated on behalf of our constituents. Let us remember that the reference to the ombudsman was made on our behalf as Members of Parliament-there were 898 separate complaints, submitted by large numbers of Members on their constituents' behalf. That is why the ombudsman became involved. It was not an official process; it was a process that we initiated on behalf of our constituents.

The ombudsman pursued her inquiry and finished her work in February 2007. It was July 2008 before that work was formally presented to Parliament, as a result of innumerable questions posed by the Treasury under a process that is described as Maxwellisation. For those not familiar with the jargon, Maxwellisation refers, I think, to one of your predecessors, Mr. Speaker, as Member for Buckingham, although he is perhaps more famous-or infamous-for other things. That Maxwellisation cost a lot of time.

We received the ombudsman's report in July 2008 and its key findings-it is worth summarising them briefly-contained 10 determinations of maladministration: one by the Department of Trade and Industry, four by the Government Actuary and five by the Financial Services Authority. The ombudsman recommended remedies-that is, compensation. It is worth remembering that, despite what has sometimes been implied by the Government, this was not a case of a difficult lady plucking some proposals for compensation out of the air. The recommendations rested on a solid body of reasoning that had been set out well in advance called "Principles for Remedy", which explained exactly the conditions under which compensation should be awarded and the process that needs to be gone through.

The ombudsman was engaging in a meticulous process of reasoning that led to the conclusion that if there is injustice as well as hardship, a compensation process should be initiated. She described in some detail what should happen. At the risk of boring hon. Members, it is worth reading some of the key sections of her recommendations, because that is what the subsequent two years have been about. She stated:

"My second-and central-recommendation is that the Government should establish and fund a compensation scheme, with a view to assessing the individual cases of those who have been affected by the events covered in this report and providing appropriate compensation."

She described how that should be done and her key recommendation was that the process

"should be independent and constituted along the lines of a tribunal or adjudication panel".

Independence of Government was central to the recommended process.

We were then given the Government's response. We had a response in the House from the then Chief Secretary, who is now Secretary of State for Work and Pensions, which people responded to very well because she made what seemed to be a full apology and suggested that the Government would put in process a compensation exercise. We were taken aback by the fact that the Government then issued a written response-as opposed to an oral response to the House-in the form of Command Paper 7538, which took us in a different direction. Several key elements have caused a great many problems to this day. The process was to be run by the Treasury, rather than independently, and payments were limited to post-1999 cases. That has now been remedied, but the limited degree of compensation excluded 90 per cent. of what the ombudsman had recommended. The document introduced the concept of disproportionate effects through means-testing, which we have already discussed, and sought to apportion blame between different actors, although of course the ombudsman was solely concerned with Government maladministration. Subsequently, the Government rejected the idea of interim payments, which might have speeded up payments to suffering individuals.

Over the last year-this brings us fairly close to where we are today-we have had a succession of responses to the Government's response. One has come from the ombudsman, and we have had two reports from the Select Committee-I notice that the Chair is here and might well contribute to the discussion. We have also had the judicial review. It is worth reflecting a little on what the ombudsman had to say about how the Government responded to her report.

922

Peter Bottomley (Worthing West, Conservative)

Will the hon. Gentleman refresh the House's memory on the time scale the ombudsman had in mind and on how much of that time is gone? While I am intervening, may I put it on the record that although I am an Equitable policyholder I would give any compensation, were I to get any, to some good cause?

924

Vincent Cable: I cannot find the exact phrase in the few seconds that I have been given, but it was very clear that the process should be expeditious and humane. That is where we are in terms of the ombudsman's approach. She also said:

"It is clear to me from the Government's response to my report and from the further evidence given to the Select Committee on behalf of the Government...that, whatever the outcome of the work to be done by Sir John Chadwick, a full remedy will not be forthcoming for the injustice resulting from the maladministration I found had occurred in the prudential regulation of Equitable Life."

In other words, she had already concluded that the Government mechanism did not allow justice to be delivered through compensation and that the process was fundamentally wrong.

924

Annette Brooke (Mid Dorset & North Poole, Liberal Democrat): It is interesting to note that the Government use the word "expeditiously" in their amendment. Perhaps timeliness is now very belatedly being addressed. Does my hon. Friend agree that Sir John Chadwick's remit does not offer us the opportunity to be assured that there will be full transparency and fairness?

