Examination of Witnesses (Questions 566
TUESDAY 16 MARCH 2004
Q566 Chairman: Lord Penrose, welcome
to this evidence session on Equitable Life this morning. It is
nice to see you. Can I start with a general question? As you know,
we had a meeting and various exchanges of letters over the last
year or so about the progress of your inquiry, which took longer
than many people would have hoped. When the inquiry was first
announced, what discussions did you have with the Treasury about
the timetable for completion?
Lord Penrose: There were discussions
about the sort of time I might be prepared to devote to an inquiry
of this kind, rather than the sort of time it might take. I think
it was recognised that I was being taken out of my ordinary way
of life, as it were, and would be likely to be translated to London,
and it was recognised that that would be a major disruption and
around that there was developed the general notion that if I were
away for about a year that would be tolerable. It was not a forecast
of the time the inquiry would take; it was rather a question of
the time I might find it not too inconvenient to be away from
home. There was no way of forecasting the time it would take.
Q567 Chairman: For the sake of the
public record, maybe I should make it clear at the beginning,
at the outset, what we expect of you this morning. This session
is intended to contribute to the public debate about the developments
at Equitable Life and the position of affected policyholders.
But it is not our intention to prejudice any possible legal
proceedings, and we recognise that there are accordingly limitations
and that it may not be appropriate for you to say certain things.
We recognise your position as a judge in the conduct of the Inquiry,
and we recognise also that the appropriateness or otherwise of
the payment of compensation by the Government is not a matter
for you. Did the Treasury consult you before they told the House
in October 2001 that it was expected you would report before the
end of 2002?
Lord Penrose: On the precise formulation
of statements made to the House of Commons?
Q568 Chairman: Yes.
Lord Penrose: No, I did not discuss
that, but, as I have said already, there was a hope that the process
would have taken a lot less time than, in the event, it did.
Q569 Chairman: In a previous statement
you kindly informed me as to why the process was taking longer
than was originally envisaged. Can I move on to your terms of
reference? They were wide, but they did not specifically invite
you to adjudicate on responsibility for what had gone wrong. Did
you feel that you had a sufficiently clear view of precisely what
questions you were expected to answer?
Lord Penrose: No. I think that
the breadth of the terms of reference had to reflect the fact
that at that stage no-one had a clear idea of what the questions
might ultimately be. I understood that I was given a deliberately
wide field, as it were, to enable me to work out where there might
be important issues to be addressed and to find the answers to
them. There were limitations, of course, on the remit, and there
had to be in the case of an inquiry of this kind. Responsibility,
viability, fault, things of that kind, in my view, could not properly
have been dealt with by the sort of investigation that I was asked
to take on in a non-statutory inquiry. So it was a balance, but
I think the terms were wide enough to let me do what I understood
I had to do without prescribing particular questions but narrow
enough to save me, if you like, from trespassing into areas that
are properly the remit of the ordinary courts of the land or other
financial tribunals that have to adjudicate in an adversarial
way on some of the issues that might arise out of the problems
Q570 Chairman: Some of the potential
witnesses refused to co-operate with your inquiry. Could you clarify
who these were? Were any of them serving Civil Servants? To what
extent do you feel that that has hampered your investigation and
Lord Penrose: That is quite a
complex question. Can I deal with Civil Servants first? No Civil
Servant refused to co-operate with the inquiry. One person did
not persist, if you like, and I cannot really explain that. I
should make it clear that the process of interview was not intended
to be gentle or unsearching, and it would not surprise me in the
least if a person found it uncomfortable or if a person found
that an inability to recollect detail was difficult and embarrassing,
but, that apart, Civil Servants did co-operate. I did not necessarily
find them all the most attractive of people, but they did co-operate.
So far as non-Civil Servants are concerned, there were former
directors who did not operate, but one must understand that they
were all people who were involved in litigation, and, as a former
litigation lawyerI do not think a judge is entitled to
say he is still a litigation lawyer, but as a former litigation
lawyerI can well understand that people would be given
advice that they could, potentially at least, prejudice their
position by co-operating with a non-statutory inquiry. Of course,
they are not protected.
Mr Burns: Can I add that the Civil
Servant who did not persist in giving evidence to this inquiry
was not a serving Civil Servant.
