House of Commons
Wednesday 21 October 2009
The House met at half-past Eleven o’clock
[Mr. Speaker in the Chair]
Oral Answers to Questions
The Secretary of State was asked—
Two weeks ago, I visited Sri Lanka to see for myself the situation of the 250,000 internally displaced people detained in camps. Conditions have improved there compared with my previous visit in April, with basic needs such as food and shelter being met. However, health care and humanitarian access remain inadequate and we are concerned about military oversight of the camps and family separations. We also believe that conditions will deteriorate during the monsoon season, which is about to start. While I was in Sri Lanka, I repeated the United Kingdom’s call for freedom of movement for all the IDPs so that they can go back to host families, relatives or their places of origin.
The Government of Sri Lanka were committed to having 80 per cent. of those detained in camps going back to their places of origin by the end of the year. To facilitate that process, I am pleased to announce today an allocation of £500,000 to the HALO Trust for mine surveillance and de-mining in the Mullaitivu area. That work has started and will make the area safe for homes and for land use for the people who were put in the camps.
It is important that the international community makes clear its position with regard to the number of people still in the camps and the importance of freedom of movement. We believe that that is happening, but, as far as the Commonwealth’s position is concerned, I know that the Government of Sri Lanka are keen to host the Commonwealth Heads of Government meeting in a couple of years’ time. That might have some bearing on their response to the developments for people who are in the camps.
May I thank the Minister for his statements and for his visit to Sri Lanka on behalf of my Tamil constituents? May I also ask his Department to support the EU Trade Commissioner’s GSP—or generalised system of preferences—plus report, which was issued on Monday, to ensure that preferred status will be withdrawn from Sri Lanka should things continue as they are?
My hon. Friend has long been an advocate for her Tamil constituents and I applaud her for her commitment. As regards the GSP plus and the announcement made this week by the European Commission, there is a process that should be followed to maintain the integrity of the GSP plus system. We believe that in the meantime the Government of Sri Lanka should look at the findings and act on them swiftly.
As someone who visited the camps earlier this year, along with you, Mr. Speaker, I welcome the Minister’s report on the basic conditions in the camps. Does he agree with me, however, that the Sri Lankan Government would better serve their interests if they gave full unrestricted access to the camp to the media and all the agencies and fulfilled their promise to allow people to return home before Christmas? What are the chances of that happening?
The right hon. Gentleman knows the situation well from his own experience and from his experience as Chairman of the Select Committee. I agree entirely with his assessment that it is in the Government of Sri Lanka’s interest to allow open access to the media. During the visit that I undertook two weeks ago, I had people from the BBC with me. It had full access to camps and individuals within those camps to do whatever reporting it felt necessary. Let me give the right hon. Gentleman an indication of the scale of the transfer that is needed. We have had a request from the International Organisation for Migration for transport assistance to help 41,000 people from the camps go back to Mannar, Mullaitivu and Kilinochchi, in addition to the 32,000 who we know left the camps in September.
I had the very distressing experience with the all-party group of visiting the camps at Menik farms zones 2 and 3 at Vavuniya. In spite of that distressing aspect, there was an uplifting side to the visit because of the attitude of the people and their hope for the future. Will the Minister ensure that any aid that is forthcoming from the Government is directed primarily at the welfare of the people in the camps and their displacement back to their own homes, which have been out of reach, to be joined with their families? Secondly—
When I was in Sri Lanka, I made it clear to the Government that from the end of this year, when the monsoon season was brought to a conclusion, we would no longer be funding aid for closed camps and that our aid would be directed towards facilitating movement from the camps. That includes the de-mining to which I have referred and means that I can announce £250,000 for predictable, safe and dignified transport for people from the camps back to host communities, as well as a further £220,000 to the Food and Agriculture Organisation to provide bushels of rice seeds to enable people to have a decent livelihood when they get back to their homes.
The Minister has confirmed this morning that a package of rehabilitation measures is being put in place by the Department. That is welcome, but he has also confirmed that emergency aid will be redirected away from the camps. The Government also voted against the $2.5 billion International Monetary Fund package in July and are now considering ending the EU’s special trade privileges that the hon. Member for Mitcham and Morden (Siobhain McDonagh) mentioned. Is that really the most constructive way to persuade the Sri Lankan Government to promote a long-term reconciliation process, and to meet their stated pledge that 80 per cent. of displaced people should be returned by Christmas? That is what members of the Sri Lankan diaspora, and all Sri Lankan people in the UK, desperately want.
We were speaking up for all the people I saw in the camps two weeks ago. It was clear that they wanted to be returned to their homes as quickly as possible, but the nature of the closed camps, with their restrictions and military oversight, is wholly wrong. That is why our assistance will be geared to the de-mining, transport and livelihood programmes, as they will enable people to move safely and securely from the camps back to their homes, where they will be able to get on with their lives. I think that that is what the diaspora community here in the UK wants to hear.
My right hon. Friend the Secretary of State recently announced an extra £39 million of additional humanitarian assistance to the region, bringing our total contribution this year to some £83 million. That will help to supply food aid, emergency nutrition, water and sanitation, and will be delivered by the World Food Programme and UNICEF, and agencies such as Oxfam and Médecins sans Frontières.
I thank my hon. Friend for that reply, and for the additional moneys that he has announced. However, he will know that it is 25 years since the first Band Aid concert brought the Ethiopian food crisis to our attention. Local Tearfund visitors say that even the weeds are not growing in some areas. This is a long-term problem, not just a short-term one. Will the Minister describe the specific steps that he is taking to address the long-term climate change issues affecting the region, and Ethiopia in particular, as well as the immediate food programmes that are so desperately needed?
My hon. Friend makes an important point and I congratulate him on his work with Tearfund and other similar aid agencies in his constituency. He will recognise that we are in a very different place now from where we were some 25 years ago. There has been a substantial increase in the numbers of people getting help. The proportion of people in Ethiopia in need of emergency assistance is lower than 25 years ago, not least because of some of the support that we have provided through in-country productive safety net programmes and humanitarian assistance. We continue to work with African leaders to make sure that their voices are also heard in the climate change negotiations that are under way at the moment, and which we desperately hope will lead to a new global deal to replace Kyoto.
Ethiopia is one of the worst affected areas. The Government have provided welcome emergency relief, but the hon. Member for Loughborough (Mr. Reed) made a good point when he spoke about the long-term problems. I spoke to the ambassador just a few minutes ago, and he stressed the importance of providing development aid. I understand that Ethiopia receives a smaller proportion of such aid than a number of other countries in the region. Will the Minister look at what can be done to provide the financial and technical assistance to Ethiopia so that these terrible famines do not keep happening?
We continue to provide a substantial assistance programme to Ethiopia. I hope to visit the country shortly to see for myself the challenges the hon. Gentleman describes. When we published the White Paper in July we set out our determination to do all we can to help developing countries such as Ethiopia increase agricultural production. We are therefore increasing our research budget for the types of crops that can survive climate change and so prevent people from needing emergency support. We also want to put further investment into the type of social protection schemes that are already making a difference and preventing people from needing emergency assistance. We are determined to provide more humanitarian assistance, and will keep up the pressure on other international donors to do more to help countries like Ethiopia, and other countries in the region as well.
Does my hon. Friend agree that children who are hungry in east Africa face particular problems? Will he therefore commend the work of the Schools for Africa School Meal Deal, and the School Food Trust’s Really Good School Dinner campaign? They provide practical support for children in school and community-based feeding schemes and also persuade children here about the importance of providing long-term support for children in developing countries.