924

Vincent Cable: Indeed. Since the Government have declared themselves to be racing us in order to get there faster than the proponents of this motion, speed is no longer the issue. They have told us that they will speed up, at long last, but fairness will become the issue. The issue will be whether the Government accept Sir John Chadwick's findings when they appear. We will come to that.

Let me finish my reference to the ombudsman's response. Following the official response, the ombudsman has been involved in a very tart correspondence with the Chief Secretary. It is worth quoting one or two of the exchanges. The Chief Secretary spoke in this House on 21 July in reply to an urgent question. In response, the ombudsman wrote a letter that has subsequently been published. She stated:

"I noted what you said in the House on 21 July, and did not recognise it as a true representation of my position. That said, this is not the first time that the Government has misrepresented my position in order to defend its own and I suspect it will not be the last."

We should be under no illusions about what the ombudsman thinks about the way in which the Government are handling the matter.

It is not just about the ombudsman. We have had two excellent reports from the Select Committee on Public Administration-"Justice delayed" and "Justice denied"-which are well summed up by the phrase that the Government's position was

"shabby, constitutionally dubious and procedurally improper".

We now come to the last stage of the process, the judicial review that concluded recently. The action group for the policyholders deserves an enormous amount of credit not just for briefing Members but for keeping alive an issue that could easily have died if it had not been driven so forcefully and with such conviction. The group took the judicial review option, at their own expense, to challenge the legality of the Government's response to the ombudsman's report.

The key point in this takes us back to the fundamentals of why we have an ombudsman. The purpose of the ombudsman was to remove the need for judicial reviews of Government decisions, or the need for people to spend large amounts of their own money challenging Government rulings in court. The review should never have been necessary, but it was sought by the action group, and it is worth reflecting on its key findings.

The judicial review concluded that the Government's position "lacked cogency", and that the Government unlawfully rejected the finding that maladministration caused injustice. It specifically instructed the Government to assess claims going back to 1990-quite a major advance in concrete terms. However, as the Chief Secretary pointed out in his statement yesterday, the review concluded that the matter had to go back to Parliament, so that the question of how the compensation process would work could be resolved.

It is therefore up to us, as Members of Parliament, to decide how the compensation process happens. Should it happen in the way that the Government have suggested, through Sir John Chadwick's inquiry, or does it need an independent tribunal process? I am sure that the Government agree that, for practical reasons, there is no need to go back to square one. Sir John Chadwick has done a lot of work, so surely we do not want to put that in the bin and start doing something else.

Of course we do not want to do that. The practical position is that the very useful work done by Sir John Chadwick forms the platform on which we can build a resolution to the problem. That work need not be ditched, because it can now be taken over by an independent process. It can be continued with absolute confidence that the findings that are reached will be honoured, because those findings are impartial and independent.

In contrast, we have no confidence at all that the Government will not simply disregard a conclusion produced by Sir John Chadwick that is inconvenient to them. The evidence for that is the fact that, for the past nine years, the Government have continually dragged their feet on every action that would have brought justice for our constituents.

kramer • . . Susan Kramer (Richmond Park, Liberal Democrat): I shall also try to be brief, because Dr. Wright said so much of what I wish to say, but said it a great deal better than I could ever have said it.

I first wish to congratulate EMAG. I am incredibly conscious of the many members of the action group and their appointed leadership who took the difficult decision to put themselves at risk and raise the resources to proceed with a judicial review. They have been utterly vindicated by the court, which accepted most of the principles that they brought before it, and changed the likely outcome for the many policyholders who lost money in Equitable Life because of regulatory maladministration. Those people deserve credit from this House.

I also join in the sentiment that the judicial review has been a marked success for Parliament and the parliamentary ombudsman. When the ombudsman produced her report, I was incredibly impressed, like many others, by the degree of detail, care and objectivity that were so evidently present in the analysis of the circumstances and the carefully drawn conclusions that she reached. I am shocked, therefore, by the Treasury response, which in many ways was arrogant, superficial and dismissive, and not the kind of response deserved by the work, thought and care that went into the ombudsman's initial report. In a sense, the response was a comment on the Treasury's view of the ombudsman system.

944

Theresa Villiers (Shadow Secretary of State for Transport, Transport; Chipping Barnet, Conservative)

I cannot think of another instance in which we have seen the Government respond to an ombudsman's report in a remotely similar way. It seems that this is unprecedented. Does the hon. Lady agree?

