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The Minister of State, Ministry of Justice (Mr. Michael Wills): The hon. Lady makes a very valuable point and I agree with a large part of what she said. It is important that we involve the British people in policy making between elections as well as at them. That is why we are bringing forward proposals for deliberative events that involve the British people in precisely the way she
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suggests. I do not agree with her precisely that we need to wrap it all up in one grand citizens convention, but on the spirit of what she is saying-the need to involve people in deliberative events to help formulate public policy-I agree.

Mark Pritchard (The Wrekin) (Con): Returning to electoral reform and the general election, given that our brave armed forces are fighting and dying in Afghanistan, partly in the name of democracy, will the Minister give our armed forces a commitment that they will be able to participate in the UK general election?

Mr. Wills: I am very happy to give that commitment. We are well aware that levels of registration among our armed services are not all they should be. We are making concerted efforts with the Ministry of Defence to improve that, and I have given an open invitation, which I extend to the hon. Gentleman, to Members who have large garrisons in their constituencies: if there are particular measures that they think would improve levels of registration, I ask them please to tell us, because we are very happy to engage with that process.

Mr. Lindsay Hoyle (Chorley) (Lab): Does my right hon. Friend hold a view about the proposed closure of the Forensic Science Service at Chorley and the effect that it will have on the justice system that he represents, given the fact that cases may not go ahead?

Mr. Straw: Of course I am concerned, as the Member for the adjacent constituency of Blackburn, about the potential effects. As I said to my hon. Friend the Member for Newport, East (Jessica Morden), I have already made clear my hon. Friends' concerns about the proposed closures in Newport and Chorley. Both facilities serve a wide area of population and it is crucial that in any organisation of the Forensic Science Service there is no dereliction or diminution in the service provided to the Crown Prosecution Service and through that, to the victims of crime.

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Equitable Life

3.31 pm

Susan Kramer (Richmond Park) (LD): (Urgent Question): 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.

The Chief Secretary to the Treasury (Mr. Liam Byrne): 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.

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
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meet Members of Parliament? Finally, given that more than 300 Members have signed the early-day motion tabled by my hon. Friend the Member for Twickenham (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?

Mr. 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 had been 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-

Mr. 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.

Mr. Mark Hoban (Fareham) (Con): Is it not clear that a year after the ombudsman published her damning report on the regulation of Equitable Life, and six months after the Government's response, no real progress has been made? Policyholders are no closer today to knowing whether they will receive any payments for the losses that they incurred as a consequence of the failure to regulate Equitable Life properly.

In the past six months, all we have seen is one paper by Sir John Chadwick addressing just one aspect of his terms of reference-relative loss. We are promised another paper in August that will include a definitive list of
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issues to be addressed. Will the Minister tell us if this will cover all aspects of Sir John's terms of reference or just the issue of relative loss? For example, will it include his advice on which groups of policyholders have suffered the greatest impact because of the failure to regulate Equitable properly? Will it include how he will seek to apportion blame between the regulator and Equitable Life, or can we expect to see many more reports from Sir John delaying justice even longer?

Although there has been criticism of Sir John, fault for any delay rests with the Treasury, which has tried to kick the issue into the long grass. Have Ministers set a deadline by which Sir John will have completed his work? Will the Minister confirm that the Government will make a formal response to each of Sir John's recommendations as they are made, or will they seek to delay the process even longer by waiting until he has completed all his work? Once Sir John publishes his final report, how long will it take the Treasury to make payments to policyholders? All that we seem to get from Sir John is more questions and very few answers, and there has been no answer from the Treasury on the most important question-when will policyholders receive the justice that they have been so long denied?

Mr. Byrne: It is perfectly appropriate for the hon. Gentleman to seek to keep up the pressure and the momentum, particularly on the timetable, because that is the question that most troubles policyholders.