I certainly will praise the work of the organisation that my hon. Friend describes and has worked with. I know that my right hon. Friend the Secretary of State, who attended the launch of the programme that my hon. Friend describes, was also impressed by its work. My hon. Friend will be pleased to know that we continue to work closely with organisations such as UNICEF which provide support to help to make sure that children are not forgotten in the delivery of emergency assistance, and that we help to tackle the levels of malnutrition that still exist among children in the region.
The situation in east Africa, particularly in Ethiopia, is dire. We welcome the additional support that the Government have offered to the Governments there but, as the hon. Member for Loughborough (Mr. Reed) highlighted, it is 25 years since the famine that killed a million people. Is it not a scandal that the World Food Programme has barely half the funding that it needs to feed the 100 million people it estimates are starving, and is it not time to stop relying on emergency appeals and get proper funding in place for that programme?
As I said in my answer to my hon. Friend the Member for Loughborough (Mr. Reed) and other Members, we accept that a series of steps need to be taken. We have to continue to provide emergency assistance to organisations such as the World Food Programme, and indeed we continue to campaign internationally for more humanitarian assistance to be provided. At the same time, we need to put in place a series of further long-term steps to help to increase agricultural production in countries in east Africa and elsewhere so that they can better tackle their own needs, thereby preventing the need for emergency assistance. We have said that we will increase our agricultural research budget, but we also continue to put pressure on other donors, some in Europe and some outside Europe, to do more to increase humanitarian assistance and to put in place long-term development programmes to help countries away from the type of problems that we are discussing.
CDC capital is invested in accordance with CDC’s updated investment code. It aims to ensure that CDC applies appropriately strong environmental, social and governance standards to its investment decisions. Specifically, it prohibits CDC investment in businesses involving hazardous products, endangered and protected wildlife, the production and trade of arms, gambling, pornography and tobacco products.
The United Nations, Hillary Clinton, NGOs and others have called for urgent investment in food production to relieve poverty in the developing world, yet CDC executives enjoy a bonus culture that would be the envy of Fred Goodwin. Will the Minister apply ethical tests to the CDC decisions that have led to just 5 per cent. of the development money received from the UK taxpayer going into agricultural projects, yet much more into financial services, shopping malls—
My hon. Friend is right to highlight the need for more investment in agriculture, as other hon. Members have done in previous questions. We are working closely with the Americans. In particular, the G8 and others have committed more than $20 billion over the next three years for food security and agricultural development. We are committing some £1 billion over the next three years. With reference to CDC, it has invested in 33 agri-businesses, as well as a series of other businesses in Africa and other developing countries. We need it to continue to invest in those businesses to help to generate more jobs so that developing countries can plot their own path out of dependence on aid.
But the damning National Audit Office report last year found that Ministers failed to demand real evidence of the impact of CDC, and that this multi-billion business was overseen by the equivalent of just one and a half full-time members of staff from the Department. What is the Minister doing to get his act together and ensure that CDC delivers on the key development objectives that we expect?
Unusually for the hon. Gentleman, he somewhat exaggerates the findings of the NAO report. Since its publication, we have put in place a further series of steps to respond to the NAO’s concerns—in terms not only of monitoring pay, but of ensuring that there is independent verification of CDC’s investment code. We have further asked CDC to shift more of its total investment into low-income countries and, particularly, into sub-Saharan Africa.
Climate change today poses the greatest risk to the poorest countries. To achieve a fair and equitable outcome at Copenhagen, it is therefore essential that the most vulnerable countries have a voice in the decisions that are taken. The UK has provided considerable financial and technical support to developing country negotiators and civil society, helping them to prepare for and engage in high-level meetings in the run-up to Copenhagen.
The world’s poorest countries are already being hurt by the leading edge of climate change, and people are calling out for help. Will my right hon. Friend be absolutely resolute in making sure that their voice is heard at Copenhagen and we get urgent action on their behalf?
Yes, I can give my hon. Friend the undertaking that she seeks. We have been tireless in our efforts to ensure that the voices of sub-Saharan African countries and other developing countries are heard at the negotiations. We welcome the engagement of Prime Minister Meles of Ethiopia, speaking up for and representing the interests of the African Union, but only last month I travelled to Bangladesh with my right hon. Friend the Secretary of State for Energy and Climate Change to ensure that he was fully apprised of the clear linkage between the need to tackle dangerous climate change and the need to tackle global poverty.
Did the Secretary of State notice that the Government of the Maldives recently held a Cabinet meeting under water to highlight the risk to that country of climate change? Given that the Maldives is an Islamic, fully fledged democracy with strong links to this country, what steps are we taking to help them in their battle against climate change?
The surest way to help the people of the Maldives and, indeed, all the developing world is to ensure that we get a global deal on carbon in Copenhagen. However, I hope that in the weeks between now and the summit we will see throughout the House a genuine consensus emerge on the key issue of development and climate finance, because although the Government have pledged that we recognise the need for genuinely additional resources to deal with the challenge of adaptation, sadly, that commitment has not yet been forthcoming from the Opposition. [Interruption.]
My hon. Friend, who has a great deal of knowledge of the subject, leading, as I understand he does, the all-party group on Nigeria, is right to recognise the issue of gas flaring. There have been considerable challenges in the delta, and I understand that there are continuing discussions on the issue, but I shall write to him.
As I saw at the Poznan climate summit last year, representatives of developing countries are at a disadvantage, because they cannot afford to employ the hordes of lawyers and negotiators that developed countries hire. In the spirit of the right hon. Gentleman’s call for a unified response throughout the House, will he look again at Conservative proposals for an advocacy fund to help poor countries to make their voices heard as effectively as possible throughout these vital forthcoming negotiations?
I have heard the voices of developing countries, and they have said clearly and unequivocally that they do not want development funds rebadged in toto as climate finance funds. That is why we as a Government have made a commitment that only up to 10 per cent. of our official development assistance will be used as part of the public contribution to what we hope will be a global deal in Copenhagen. Sadly, that commitment has not been forthcoming from the Opposition, but if the hon. Gentleman is concerned about the need to listen to the voices of the poor, perhaps he will give that commitment now.
HIV Vaccine (Funding)
The Department has committed a total of £78 million for the international AIDS vaccine initiative. That comprises £38 million from 1998 to 2007 and a further £40 million from 2008 to 2013. The United Kingdom’s Government were the first to fund the IAVI, in 1998, and we have remained a major bilateral supporter, providing the long-term and predictable support that we believe is essential for vaccine development.
I am grateful to the Minister for that answer, and I recognise the funding that has already gone in. Does he accept that the recent media coverage of the potential, yet-to-be-proven vaccine breakthrough in this area points up even more the huge need for funding to build capacity in vaccine research, as well as the huge rewards that would flow from success in this area?
We gave a cautious welcome to the findings that have recently come from research in Thailand, for example. We believe that prevention must be at the heart of our approach to dealing with HIV/AIDS, and that the search for a viable, effective and accessible vaccine must be the backbone of our approach to prevention.
Will my hon. Friend and his ministerial colleagues use their influence to ensure that people, particularly in east Africa, including Uganda, are not encouraged to pull out of the necessary treatment because of the terrible picture in terms of the food shortage?
My right hon. Friend has had a long-term interest in international development, and I pay tribute to that. I entirely agree with his sentiment that it is important that people who have embarked on treatment continue with it if we are to deal with the scourge of HIV/AIDS.
The General Affairs and External Relations Council has two sessions each year on development issues. Climate change was a focus of the May meeting, and we will again be looking at climate change in the November meeting, as well as ensuring that we are represented at these meetings. I take numerous opportunities to discuss the road to Copenhagen with my EU counterparts.
I thank the Secretary of State for that reply. Does he agree, however, that it is important that developed countries, including our European counterparts, show sensitivity to the developing world as regards climate change implications from the vantage point of the developed world? Will he therefore stress to them his personal support—and, I hope, that of the Government more widely—for the 10:10 campaign, which will feature in my colleagues’ Liberal Democrat-led debate later today?