945

Susan Kramer (Richmond Park, Liberal Democrat): I very much agree with the hon. Lady's comments. I also say to the Exchequer Secretary that we saw today a repeat of some of that attitude when the ombudsman's timetable for delivering compensation to injured Equitable Life policyholders was questioned.

945

Bob Spink (Castle Point, Independent)

Does the hon. Lady agree that it would show greater respect to policyholders were the Labour or the Conservative party-whichever wins the general election next year-to undertake to make interim payments or payments in full to policyholders before the end of next year? That is a substantive issue.

945

Susan Kramer (Richmond Park, Liberal Democrat): I can only agree with the hon. Gentleman. On the ombudsman's timetable, the Government's response to the ombudsman's recommendations, published in January 2009, states:

"The Ombudsman has said that the scheme"-

the compensation scheme-

"should be established within six months of any decision being taken to set it up"-

the ombudsman would have assumed that that meant summer 2008-

"and that its work should be completed"-

completed means all payments made-

"within two years of its being established."

We would have been almost through the entire process had the ombudsman's ideas and structure, which came out of the detail of four years' work-they were not off the cuff or the back of an envelope-been accepted. Today, once again, the Government and Treasury have suggested something very different from the ombudsman's position.

945

Jo Swinson (East Dunbartonshire, Liberal Democrat): I totally agree with what my hon. Friend says about the detailed work done by the ombudsman. We have an ombudsman to consider such cases and recommend justice. Does she agree, however, that the Government's response undermines the whole office of the ombudsman? Treating this report in such a way could create a precedent for future ombudsman reports being ignored and recommendations being cherry-picked.

945

Susan Kramer (Richmond Park, Liberal Democrat): I could not agree more with my hon. Friend. Everything that we do has the potential to create a precedent. I and, I suspect, many other hon. Members would like the ombudsman's role to be accepted and strengthened, rather than weakened dramatically.

I want quickly to raise a second issue. What, for most of my constituents, goes to the heart of the matter is the issue of "disproportionate impact", which is to be the principle for compensation payments. In June 2009, Sir John Chadwick, who was asked to consult on this matter, used the following phrase:

"I am satisfied that the Terms of Reference"-

his terms of reference-

"do not require me to engage in any form of means-testing in relation to individual policyholders."

What we have heard from Treasury Ministers today seems to conflict with that statement. Therefore, I hope finally to hear in the winding-up speech a definition of "disproportionate impact". I certainly do not want to argue against a principle if the Government have already abandoned it, but it did not sound to me, from the Chief Secretary's opening speech, that they have.

945

Mark Durkan (Foyle, Social Democratic and Labour Party)

Like many of us, the hon. Lady has received many representations from constituents and others. Has she received any representation from any policyholder who feels that they suffered, or whom she believes suffered, merely a proportionate impact?

946

Susan Kramer (Richmond Park, Liberal Democrat): The hon. Gentleman speaks with great common sense and reflects the voices in the letters and representations that I have received.

946

Andrew Stunell (Hazel Grove, Liberal Democrat): I am sorry to interrupt my hon. Friend when she is in such fine form, but does she not also agree that the fact that the judicial review struck down the Government's alternative plans shows very clearly that the Government have been on the wrong foot right the way through in their response to the ombudsman?

946

Susan Kramer (Richmond Park, Liberal Democrat): I am glad that the judicial review has been raised, and I agree with my hon. Friend. I do not want to repeat the comments about the judicial review made by my distinguished neighbour, my hon. Friend Dr. Cable, in his opening speech, because he summed up most of the situation extremely effectively. However, I want to point to one issue raised on the Floor: the presumption that somehow there is some resistance to the principle of compensating for regulatory maladministration. Comments were made by the judges on precisely that issue. We should pay attention to such comments when they come from such a distinguished source. They said that they

"found no evidentiary support, at least in the material before us, for the claim...that Parliament 'has accepted' that compensation for regulatory failure is 'not generally appropriate'".

These are judges. They understand how to read legislation and Hansard, and they did not think that this House had set up a barrier, or raised some principle, against compensating for regulatory maladministration. I understand the judges words to mean that we might strongly presume that the House expects regulatory maladministration-as others have said, we are not talking about market or management failure at Equitable Life-by the regulator to lead to some form of compensation, or the expectation of it.