Q571 Mr Plaskitt: I am sorry?
Mr Burns: The Civil Servant who
did notit was a former Civil Servant who did not persist.
Chairman: Before I hand over to the rest
of the Committee, some of us have a declaration of interest to
declare. I have a policy with Equitable Life at present. Is anyone
else in that position?
Mr Fallon: I am a policy holder.
Mr Cousins: Chair, my former employers
have just transferred the ownership to me of some dormant Equitable
Life policies whose ownership they have retained for a period
of almost 30 years.
Norman Lamb: I am a former policyholder.
Mr Walter: I am a current policyholder.
Q572 Mr Fallon: To follow up this
point about the witness, in Chapter 19, paragraph 173, you say
the Government actuary declined to complete the interview process.
This is the incident that you are referring to, is it?
Lord Penrose: Yes, not the Government
actuary, a member of his staff. I was not referring to the Government
Q573 Mr Fallon: You are using phrases
to us this morning like "he did not complete" or "did
not persist". You mean he walked out of the interview?
Lord Penrose: No, no, he did not
Q574 Mr Fallon: He did not come back?
Lord Penrose: Yes.
Q575 Mr Fallon: We are still being
very gentle about this, but did you not deplore that?
Lord Penrose: No. I think one
must be very careful about making judgments about individuals.
I do not know the circumstances. I would judge him if I knew all
of the circumstances, but since I do not I prefer to leave matters
as they are.
Q576 Angela Eagle: Lord Penrose,
I wonder, looking at your letter to the Financial Secretary, which
is at the beginning of this very long and detailed report, and
trying to get some more colour about the context and the way in
which you approached what is a very complex and difficult job
stretching over so many years trying to trace what happened in
the case of Equitable, you say in paragraph 2 of your letter that
you were initially given a very broad remit and it was left to
you to determine how to proceed. You then, in paragraph 4, say
that you opted for an approach that had no formal powers and no
statutory powers either. Could you say a bit more for us about
why you did that? Can you particularly share with us your thoughts
on whether statutory powers would have been helpful to you, given
that some people, as you have just explained, did refuse to appear?
Lord Penrose: Another very complex
question, if I may say so. It seems to me, or it seemed to me
at the time, generally to be preferable to approach an inquisitorial
exercise using persuasion, a little bit of carrot and occasionally
stick, to obtain the material that I required. I did not know
at the outset what the material would turn out to be. If I had
had statutory powers, I would have had to have been very certain
about their exercise or I would have risked judicial review from
the outset and I think I would have been in and out of the High
Q577 Angela Eagle: For many years?
Lord Penrose: For many years.
So it seemed to me at the outset that, if I could make it, as
it were, without statutory powers, that would produce the best
result in the long term. As the inquiry has progressed I have
become more ambivalent about that. I think that, looking to the
future rather than to the past, it could be that the public interest
would be best served if there were a suite of general powers that
could be conferred on inquiry chairmen perhaps to use at their
discretion. I think that to force all inquiries into a statutory
mode would not be a desirable thing to do. So I am ambivalent.
I think that at the end of the day it would have helped me use
the stick if I had had available to me a suite of powers, perhaps
in primary legislation, that could be called upon, but for this
inquiry I felt at the outset that I was better off without them.
Whether that is right or wrong, I do not know. I think I incline
still to the view that it was probably right to go without.
Q578 Angela Eagle: So you are happy.
Although you are obviously projecting into the future and making
some comments about general powers for future inquiries, you are
fairly happy with the tools that you were given to do the job
and you are reasonably happy that you were able to proceed in
the way that you wished?
Lord Penrose: Essentially, I was
the tool that I was given to do the job and it was really up to
me to make the best of that position. All I can say is that I
hope I have, but it is for others to judge whether that was a
correct view to take.
Q579 Angela Eagle: Did you receive
the appropriate cooperation that you expected from the Treasury
during the course of their work? Are you happy with the way that
they dealt with this?
Lord Penrose: I am happy that
they provided the resources I needed as I identified them. I cannot
think of any occasion when I was denied either the human support
or the technological support that I sought. As in every exercise
of this kind, there are some things that I wish I had asked for
earlier now in retrospect, but, no, the Treasury gave me the support
it promised and I have no complaint to make about that.