The right hon. Gentleman is entirely right in recognising that there needs to be a genuine engagement with the developing countries. That was one of the reasons I recently travelled to India to engage with dialogue there on the issue of climate change. In relation to the 10:10 campaign, I can confirm that my Department has signed up to that campaign; that is a powerful signal of the continuing commitment of several of us to tackle this issue. [Interruption.]
Order. I recognise that Members on both sides of the House are excited about the approach of Prime Minister’s questions, but it is very discourteous for Members to witter away when a question is being asked or an answer is being given. The public do not like it—and, as I have said, neither, frankly, do I.
I welcome the determination expressed by the Secretary of State, but what confidence can he give us that the rights and needs of vulnerable developing countries will be better protected in negotiations on climate change at Copenhagen than they were at the world trade negotiations?
My hon. Friend is right to recognise that there are intertwined challenges of dealing with dangerous climate change and with global poverty. Unless we are successful in Copenhagen in securing a global deal, then dangerous climate change threatens the attempt to make poverty history for millions of our fellow citizens around the world. That is why we have worked so hard to ensure that the voices of the poorest countries, as well as the richest, are heard in Copenhagen this December.
The Department for International Development is supporting the work of the Afghanistan national development strategy to establish a more effective state; to encourage economic growth, providing alternatives to poppy growing; and to promote stability and development in Helmand province. We work with the wider UK Government strategy for the region to strengthen state institutions, counter the threat of violent extremism, and produce sustainable economic growth.
Are not storage and distribution systems, and a marketing strategy including minimum guaranteed prices, essential to support wheat production in Afghanistan, because otherwise we run the risk of over-production there, collapsing the price and therefore destroying the credibility of international aid?
These are exactly the issues that we are discussing at the moment with both the Government of Afghanistan and Governor Mangal in Helmand province. We welcome the fact that we have moved to a position in which more than half the provinces in Afghanistan are poppy-free. Amidst all the complexity, there is a basic equation: where we can deliver security, we are more likely to reduce the level of opium production. That is why we welcome not just the number of poppy-free provinces but the fact that Governor Mangal is leading the initiative on wheat seed production.
The Department for International Development is holding discussions with the new Government of Moldova about our assistance programme. Indications are that the new Government wish to see ongoing support for their national development strategy, economic development in rural areas, conflict resolution and reform of the social assistance system.
Moldova is the poorest country in Europe, very small and weighed down by the conflict in Transnistria, and it depends greatly on citizens working abroad, particularly in Europe. Will my hon. Friend ensure that now the election crisis has been resolved, we focus on enabling Moldova to prepare itself to join the European Union?
The Prime Minister was asked—
Last night and this morning, I have been meeting the Northern Ireland First Minister and Deputy First Minister on the devolution of policing and justice to Northern Ireland. I have been in touch with all party leaders in Northern Ireland, and I am now sending to all of them and placing in the House of Commons Library my proposals for a financial settlement that is designed to make possible the completion of the final stage of devolution in Northern Ireland. We will of course keep the House fully updated. Our aim is a peaceful, more secure and more prosperous Northern Ireland.
In addition to my duties in the House, I shall have further meetings today.
Reigate is proud to be home to 579 bomb disposal squadron of the Territorial Army. Last Wednesday, when the Prime Minister was making his statement on Afghanistan, it was being told that it could not train until 1 April next year, and its TA centre is under threat of closure. What effect does he think those measures will have on the recruitment and retention of those vital volunteer specialists?
I made it clear last Wednesday when I made my statement that we would ensure that our resources were devoted to the campaign in Afghanistan, and any member of the Territorial Army who is going to Afghanistan in the next few months will secure the training that is necessary. As the Chief of the General Staff has made clear, the reason why the changes have been necessary is that the Army has recruited more regular soldiers in the past year—9,000 extra compared with 7,000 in previous years. That is why, with those resources being devoted to Afghanistan, we have to focus on those people who are going to go to Afghanistan. They will not only have the pre-deployment training—I have answered the Leader of the Opposition on that—but everybody who is going to Afghanistan will be individually assessed to make sure that they have all the training that is necessary.
It is right that the House learns the progress that is being made on vaccinating those people who might be at risk of swine flu, and it is right that I tell people that for both those who are at risk and health service workers we are starting the process of vaccination immediately. It is also right to say that we have been ahead of the world in purchasing the vaccines that are necessary and in making sure that those people who need treatment with antivirals have it available at the earliest opportunity. I hope that there is all-party support for making available those vaccinations to people who need them.
The planned strikes at the Royal Mail will be bad for the economy and business, bad for customers and, above all, bad for all those who work for the Royal Mail and care about its future. Will the Prime Minister condemn these strikes and join me in sending a direct message to the trade union to call this strike off?
I said exactly that last week—that it was counter-productive for there to be a strike—but I think it is right for us in this House to urge negotiation and mediation. Our role must be to encourage the negotiations that are taking place, to urge people to go to ACAS when that becomes the right thing to do and to make sure that we do everything in our power to get a negotiated settlement to something that arises from the 2007 modernisation plan. It is in nobody’s interest that this strike goes ahead.
Peter Mandelson said that abandoning part-privatisation of the Royal Mail would be
“irresponsible and an abdication”
of an important “commitment”, and that it
“would…threaten the sustainability of the network”—[ Official Report, House of Lords, 11 May 2009; Vol. 710, c. 834-848.]
Yet five months after the Postal Services Bill left the House of Lords it still has not come to the House of Commons. Can the Prime Minister tell us why he has allowed this appalling display of weakness?
There is no commercial buyer for the Royal Mail—the right hon. Gentleman must understand that. This is nothing to do with the dispute which, as I am trying to explain to him, is about the 2007 modernisation plan. In most areas of the country, the 2007 modernisation plan has been implemented. In some areas, it still has to be implemented. We must encourage all those in the postal services to go ahead and implement it. We are the Government who made possible £1.2 billion in loans for that to happen. Let us—on both sides of the House—urge the negotiation and mediation that is necessary to avoid an unproductive strike.
What the Prime Minister has just said is complete nonsense. He did not stop the Bill because he could not sell the Royal Mail; he stopped it because he could not sell it to his own Back Benchers. Only last week he was telling us what a wonderful time it is to sell the Tote, the Dartford crossing, the channel tunnel rail link and the student loan book. Everybody knows that the reason why he dropped the Bill is that his Back Benchers will not support it. Just for once, why does he not admit that?
We have—rightly so, and it should be acknowledged—announced a disposals programme for all the assets that I mentioned last week, and we will go ahead with that. However, I have to say to the right hon. Gentleman that this is nothing to do with the dispute at the moment. The dispute is about the 2007 modernisation plan. He had a shadow Minister yesterday saying that he did not know whether, if a Conservative Government came into power, they would be able to sell the Post Office either.
The Prime Minister gesticulates, but our view is very clear: bring forward the Bill and we will support it. Why has he not got the guts to do that? The fact is that this Prime Minister is incapable of giving a straight answer to a straight question. By the way, he says there is no connection between the strikes that we see and the weakness he showed in withdrawing that Bill. Does he agree that since the Government abandoned part-privatisation of the Royal Mail, union militancy has actually got worse?
As a result of the modernisation plan, 40,000 jobs have gone in the Royal Mail. The right hon. Gentleman may wish to seek to bring the industrial relations of the Royal Mail into the political arena in the way that he is doing now, but it would be far better if the Conservative party and other parties encouraged negotiation and, if necessary, arbitration on this matter. I repeat to him: the 2007 modernisation is at the heart of this dispute and that is what has got to be moved forward. Already, large numbers of jobs have had to go as part of that. I also say this to him: the Bill that came before this House is nothing to do with the dispute.