I do not want to take up the time of the House by talking about my many individual cases, but it is important to make it clear again-this has come up in previous debates-on the Floor of the House that people impacted by maladministration do not form a select group of highly paid, wealthy professionals who happened to engage in exotic life policies. Those who have been impacted in my community range across the social scale. Some are on very low and meagre incomes; others are on decent incomes. However, the notion that this is a case of the rich coming with a cry of heart is completely false, yet often that belief seems to underpin much of the thinking of those on the Treasury Bench.

I want to make a plea that I have made before on the Floor of the House: we should be able to hold such a debate in Government time. We have heard that from others, but we all ought to make it clear that this is our expectation. Many people will resist supporting a motion tabled by an Opposition party, particularly on one of its Opposition days, merely on the principle that that is what is done. That is unfortunate, because an issue like this, given the suffering that has been caused, overrides any such facile view of how Parliament should function. The Government keep challenging us, over and over again, on our position on this issue, but surely this is exactly the kind of instance in which the Government should be introducing the debate, presenting it to the House and allowing the House the final word. We live in a parliamentary democracy, and surely we must fight for that principle, as well as the principle of justice-real justice-for our constituents.

I want to make one last remark on Sir John Chadwick. I have great respect for him, but he has been very resistant to meeting the all-party group on Equitable Life policyholders, of which I happen to be the secretary. I find that unfortunate and I take it to mean that the debate that he is conducting is far less well informed than it should be. I ask the House to call again on Sir John Chadwick to rethink his interest in excluding Members of Parliament from considering these issues.

• . . John Barrett (Edinburgh West, Liberal Democrat): I shall not take the full allocation of my time in the debate to ensure that all my colleagues who wish to speak can also get in. I should like to thank my hon. Friend Dr. Cable for his opening speech, and I shall try not to repeat the points that he made. I advise anyone reading this in Hansard that his speech is worth reading from start to finish.

I am delighted to have been called to speak today. I remind the House of a previous Liberal Democrat Opposition day motion on an issue of fairness and justice. At that time, many MPs from all parties got together and did the right thing. That day, it was for the Gurkhas, and common sense and decency prevailed. Equitable Life policyholders, who I am sure will be following today's debate, will be hoping for more of the same from the House today. Parliament was in the news last week for all the wrong reasons, and today's debate gives us a chance to show this place at its best.

It is a scandal that we even need to have this debate. Quite apart from the number of times we have spoken about this issue in this place and in Westminster Hall over the years, we have also had an ombudsman's report, a damning Public Administration Committee report, an almost unprecedented special report from the ombudsman and now a High Court ruling, all of which concluded that there is an injustice that needs to be remedied quickly. It seems that it is only the Government who do not get the message.

Today's debate takes place in the context of last week's court ruling. Treasury officials tried their best to spin the outcome, but it was clear to everyone, including the judge, that the policyholders were the principal victors. I was glad to hear yesterday that the Government will not be seeking to take the decision to appeal. Of course, we should remember that, were it not for the tenacity of EMAG in bringing the case to court, it is likely that the Government would have got away with their inadequate response to Ann Abraham's initial report. That raises this question: what use is an ombudsman, if they are simply ignored by Ministers and the Government? The fact that the ombudsman felt that she had to issue a special report to highlight the Government's inaction is a disgrace. This is only the fifth time in 42 years that the ombudsman has felt moved to use the so-called nuclear option, and it shows how serious the Government's negligence has been.

951

Daniel Kawczynski (Shrewsbury & Atcham, Conservative)

The hon. Gentleman paid tribute to EMAG, and I echo that sentiment. Will he join me in particularly congratulating Mr. Paul Braithwaite, who has spearheaded this campaign? He has been to the House of Commons on many occasions to interact with the all-party group on Equitable Life, and he has really driven the campaign forward.

952

John Barrett (Edinburgh West, Liberal Democrat): I am happy to concur with that.

A lobby of Parliament by Equitable Life policyholders is scheduled to take place next month. I have read that the lobbyists will be drawing our attention to the fact that 15 policyholders die each day waiting for justice while the Government drag their heels. It is a great testament to the policyholders that they are prepared to keep fighting for the cause not only for themselves, but for those who are no longer with us. Let us be very clear, however: they should not still have to be fighting.

Like all hon. Members, I have a great many constituents who been affected by the collapse of Equitable Life. They include Ian Fairweather, John Stepney, James Michael Morton, Hana Hornung and John Smith, among many others. Those people did the right thing and made provision for their retirement. The proposed payout scheme looks as though it will leave 90 per cent. of policyholders with little or no help at all. That is simply not good enough. In fact, it makes me think of my constituent, Joe Shepherd, who has been fighting for justice in pensions-not against Equitable Life-for 19 years. He has gone through three MPs and when I stand down at the next election, he will be into his fourth. He is now in his 80s and he is the last pensioner from the relevant company left, yet he has still not had justice. I dread to think how many Equitable Life people will be in the same position.