I completely reject the argument about an absence of progress. Once the ombudsman concluded her investigation, and set out where she thought that injustice had been perpetrated, it was perfectly proper for us to reflect on what she said, then make the decision to put in place an ex gratia scheme to correct those injustices. I am sure that the hon. Gentleman would agree that to ensure that the maximum possible help is delivered to those who are in the hardest and most difficult financial position, it is vital to understand who has lost what. There are hundreds of thousands of policyholders, and every single bit of information associated with those policyholders has to be gone through first, which is why we have given Sir John Chadwick all the resources for which he has asked, and it is why we will continue to check that he has all the resources that he needs to conduct his task. We are absolutely committed to getting a scheme up and running as quickly as possible, and I hope that the hon. Gentleman will continue to make representations on behalf of policyholders, as I know other hon. Members will, to make sure that that ex gratia scheme is designed in the fairest possible way.

Mr. Jeremy Browne (Taunton) (LD): 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
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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?

Mr. 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.

Rob Marris (Wolverhampton, South-West) (Lab): I lost a small amount in the Equitable Life fiasco. May I urge my right hon. Friend not to be so stubborn and slow about this? Responsibility for these losses rests in three parts: first, with savers; secondly, with Equitable Life itself; and thirdly with the Government for what they themselves admit is maladministration. I urge my right hon. Friend to revisit the question of compensation: it would be much quicker, and they could put a cap on it, so that smaller savers would receive proportionately more. Will he revisit that issue?

Mr. Byrne: No, I will not for the simple reason that, first, I do not believe that the Government should be the compensator of last resort when there has been regulatory failure; and secondly, I simply do not think that it would be rational or a good use of public money to provide compensation when there have been conclusions that we simply do not accept. However, I do not subscribe to the ombudsman's view, put forward on 23 January, that it would be better to accept all the recommendations and then do nothing to provide any compensation at all. It is important that an ex gratia scheme be set up, because there is injustice that we recognise. We must now ensure that public money goes to where it is most needed, and that is why we must understand, first, who has lost what.

Mr. Michael Fallon (Sevenoaks) (Con): Why will the Chief Secretary not announce a long-stop date by which the Government expect the bulk of those ex gratia payments to have been made? Does he expect it to be in this financial year?

Mr. Byrne: That is an extremely reasonable point to which I am entirely sympathetic. However, until Sir John has done his first run-through of the information from literally hundreds of thousands of policyholders, that being the exercise on which he is now embarked, it will be difficult for us intelligently to present that long-stop date to the House. However, it is my ambition to come back with that date at the earliest possible opportunity.

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Mr. Gordon Prentice (Pendle) (Lab): How will Sir John Chadwick determine who has been hardest hit? He has access to Equitable Life records but not to Customs and Revenue records, so how will he square that circle?

Mr. Byrne: I would not want to steer Sir John in respect of the conclusions that he has been asked to reach; it is an open question that we have left to him to answer, and he has considerable experience in answering such difficult questions. I am satisfied that he has at his disposal all the information that he needs to come to those conclusions, but, if he were to make further requests of us for further information, I would consider them.

Mr. John Redwood (Wokingham) (Con): How much compensation does the Minister envisage for his ex gratia scheme? I do not suppose that he has put a penny in his budget for this year or for next, so I do not believe that he intends to pay any.

Mr. Byrne: That is not an estimate that I shall present to the House this afternoon; it is something that I shall look at when Sir John presents his initial recommendations.

Geraldine Smith (Morecambe and Lunesdale) (Lab): What is the point of the ombudsman doing her report if the Government do not accept the recommendations? Is it not time that the policyholders had the justice that they deserve?

Mr. Byrne: I absolutely agree that it is time that the policyholders of Equitable Life had the justice that they deserve. They are in their current position because of a series of regulatory failures that go back many years, but Governments sometimes disagree with reports from ombudsmen; there have been five such occasions in recent years. As I said, I do not accept the ombudsman's conclusion that we should just accept the recommendations and then do nothing-she said on 23 January that that was her preference. I actually think that an ex gratia scheme is sensible, because there has been an injustice that we have accepted.

Mr. Paul Burstow (Sutton and Cheam) (LD): 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?

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

Mark Durkan (Foyle) (SDLP): Does the Chief Secretary not recognise that for many people Sir John Chadwick's exercise appears to be evasion dressed up as examination? Today, the Chief Secretary referred to when Sir John does his first run-through. How many run-throughs are there going to be? Do they not amount to people in a dire predicament being given the run-around?

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