The Prime Minister keeps saying that there is no connection between the Bill and the action that we are seeing from the trade union, yet his own Business Minister, the right hon. Member for Wolverhampton, South-East (Mr. McFadden), said yesterday in the House of Commons that
“since the Government said that we would not proceed with the Bill…we have seen…a return to the destructive pattern of industrial disputes”.—[Official Report, 20 October 2009; Vol. 497, c. 789.]
Even his Minister says that there is a connection. Is it not the case that this trade union can sense weakness, and it sees weakness in this Prime Minister and this Government?
I would have thought that a Conservative Opposition would be trying to ensure that this strike did not take place. I would have thought that they would say that people should negotiate and that there should be arbitration if necessary. I would have thought that they would have repeated with me that this is a counter-productive strike and that it could be resolved only by proper negotiation and arbitration. I would urge the right hon. Gentleman to reflect on his comments as to whether anything that he is saying is making it easier for us to solve what is a difficult dispute.
The way to stop these strikes and this militancy is to show some leadership, some backbone and some courage. Are we really going to spend another six months with a Prime Minister who cannot give a straight answer, who cannot pass his own legislation, and who sits in his bunker not even able to decide what sort of biscuits he wants to eat? Does he not understand that stopping these strikes will take some courage and leadership, and is it not clear that he has none of that to offer?
The Conservative party has been wrong on every issue affecting the British economy. Conservatives were wrong on the nationalisation of Northern Rock; they were wrong on the rescue of the banking system; they were wrong on tackling unemployment; they were wrong on helping to protect people against mortgage repossessions; they were wrong on the fiscal stimulus; and they were wrong on international co-operation. On every economic issue, they have not shown any leadership. They were wrong on the recession and they are wrong on recovery.
May I begin by thanking the Prime Minister for meeting some West Lancashire residents and discussing their issues? They told him about the failure to develop the town centre in Skelmersdale and transport issues such as the Ormskirk bypass—really important local issues. Does he agree that we must continue to invest in people and communities and in delivering such services, aiding regeneration and growth and not cutting services, which should not be on the agenda today?
I am grateful to my hon. Friend and I was pleased to visit her area in the past few days and talk about regeneration there. I appreciated the opportunity to meet the West Lancashire residents in her constituency and talk about the challenge of regeneration for the future. We can regenerate our economies only if we invest in recovery. We cannot do so with a party that says all the time that we should remove the fiscal stimulus. The only way forward for this economy at the moment is to maintain the fiscal stimulus and ensure that we have growth in the economy.
In June, and again in July, I asked the Prime Minister whether he would do the right thing and break up the biggest banks. Yesterday, the Governor of the Bank of England also repeated his view that the banks should be split up. Is the Governor wrong?
The reforms that we are bringing into the banking system will include greater competition in banking. We will have a judgment from the European Commission soon, which we are supporting, that will allow more competition in British banking. As for the restructuring of the banking system and whether there should be investment banks on one side and retail-only banks on the other, the right hon. Gentleman must remember that Northern Rock was effectively a retail bank and it collapsed. Lehman Brothers was effectively an investment bank without a retail bank and it collapsed. The difference between retail and investment banks is not the cause of the problem. The cause of the problem is that banks have been insufficiently regulated at a global level and we have to set the standards for that for the future. We will be doing that at the G20 Finance Ministers summit in a few weeks’ time.
The basic failings that let the banks bring this economy to its knees are still in place. In fact, the position is worse than it was before. The banks are increasingly operating like a cartel, they are underwritten by the taxpayer, they have fewer competitors and they are now paying themselves eye-watering bonuses while the taxpayers who bailed them out are losing their jobs. If the Prime Minister will not make up his mind about splitting up the banks, does he at least agree that as long as those banks have a blank cheque from the taxpayer it is right to consider imposing an additional tax on their profits?
I am afraid that the right hon. Gentleman is wrong on both counts, and wrong again. The basic fact is that we expect that when we have completed the restructuring of the banks the taxpayer will benefit financially from that, not lose money. His assumption that somehow we will lose money is wrong: we are determined to make money out of this. On the restructuring of the banks, competition regulations will require the competition that is necessary in the banking system.
The right hon. Gentleman says that the situation is worse than it was last year, but last year banks in Britain threatened to collapse entirely. We have restructured the banking system and we will continue to do so, so that it serves customers properly. I hope that he, unlike the Conservatives, will support our measures to stimulate the economy.
I do not accept what my hon. Friend is saying. We have an electoral process in Afghanistan that has revealed that, where there is fraud and where there has been malpractice, there has to be a new election. We have an election process in Afghanistan that, despite the fact that the Taliban insurgency tried to prevent an election from taking place, had millions of people voting. Our job is to help the infant Afghan democracy, and that is what we will continue to do. I think that hon. Members will have seen, from the comments by President Obama and all the European leaders yesterday, that we are determined to do what we can to support the security during that election period, and to make sure that, by training the Afghan forces themselves, our troops can eventually come home.
I understand the work of the hospice movement. Obviously, I have been in contact with many people who work in it, and try to help. We are trying to give the hospice movement more money to enable it to do its job, and we are looking at what more we can do in future. I thank the hon. Gentleman’s constituents for the work that they do. I understand that this area of health care has not had the resources that it needs in the past and will need greater support in the future. We will do what we can to support a movement that gives dignity to people in the last years and months of their lives.
Will the Prime Minister commit all Departments and Government-controlled organisations to reducing their greenhouse gas emissions by 10 per cent. by the end of 2010? After all, what chance do we have of achieving challenging targets for later years if we do not take this opportunity now?
My hon. Friend is absolutely right that Departments have a responsibility, and so do all public organisations—and I know that many commercial companies want to do this—but there can be no substitute for an agreement in Copenhagen. If we do not get an agreement in Copenhagen, the world will drift backwards, not move forwards, so I am determined to work with other leaders over the next few months and to go to Copenhagen to make sure that we can make progress at this vital time. I believe that there is support in all parts of the House for doing so.
The purpose of devolution, whether to Scotland, Wales, Northern Ireland or London, is to allow those people in those areas who are represented to make the decisions that affect their lives. If they make these decisions by doing one thing, it is at the cost of their ability to do other things.
This allows me to thank my right hon. Friend for everything she did to make Sure Start possible in the first place. I think that all Members of the House will acknowledge that Sure Start has been pushed forward in the past 10 years. There are now 3,000 Sure Start centres across the country; our aim is 3,500 Sure Start centres. That means roughly five or six in every constituency. I would say to those who are thinking of cutting the Sure Start budget that they are making a grave mistake—for the education and learning of young children, the needs of their parents and the stability of these communities. We will keep the Sure Start centres; I am afraid that the Conservative party wants to cut them.
As a result of the other measures that we are taking, pensioners have received more than an earnings link would have granted them, because they have the winter allowance, free television licences, national concessionary bus travel and pension credit, and this year, even though inflation is around zero, the pension will rise by 2.5 per cent.
It was a negotiated settlement, because we are part of Europe: 60 per cent. of our trade is with Europe, 3 million jobs depend on our membership of the European Union and 750,000 companies trade with the European Union. I would have thought that at this time, when we need an export-led recovery which will include trading with the rest of Europe, instead of disparaging our membership of the European Union the Opposition should be saying that it is an absolutely important element of the economic future of our country.
Our proposal to deal with type 2 diabetes is to offer adults between the ages of 40 and 74 an assessment of their risk of developing it. That will be a major means by which we can identify the disease, help people to get on better diets and, potentially, deal with kidney failure as well as diabetes. There is a nationwide drive to deal with obesity, which is an issue that my hon. Friend has raised. A key factor, of course, is type 2 diabetes. The Change4Life programme, which was set up by the former Health Secretary, my right hon. Friend the Member for Kingston upon Hull, West and Hessle (Alan Johnson), is one of the means by which we can address this. I hope that we can publicise the existence of that programme for everybody who is a diabetes sufferer.