If Equitable Life policyholders are left with nothing, what message does that send out to the next generation, who are already reluctant to save towards their pensions? My constituents who have lost significant sums of money are justified in asking why Equitable Life is treated so differently from a failed bank. I have no good answer for them. At today's Prime Minister's Question Time, the Prime Minister responded to one of the later questions by saying that not one saver had lost money in a British bank. We in this place have to ask why the Government are not giving the same pledge to Equitable Life savers.

My hon. Friend the Member for Twickenham mentioned earlier that some Members were not elected to this place when the whole saga started. Many Members, for the same reason as me or for other reasons, will not be in this place when-hopefully-the payments start to go through. In my own city of Edinburgh, which has seen many Equitable Life members badly hit, I believe that a number of MPs, including a number of Labour MPs, will lose their seats at the next election. I think that they will have let down Equitable Life policyholders.

The treatment of Equitable Life policyholders is one of the great injustices of this Parliament. It is a mess of this Parliament's making and we need to sort it out and to do it quickly. The Government have just over two weeks to give their response to the High Court ruling. The great tragedy is that for too many policyholders, time has already run out.

951

Daniel Kawczynski (Shrewsbury & Atcham, Conservative)

952

John Barrett (Edinburgh West, Liberal Democrat): I am happy to concur with that.

• Daniel Rogerson (North Cornwall, Liberal Democrat): I start by congratulating my hon. Friend Dr. Cable on introducing the debate and making use of this Opposition day to outline, as other hon. Members have said, what could have been done differently by the Government. It is very important to have this debate, carrying on from our previous debate in Westminster Hall. I thus congratulate my hon. Friend on his use of Opposition day time and, of course, on his excellent introduction and the way in which he framed this afternoon's debate.

I also pay tribute, as have others, to the Equitable members action group, to the all-party group and the Select Committee, which has examined the issue in detail. I also mention the work of the ombudsman: although at least one other hon. Member has commented on how long that took, it is nevertheless part of the process of getting us to where we are today.

Hon. Members of all parties have been assiduous in pursuing this issue on behalf of individual constituents, but also because most of us are motivated, I hope, by a sense of justice in all we do. I sometimes think that there is little more than a great injustice-whether it be to an individual or to a whole group of people-that can motivate MPs in taking hold of particular issues and not letting them go. This situation falls into the category of a whole group, as many people across the country are affected by the issue and they will continue to be affected by it until they have some form of resolution.

I am pleased that so many Members have had the courage of their convictions and signed early-day motion 1423, which I hope is a statement of intent for later today. What we are debating today is essentially the same principles as are in the motion. Although I understand that Labour Members find themselves in some difficulty in thinking about how to vote on an Opposition day motion, I hope that they can set it aside, because, as has been said, today provides our only opportunity. While many hon. Members have expressed a hope that the Government will bring something forward to return to the issue later on, I have to say that the evidence thus far does not lead me to the conclusion that that will happen. This may well be the only opportunity that the House has in the near future to get something on the record and have a vote on this crucial issue. I urge Labour Members-I understand their difficulty-to carry through what they have already done in signing the early-day motion.

In 2000, what happened through Equitable Life's default was hugely painful for all those who had invested, but those involved in the mismanagement of the funds are not solely to blame. The Government as a regulator and the agencies that the Government established to regulate financial matters have been shown, sadly, to have failed time and again in recent years. We must be absolutely clear that those failures were under the watch of this Government and their predecessor, as they looked into what was going on in Equitable Life. The people who invested in good faith expected the regulatory mechanisms to guarantee their interests, so they feel very let down. They have, of course, been let down particularly badly.

What action, then, can we take finally to offer some justice? The Government say that ex gratia payments are an adequate mechanism for providing that, but I am not convinced that they are. Members of the action group, who have acted very effectively on behalf of all the Equitable members, certainly do not feel that that is the case. Of course, whatever happens will cost money, but as other hon. Members have said, the Government have found the money in other circumstances-to bail out the banks, for example. My hon. Friend the Member for Twickenham made the point that investors in banks found their interests protected and he asked why Equitable members should not also find their interests protected in the same way.

