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Baroness Crawley: My Lords, we work extremely closely with our European partners and wherever possible we ensure that the common position is strengthened in reproductive and sexual health matters and we shall continue to do so.

Equitable Life: Penrose Inquiry

3.12 p.m.

Lord Higgins asked Her Majesty's Government:

Lord McIntosh of Haringey: My Lords, Lord Penrose has said that he intends to report to Treasury Ministers later this summer. The report will be published as soon as reasonably practicable after it has been received.

Lord Higgins: My Lords, as the Treasury was responsible for regulating Equitable Life, is it wrong for the inquiry to be set up by the Treasury, with terms of reference determined by the Treasury, with reports being made back to the Treasury and with the Treasury deciding what to do about it? The inquiry was set up in August 2001 and it was expected to report last year. It is still stuck in the long grass. When will we have a firm date for the report? Can the Minister tell the House?

More specifically, does the Minister recall that the Economic Secretary to the Treasury, speaking on the "Money Box" programme, said that if any former Equitable Life director was not prepared to co-operate with the inquiry, the inquiry would be put on a statutory basis. Have any witnesses refused to co-operate and is that still the Government's position?

Lord McIntosh of Haringey: My Lords, the noble Lord, Lord Higgins, is running in two opposite directions. On the one hand he says that the report is too much controlled by the Treasury and, on the other hand, he complains that we have not speeded up the report. The report is independent. It is being

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conducted by a Scottish judge. He has complete freedom on how he conducts his inquiry. Incidentally, he is still being paid as a Scottish judge; he is not being paid by the Treasury. The Treasury has no influence on when he produces his report. As to the issue of refusals to participate, it is not my understanding that there have been more than occasional refusals to participate and I am told that those refusals are not critical to the report.

Lord Razzall: My Lords, does the Minister accept that, while the House recognises that the report is not formally a Treasury report, the Government have taken a significant interest in the developments in Equitable Life if for no other reason than the fact that most Members of the House of Commons had their pensions with Equitable Life? Does he accept that the delay in publishing the report is damaging to the interests of policy holders who may have lost money and to directors who have co-operated with the inquiry and who have the threat of litigation, both actual and potential, hanging over them? Does he take the view that Her Majesty's Government should do anything that they can to speed up the inquiry?

Lord McIntosh of Haringey: My Lords, I certainly agree that it is the Treasury's job to keep abreast of the situation. Indeed, the Ombudsman, in her report published recently, says specifically that the Treasury kept abreast of the developing Equitable Life situation and had regular discussions with the FSA. In other words, life goes on despite the fact that Lord Penrose is still producing his report. Once we set up an independent inquiry, and once it has been given the very wide terms of reference that it has, it is for Lord Penrose to decide when he feels able to produce a report with which he is content; it is not for us to chase him.

Lord Clinton-Davis: My Lords, does my noble friend agree that what he has outlined has been the policy of successive governments, certainly since the 1970s, when I had that responsibility? It is entirely wrong for any suggestion to emanate anywhere in the House that Lord Penrose or anyone in such a situation should be influenced by the government of the day.

Lord McIntosh of Haringey: My Lords, I entirely agree. Imagine the reaction if the Treasury had said to Lord Penrose, "Come on, this has taken long enough; produce your report now", and he had produced a report that was, let us say, critical of some players in Equitable Life. Would they not then say that the report did not have credibility and would they not protect themselves on the grounds that the report had been rushed forward by the Treasury?

Baroness Oppenheim-Barnes: My Lords, would it not be more sensible and compassionate to employ someone full-time to produce the report, to reach conclusions and to make recommendations before more people lose future pensions in other pension schemes and in the Equitable Life scheme?

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Lord McIntosh of Haringey: My Lords, when I said that Lord Penrose was being paid as a Scottish judge I did not say that he was acting as a Scottish judge. He is, and has been from the beginning, full-time on the inquiry and he has a very substantial staff working for him.

Lord Skelmersdale: My Lords, I am glad that the Minister spoke of the Ombudsman's report on this subject, which presumably, like me, he has read. Will he undertake to investigate the Ombudsman's comment that the FSA was under such a lax regulatory regime, under instructions by the Treasury?

Lord McIntosh of Haringey: My Lords, the Ombudsman is entirely independent of the Treasury and we are not responsible for anything in her report. I have read only the summary and conclusions. The report is 100 pages long and I congratulate the noble Lord, Lord Skelmersdale, on having read every word of it. I do not recognise the quotation that he appears to be giving the House, but I shall look into the matter and see whether a response is necessary. It did not seem to me that the Ombudsman's report, as a whole, focused significant criticism either on the FSA or on the Treasury.

Directors' Remuneration

3.19 p.m.

Lord Dormand of Easington asked Her Majesty's Government:

    What progress they have made with their proposals to deal with excessive awards to company chairmen and directors.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, in August 2002, the Government introduced the Directors' Remuneration Report Regulations, which give shareholders of quoted companies a vote on the directors' remuneration report. These regulations need to be given time to demonstrate their full effect. The options presented in the Department of Trade and Industry's document "Directors' Remuneration—Contracts Performance and Severance", published on 3rd June, are currently the subject of consultation, which closes on 30th September. Any further government action on this issue will be considered in the light of the responses to the consultation.

Lord Dormand of Easington: My Lords, I thank my noble friend for that reply. Is he aware that in recent months there has been a noticeable increase in the number and type of payments and perks in this field? My noble friend mentioned consultation. If I am correct, we have now been consulting for at least two, possibly three years. Can he say, or hazard a guess on, when the Government might come to a decision? Will that be by the end of this year?

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Lord Sainsbury of Turville: My Lords, we have not only been consulting, we have taken action. As I said in my Answer, we have produced the Directors' Remuneration Report Regulations 2002. We need to see what effect those will have. We are now consulting on a new set of proposals. There is no point in consulting unless one waits to the end of the consultation before taking action.

Lord Lea of Crondall: My Lords, does my noble friend the Minister recognise that many of us are encouraged by the persistent way in which my noble friend Lord Dormand presses this question? We need to see a consideration of the extraordinary and persistent growth in the ratio of top pay to average pay. It is now 100:1 in major public limited companies; that is, 20,000 to 2 million. Will he take note of the fact that this is not a free market, as would apply to David Beckham and other footballers? It would be better described in some respects as a rigged market in so far as self-serving remuneration committees are all chasing the upper quartile, as independent studies have demonstrated.

Lord Sainsbury of Turville: My Lords, I am aware of and greatly admire the persistence of my noble friend Lord Dormand, on this question. Hardly a month passes without us returning to this question. He is right to do so, because the issue is serious. The only question in dispute is over the best way to tackle it. We continue to think that the best way to tackle it is by giving more opportunities to shareholders to make their voices heard. That is the correct way. It is significant that we have seen spectacular revolts by shareholders when they felt that a company's position was being abused. We would like to see that continue.

Lord Razzall: My Lords, given that the Minister has answered the identical question asked about three weeks ago in this House by another of his noble friends, and given that his answer has for certain an outstanding merit for consistency—because he has given the same answer—would he be prepared to answer a slightly wider question that is germane? When will the final decisions on the implementation of the Higgs report be put into place, because that report will be germane to this issue?


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