I welcome the Prime Minister’s decision to publish his proposals for funding policing and justice in Northern Ireland. Setting aside how he intends to assist in dealing with foreseeable but inescapable pressures, would he give us his views on how the Government will assist if unforeseen emergency circumstances arise, so that the Northern Ireland Executive will not have to raid their budget for health, education, housing and other critical elements?
I praise the First Minister and Deputy First Minister of Northern Ireland for the way in which we have discussed all the issues that will affect the devolution of policing and justice. I also praise all the party leaders in Northern Ireland, whom I have met to discuss this issue, and thank all those who have been involved in meeting me and others to discuss how we can progress the devolution of policing and justice. This is the final stage of the devolution settlement for Northern Ireland, and it must be accompanied by a financial settlement that makes it possible for Northern Ireland to address its security and policing needs. We have made provision in the letter that I have sent—I believe that the Opposition parties will now have a copy available—for the reserve to be available if exceptional security needs arise in any one year. We have done so this year because of what happened with the killing of soldiers and the killing of PC Carroll; we will do so in future years if such an emergency or difficulty arises. I have made that clear in the letter that I have sent to the First Minister and Deputy First Minister. A secure Northern Ireland is the key to a more prosperous Northern Ireland. We will take no risks with the security of Northern Ireland.
The reason why we took action on the banks was not to save the bankers but to ensure that ordinary people’s savings, jobs and mortgages, and the businesses on which jobs depend, were secure. There is not one saver who has lost money as a result of the failure of a British bank to make good its promise to pay money to savers. Equally, my hon. Friend is absolutely right: the banks have failed us in many ways. That is why we are making the necessary reforms, but we have to make these changes globally to make them work. Otherwise, banks will just move from one country to another. We have to create a system of remuneration that has global implications for all banks, rather than one that applies to just one country. We have to ensure that the banks will again lend the money necessary for industry and for home owners, and that is exactly the Government’s policy.
Aviation emissions will come within a total of emissions that have to be met. We have said that if we can get a climate change agreement and Europe is able to sign up to it, we will go to 30 per cent. emissions instead of 20 per cent. emissions. So we are prepared to go further on the level of emissions that we will agree to, if we can get a global agreement. Far from not being ready to compromise, we are therefore ready to do so further if we can get an international agreement. I hope that, instead of criticising us, the hon. Gentleman will support us in the negotiations.
It is absolutely remarkable that a political party can say that it is going to tell people in their 50s that they have to retire later, while at the same time insisting on giving the richest estates in the country £2 billion extra in tax cuts. They should be ashamed of themselves.
The process that we have is right: the law is settled by Parliament. I have made my views clear on this, and there have been debates in Parliament. The law is settled by Parliament, and if people interpret that law, it must be in line with the decision of Parliament. That is where I stand.
As someone who was engaged with working people in Northern Ireland for 20 years, may I tell my right hon. Friend how much I welcome his statement? I congratulate him and the leaders of all the parties in Northern Ireland on the great work that they have done to get us to where we are. Will he tell us exactly what we are going to do next to ensure that the plans are implemented as quickly as possible?
I hope that, when the leaders of the Northern Ireland parties take the proposals back to their parties, they will find that they command support. The next stage is a consultation with the community in Northern Ireland, and that is for the Northern Ireland Executive themselves to trigger. I hope that, in addition to the legislation being passed in the Northern Ireland Assembly, the community consultation will yield the ability of the Northern Ireland parties to have a cross-community vote and to go ahead with the devolution of policing and justice. I believe that we in this Parliament will do everything in our power to make that possible, with legislation that would necessarily come to this House, but it is now for the parties of Northern Ireland to respond to the proposals that we have made. I have seen from the speech made this morning by the First Minister of Northern Ireland, and from the response of the Deputy First Minister, that they are ready to move forward now that the financial proposals have been agreed.
I am happy to look at the hon. Gentleman’s question in relation to his constituency, but perhaps he would look at the bigger issue. If his party goes ahead and cuts education dramatically, not just his constituency but every constituency would be affected. At some point, the Conservative party has to face up to the fact that it is ready to cut Sure Start, cut educational expenditure in schools, cut the capital building programme, cut education maintenance allowances and, of course, cut away all help for the unemployed. They have been wrong on the recession and they are going to be wrong on the recovery.
The Secretary of State for Health will be happy to meet the hon. Gentleman, but he knows that these decisions are made by local clinicians, not by central Government. We have made proposals to bring diagnostic services nearer the community, so that people may not in future have to travel to hospital for their diagnosis and care. That is something that we have proposed should be introduced in future years, but again, that depends on our willingness to fund the capital investment in the national health service, which I hope the hon. Gentleman will support.
Points of Order
Even Homer can nod, Mr. Speaker. There are reports in the papers this week that an e-mail of this House was used to alter the Wikipedia entry of the leader of the British Conservatives in the European Parliament in order to remove references to his membership of what the chief rabbi of Poland called “a neo-Nazi party”. I would like you to ask whether it is possible for the House computer authorities to investigate this matter, and either make a statement or place a report in the Library, because no e-mail of this House should be used to whitewash away any massacre of Jews by anyone in support of neo-Nazi organisations in Europe.
May I say to the right hon. Gentleman that I was wrong, but I am afraid that he is wrong, too, which I say in all solemnity. I recognise that he feels extremely strongly about this matter and he has put his views on the record several times—doubtless he will do so again—but I am afraid that that is not a point of order, but a point of debate.
On a point of order, Mr. Speaker. Just before the recess, the Department for Children, Schools and Families and the Secretary of State in person announced an inquiry into Gloucestershire county council, and in particular its relationship with national challenge schools. On Monday of this week, one of my schools, the Vale of Berkeley college, was announced for closure. As yet, I have not seen the report from Mr. Badman. I have asked both the DCSF and the local authority for a copy of the full report. Given that you, Mr. Speaker, protect Back Benchers, will you as a matter of urgency look into why that report has yet to be made available?
I am afraid that that also is not a point of order, and I have a hunch that the hon. Member for Stroud (Mr. Drew), as an experienced and assiduous attender, is well aware of that fact. However, he has firmly registered his views on the matter, on the record, and I feel sure that those on the Treasury Bench will have heard what he has to say. If there are no further points of order, perhaps we can move on to the next business.
Local Health Services and Democratic Involvement
Motion for leave to introduce a Bill (Standing Order No. 23)
I beg to move,
That leave be given to bring in a Bill to require Primary Care Trusts to obtain prior approval for their spending plans; to require Primary Care Trusts to present an annual spending plan to certain local authorities for approval; to provide resolution arrangements in the event of Primary Care Trusts failing to secure the consent of the relevant local authority; and for connected purposes.
Judging by the Bill’s placing in the parliamentary timetable, I harbour few illusions about the odds on it making it to the statute book, unless fellow Members, or you, Mr. Speaker, are so impressed—clearly, you are not—by its obvious merit as to vary existing procedure. However, my Bill encapsulates a huge issue in this and the past few Parliaments: the democratic deficit in the NHS—the local NHS.
The local NHS is a huge taxpayer-funded service, affects everyone, is important to everyone, but is sadly totally remote from democratic decision making. Those who take the trouble to get elected to secure a mandate can make decisions about who goes to jail, who goes to war, who is taxed, who has power and who does not. We can make decisions about people’s daily behaviour: what they may say, whom they may marry, what they may buy and sell, where they may smoke and what, but not about what happens in the local NHS in their area. Those decisions are made by enlightened quangos or trusts, and they are usually a combination of medical experts and appointees who may or may not bring relevant expertise with them. They decide what drugs are available, which hospitals or hospital departments stay open, where services are, how GPs and dentists shape up, and what after-hours care exists. All those issues mean a lot to some people part of the time, and much to all people most of the time.
MPs can protest at the actions of such bodies, as I did when my town lost its children’s A and E service. We can plead for their intervention, as when we cajoled them into producing plans for a minor injuries unit. We can present petitions, and express concerns. But the thought of allowing anyone who has gone through the sordid process of getting elected anywhere near decision making has given successive Governments the vapours, and has been resisted hook, line and sinker, much to the satisfaction of hospital chief executives and health service managers.
Afraid to speak their minds, Ministers and mandarins have offered instead various sops. There were the community health councils—well-understood sounding boards, but bolshie enough to get abolished. There were PALS—patient advice and liaison service—the short-lived, worthy but ineffectual feedback collector. Now there are the mysteriously named and constructed LINks—local involvement networks. All were set up by successive pieces of legislation with the function of scrutinising, informing, listening, collating, airing and hearing, involving and consulting—anything, but never deciding.
All that is done on the mistaken assumption that the general public are too stupid to notice that they have absolutely no power over what happens in their local NHS. When an MP raises in this place decisions that their constituents oppose, and tasks a Minister about it, time and again the Minister, with almost comic sincerity, in Pontius Pilate fashion, says, “This is a matter for local decision making,” as though “local decision making” implied that local people—outside the quango circle—had any part in it.
That is a perversion of democracy, but it satisfies the professionals, who like the prescription and genuinely fear the alternative—democratic accountability. It would be refreshing if Ministers said what is on their, or the Department of Health’s, mind—what they really thought, but dare not say. What they think is that democratic decision making would lead to unworkable populism, that expert government is better than public governance, and possibly that the calibre of those elected is not up to the job—they may be too stupid or ill informed, even though many of the elected reappear on health quangos as appointees wearing different hats. They really think that this public service wants no genuine, local public voice—that that way madness lies. If a Minister actually said that, such a refreshing overt, clear declaration would flush out this argument for the fatuous nonsense that it is.
Democratically elected representatives can only espouse naked unthinking populism—which is what is feared—when they do not have to pick up the tab, run the budget or bear the consequences. Democratic bodies put up taxes, impose parking charges, change refuse arrangements, declare war, cut benefit and close facilities. I see no reason why they cannot make tough decisions, and no evidence to support that view. Democratic bodies also make a host of very technical decisions, competently, when aided by good professional advice.
For the reasons that I have given—solid and good reasons—the Liberal Democrats are very comfortable with the idea of elected health boards. We believe in removing appointees who have been whisked smugly, or in some cases humbly, into power because they have impressed some other appointee who has previously been whisked smugly or humbly into power, and replacing them with elected individuals who have had to impress the citizens served by the local trust, who gain community support and approval, and who, ultimately, justify their position to the people whom they serve.
My Bill is simply a bridge to that position. It involves even less change, and uses existing institutions. I propose that primary care trusts, as currently constituted, lay before the health scrutiny committees of existing councils, as currently constituted, their annual plans and their big decisions—not for scrutiny or consultation, but for approval, agreement and amendment. I propose a kind of democratic lock on the local NHS: a move beyond mere consultation. I propose a genuine redistribution of power from one existing institution to another existing, established institution. This is such a good idea that I believe that the model has already been embraced voluntarily in some areas.
There are likely to be disputes of substance between the PCTs and the health scrutiny committees. There are likely to be sharp differences on how to commit existing resources, given that resources are always limited. The PCT may suggest that maternity services be decommissioned, and the tribunes of the people—the council—may object. What one wants, the other may regard as plain unsafe. The Bill therefore contains a resolution procedure including, eventually, a reference upwards to the Secretary of State as a last resort.
I genuinely see no reason why this model cannot work—in fact, it does work— and produce not simply good decisions, but good decisions with a popular mandate. That would be nice. Our NHS could be reclaimed, without micro-management or meddling, and not with government by experts but with popular government, expertly informed.
Question put and agreed to.
That Dr. John Pugh, Andrew George, Annette Brooke, Paul Holmes, Andrew Stunell, Mark Hunter, Mr. Adrian Sanders and Mr. David Heath present the Bill
Dr. John Pugh accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 23 October and to be printed (Bill 152).
Before we move to the main business—the Opposition day motion in the name of the Liberal Democrats—I have a very brief and, I hope, pertinent statement to make.
I am grateful to the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) for raising on a point of order on Monday the question of whether Members who have incurred losses with Equitable Life can vote on the first motion today.
As in previous debates on Equitable Life, any Members speaking in the debate should follow the advice of the Registrar of Members’ Financial Interests dating back to 2003 and declare their interests, whether or not they are formally registrable.
In relation to voting, I can only repeat the words of Mr. Speaker Weatherill in January 1986 in relation to members of Lloyd’s:
“In matters of public policy, it has been the long-standing practice of the House—originally formulated as far back as 1811 by Mr. Speaker Abbot—that there is no obligation on an hon. Member to refrain from voting on a matter of public policy.”—[Official Report, 14 January 1986; Vol. 89, c. 1013.]
I appreciate that that does not solve the right hon. and learned Gentleman’s problem—that, without speaking in the debate, he cannot put on the record his interest when voting—but he has himself done so by raising this as a point of order.
[19th allotted day]
[Relevant Documents: The Second Report from the Public Administration Select Committee, on Justice Delayed: The Ombudsman’s report on Equitable Life, HC 41, and the Government response, HC 953; and the Sixth Report from the Committee, on Justice denied? The Government’s response to the Ombudsman’s report on Equitable Life, HC 219, and the Government response, HC 569.]
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 injustice unremedied.
The constitutional issue is as follows. We have an ombudsman, and that office 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 so far declined to do so, either in spirit or in substance.
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 has been 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.
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?
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.
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—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.
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.
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?
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.
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 excluded a set of people whom the ombudsman rightly thinks, as do we, have suffered injustice.
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.
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.
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?
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.
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?
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.
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?
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, the hon. Member for Runnymede and Weybridge (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 the hon. Member for Croydon, South (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.
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 the Member for North Norfolk (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 past 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.
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?
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.
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?
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.
This 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.
I beg to move an amendment, to leave out from “Life” to the end of the Question and add:
“also notes the Public Administration Select Committee’s Sixth Report Justice denied? The Government’s response to the Ombudsman’s report on Equitable Life; recognises the vital role the Ombudsman plays in public life; reaffirms the duty of Parliament to support the office of the Ombudsman; recognises the Government’s determination to introduce an ex gratia payment scheme that is administratively quicker and simpler to deliver than that envisaged by the Ombudsman; further welcomes the Government’s decision announced to the House on 20 October 2009 to widen the ex gratia payment scheme to include trapped annuitants who took out policies after mid-1991; urges Sir John Chadwick to report as quickly and expeditiously as possible; and recognises the impact and significant distress that maladministration and injustice have caused in respect of Equitable Life.’.”
I start by genuinely welcoming the speech made by the hon. Member for Twickenham (Dr. Cable), and the fact that he has triggered this debate. This is a very proper subject for today’s Opposition day debate, and I want to set out a number of responses to some of the points that he made. First, however, I want to echo the apology on behalf of this and previous Governments made by my predecessor, my right hon. Friend the Member for Pontefract and Castleford (Yvette Cooper), who is now Secretary of State for Work and Pensions.
I have made two statements already since the House returned earlier this month, as I want to keep right hon. and hon. Members up to date with the Government’s work to clear up the problems of Equitable Life’s past. However, today is the first opportunity for a debate since the judgment in the judicial review brought by the Equitable Life members action group—EMAG—was handed down last week.
I promised the House last Monday that I would reflect on the court judgment as quickly as I could. I did that, and I updated the House on the matter yesterday. I should like to elaborate on that statement this afternoon, and try to address the three points that I think are now uppermost in the minds of both Equitable Life policyholders and hon. Members—the scope of the proposed ex gratia scheme, the speed with which we can act, and the fairness of the approach that we propose.
Before I go into that, perhaps I should first say a word about the role of the parliamentary ombudsman. In preparing for this debate, I looked back over the comments that I have made in the House on this subject. I think that I underplayed and under-celebrated the role of the ombudsman in public life. This afternoon, I want to put on record my gratitude to her for her work, and I have made sure that that is underlined in the Government amendment.
It was only right for the Government to make sure that our response to the ombudsman’s report on Equitable Life was based on a thorough examination of what she said. It is true that we did not wholly agree with her conclusions, but we did agree on many things. Indeed, in nine out of 10 of her findings we agreed wholly or in part with the charge of maladministration, and in five areas we believed that injustice followed.
I am grateful to the Chief Secretary for giving way at this early stage, but is it the Government’s view that they should decide whether they agree with a judgment handed down by a court? If the Government do not consider that appropriate, is that the right attitude to adopt when an ombudsman makes a decision or recommendation?
I think that the two things are quite different, and I shall explain why in a moment.
As I was saying, we agreed with the charge of maladministration in nine out of the 10 findings, and thought that injustice followed in five areas. To address that injustice, we proposed that an ex gratia payment scheme should be put in place.
How many people have received ex gratia payments? What is the difference between the Government’s position, as expressed in their amendment, and the Opposition’s, as expressed in their motion? A number of people in my constituency are extremely concerned about the delays in receiving compensation. I get regular letters and I have raised the matter myself, and I really want to know what the fundamental difference is, as there is a lot of hardship out there.
My hon. Friend is absolutely right, and I am grateful to him for that point. I shall say something in a moment about how many people I think are now within the scope of the ex gratia scheme, but I hope that he will allow me to take a short run-up to that.
The starting point for the debate about scope is the fact that the ombudsman acknowledged—I think in her evidence to the Public Administration Committee—that the Government could have chosen not to make any payments at all. She also recognised that the Government have a responsibility to balance competing demands on the public purse, a point that was underlined by the court last week.
That said, however, there is clearly a moral and ethical case for the Government to provide an ex gratia payment scheme from the public purse. The question then becomes, “What is the rational basis for the operation of that scheme?” Having considered that question carefully, we concluded that the right approach was to look at where we agreed with the ombudsman in thinking that injustice had arisen. We decided that that should be the foundation of the ex gratia scheme that we put in place.
We lacked the information about Equitable Life policyholders needed to understand exactly who would be embraced by such a scheme. That is why we asked Sir John Chadwick for his advice on the fastest and fairest way forward. That approach was then challenged in judicial review proceedings by the Equitable Life members action group. The hearing took place in July, and the judgment was handed down last week.
It is an important ruling. I think that it takes us one step closer to a swift resolution and the provision of support for those who are suffering. The court recognised that the Government’s basis for a payment scheme was lawful, and it accepted that the Government were entitled to seek Sir John Chadwick’s advice in establishing the scheme.
We very much welcome that confirmation of the legal basis of our approach, but the hon. Member for Twickenham was right to go on to say that the court also concluded that in two areas we focused too narrowly on the question of regulatory compliance. Having considered that judgment very carefully, and because I am ambitious for a speedy resolution to the matter, we took the view that the scope of the ex gratia scheme should be widened. Therefore, we have asked Sir John Chadwick to consider injustice arising in the period from mid-1991.
What will be of interest to many right hon. and hon. Members is that that decision ensures that a number of the policyholders who are often called “trapped annuitants” are now likely to fall within the scope of the ex gratia scheme. The fact that the scheme has been widened means that something like up to 1 million people could be covered.
I shall deal with that question immediately. Speed, as the House has urged, is now of the essence. My goal, with the benefit of Sir John’s advice, is to deliver an ex gratia scheme that is administratively quicker and fairer than the approach proposed by the ombudsman, and in a way that puts less of a burden on policyholders.
Can the Chief Secretary answer me on a matter of principle? The Government have gone for an ex gratia scheme, but I do not understand why, if other people have lost out owing to maladministration, they should be excluded from compensation. The Government have, in effect, entered into a means-testing arrangement for policyholders in Equitable Life.
That is an important point, which was acknowledged both in the Bradley judgment and again in the court last week. There is no legal obligation on Government to compensate people for a regulatory failure that, in large part, was caused by a failure of regulators in the early 1990s, extending up to 1998. Also, as Lord Penrose says, the company itself was the architect of the failure. Although there is no legal obligation on the Government to provide compensation for such regulatory failure, there clearly is an ethical and a moral demand for Government to provide some kind of ex gratia payment scheme. The question then becomes what is the rational basis for that scheme. The Government’s conclusion has been that the only rational basis for the scheme is where we agree that injustice was caused through maladministration.
On the question of speed—
Dates will come in a moment. When the ombudsman reported in July 2008, she suggested that a scheme could be established within six months and that, once established, such a scheme could conduct its work over the course of a further two years—in other words, taking us to December 2010. But we concluded that the approach that was recommended could be better. Indeed, when Sir John Chadwick, who is an independent judge of some repute, looked at the question, he described the ombudsman’s approach as
“at best unsatisfactory and more likely impossible”.
The reason for this is that the approach that was proposed by the ombudsman and that has been rehearsed again by the hon. Member for Twickenham and is recommended in his early-day motion entails a case-by-case review by a tribunal or another body of the evidence of loss from individual policyholders.
If we believe, as the hon. Gentleman says, that there are up to 1 million policyholders, and if we had to consider each of their investment decisions in the period that we are talking about, we would have to review something like 30 million different investment decisions. The approach proposed by the ombudsman puts the burden on the individual policyholder to show how regulatory failure created a loss. Then the policyholder would need to show what kind of relative loss they had suffered, which would require them to say something about a counterfactual.
What we have asked Sir John to do is to undertake a better way of securing ex gratia payments for policyholders. The approach that Sir John proposes is to look at different classes of policyholders and understand what the relative losses may be, in order to make sure that a much swifter and policy-based compensation payment can be made. That will be faster than a case-by-case review of 30 million investment decisions.
I understand what the Minister says about the amount of time and effort that needs to be put into the compensation scheme, but echoing the hon. Member for Guildford (Anne Milton), may I ask him to confirm that the compensation scheme will be in place in the lifetime of his Government—before the general election?
I think the Minister is going to receive another letter from the ombudsman for again misrepresenting what she said in her report about a process that she recommended could be completed within two years as a mechanism for compensation. Does the right hon. Gentleman accept that the term “disproportionate”, as he describes it, applies simply to the different impacts on different classes of policyholders if, for example, somebody had policy type A rather than policy type B? It is not a means-testing measure, and that point is crucial.
There are two points there, as the hon. Lady said. First, on the question of relative loss, it will be important to look at what policyholders would have made if they had put their investments into a different organisation, rather than a trade-off between different policies. All parties will have to come to a view about how what will ultimately be a fixed pot of money is shared between policyholders. That is one of the questions that Sir John has to consider, and it rightly should be a matter for further debate in the House.
I can see the strength of my right hon. Friend’s argument for a different mechanism from that proposed by the ombudsman, but a problem is that we are still a long way from getting that mechanism set up. The difficulty is that people are rightly asking why these leisurely discussions and reports are going on. Out there, people are dying. Out there, people are not getting any money. Why have not steps been taken already to set up the mechanism so that people can be paid out now? My right hon. Friend needs to give us definite indications of dates when payments can be made or when a mechanism can be set up if he is to persuade many of us to support him in the Lobby later today.
I am grateful to my hon. Friend for that point. It allows me to say that work is well in hand. Sir John has already set out his approach and he is already a long way through the work. It is worth the House reflecting on the scale of the task that Sir John is working through. He has to consider information on 2 million policies and information dating back to around 1990 on payments and investments for over 20 main types of policy. That demands a review of several hundred specific policy products. It requires that data be checked by both his actuaries and those of Equitable Life.
Sir John then has to give advice on how to assess the relative losses of the varied classes of policyholder. The only way to do this is to assess the performance of the rest of the industry at the time, a process that will demand some pretty difficult actuarial calculations and the testing of a number of assumptions, not least how to make payments most easily and what their tax treatment should be. We have asked Sir John to finalise the design of his scheme by spring 2010.
We all understand that the Minister has a perfectly legitimate role in protecting the Treasury, but his argument seems to be that the Government’s route is designed to protect the policyholders by getting them resolution more quickly than the ombudsman would. Why, then, does he think the policyholders have invested a substantial amount of money in order to pursue a legal action to follow the ombudsman route, rather than the one that he is recommending?
I cannot second-guess what was in the minds of EMAG, but I think there were two concerns in particular, both of which it was legitimate to test. The first was the legal basis for the Government’s approach, which the court was happy to confirm. The second, rightly, was for policyholders to test the scope of the ex gratia scheme.
The ombudsman used the expression “relative loss”, which has been used before in the debate. My right hon. Friend has also referred to that, but the Government’s favoured position is based not on relative loss, but on disproportionate loss. I have not seen a definition of that. Could he cast some light on the distinction between relative loss and disproportionate loss?
That is one of the questions on which we have asked Sir John Chadwick to advise. When the next stage of the report is finished, which I hope will be in the next week or two, that may be something that I could lay before the House so that we could test some of the conclusions in debate.
So that the House is not misled, may I put it to my right hon. Friend that the issue is not the technical efficiency of different schemes for delivering redress, but a fundamental difference in approach between the ombudsman, who says that redress should be as of right because of regulatory failure, and the Government, who say that they shall create an ex gratia remedy for those who have suffered disproportionate loss? That is a fundamentally different approach.
It is, and my hon. Friend might want to intervene again. However, the Bradley judgment and last week’s court judgment confirmed the legal basis of the Government’s ex gratia proposal, and that brings us to the point that there is no legal obligation on the Government to provide compensation for regulatory failure. The ombudsman appeared before my hon. Friend’s Committee, and it may have been him who asked her directly whether she would have been content for the Government to accept all the recommendations and then provide no compensation whatever. I think that it was question 29 of the relevant report, and her answer was yes: she would have been, perhaps not satisfied, but content that it would have been perfectly legitimate for the Government to provide no compensation whatever. However, even though there is no legal obligation to provide compensation, all parts of the House agree that there is a legal and moral demand for the provision of some compensation. The question then becomes, what is the rational basis on which to put in place that scheme?
The Chief Secretary is doing a wonderful job of dancing on the head of a pin. I met Equitable Life victims yesterday, and the reason they have gone down their particular route is that they do not trust the Government. If we do not sort out the matter now, we will live with that fundamental break in trust—in terms of being encouraged to invest—as a very poor legacy of this situation. Therefore, may I ask the Chief Secretary yet again to respond to my hon. Friend the Member for Guildford (Anne Milton) on the question of dates? Spring is not good enough.
I am grateful to the Minister for giving way; he has been generous in doing so. All who are concerned on behalf of their constituents about the issue will not be surprised at what I suspect will be the fury of the many thousands of people who will have looked in on this debate and, frankly, expected and hoped—despite all the odds—for a little better from the Government. Has the Minister calculated how many fewer people—because people with legitimate claims are dying—he will have to pay by his target date of spring next year?
Perhaps the hon. Gentleman will want to intervene again if I pose this question. How much faster does he think that compensation would flow to policyholders if an independent process were set up that then reviewed the investment decisions—all 30 million—of 2 million people? Will he intervene again and tell me how much faster he thinks that compensation scheme would be up and running?
I am glad that the hon. Gentleman says that a better approach is to review different classes of policyholder, because that is exactly the approach that Sir John Chadwick recommends. Perhaps the hon. Gentleman will answer the following question by intervening again. What is at stake is a test of approach, and the hon. Member for Twickenham prayed in aid the ombudsman’s report, citing paragraph 9.27, which says:
“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.”
Is the hon. Member for Cheadle prepared to intervene again and say that that is the wrong approach and that we should consider providing compensation for different classes of policyholder, which is of course Sir John Chadwick’s approach?
If my hon. Friend will allow me, I should say that the Minister has not answered the question from our hon. Friend the Member for Twickenham (Dr. Cable). The Minister offers what he calls a swifter and better way, but, if it is, why has he not convinced one single policyholder—they are not stupid—that that is the case?
All I can do is point to the ombudsman’s recommendation for, and assessment of, when her proposed compensation scheme would be up and running and have concluded its business. That best-case assumption was December 2010. When we and, indeed, Sir John Chadwick looked at what running that scheme would entail, we found that it was a pretty conservative estimate of how long it would take to get through the business. I think that Sir John’s approach is right and offers a swifter route to justice.
I am grateful to my right hon. Friend for giving way again. I, unlike many colleagues, was convinced of the correctness of the Government’s ex gratia scheme approach, rather than of an approach that seemed to be a lengthy way of resolving the issue. However, I am concerned about the time scale—and even more now. We are told that the proposals for the scheme will be in place by 2010. Allowing for the natural delay to such schemes, anyway, we are probably talking about proposals coming forward next summer and there will be months of debate after that. By the time any money starts being paid out, we will probably be well into 2011, or beyond. That is unacceptable, so may I ask the Chief Secretary to—
I do not share this love-in with the ombudsman, who took a slothful more than four years to produce her report. Nor do I share any love-in in terms of the time that the Government have taken. My right hon. Friend says today that a design for the scheme will be finalised by spring 2010, and that seems to be much better than the ombudsman’s proposal to review 30 million decisions. However, spring is an elastic date. By what dates does my right hon. Friend think that pay-outs will start?
That, I know, is the million dollar question, which I cannot answer this afternoon. [Interruption.] I know. Until Sir John has finished looking at the principles of how we calculate relative loss and assess disproportionate impact, both of which we will want to debate in the House, I cannot answer that question. I can commit to a date for the next stage—the scheme’s design.
The Chief Secretary is in danger of treating the House and our constituents like fools. He tried to dance around the issue of when payments will be made, and he said that Sir John Chadwick would design a scheme by spring 2010. Surely the Treasury has looked at how long it will take to implement a scheme. Treasury officials tell us that it has been working in parallel on those issues since Sir John’s appointment. When will payments be made to policyholders who have lost out? The Minister must have an indication of the timetable for delivery.
As I have said, the regulatory failures of the 1990s, which we are now attempting to clear up, unfortunately entail Sir John having to go back over 2 million policies and information going back to 1990, to review several hundred different products and to assess the relative losses that people may have suffered. That will entail, quite obviously, an assessment of the money that people could have made by putting their cash into alternative products. If a fair system is what we want, a fair system will require a thorough examination of the records. The hon. Gentleman will share my ambition and determination, given his party’s responsibility for and involvement in some of the regulatory failures of the past, to ensure that the ex gratia scheme is fair to policyholders. He will not want any short-circuiting during the review; he will want us to ensure that all the records are checked.
Can the Chief Secretary not assure the House and Equitable Life policyholders that, at the close of today’s debate, they will receive what they have not received to date—clarity and certainty about the dates when payments will be made?