Money has also been squandered in other recent Government pet projects-on big IT projects and certain foreign adventures have been launched against the demonstrated will of the people living out there in the relevant countries. Money has been found for those things, but not, it seems, in this case. It may well be painful to find the resources to provide this measure of justice, as we are being invited to do, but however difficult it is, the central issue is natural justice and it must be met.

At every turn, the Government have dragged their heels. Many Members have sought to focus on the imperative to get this issue dealt with as soon as possible because some of the people involved are, sadly, no longer with us-and there are others who, sadly, will not live to see the benefit of any compensation scheme. We must not allow any imperative to act against the issues of fairness that EMAG has raised all along.

In other fields, I know that the Government have sought to speed the processes up. Sometimes, in my view, they have done so against the interest of securing the right resolution. In a planning Bill of a couple of years ago, for example, there was an absolute dedication to getting all major infrastructure planning issues sorted out in six months; what is important to me, however, is reaching the right decisions in these circumstances. Yes, time is important, but it is not the only thing that we have to consider.

I have been in regular correspondence with a number of my constituents affected by Equitable Life. There are about 50 or so of them, but I well know that there are many more in my constituency who have not contacted me about it. They have contacted EMAG and may be cynical about whether they will ever get the resolution they want and deserve. In every one of our constituencies, there are so many people affected, and they are watching what we are discussing here this afternoon.

I spoke to a couple of constituents this morning. What touched me is that they both prefaced their remarks by saying, "Others are far worse off than I am. Others are going to be affected worse. My retirement plans have been affected, as has my ability to do things like replace my car, which is currently on its last legs, but I have lost only £9,000"-and in the other case, it was between £13,000 and £14,000. Those are significant sums for those people, but I thought it revealing that they adopted the approach of talking about others who were even worse off than themselves.

We clearly need a scheme that is reasonable and takes account of the constraints on resourcing, but it must also compensate properly and it must not be a token effort. In order to be reassured that that is the case, it needs to be overseen, as my hon. Friend the Member for Twickenham said earlier, by an independent tribunal. He set out how that could happen without setting aside the work put in up to now.

953

Bob Neill (- Shadow Minister (Local Government & Planning) (Also Deputy Chairman of the Conservative Party), Communities and Local Government; Bromley & Chislehurst, Conservative)

I very much agree with the hon. Gentleman, whose experience in his constituency is similar to mine. Is not the conclusion he advances reinforced by the findings of the Public Administration Select Committee, which rightly made it clear that compensation was

"not a matter of charity, but a requirement of justice to redress a wrong"?

Should that not be the principle that underlies any decision taken on this matter?

955

Daniel Rogerson (North Cornwall, Liberal Democrat): As ever, the hon. Gentleman speaks with great authority, and I agree with his comments. As many hon. Members have said, we must consider an approach that is based not on issues of hardship and on means-testing, but on justice. The Government's written responses have not contained a good enough apology for the failings that occurred, and it would reassure people to see that in writing. We need a fuller apology, something that provides hope for those Equitable members who are affected, and genuine measures that offer them justice.

Earlier, I probed those on the Conservative Front Bench on their proposals, and I completely understand their desire to push forward and criticise the Government for the speed of their response. However, bearing in mind that they have added their signatures to the motion tabled by my right hon. and hon. Friends, which is welcome, I am disappointed that they are stepping back a little from an independent tribunal, which is crucial to reassuring Equitable members that their interests are being looked after.

955

Denis MacShane (Rotherham, Labour): The hon. Gentleman makes his case calmly and fairly, and it will have an echo in my constituency. It is good that he is putting ideas in front of us. Obviously, in the Division, which will be on party political lines, we will vote as we will. May I say that I hope the Government take on board some of the ideas put forward, because an injustice was done and needs to be put right? I congratulate him on his thoughtful and measured case.

955

Daniel Rogerson (North Cornwall, Liberal Democrat): I am grateful to the right hon. Gentleman for his kind remarks, although I am perhaps slightly disappointed by the signal he has sent as to which Lobby he might find himself in later. I hope that he will take the chance to reconsider that on the basis of further contributions.

956

John Barrett (Edinburgh West, Liberal Democrat): Will my hon. Friend expand on why the decision ought not to be made on party political lines?

956

Daniel Rogerson (North Cornwall, Liberal Democrat): Many hon. Members have served in local government, where, when difficult decisions are faced, administrations often talk about being above, and not wanting to get into, party politics. However, when the boot is on the other foot, they are quite happy. When the courts have handed such an issue back to the House, for it to respond to the ombudsman, hon. Members must take a view based on the interests of Equitable members in their constituencies, irrespective of which party has put forward the proposals. I hope that they will do that later, and as has rightly been pointed out, many Members signed the early-day motion and put their comments on the record. Therefore, if they decide to vote with us, it should be easier for them to justify that decision to their Whips.

My hon. Friend John Barrett also drew a strong parallel with an earlier Liberal Democrat Opposition day vote on the Gurkhas. I had the honour of being a Teller on that occasion, and in what I hope is a sign of things to come, I delivered the verdict to the House. Tonight, I hope that hon. Members across the House will unite to send a strong signal to Equitable members and the Government that the Government's proposals are inadequate, that we need to focus on what the ombudsman, EMAG and people across the country have said would be the right, meaningful compensation, and that we need to do that quickly.

Daniel Rogerson (North Cornwall, Liberal Democrat): I start by congratulating my hon. Friend Dr. Cable on introducing the debate and making use of this Opposition day to outline, as other hon. Members have said, what could have been done differently by the Government. It is very important to have this debate, carrying on from our previous debate in Westminster Hall. I thus congratulate my hon. Friend on his use of Opposition day time and, of course, on his excellent introduction and the way in which he framed this afternoon's debate.

953

Bob Neill (- Shadow Minister (Local Government & Planning) (Also Deputy Chairman of the Conservative Party), Communities and Local Government; Bromley & Chislehurst, Conservative)

"not a matter of charity, but a requirement of justice to redress a wrong"?

Should that not be the principle that underlies any decision taken on this matter?

955

956

John Barrett (Edinburgh West, Liberal Democrat): Will my hon. Friend expand on why the decision ought not to be made on party political lines?

956

• . . Lorely Burt (Solihull, Liberal Democrat): I shall be very brief, as I know that other Members wish to speak.

I fervently hope that we are now reaching the end of this decade-long saga, in which 30,000 people have died waiting for justice. One million investors have lost up to half their pensions, amounting to an estimated £5 billion, and they were people who did the right thing: they saved for their retirement, but they have been let down by a series of regulatory failures by this Government.

What does this mean in human terms, however? I shall explain by recounting just two stories that west midlands Equitable Life investors have told me. It means a couple having to sell their lovely retirement bungalow and move into a caravan. It means that instead of going to the shops with enough money to be able to enjoy the experience of shopping and buying what was described to me as "nice things", they have to scratch around for the cheapest reduced items just to make ends meet. It may not mean destitution in many cases, but for most of such people it means the destruction of a quality of life that they saved for, made sacrifices for and deserved.

My hon. Friend Dr. Cable has outlined the history of this sorry episode and I will not repeat it now. I do not want to dwell on the shameful history of how this Government have prevaricated ever since the publication of ombudsman Ann Abraham's report in July 2008, so aptly subtitled "A decade of regulatory failure", although I entirely share her frustration at the prevarication of the Government in their response, which prompted her to take the unprecedented step of issuing a second report this May, called "Injustice unremedied". I am not going to dwell on the Government's response, which was to attempt to exclude up to 90 per cent. of pensioners from any compensation at all, but I do wonder how a Government who purport to be a compassionate Government could allow so many people to suffer for so long, ignoring the ombudsman's findings and trying to evade paying compensation.

I welcome the decision of Lord Justice Carnwath and Mr. Justice Gross backing the decision of the ombudsman that compensation should be paid back to 1991, not 1995 as the Government wanted, and I implore Sir John Chadwick to come up with a compensation scheme with the utmost urgency so that as few more pensioners as possible have to die without ever seeing justice in their lifetimes.

I ask the Minister to say what will happen in respect of pensioners who have died. My understanding is that their money will be forfeited altogether, so that neither they nor their surviving relatives will ever benefit. If this is the case, is there any provision for making some compensation available to their estate even when, because of the great length of time this has taken, it is not only they but their families who would otherwise lose out?

Finally, as a final act of compassion, I ask the Government to ensure that a compensation scheme will be in place and payments will already be being made by the time they leave office and we have a general election next year.

• . . Question put (Standing Order No. 31(2)), That the original words stand part of the Question. The House divided: Ayes 269, Noes 294. Question accordingly negatived.

Richmond upon Thames Liberal Democrats: