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House of Commons Hansard
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Commons Chamber
16 March 2010
Volume 507

House of Commons

Tuesday 16 March 2010

The House met at half-past Two o’clock

Prayers

[Mr. Speaker in the Chair]

Oral Answers to Questions

Treasury

The Chancellor of the Exchequer was asked—

Government Holdings

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1. What recent discussions he has had with United Kingdom Financial Investments Ltd on its management of Government holdings in lending banks. [322185]

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As you will be aware, Mr. Speaker, the Chancellor of the Exchequer is at a meeting of European Finance Ministers in Brussels today. However, he and the Treasury hold frequent discussions with United Kingdom Financial Investments Ltd on a range of topics related to the Government’s holdings in financial institutions, in line with the UK Financial Investment’s framework document and investment mandate.

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Given that the Government have reduced competition among high street banks, does the Minister not recognise that many small and medium-sized businesses will be frustrated by an economic recovery, because they will be unable to access finance on the terms that they need for expansion and recovery? Is it not the Government’s responsibility to ensure that they can do that, so will he do something about it rather than being passive on the sidelines?

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We are certainly not being passive on the sidelines. As the House is well aware, the Government have negotiated binding commitments with RBS and Lloyds Banking Group on lending to businesses, as well as mortgage lending. We have taken further actions to help small, growing companies, through the enterprise finance guarantee, which has been a big success in lending to small businesses, and through intermediate lending by the European Investment Bank. We have also seen EIB loans at cheap rates to help companies through the recovery, which is what we all want to see.

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Like many hon. Members, I have probably spoken to more constituents over recent months than I would normally, and there is still a huge amount of anger among my constituents—and, I suspect, many others—about bankers’ bonuses. They feel that, as the Government have a stake in a number of such institutions, perhaps they should have taken a lot more action to curtail the amount that bankers are still being paid.

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The whole House will have had representations from constituents on the issue of bankers’ bonuses. My hon. Friend will be aware that UKFI manages the Government’s interests in RBS, Lloyds Banking Group, Northern Rock and Bradford & Bingley on an arm’s length basis. It is not in the interests of shareholders, including the taxpayer, for banks to lose key profit-making staff, but we have to ensure an appropriate balance. As she will be aware, RBS made a commitment to pay the minimum possible, to protect the banking franchise, and it is in investment banking where that issue is most apparent. On behalf of the Government, UKFI took independent analysis and looked at sector averages in coming to its conclusions, and it was entirely appropriate that it showed that due diligence.

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On lending banking, has the Chancellor yet modified his opposition to Mr. Paul Volcker’s view, which is strongly supported by President Obama, that it is a mistake for commercial banks to allow their depositors to run the risk of their money being handled by investment banks?

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No, I do not think that the Chancellor has changed his views on that. Indeed, he has clearly expressed the view to the House on a number of occasions that he does not believe the causes of the current financial crisis to have been brought about as a result of a failure to implement Glass-Steagall and split investment banking from ordinary commercial banking. Both types of banks have got into difficulty over the past couple of years. What is important is that we pay due attention to ensuring the effective regulation of the banks. That is the approach that we have adopted, which is why we have introduced recovery and resolution plans, for instance, as part of our new legislative programme.

Budget 2009

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2. What recent assessment he has made of the effect on the economy of his Department’s policies introduced in Budget 2009. [322186]

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Since the Budget more than 3.5 million people have been helped off jobseeker’s allowance—

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Order. I think that the Chief Secretary was seeking to group this question with Question 12.

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Yes, I was.

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12. What recent assessment he has made of the effect on the economy of his Department’s policies introduced in Budget 2009. [322196]

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In the past year more than 3.5 million people have been helped off benefits and back into work, while more than 300,000 people have been helped to stay in their homes and more than 160,000 businesses have been helped to defer more than £5 billion in taxes. Together, those measures have helped our economy return to growth.

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Will my right hon. Friend join me in congratulating the partnership of Yorkshire Forward, the local authority, West Yorkshire MPs and local businesses, which has been so successful in saving the Halifax brand, as well as the maximum number of jobs in my constituency? Can he also tell the House what further he can do to support jobs in my constituency?

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I am pleased that because of the measures that we have taken over the past year, unemployment in my hon. Friend’s constituency is not only lower than the UK average, but lower than the average for Yorkshire and the Humber. Thanks to the Government help that has been put in place, the partnerships to which she referred have now delivered more than 350 jobs to the local community. We have no plans to take away that support, which is helping to get people back into work. We still provide the young person’s guarantee which helps young people to obtain jobs when they have been out of work for six months, and extra help is also available to those aged over 25 who are in that position.

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May I stress the importance of capital expenditure to the Merseyside and Cheshire area, and, in that context, the importance of a decision on the proposed Mersey gateway bridge, which will create hundreds of construction jobs and many thousands of jobs thereafter? Will my right hon. Friend talk to his colleagues in the Department for Transport about the need for an early decision?

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I congratulate my hon. Friend on the consistency with which he has championed that project over the past few years. It will make a great deal of difference to the local economy: I understand that it is worth 4,000 or 5,000 jobs to his area. As he will know, the Government have brought forward some £3 billion of capital expenditure to help fight the effects of the recession. I understand that the Departments for Transport and for Communities and Local Government have received an inspector’s report on the bridge, and I will continue to press my colleagues for an early decision.

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If last year’s Budget decisions were right, why did the Chief Secretary rule out a VAT increase last week only to rule it in again this morning? Will he clear up the confusion, and tell the British public categorically whether or not an increase in VAT is being considered?

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The hon. Gentleman has been in the House long enough to know that tax decisions are matters for the Chancellor, who presents them to the House in both the pre-Budget report and the Budget.

We will not cut support for the economy this year, unlike the Conservative party. Once growth is locked in, we will take action to halve the deficit over the next four years. What we will not do is make the commitment made this morning by the shadow Business Secretary, the right hon. and learned Member for Rushcliffe (Mr. Clarke), to bring down the deficit to 3 per cent. by 2014-15—a step that would take another £20 billion out of public spending over the medium term.

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Does my right hon. Friend share my concern about the impact of continuing low interest rates on people who rely on savings income, especially pensioners? What measures to support that group were taken in the last Budget?

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Over the past year, steps have been taken not only to increase the basic state pension, but to increase the support available through pension credit. We have increased the disregard in the pensions system to put more money into pensioners’ pockets, and they will also have benefited from VAT cuts over the past year which have put about £1 billion into the pockets of consumers throughout the country.

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At a time when economic confidence is crucial to Britain’s recovery, the assessment of the policies in the 2009 Budget that matters is not the Chief Secretary’s assessment or mine, but that of the international investors who have to buy our debt and the business men who will invest in that recovery. Their verdict is clear, and it is getting louder. It is summarised very neatly by the European Commission’s view that the Government’s plans are “not sufficiently ambitious” and that “additional fiscal tightening” is necessary. Is not the simple fact that the Government’s deficit reduction plan is not designed to restore confidence in markets, not designed to kick-start business investment and not designed in the long-term interests in the British economy, but designed to postpone the tough decisions until the other side of a general election?

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The argument that the shadow Chief Secretary seeks to advance is one that he has rehearsed over the past year. In his opinion, it would be right to start to cut public spending now, before the recovery is locked in. If he is so interested in the views of business leaders and others, let me quote a couple. Richard Lambert has said:

“I think the Government is right to say that it would be a bad idea to slam on the brakes right now because the economy’s still… fragile.”

The Institute for Fiscal Studies has said:

“it doesn’t make sense to announce more tax increases or spending cuts that would take effect over the course of the coming year.”

That argument has been reinforced by the International Monetary Fund. If the hon. Gentleman does not wish to listen to those organisations, however, perhaps he will listen to his own economic adviser, Alan Budd, who has said:

“If you go too quickly, then there is a risk that the recovery will be snuffed out and we will go back into a recession. I mean, what do the Americans say? ‘Remember 1937.’”

I hope that the shadow Chief Secretary will heed that advice.

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Order. May I say to both the Chief Secretary and the shadow Chief Secretary that what I do not want is for Back Benchers to be “snuffed out” by excessively prolonged exchanges between the Front Benches. Mr. Hammond, I know that your second question will be shorter than your first.

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Yes, Mr. Speaker, and we hope it will elicit a shorter reply, too.

The fact is that the Chief Secretary is not listening. In particular, he is not listening to the people whose assessments really matter, such as Sir Martin Sorrell, who says:

“If Labour win we may well have a sterling crisis.”

I might also mention Fitch, which says that

“halving the deficit over four years is frankly too slow”,

and the CBI, which says that

“the Government has no credible plan.”

The truth is that whereas the Conservative party is willing to roll up its sleeves and take the tough decisions that are necessary for Britain’s future, Labour still has its head buried in the sand and is merely hoping that the problem will go away. When will the Chief Secretary start telling the British people the truth about the challenges that lie ahead?

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We could carry on trading quotes from business leaders, but the International Monetary Fund, the Bank of England and respected economists such as the chief economist of UBS have all made it clear that this year would be the wrong year to start making cuts. The hon. Gentleman is, I think, reaffirming the argument made this morning by the shadow Business Secretary, which is that another £20 billion should be cut from public spending. Will the hon. Gentleman deny that today? [Interruption.] Will he issue a statement denying that today? It appears that the shadow Chancellor and the shadow Business Secretary are now auditioning for the same job, but the problem is that they are using a different script.

Small Manufacturing Business

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3. Whether he plans to amend the fiscal environment for small manufacturing businesses to facilitate their growth. [322187]

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The annual investment allowance of £50,000 is particularly helpful for small manufacturing businesses. The business payment support service allows firms with cash-flow difficulties to spread tax payments over a period. My right hon. Friend the Chancellor will set out our plans in his Budget statement next week.

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Is my right hon. Friend aware that many businesses, such as manufacturing businesses in Yorkshire and especially Huddersfield, very much value the range of incentives that they have, particularly the research and development tax credits? Does he also understand that they are very worried? One business man said that he could not sleep at night because of thoughts of a naive new Chancellor sweeping all this away.

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My hon. Friend is absolutely right. There is a great deal of concern among manufacturers about the Conservative party’s proposals. I agree with the Engineering Employers Federation, which has described the proposals as a disaster for manufacturers. The Institute for Fiscal Studies said that the proposals

“would help companies that make large profits with little investment, at the expense of businesses that are investing heavily in the UK”.

What we should be doing is supporting investment.

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The Financial Secretary told the hon. Member for Huddersfield (Mr. Sheerman) that he would have to wait for further announcements in the Budget, but why does he have to wait until then when the Chief Secretary is merrily going around ahead of the Budget telling the world there will be no tax increases? Is the purdah rule now selectively applied, or is the Chief Secretary just gaffe-prone?

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As my right hon. Friend the Chief Secretary has made clear, tax announcements are made at the time of the Budget. Like my right hon. Friend, however, I am very interested in what the shadow Business Secretary has been saying this morning, apparently committing the Conservative party to a 3 per cent. deficit by 2014.

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Order. The Minister is being very cheeky—anybody would think an election is on the way. The Minister does not need to preoccupy himself with the policies of the Opposition, and I know that in a moment he will want to return to the policies of the Government.

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In recent evidence to the Treasury Committee, Lord Turner told us that

“the tax deductibility of interest is creating a bias in the tax system”.

That bias is towards debt, rather than equity. For the sake of all manufacturing industry, is it not time that we had a real debate on this issue, so that we correct the tax system in favour of people who are involved in manufacturing and creating jobs in the country?

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My right hon. Friend is right. We will need to reflect on this, but I think that he will agree that it would be a mistake to make changes now that undermine the incentive to invest in manufacturing. That is what the Conservative party is proposing, however.

Budget Deficit

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4. What recent estimate he has made of the current and future level of the Budget deficit; and if he will make a statement. [322188]

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With your permission, Mr. Speaker, I will answer Questions 4 and 23 together. The Chancellor will provide an update on the Government’s—

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Order. Far be it from me to rain on the Chief Secretary’s parade, but I have received no such request, and I regard both the request and its timing as deeply irregular. I think we will treat the questions separately.

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I am very grateful for your judgment, Mr. Speaker; I shall answer Question 4 directly.

The Chancellor will provide an update on the Government’s fiscal position, including forecasts for public finance, at the Budget. The Fiscal Responsibility Act 2010 puts a legal obligation on the Government to more than halve the deficit over four years and have debt falling by 2015-16.

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The Government’s fiscal plans have been criticised by the Governor of the Bank of England and the European Commission in the past week. A few moments ago, in response to my hon. Friend the Member for Sevenoaks (Mr. Fallon), the Chief Secretary said that this was the wrong year to make cuts. Last week, the Chief Secretary told us that there was no need for tax rises, but this week he has changed his mind. Following the Chancellor’s reprimand of him, is he now going to tell us that this is the right year and that this Government will be increasing taxes this year?

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We were clear in the pre-Budget report about our belief that £19 billion-worth of tax increases need to be secured over the next few years. We have not caveated our language with the kind of dissembling that we have seen in some quarters about whether proposals on national insurance contributions will be reversed or implemented. Alongside those proposals, we have said that £38 billion-worth of cuts and efficiency savings also need to be secured. We have been clear about our plans to halve the deficit—I hope that the Conservative party will match that clarity.

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At a time when we need to make savings, is my right hon. Friend aware that Gloucestershire has seven local authorities? There are too many councillors and too many local authorities, so in the run-up to the Budget will he consider allowing us to bring in unitary authorities in places such as Gloucestershire? We could save £16 million a year by reducing the number of authorities from seven to two, by cutting the number of councillors and by reducing the amount of duplication. If we took a similar approach across the country, we could save half a billion pounds a year.

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I will listen carefully to all sensible proposals to save money.

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Is the Minister not mildly embarrassed that the Government claimed to be leading the international debate on recovery from the financial crisis but have now been chastised by the European Commission for a lack of clarity in their plans for tackling the fiscal deficit? Although the Government have been clear about when to make cuts and how rapidly to do so, they have been massively unclear about what they propose to cut—when are we going to hear that?

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I think that the European Commission made the wrong decision by saying to the United Kingdom that we should reduce the deficit to 3 per cent. of GDP by 2014-15. That would entail a cut of well above £20 billion in public spending or commensurate tax increases. In the pre-Budget report we set out deliberately how we would save £20 billion of current spending over the next four years: £4.8 billion of that would come through savings on pay and pensions; there would be £5 billion of cuts to departmental expenditure limits; and £11 billion of it would come through the reorganisation of Whitehall and doing things more efficiently in the future. We set that out clearly in chapter 6 of the pre-Budget report.

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Does this European report not also relate to a deeper argument within Europe about whether recovery should be led by countries such as Germany widening their deficit—that is the French argument—or by the weaker countries, such as Greece, Ireland, Italy, Spain and probably Britain, taking action on their deficits? Where do the Government stand on that debate?

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We are very clear that what is in the interests of the United Kingdom economy—I believe that the hon. Gentleman has made this argument before—is rebalancing our economy in the years to come and having an investment and export-led recovery. No one country can secure that policy acting on its own, which is why international trade reform is part and parcel of our approach to the agenda for the G20 over the year to come. The truth is that if American savers carry on saving at today’s rates we will not be able to rely on them to drive growth in the global economy in the way that they have done in the past.

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Will my right hon. Friend confirm that there could not be a more bizarre sight than the Tory Front-Bench team joining unelected European Commissioners to call on the British Government to carry out a policy of creating mass unemployment by postponing the attempt to halve the deficit in four years? And the Member for the Liberal party ought to know better than to join these unelected people who want to throw workers on the scrap heap.

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My hon. Friend is absolutely right. Over the past year, 22 million people have benefited from tax cuts because of measures we have introduced. Up to 500,000 jobs have been protected, more than 160,000 businesses have been helped with their cash flow and 120,000 jobs have been provided through the future jobs fund. That has all been possible because of the measures that we took over the course of the past year. It would have been impossible to sustain those steps had we followed the advice of the Opposition.

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Given that the Chief Secretary’s pronouncements on tax policy last Thursday were overruled by the Chancellor on Sunday, will the Chief Secretary tell the House whether he speaks on these matters with the authority of the Chancellor, or is the relationship between the Chief Secretary and the Chancellor as dysfunctional as the relationship between the Chancellor and the Prime Minister?

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What a non-question. What I did last week was set out very clearly proposals for how, over the next four years, we will increase taxes by about £19 billion. They are difficult decisions that no Chancellor wants to implement, but none the less they are decisions that we have faced up to. Alongside that, we have said that we will reduce spending on day-to-day public services, but we will not take precipitate action as proposed by the Opposition. We will lock in the recovery, not put it at risk, as proposed by the Opposition.

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If John Maynard Keynes were alive today, he would agree absolutely with my hon. Friend the Member for Bolsover (Mr. Skinner) and would have contempt for the views of the Opposition. May I suggest to my right hon. Friend that cutting now would be about as intelligent as burning witches in the middle ages?

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Not just my hon. Friends agree with our approach. My hon. Friend and others may convey it in different language, but that approach is supported not only by the International Monetary Fund but by the Institute for Fiscal Studies, UBS, the CBI, two Nobel economists, the hon. Member for Twickenham (Dr. Cable) —on occasion—and the independent fiscal forecaster for the Conservative party, Sir Alan Budd.

Crown Estate Commissioners

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5. What recent assessment he has made of the performance of the Crown Estate commissioners; and if he will make a statement. [322189]

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The Crown Estate has delivered good financial returns over the past 10 years, with capital up 66 per cent. and revenue paid to the Exchequer up 70 per cent., reaching £226 million in the last full financial year. Over the past 10 years, the value of the portfolio has increased by £2.3 billion and the Crown Estate has paid a total of £1.8 billion to the Exchequer.

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The Minister is—I hope—aware of the announcement made this morning by the Crown Estate on licensing sea bed areas around Orkney and the north of Scotland for the development of marine renewables. May I tell her, however, that many in the renewables industry, although they welcome the announcement, have serious concerns about the process that the Crown Estate has used in getting to this point? Will she use the powers that are given to her in the Crown Estate Act 1961 to have a look at what has been done to ensure that the Crown Estate becomes a facilitator rather than a hindrance in the development of green renewables?

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I have to disagree with the hon. Gentleman; I do not think that the Crown Estate is a hindrance. I have had it from the Crown Estate that it wishes to be involved in that process and recognises the importance of the sea bed around Scotland. I am having a meeting with the Crown Estate commissioners in the next couple of weeks and I intend to take various issues to that meeting, including the marine issues to do with renewable energy in Scotland and other matters that have been raised by hon. Members.

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This question reminds me of how, soon after I was elected, I had to do battle with the Crown Estate commissioners on the foreshore of the Thames for putting in jeopardy the 1,000-year-old ferry route between Tilbury and Gravesend. It is rather sad that, as I come to the end of my life in the House of Commons, that ferry is again in jeopardy. I do not know to what extent the Crown Estate commissioners are involved, but I ask my hon. Friend to look into that in her discussions. The real problem is that work, employment and school opportunities for my folk are being put in jeopardy by the Conservative borough council, which wants to cut the subsidy. That was not mentioned to the hon. Member for—

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Order. We have got the thrust of the question, but councils are not the responsibility of the Minister.

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I certainly agree with my hon. Friend that there are frustrating Conservative councils. If the Crown Estate is involved in that decision, I will be more than happy to raise it at my meeting.

Value of Sterling

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6. What assessment he has made of the effects on the economy of recent changes in the value of sterling. [322190]

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As stated in the previous pre-Budget report, the depreciation of sterling is expected to help contribute to recovery in the UK economy. It should give a competitive edge to UK exporters, and encourage UK consumers to switch to domestically produced goods and services.

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I thank the Minister for that reply. However, given the faith that Ministers have placed in a weak sterling supporting export growth, does the drop in the previous quarter’s export figures not demonstrate again both the complacency of Ministers about the recovery, and the extent of the damage that has been done to the UK’s manufacturing and export base under this Government?

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We are certainly not complacent about the recovery. That is why we have taken the fiscal judgments that we have taken, and why we have said explicitly that we need to make sure that we lock in the recovery. We have taken actions to help exporters through UK Trade and Investment, which helps some 20,000 exporters every year. I happen to believe that there is more to be done: perhaps it is because I come from one of the UK’s manufacturing heartlands that I believe that we will not have a successful economic future unless we export goods and services. So, yes, I think that there is more to be done, but this Government have a good record in supporting UK exporters.

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Is not the implication of the fact that a more competitive exchange rate has not produced greater exports that we may need to do more to reflate the world economy?

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Pretty much any economist will say that there is a time lag between depreciation occurring in an economy and its visible effects in both exports and import substitution. I am confident that the normal laws of economics still apply to the UK and the global economy. Because of the financial crisis that has hit the world economy, I have concerns about the effectiveness of banks as a transmission mechanism for supporting growth in our exporters and businesses. However, I have every reason to believe that the exchange rate as it is will help UK firms.

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Order. We really must have sharper questions and answers. Progress today is lamentably slow and it needs to get better.

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Every time that this discredited Government make any kind of recovery, sterling falls sharply. That is due to their lack of credibility when it comes to the deficit. Does the Minister think that it helps the Government’s credibility with the markets and sterling for the Chief Secretary to make promises on tax that he has to retract five days later?

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The hon. Gentleman must have been reading one of the reports in The Times today, which said that sterling was on the slide as a result of recent announcements. That might have been true between 6 am and 11.40, but then it changed round, and apart from a blip at about 7.40 to 8 o’clock this morning, the pound has gone up again. It has been within a trading range for a considerable period of time.

Capital Allowances

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7. What recent representations he has received from businesses on the level of capital allowances. [322191]

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We receive representations from a number of public and private sector organisations as part of our policy development and delivery. More than 500,000 businesses that invest are able to claim tax relief on their qualifying investment expenditure under the capital allowances regime. In 2010-11, it is estimated that £62 billion of capital expenditure investment will be made and supported by these allowances.

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Does my hon. Friend recall that the polices of the Conservative Government of the 1980s and 1990s meant that it was far more tax-efficient to distribute what should have been retained profits for investment than to retool and re-kit our industry? That was especially true in the west midlands, where we lost a great deal in terms of modernisation. Will she tell us this afternoon that the policy of this Labour Government, which encourages investment, will continue?

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I assure my hon. Friend that we believe that investment is crucial for the UK economy’s long-term success. That is why we acted to support business investment during the recession by temporarily doubling the main rate of capital allowance. We support capital allowances—unlike the Opposition, who wish to cut allowances for investment.

Listed Places of Worship (Grants)

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8. What plans he has for the future of the listed places of worship grants scheme; and if he will make a statement. [322192]

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The Government’s plans for the listed places of worship scheme beyond 31 March next year will be announced in the spending review later in the year.

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I hope that it will be good news. The Minister will know that the scheme involves money given to help defray the cost of value added tax on repairing listed buildings. Many communities up and down the country are trying to keep their churches in good repair, and either the scheme has to be extended or the Government must restore heritage as part of national lottery funding. Does he agree that we cannot expect this important element of our built heritage to be done on thin air?

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The hon. Gentleman raises an important point. This scheme has now generated some £100 million for 10,000 buildings since it was introduced in 2001. We have recognised that listed churches are a special case. Our long-term aim is that a lower rate of VAT should be agreed at European level for instances of that kind, but in the meantime the joint English Heritage/Heritage Lottery Fund scheme is providing £25 million a year. We will look at that particular scheme again in the spending review.

Tax Credits

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9. What recent assessment he has made of the effect on the economy of the operation of tax credits. [322193]

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11. What recent assessment he has made of the effect on the economy of the operation of tax credits. [322195]

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Tax credits have supported the economy in the downturn, responding quickly when household income falls. Last October, 400,000 households whose income had fallen since the start of the year were receiving, on average, £37 a week more in tax credits.

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Tax credits have helped more than 9,000 families in my constituency by supporting them through difficult times and helping to reduce child poverty. Will the Minister reaffirm his commitment to that policy, in contrast to the two main Opposition parties, which are looking to cut tax credits for those on very modest incomes?

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My hon. Friend is absolutely right. I can reaffirm our commitment to the policy. Under the last Government, child poverty more than doubled, to the highest rate in Europe. We have been able to reverse that rise, and indeed reduce the number of children below the poverty line by 500,000 on the most recent data. I can confirm to my hon. Friend that we will maintain that policy.

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My right hon. Friend makes an important point about the impact of tax credits on family poverty. Can he give any guarantees that if there were to be a change in political fortunes, those tax credits would still go into the pockets of families in need?

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Yes. Our view is that the tax credit system has played a very important role in supporting the economy, particularly in the past year, when a lot of people have seen their income fall—for example, because their hours have been reduced—and it has been possible for their tax credits to increase very quickly in response. I noticed that in my hon. Friend’s constituency more than 500 families have benefited, by an average of just over £41.

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I wonder whether the Minister can tell the House how many people have been in his constituency surgery in tears because of the way in which the tax credit system operates.

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I do not think that I have had people in tears over that in my constituency surgery. The hon. Gentleman might be pleased to note that in April to December 2009 the number of complaints about the operation of the tax credit system was 40 per cent. down on the year before, so we are making good progress.

Youth Employment

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10. If he will bring forward proposals for fiscal measures to encourage businesses to employ young people. [322194]

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The Government have introduced a significant package of support to help young people into work quickly. This includes the £1.3 billion young person’s guarantee of a job, and up to £1,000 for businesses that recruit unemployed young people.

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In Stockport, more than 4,000 young people are not in education, employment or training and many employers are ready to help them. Is it not time for the Chancellor to increase his support for employers, so that they can give the young people in my constituency the break and the start that they need?

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I will take that as another Budget submission, but just to be clear with the hon. Gentleman, the young person’s guarantee is already providing jobs and work experience and training for those aged 16 to 24 who have been out of work for six months. From April this year, if a young person has been out of work for 10 months, they need actually to take that job or that training opportunity, or the community service on offer. We have already provided access to 120,000 jobs for young people through the future jobs fund, paid at the national minimum wage, together with 120,000 pre-employment training places.

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Will my right hon. Friend ensure that special help is given to those young people recovering from either mental health problems or addiction difficulties, given that there seems to be a disproportionately high number of such people among the young unemployed?

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We can, and partly because of the extra resources that have been put in place in jobcentres, many thousands more people have been added to the strength of that particular front line. That obviously increases the personalisation of the service that jobcentres can offer, and it is part of the reason that 3.5 million people have been helped off jobseeker’s allowance and into jobs over the past year.

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Last week, before he was forced to make his humiliating climbdown on tax increases, the Chief Secretary was boasting about the difficult decision to increase national insurance. Will he tell the House what the impact of that difficult decision would be on unemployment?

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Experience suggests that general national insurance cuts and wage support have very limited impact on employment. Of course, taking those national insurance contributions out of the forward programme for tax would leave a £7 billion hole in the tax base. The Conservative party has yet to come clean with the public about how it intends to fill that gap.

Credit Rating

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13. What recent representations he has received from credit rating agencies on the UK’s triple A rating. [322197]

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As the House would expect, Treasury Ministers and officials have meetings with a wide variety of organisations.

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I thank the Minister for his conclusive answer. With a Budget deficit higher than that of the Greeks, is it not a matter of some embarrassment to the Government that after 13 years of their being responsible for the economy, serious figures—from the CBI, to the Bank of England, to credit rating agencies—are raising questions about this country’s credit rating in the manner of some disreputable pyramid scheme salesman who has finally been caught out?

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I do not think that the hon. Gentleman’s words are representative of how a vast majority of informed commentators look at these issues. They certainly are not representative of the credit rating agencies, all of which recognise the UK’s strong funding flexibility. They continue to judge the UK as having the highest possible sovereign credit rating. I point out to him that average debt maturity in the UK is 13.5 years, which is twice that in France, Germany and Italy, and is more than three times that in the United States.

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Is it not the case that the credit rating agencies take account of the real economy, that Britain is the world’s sixth largest exporter of manufactured goods and the world’s second largest exporter of services, and that there is no possibility of the credit rating agencies downgrading our rating?

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My hon. Friend is absolutely right to point to the strength of the UK as a manufacturing nation and our strength in exporting services. Rather than speculate about credit ratings when it is very clear from all that the credit rating agencies have said that there is currently no risk to the UK’s credit rating, we should focus on a strategy for growth and jobs for the future. We will hear more about that next week.

Government Holdings (RBS)

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14. What recent discussions he has had with UK Financial Investments Ltd on its management of the Government holding in the Royal Bank of Scotland. [322198]

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The Treasury holds frequent discussions with UK Financial Investments on a range of topics related to the Government’s holdings in RBS, in line with the investment framework and investment mandate.

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Does my hon. Friend accept that it is very difficult for me to convey the absolute anger of a number of my constituents, especially small businesses, many of which have been forced to the wall because of the lending policies of those institutions? Does he accept that that is all the more repugnant given that RBS found £1 million to pay 100 executive bonuses last year? Clearly, something has to be done.

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My right hon. Friend will be aware of my comments on bonuses and what RBS has said on the matter. It is certainly the case that some businesses have, sadly, gone to the wall as a result of the global recession. The Government have always been consistent in pressing to make sure that lending continues in the UK economy. He might be aware that RBS recently announced a £1 billion manufacturing fund for providing flexible long-term loans to businesses. I am sure that that will be welcomed by businesses in Scotland and throughout the UK given RBS’s role right through the UK economy.

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Does the Minister accept that the question of the RBS debt is central to the question of public sector debt generally? Does he disagree with the Office for National Statistics that the total amount of debt is between £2.65 trillion and £3.15 trillion, or between 185 and 215 per cent. of gross domestic product when financial sector interventions are included?

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I do not have the figures from the ONS to hand, but I have no reason to doubt the hon. Gentleman. It is established practice when reporting on Government accounts to exclude financial interventions in RBS and Lloyds Banking Group. In the same way, the German Federal Government tend to exclude KfW and their investments in banks. I do not think that anything we are doing is particularly unusual and, as we have discussed before, there are different methods of accounting, which are at issue. I do not think, however, that party politics should be part of that. We are clear and transparent about the overall financial situation.

Economic Growth Forecasts

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15. What recent discussions he has had with the Prime Minister on forecasts for economic growth. [322199]

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I am on a roll. The Chancellor and the Prime Minister have regular discussions on a range of issues, including the prospects for the UK economy.

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It would be good if the country was on a roll, too. Exports are absolutely vital for our future economic growth, so why during the Government’s stewardship has the UK’s share of world trade fallen by 31 per cent., when Germany’s has gone up by 5 per cent.?

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My right hon. Friend the Chief Secretary says that the hon. Gentleman might have noticed the rise of India and China over the past 10 to 15 years, which probably explains why the UK has slipped down to being the sixth largest manufacturing nation in the world. However, we are still the second largest exporter of services, and our manufacturing performance is strong. I believe that it will become stronger over the next 12 months to two years, and a competitive exchange rate will help a great deal.

Topical Questions

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T1. If he will make a statement on his departmental responsibilities. [322210]

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The Treasury’s responsibilities remain as the Chancellor has set out on previous occasions.

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I appreciate that the Chief Secretary is pretty embarrassed about his U-turn this morning. Last week, he ruled out VAT increases, presumably to curry favour with the Prime Minister and undermine the Chancellor, so can he simply explain to the House when and why he changed his mind?

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I have merely set out the statement made by my right hon. Friend the Chancellor at the pre-Budget report about how we plan to halve the deficit over the next four years by raising taxes by £19 billion. We will do so in a fair way, unlike the Opposition, if they ever get into power, by ensuring that half the taxes that we raise fall on the shoulders of the top 5 per cent. of earners. Alongside that, we will cut capital and current spending by £38 billion. In that way, we will halve the deficit over four years, as set out by the Fiscal Responsibility Act 2010. What we will not do is pursue the Opposition’s approach, which is to introduce cuts now and put the economy into a double-dip recession. We will not follow the approach set out by the shadow Business Secretary this morning by reducing our deficit to 3 per cent. of GDP in 2014-15, because that would require taking out something like an extra £20 billion to £30 billion of public spending—a strategy that has not been renounced by the Opposition Front Bench this afternoon.

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As right hon. and hon. Members know, topical questions and answers are supposed to be shorter— a fine example, I know, will now be provided by Mrs. Madeleine Moon.

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T3. Low interest rates on savings in the UK can encourage people who receive what appear to be high-interest offers by telephone, e-mail or letter to invest in US share scams—so-called boiler scams. How can we alert the public to those scams so that they avoid those scam savers who are stealing our investors’ money? [322212]

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Boiler room scams are completely unacceptable. It is the responsibility of the Financial Services Authority to take action in this area, and it has increased its surveillance capacity quite substantially. My hon. Friend is right to make the point about the importance of savers. People need to have confidence in the savings products in which they invest, and it is the responsibility of the regulatory authorities to ensure that that confidence is not misplaced.

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T2. Will Ministers promise to revise the business rate valuation model for rural filling stations, many of which are seeing increases in rates of more than 300 per cent. this year, putting many of them out of business as a result? [322211]

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The Valuation Office Agency is directly responsible for the matter. For the past two and a half years it has been involved in discussions with representatives from the industry and their agents. There must come a time when negotiations stop. There are three aspects of the model. They are not exceptional, but I agree that some of the rating valuations appear to be very high. The VOA continues to work on the matter.

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T5. If Ministers accepted the advice of the shadow Business Secretary and cut a further £20 billion to £30 billion from the economy, what would be the cost in lost output, employment and services, and who would pay that cost? [322214]

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rose—

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Order. I know the Chief Secretary will be well aware, because he is a clever fellow, that the responsibility of the Government does not extend at Question Time to the costing of the policies of other parties, so I know he will not comment on that.

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If I were asked to take £25 billion out of public spending, I would merely point out that that would involve halving the education budget or increasing VAT to 23 per cent.

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T4. Does the Chief Secretary accept the reproach from the European Commission that the plans for deficit cutting in this country are unambitious? Which of his various views on VAT were designed to address it? [322213]

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I said this morning that we think the European Commission is wrong to say that we should be trying to reduce our deficit to 3 per cent. of GDP by 2014-15, which is the timetable proposed by the Commission. I look forward to members of the shadow Front-Bench team confirming that that is their position, too.

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What progress is being made with the G20 in making the international banking industry more responsible by introducing such measures as a Tobin tax?

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I welcome the campaign for the Robin Hood tax, as it has been described, for the energy that it has generated and the interest in this important area. Any changes in that direction would need to be made on a global basis, not just on a UK basis, and the IMF will look at that option with others to see how the balance of risk and reward between the banks and taxpayers can be changed for the future.

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T6. A few moments ago the Economic Secretary recognised that the laws of economics apply to the Government. As one of the final actions here of a decent and likeable Minister, would he dare take that knowledge to his Prime Minister, who some years ago claimed to have abolished boom and bust and therefore have the laws of economics apply to a higher power? [322215]

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I thank the hon. Gentleman for his kind words, which are typically generous of him. I do not think the Prime Minister needs any lectures in economics. He was an outstanding Chancellor of the Exchequer and is a very effective Prime Minister, as I am sure the Opposition will recognise in the course of the upcoming election campaign. I will happily watch it from the sidelines.

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Why, in the current economic climate, do we allow the salaries of senior managers in the public sector, such as vice-chancellors of universities, chief executives of local authorities and chief executives of housing associations, to rise way above the rate of inflation, while those same managers are encouraged to keep the salaries of the public sector workers whom they manage at a very low level?

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We have repaired the salaries of public service workers in this country. Over the past decade, public sector wages have risen by about 25 per cent., but at a time like this we think it is important that senior leaders in the public sector show an example, which is why, in our evidence to the Senior Salaries Review Body, we recommended a pay rise of 0 per cent. That was the rise that we implemented across the board last week.

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T7. Do the Government accept that the staggering rise of 35 per cent. in tax and duty on wine and spirits has had any connection with the loss of 25,500 jobs, and 2,000 jobs in that sector? What plans do the Government have to help that important sector of the economy? [322216]

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I do not want to pre-empt any announcements that will be made by my right hon. Friend the Chancellor in the Budget next week. We recognise that alcohol duties play an important part in fiscal consolidation, but we also recognise that the alcohol industry creates many jobs. We will get that balance right.

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When the time comes for the Government to sell off their shareholdings in the banks that they rescued last year, what steps will they take to ensure that the taxpayer gets best value for money?

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My hon. Friend is absolutely right to raise that as an issue. The Government have made substantial investments in institutions such as Royal Bank of Scotland, Lloyds Banking Group, Bradford & Bingley and Northern Rock, and we need to ensure that we get best value for the taxpayer. We will not be giving these away, and it is the responsibility of UK Financial Investments to manage the Government’s interests in these matters. We do not want to own these for the long term. We do want to make sure that they go back into the private sector. But it has to be done at a price that works for the taxpayer.

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T8. For the purpose of furnished holiday letting rules, will the Minister please explain why it is that if a holiday letting provider is providing a static boat, they are deemed to be trading, if they are providing a static caravan, they may or may not be trading, but if they are providing a chalet, they are deemed definitely not to be trading, very much to the detriment of their future business? [322217]

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These matters are the result of lengthy application of the law. We have said that the current concession, which applies only to freehold holiday lets in the UK, may not be consistent with European law and therefore we will withdraw the concession from 2011. But the definitions are very well established and familiar in tax law.

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The announcement recently by the Treasury to extend the offshore new field allowance to developments west of Shetland, will, I hope, allow the Laggan-Tormore development to go ahead. Has my hon. Friend worked out how much the development of the west of Shetland province could be worth to the British economy in the years that follow?

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We certainly wish to assist in the development of fields where it is more difficult to get out the natural resources, not only for the security of supply for the UK but for the benefit of the whole economy. I do not have the exact figure to hand, but I will be more than happy to write to my hon. Friend.

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T9. When the Chief Secretary said last week: “We don’t see a need to raise VAT”,what exactly did he mean by that? [322218]

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At the risk of repeating myself, we said that over the next four years we will halve the deficit—we have not seen a plan as clear as that from the Conservative party—and we said that we would do that in a fair way. We said that in part we would need to raise taxes, and we set out very clearly how £19 billion of taxes needs to be secured, alongside spending cuts. I hope that during the next week or two we will see a plan of equal clarity from the Conservatives, and I hope that as part of that plan they will renounce the proposal that the shadow Business Secretary set out this morning to take another £29 billion out of public spending by 2014.

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I put it to my right hon. Friends that cuts in public spending are not the only way to reduce the deficit. We could, for example, raise the basic rate of income tax, not to as much as it was under Mrs. Thatcher, but by a penny or two.

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Our view is that those with the highest incomes should bear the largest share of the burden of consolidation. That is the reason we have announced the introduction of the 50p rate of income tax on the highest incomes, and the restriction of personal allowances also for people with high incomes. We think that that is the right place for the consolidation to start.

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T10. Does the Chancellor agree that we now need a dangerous banks Act, with owners who cannot control them refused permission to maintain them? [322219]

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That just shows what would happen if the Liberals held the balance of power in a future Parliament.

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The Chief Secretary to the Treasury referred to the budget deficit. Is the UK’s budget deficit as a proportion of GDP higher or lower than that of Greece?

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We have the highest budget deficit, pretty much, in the G7, but the reason why we have a high budget deficit is that we chose to act to protect jobs, to protect homes and to protect businesses over the course of the past year. As the International Monetary Fund has recognised, the reason why we had that flexibility to act was that we went into the recession with the lowest debt of any country in the G7 apart from Canada.

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The Minister prays in aid EU legislation to change the basis of furnished lettings. Will it apply to French gîtes as well?

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The proposal that we have announced is to withdraw the concession, so it would not apply to furnished holiday lets outside or inside the UK.

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Last week Sutton council granted planning permission for a new patient wing to be built at St. Helier hospital, removing the last obstacle to Treasury approval for the necessary investment. Will the Minister today give my constituents and NHS workers the good news that Treasury approval is coming and coming very soon?

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I thank the hon. Gentleman and my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) for the consistent way in which they have championed the need for a new hospital in their area. The hon. Gentleman knows that I am in close discussion with the Secretary of State for Health, and we hope to make an announcement on that matter shortly.

British Airways Strike

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Before I call Theresa Villiers to ask the urgent question, I should inform the House that an appeal has been lodged in the court case related to the British Airways strike action. This matter therefore falls within our sub judice resolution. I have exercised my discretion to allow this matter of public importance to be discussed, because I do not consider that there is a substantial risk of prejudicing the court proceedings.

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(Urgent Question): To ask the Minister of State for Transport if he will make a statement on the current situation relating to the BA strike.

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Passengers will be seriously inconvenienced if a strike goes ahead. The Prime Minister and my right hon. and noble Friend the Secretary of State for Transport have both urged the union to call off the strike and both sides to seek to reach an agreement. However, British Airways is a private company, and the resolution of the dispute is a matter for the company and its staff. The Government have no powers to impose a settlement.

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Since before Christmas the Conservatives have been urging Unite to cancel the strike, which will inflict huge misery on passengers and serious damage on BA. Why did it take the Prime Minister so long to condemn the strike? Has the Prime Minister spoken directly to Unite officials to urge them to call off the strike? Will the Minister admit that Labour accepted £300,000 from Unite on the very same day that the Christmas strike dates were announced; and that the party was able to get its accounts signed off in 2008 only after the union gave a written guarantee of future funding? How can the Government stand up for the interests of passengers when one quarter of Labour’s funding comes from the—

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Order. I am genuinely sorry to interrupt the hon. Lady, but there is for parliamentary purposes a distinction between the Labour party on the one hand and the Government on the other, and it is in relation to the responsibilities of the Government that she must focus her remarks and questions. I know that that is what she will now do.

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Yes, Mr. Speaker. Will the Minister join me in urging cabin crew to work despite the call for strike action? Will he ensure that the Government are going to stand up to the unions? How can Labour propose to do that when one quarter of its funding is provided by the very same union that is holding passengers to ransom and threatening to wreck their holidays?

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You always, Mr. Speaker, impress on people who speak in the Chamber the need to think about how the public will view them, so I ask the public to ask the question about how a party that seeks to form a Government tries to politicise what is an industrial dispute. Some serious allegations have been made about the motives of the trade union and the Government, and, rather than trying to encourage both sides to reach a resolution in a calm and less emotive manner, one party is seeking to politicise an industrial dispute. I urge both sides of the dispute to start talking again to try to reach a settlement, so that the thousands of passengers who would otherwise be inconvenienced will not be. I would have hoped that there would have been agreement around the Chamber on that wish; given that an election is imminent, I am afraid that that has not been the case.

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I am disappointed that British Airways and the Unite union are acting like two badly behaved children and seem to be paying little attention to the needs of their passengers; macho management from BA and intransigence from the union help nobody.

May I ask the Minister what steps in particular he has been taking since November, when the dispute first appeared imminent, to try to stop it occurring? Clearly, the strike has had a long period of notice. We could legitimately expect the Government to have taken action to try to prevent our reaching the stage that we have got to now. The Minister will understand why without any clear indication of what action has been taken, some feel that there has been some influence from the trade unions.

May I ask the Minister about compensation for passengers who are not able to get their flights but will nevertheless be significantly out of pocket—through holiday tours that they have booked, for example? Will there be any compensation for them, from the airline or elsewhere?

Does the Minister believe that when they voted for industrial action, the union’s members understood that they were voting for seven days or more of such action, or did they think, as many appear to have done, that it was a one-day strike?

Lastly, what further steps does the Minister intend to take now to knock heads together? Would it not be sensible for the BA offer to be retabled now—if necessary, at the same time as Unite withdraws its strike action, as it ought to do immediately?

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As ever, I thank the hon. Gentleman for his questions. Ministers have been in close contact with all parties from the outset and continue to be so. It would be unhelpful to give a running commentary on the steps taken to try to resolve the matter. What is important is that there is willingness in some parts of the Chamber for there to be a resolution; clearly, however, it is in some parties’ interests for the dispute to carry on.

It is important that BA should provide as much information as possible to the thousands of passengers who would otherwise be inconvenienced. I checked its website before I came to the Chamber; it does provide lots of advice to passengers who may be inconvenienced, and it has a phone number that can be rung by people who do not have access to a website.

The hon. Gentleman’s final point was about balloting. It is not for me to look into whether the balloting was fair. He will know from history that when BA thinks that there has been unfair balloting, it seeks to challenge the trade union in the courts. It has not sought to do so in relation to this ballot.

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rose

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Order. Some 14 Members are seeking to catch my eye, and as always I should like to be able to accommodate everybody. However, I require brevity, a legendary example of which will now be provided by the right hon. and learned Member for Folkestone and Hythe (Mr. Howard).

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Is there not a very simple way in which the Government can demonstrate that they are sincere when they say that they disapprove of this strike? Why does the governing party not refuse to take any more money from Unite until the dispute is resolved?

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There is one party that has been clear and transparent in how it receives donations—[Interruption.] It is an insult to the 6 million hard-working trade unionists, all of whom pay taxes, who have chosen to give money to a political party. I remind the right hon. and learned Gentleman that parties have stayed within laws made by Tory legislation. One big donor to the Conservative party, I am afraid, has breached both the spirit and the word of the law.

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Does my right hon. Friend agree that the trade unions have stuck within the law during the whole of this dispute and the one thing that we do not want is politicians interfering? This is an industrial dispute, not the political dispute that the Opposition are trying to orchestrate to make the situation worse, not better, for the passengers.

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It is noteworthy that while a Member of Parliament is trying to urge both sides to get together and resolve the issue, other Members are hectoring him. The public will not be fooled by the politicisation of an industrial dispute.

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Will the Minister now answer the question about why the Prime Minister took four days to condemn the strike? Does it have anything to do with the fact that Charlie Whelan, the political director of Unite, is now back at the heart of Downing street?

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If evidence were required of some people’s desperation to try to politicise a dispute, it has been provided by the tone and substance of the questions that have been asked. This is a private dispute between BA and Unite, the trade union. It is important that both sides should get around the table and resolve the issue. I am disappointed that there is not agreement in the House that the dispute should be resolved sooner rather than later.

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May I declare, as a member of T & G and Unite for some 36 years, that I genuinely feel that stuck in the middle of all this, as my right hon. Friend the Minister has indicated, are the customers of BA, the work force, and the company itself and where its future lies? Does he agree that cheap political point-scoring plays no part in where this company and its work force should be going?

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It is worth comparing and contrasting the questions by the Liberal Democrat spokesman, who was concerned about customers and the work force, and the questions from Conservative Front Benchers and Back Benchers—evidence, if ever it were needed, that they believe that this is a political dispute, and that rather then trying to resolve this in an amicable, calm and temperate manner, they are trying to use emotive language to raise the temperature.

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The Prime Minister said yesterday on “Woman’s Hour” that the strike was

“worthy of effort to try and prevent it.”

Given, however, that we have been made aware by the Unite union since 14 December last year that a strike would happen, exactly what has the Prime Minister been doing for the past three months?

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I have already answered that question. One of the problems when someone is given a question to ask by their Whips is that they often do not hear the answers that are given before they ask it. To put the answers that the Prime Minister gave on “Woman’s Hour” in context, he said:

“It’s the wrong time. It’s unjustified. It’s deplorable. We should not have a strike. It’s not in the company’s interest, it’s not in the workers’ interest, and it’s certainly not in the national interest, so I hope that this strike will be called off”.

Do the Conservatives agree with that?

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Is my right hon. Friend aware that of the approximately 40 per cent. of BA flights that will not go ahead during the dispute, the overwhelming majority are on the domestic routes, primarily to Glasgow, Edinburgh and Aberdeen, which means that travellers to and from Scotland, and businesses in Scotland, will be disproportionately affected by this industrial action? Does not that underscore the need for a grown-up attitude towards this and for all sides to get back around the negotiating table to solve what is primarily an industrial dispute, which is not being helped by partisan point-scoring?

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I thank my hon. Friend for his comments. He is absolutely right. Cool, calm heads are required now, not dossiers about perceived links between a trade union and a Government being unfurled at press conferences. I really hope that British Airways and the trade union will listen to some of the debate in the Chamber today and get round the table to resolve this so that my hon. Friend’s constituents, big businesses, small businesses and ordinary residents of this country are not suffering unnecessarily.

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Following the previous question, with Aberdeen airport in my constituency and as a regular user of BA, I welcome the fact that BA has protected some of the services at Aberdeen because it recognises how important it is, but the situation is still inadequate.

May I follow up the point made by my hon. Friend the Member for Lewes (Norman Baker) about compensation? I am told that people who have discounted tickets are being told that no refunds will be provided following industrial action. Will the Government intervene to ensure that that issue is addressed, and will the Minister do everything he can to ensure that this strike does not destroy British Airways, because the union does not seem to understand that?

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It is a private dispute; BA is not a nationalised company. BA has said on its website, and made it clear in all its press announcements, that it will allow passengers who are inconvenienced to rebook or to cancel and be refunded. If there are particular issues that the right hon. Gentleman wants to raise with me, I will be happy to raise them with BA.

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Will my right hon. Friend rise above the smokescreen of party funding and use all his energies, and those of his ministerial colleagues, to get a satisfactory conclusion to this bitter dispute? Does he agree that any inflammatory statements are counter-productive? Will he find out where Mr. Walsh is, because we have not heard from him, or from any of BA’s senior management, for quite a long time?

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My hon. Friend is absolutely right. What is required at this time are cool, calm heads, and for British Airways to meet the trade union to try to resolve this dispute. I am afraid that sending out press releases, doing press conferences and using emotive language is not the way to reach a resolution, and nor are sending one’s pit bull to press conferences and using dossiers to try to muddy the waters.

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The Minister spoke of clarity and transparency, so he will not mind being reminded that Messrs. Whelan, Dromey and Woodley all have passes to the House of Commons provided by members of the Labour party. Does he agree that this is a question of the Labour Government being bankrolled by Unite while Unite bankrupts British Airways in Britain?

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Let us be clear. The Labour party has been fully transparent about how it is funded by 6 million hard-working trade unionists, all of whom pay taxes, and by many other individuals. One political party relies on a small number of individual donors, and only because of the Freedom of Information Act did it reveal how it was funded. At least those who contribute to the Labour party pay their taxes.

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Will my right hon. Friend confirm that it is not in the interests of British Airways or the travelling public for this matter to be turned into a party political football? Does he agree that what would help is if Willie Walsh put the offer that was made previously back on to the table as a basis for both sides getting into serious renegotiations?

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My hon. Friend raises a really important point. What is required is not for British Airways, the huge work force or the thousands and thousands of passengers to be used as political footballs in the lead-up to a general election. What is required is for British Airways and the trade union to sit around a table and resolve any differences that still exist. My understanding is that they were close to agreement last week as a consequence of the terms to which my hon. Friend referred, and I am disappointed that they were unable to reach a resolution. I am optimistic still that cooler heads will prevail, but what is important is that we must not allow what is an industrial dispute to be politicised. The question that must be asked is this: why do some people wish to do that?

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The reality, though, is that this is a political dispute, because Unite gives Labour money, and it is one of the key stakeholders pushing for the expansion of Heathrow, which is the policy of this Government. Will the Minister therefore condemn Unite in going ahead with this strike? It puts not only passenger services at risk, but Heathrow jobs and local communities.

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The history is that a Conservative Government passed legislation on how political parties should be funded. Unite, like other trade unions and individuals, gives money to political parties, and does so in an open and transparent manner. Some individuals decide not to abide by the rules, and only because of a freedom of information request are funding sources revealed. I am disappointed that undertakings are not respected and that deputy leaders are hoodwinked. I am keen to see whether the deputy leader of the Conservative party and its deputy chairman will come to give evidence on Thursday to the Select Committee.

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Order. I have operated a very considerable latitude in these brief exchanges, and there have already been several—frankly, too many—references to the issue of party funding. The matter upon which we need exclusively to focus is that of the BA strike. I feel sure that a fine example of that focus will now be provided by Mr. Dennis Skinner.

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In any industrial dispute, it takes two sides to cause a row. Will my right hon. Friend draw the distinction between the clean money that is given by the trade union movement to the Labour party, as opposed to a man who refuses to pay tax on £127 million and bankrolls the Tory party?

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Order. The hon. Gentleman has placed his point firmly on the record, but the Minister requires only the—[Interruption.] Order. The Minister requires only the briefest of replies.

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Why do you only stop me and not these others?

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Order. [Interruption.] Order. The House needs to let me address this. I must say in fairness to the hon. Member for Bolsover (Mr. Skinner) that I did not stop him. He made his point, and I have no objection to his doing so. To be fair, I did not interrupt him. He had his say.

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You do plenty of interrupting.

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Order. I do do some interrupting when it is necessary for me to do so.

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Over the years, trade unionists have understandably campaigned for bank holidays and public holidays. Does the Minister not agree that there comes a time when there should be an understanding or convention so that we do not always have disruptive strikes over bank holidays? They destroy the holidays for many working families, people who want to go and see relations, and kids who want to get back from university. I understand that there is also a suggestion that the National Union of Rail, Maritime and Transport Workers is going to go on strike over Easter. It is very unfair—not to employers, but to working families—when other trade unionists strike, so disrupting their lives.

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Clearly, any industrial dispute causes a huge inconvenience, but when families have planned holidays or to visit loved ones, and saved money to do so, a strike looming over them and their plans is a huge source of discomfort. That is one reason why I hope BA and the trade union will sit around the table, and why they should not allow emotive language to affect the possibility of reaching a resolution to what is an industrial dispute.

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Does the Minister believe that the union leaders behind the BA strike should set an example and forgo some of their £150,000 a year pay packets? Is not that another example of the arch hypocrisy at the very top of the Unite union?

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Order. I am sorry—[Interruption.] Order. Leave me to deal with this. I have to say to the hon. Gentleman that his question does not remotely relate to the issue that we are considering, and that is why—[Interruption.] Order. I do not require any comment or signalling from the hon. Gentleman. I am giving a ruling: the hon. Gentleman can listen to it and he can like it or lump it. I intervene—[Interruption.] Order. I require no gesticulation from the hon. Gentleman—[Interruption.] Order. His question was out of order. That is the beginning and the end of the matter.

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Clearly, the holidaying public and business need to see this strike called off and an end to the dispute. May I specifically ask the Minister to reinforce to British Airways the point that Aberdeen is a long way from London? It may be a domestic route, but there is no viable alternative for getting business done. Therefore, can he reinforce to BA the need to maintain as many vital services to Aberdeen as possible despite any disruption to services?

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I am happy to do just that.

Points of Order

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On a point of order, Mr. Speaker. Is the expression “verbal diarrhoea” parliamentary language? I have not heard it used in this House before, and certainly never about yourself or another occupant of the Chair, as it was just now.

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I did not hear the offending expression to which the hon. and gallant Gentleman refers. There is a certain amount of gesticulation now from a sedentary position both from him and from the hon. Member for Gainsborough (Mr. Leigh). The written record will tell us all, and I am happy to await it. The hon. Gentleman, who came into the House in 1992, knows—not least from his smile—that what he has just said does not amount to a point of order.

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On a point of order, Mr. Speaker. May I seek your guidance? As I understand it, there are 112 Members who are also members of the Unite union. When we are discussing matters that relate directly to the conduct of that trade union and hon. Members who are members of it seek to take part in that discussion, should they declare their membership of that union at the time of their participation in the debate?

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The straight answer is that that is not a point of order because the declaration of interests is a matter for individual Members: it is not a matter for the Chair.

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On a point of order, Mr. Speaker. On Thursday 11 March, the Secretary of State for Children, Schools and Families visited my constituency without notifying me. He visited a local primary school where he made comments of a highly political nature to the local press. He then went canvassing for his party and, as a school visit is within the subject matter of his portfolio, I am given to understand that that may be in contravention of section 10.9 of the ministerial code. I seek your guidance on this matter.

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Certainly, if it was an official visit, the Minister in question should have given notice of the intention to visit the constituency. This is the first I have heard of this particular case. However, at this relatively febrile time, perhaps I may simply reiterate the overriding point that there is a long-established courtesy in this place that when one Member visits another Member’s constituency on public business—as opposed to a private visit—the Member visiting has a duty to notify, suitably far in advance, the Member whose constituency he or she is visiting. I hope that that courtesy will be observed across the House. On the whole it is a respected and valued courtesy and we should uphold it.

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On a point of order, Mr. Speaker. I have raised a lot of points of order over the past 20 years, and I do not think that any of them have been in order, but I hope that I will be successful this time. Last Thursday a statement was made in the House of Lords by the Secretary of State for Transport. It was 40 minutes before that statement was made here. I went to the Table Office to get a copy of that statement after the Secretary of State had sat down, but I was told that it would not be available until it had been made in this place. I then went to the House of Lords and got a copy of the statement. Surely that cannot be right, and surely it cannot happen again in future.

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It would give me great pleasure if I were able to satisfy the hon. Member for Carlisle (Mr. Martlew), but I fear that I cannot. I entirely understand why he and others might have been frustrated by this; however, it results from the simple fact that the Secretary of State—[Interruption.] Order. The hon. Member for Peterborough (Mr. Jackson) should be quiet when I am ruling on the point of order that has been raised. What happened arises from the fact that the Secretary of State for Transport is a Member of the other place, and although there are arguments about accountability to this place and so on, that is the situation.

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Further to that point of order, Mr. Speaker. I do not have any disagreement with that; in fact, I have advocated that the Secretary of State should come to this Chamber. However, statements should be made available to Members of this House after the Secretary of State has sat down, because they are available to noble Lords and the general public.

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Those Members are in another House. I entirely understand what the hon. Gentleman is saying, but it is not clear to me that an immediate resolution of the issue is available. However, I will reflect, as I always reflect on what he has to say, and if I have anything further to report, either to him or to the House, he and the House will be the first to learn of it.

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On a point of order, Mr. Speaker. Some moments ago you rebuked me—I think unfairly, but I stand by your ruling. However, after my question there was a pause, whereupon I saw the Minister of State—he appeared to prompt you, Mr. Speaker. I am sure that was not the case, because of course you can rebuke me in your own right—

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Order. Let me deal with this point of order very clearly and conclusively. [Interruption.] Order. The hon. Gentleman will sit and listen to the response and not gesticulate while I am offering that response. I saw no sign whatsoever, from any Member on the Treasury Bench, and for the hon. Gentleman to suggest that I would be prompted—in this House, from the Chair—by another Member to make a comment or response is quite wrong, and it is also an unacceptable observation on his part. Let me very politely suggest to the hon. Gentleman, whose behaviour was untoward, that it would be sensible and rational of him simply to accept the rebuke, to call it a day and to move on. That is the end of the matter.

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On a point of order, Mr. Speaker. Last week I raised a point of order about two unanswered questions to the Department for Work and Pensions. Since your kind intervention on my behalf, one of those two questions has been answered. The other is now five weeks overdue, and it concerns the administration of jobseeker’s allowance up and down the country, an important matter for a great many of our constituents. The question number is 316962, and I repeat: it is five weeks late. Could I please ask you, Sir, for your kind intervention a second time to get the Department to do what it should have originally done within five days?

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I am grateful to the hon. Gentleman for his point of order, of which, as he knows, I had no advance notice whatever. He has taken the opportunity to air—and very properly to air—his concern about the excessive tardiness of ministerial replies. I feel sure that his point of order will have been heard by those on the Treasury Bench, and I hope that, as a result, a reply will come to him extremely quickly. I hope that it will not be necessary for him to raise his point of order again. I simply say to Members on the Treasury Bench, including the Deputy Leader of the House, that these matters must be taken seriously by Ministers. Indeed, it looks to me as though the Deputy Leader of the House would like to say something, and I think that the House would welcome that.

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Just to be clear, I have said on a number of occasions, as has my right hon. and learned Friend the Leader of the House, that we will take representations from Members and put them to Departments, and I think I said that last Thursday at business questions. I am happy to do that for any Member who has similar issues, and will do so now if the hon. Member for South-West Bedfordshire (Andrew Selous) wants to give me the details.

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I am grateful.

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On a point of order, Mr. Speaker. The Debt Relief (Developing Countries) Bill, which was tabled as Government business yesterday, is not on the Order Paper at all today. Can you assure me, Mr. Speaker, that it will be tabled again tomorrow? We want Government time in which to debate the remaining stages of the Bill, and to vote on it.

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Unfortunately I cannot reassure the hon. Lady, for the simple reason that—although I understand the background to, and concern about, this matter—the tabling of Bills is not a matter for the Chair. I think that she will have to have discussions with people other than me. She indicates from a sedentary position that she has already done so, but I know of her dedication and persistence, and I think that they may be required in this case.

Bill Presented

Council Tax Benefit (Change of Name) Bill

Presentation and First Reading (Standing Order No. 57)

Mr. Paul Burstow, supported by Mr. David Heath, presented a Bill to change the name of Council Tax Benefit to Council Tax Rebate; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 26 March, and to be printed (Bill 88).

Illegally Logged Timber (Prohibition of Retail, Wholesale and Distribution)

Motion for leave to bring in a Bill (Standing Order No. 23)

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I beg to move,

That leave be given to bring in a Bill to prohibit the retail, wholesale and distribution in the United Kingdom of timber and wood products that were obtained or produced illegally in their country of origin; and for connected purposes.

The earth’s rain forests are not only one of the greatest wonders of the natural world; they are the green lungs of the planet. They are also the source of the forest resources that help to support the livelihoods of nearly 1 billion of the world’s poorest people. Moreover, the carbon dioxide emissions that arise from the annual burning and destruction of rain forests account for about 17.5 per cent. of global greenhouse gas emissions, more than the whole global aviation and transport sector put together. Without urgent action to halt deforestation, we shall have no chance of beating global climate change. Even if there were no threat from man-made climate change, we could not stand by and see the forests destroyed, because of the vast and unique ecosystems that they support and the livelihoods that depend on them.

Saving the rain forests is something that we can achieve if we can find and summon the necessary political will, and it is certainly something that fires the imagination and support of my constituents. Like all good climate policy, however, urgent action to save the world’s forests is a good thing in itself. Ultimately, we need to continue to find ways in which to create an economic value for tropical forests in particular, so that they are worth more standing than as timber.

There is no magic solution to saving the rain forests, and good progress was made at Copenhagen on support mechanisms for forestry, but one measure that we can take now is to choke off demand for illegal timber here in the UK market. In a speech before the Copenhagen summit, my right hon. Friend the Member for Richmond, Yorks (Mr. Hague), the shadow Foreign Secretary, made plain the strength of the Conservatives’ commitment to halting deforestation, and in particular to addressing illegal logging. He gave the clear commitment that a Conservative Government would make it a criminal offence under UK law to import and possess illegal timber.

Three weeks later, during Prime Minister's Question Time—and during the Copenhagen summit—my right hon. Friend asked the Government to support that proposal, and in January, during the first Energy and Climate Change questions after the summit, I repeated his call for the Government to match our commitment to action. The Government’s own Back Benchers have mounted concerted and considerable efforts and campaigns to secure a measure to criminalise illegal timber activity, yet, despite encouraging rhetoric, the Government themselves have refused to legislate, choosing instead to hide behind the slow and indecisive process taking place in the European Union.

Conservative Members have supported, and remain committed to, a strengthening of the draft EU regulation

“laying down the obligations of operators who place timber and timber products on the market”.

I pay tribute to my colleagues, and indeed members of all political parties, in the European Parliament who have also pressed for a more ambitious regulation. However, it is clear that action at European level will not go far enough.

On 1 March, the EU Council adopted a common position on the regulation, which lays down only the minimum requirement that companies trading in timber and timber products should exercise due diligence to minimise the risk of placing illegally harvested timber and timber products on the internal market. It lacks an explicit overarching prohibition on illegal timber in the EU market. With no explicit prohibition, there is no incentive to exclude illegal timber from entering the market; there is only an incentive to prove that the company concerned has tried to prevent it. Furthermore, the regulation applies only to those companies that place timber and timber products on the market for the first time, rather than all operators involved in the distribution chain. Loopholes are therefore created whereby all downstream companies—the majority of EU traders—are exempt from even the bare minimum of due diligence requirements. A prohibition on illegal timber needs to apply to all companies that make timber available to the market, whatever their position in the supply chain.

Unlike the EU, the USA has shown real leadership on this issue. In 2008, the United States amended the Lacey Act and made it illegal for a person or company to import, export, transport, sell, receive, acquire or purchase illegal timber or illegal timber products. The Lacey Act amendments are widely seen as a historic breakthrough and are already leading to changes in practices among US retailers and importers, and manufacturers and logging companies. There is no reason why that legislative change cannot be replicated here in the UK with the creation of an offence of selling or distributing imported wood illegally harvested in its country of origin, or, indeed, of importing such wood into the UK. The Environment Secretary himself has said

“illegal timber should be just that—illegal”

but to date his Department has stubbornly refused to legislate to that effect with the introduction of simple and specific domestic legislation to make the sale of timber produced illegally an offence in the UK.

The effectiveness of the Lacey Act lies in its simplicity. It defines in law what companies must not handle, but gives companies the freedom to find ways to meet that obligation. My Bill is intended to replicate the Lacey-style approach in the UK. It would apply equally to all operators in the UK supply chain and prohibit illegal timber in the UK market. Agreement at the European level and tough action by individual member states is now no longer a matter of either/or, given that there is not an agreement at Council to go any further than a due diligence system. The clarity of this Bill would complement the due diligence approach in the EU and, given that the UK is the third largest importer of illegal timber in the EU, measures taken in the UK would have more than merely a token status: they would have a significant impact on illegal logging and on the EU market.

This Bill is endorsed by not only environmental groups such as the WWF and the Environmental Investigation Agency, but by the certification bodies the Forest Stewardship Council and the Programme for the Endorsement of Forest Certification schemes, and also by major retailers such as B&Q and Timbmet, the UK’s largest hardwoods importer, which already proves that it is possible to be both kind to the environment and deliver real value and choice to customers. It is also endorsed by the Coalition for Rainforest Nations, an umbrella organisation that accounts for the majority of the world’s rain forest nations. This Bill is also directly consistent with the “legislative principles on forestry” adopted by 120 legislators from the world’s major economies at the GLOBE Copenhagen legislators forum last October.

In conclusion, without urgent action to halt deforestation we do not have a chance of beating man-made climate change. In January, I gave a commitment that if this Government do not act to make the sale of illegal timber a criminal offence, a new Conservative Government will, and, moreover, a Conservative Government will work with other EU states to do the same. However, I hope that after the election, if it falls to the Conservatives to form the Government, we will have the opportunity to bring forward this measure on the back of a new consensus that recognises the part that Members from across the House have played in the campaign. I should like to note that this Bill is co-sponsored by colleagues not only from the shadow Cabinet, but by distinguished Labour Back Benchers and former Labour Ministers. I particularly want to pay tribute to the huge body of work on this issue by the hon. Member for Brent, North (Barry Gardiner)—the Prime Minister’s former special envoy on forestry—and the efforts of the hon. Member for Hendon (Mr. Dismore), but it seems that it will require a new Conservative Government to take this vital step forward on to the statute book and send a message to the rest of Europe that the UK is ready to change and to take the lead on the campaign against illegally harvested timber.

Question put and agreed to.

Ordered,

That Gregory Barker, Mr. William Hague, Greg Clark, Nick Herbert, Mr. Oliver Letwin, Charles Hendry, Barry Gardiner, Alun Michael, Mr. Peter Ainsworth, Bill Wiggin, Mr. Hugo Swire and Mr. Nick Hurd present the Bill.

Gregory Barker accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 7 May, and to be printed (Bill 87).

Opposition Day

[6th Allotted Day]

Equitable Life

[Relevant documents: The Second Report from the Public Administration Select Committee, Session 2008-09, on Justice Delayed: The Ombudsman’s report on Equitable Life, HC 41, and the Government response, HC 953, and the Sixth Report from the Public Administration Select Committee, Session 2008-09, on Justice denied? The Government’s response to the Ombudsman’s report on Equitable Life, HC 219, and the Government response, HC 569.]

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I inform the House that I have selected the amendment in the name of the Prime Minister.

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I beg to move,

That this House notes that the Ombudsman published her report on Equitable Life in July 2008, that the Government did not make its response until January 2009, and that its rejection of some of her findings was successfully challenged in the High Court; believes that the delays caused by the Government since the publication of the Ombudsman’s report have led to further and unnecessary hardship for Equitable Life’s policyholders and have done further damage to the UK’s savings culture; and calls on the Government to set a clear timetable for implementing the Ombudsman’s recommendations and remedying the injustice suffered by policyholders.

It is hard to believe that nine years after Equitable Life’s policyholders saw the value of their policies slashed, six years after Lord Penrose identified regulatory failures, 18 months after the ombudsman’s damning report on the regulation of Equitable Life and more than a year since the Government’s response, policyholders are still no nearer to knowing what the outcome of their fight for justice will be. They have been given no timetable for payments and no certainty as to how much they will receive. That is the tragedy of Equitable Life for its policyholders, many of whom will not live to see justice done.

The truth is that it did not need to be this way. The Government deliberately chose, at each turning point on the road to justice, to take the longer and more difficult route— there were no short cuts for the Government, because the delays suited them—and from the outset they sought to block the campaign. The pattern of the Government’s behaviour is clear. They wanted to block, frustrate and then delay the fight for justice. They could have chosen a better, quicker route to justice, but they dogmatically chose a different path: one that has delayed justice. Who has paid the price for that? The answer is Equitable’s policyholders, the people who have faced an uncertain future, the people who are struggling to make ends meet because their pension is not as much as they expected, not because of the market, but because of actions taken by the management of Equitable that were not picked up by regulators over the course of a decade. Every Member in this House will know from their postbag the personal cost of this to their constituents, but whatever the outcome for policyholders we know that more than 30,000 will not see justice. We also know that as every day goes by, more and more policyholders see the prospect of justice disappear.

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May I cite the case of a constituent of mine, Mr. David McKeever, who has been particularly critical and believes that the Government are doing all they can to delay payment to the victims of the Equitable Life collapse? He told me that, since 2002, 10,000 of the 54,000 annuitants have died. Does my hon. Friend believe that the Government want to wait until all of these people die?

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My hon. Friend makes an important point, because there have been huge delays during this process—I shall detail some of those that the Government have engineered—and, as a consequence, many of the policyholders have died and will not see justice delivered.

The fight for justice has united Members from all parts of the House, and I commend the creation of the all-party group on Equitable Life policy holders, which is chaired by my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) and the hon. Member for Leeds, North-East (Mr. Hamilton), a Labour Back Bencher. I pay tribute to the work that they have done within this House to ensure that Equitable remains on its agenda. Tribute must also be paid to the Equitable Members Action Group—EMAG—which has galvanised policyholders into an effective campaigning body. EMAG’s members have not been slow in making their views known to Members of Parliament and their lobbying has been effective in maintaining the profile of this issue for many years.

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I am following the hon. Gentleman’s remarks closely. Does he agree that as a gesture of compassion, given that 10,000 pensioners have already died unpaid and waiting, the Government should instruct Sir John Chadwick to make an interim tax-free payment—as advocated by EMAG—equivalent to two years on account to alleviate some of the hardship and stress that pensioners are facing now?

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The hon. Lady raises the plight of a very important group of Equitable Life’s policyholders. It was noticeable that in the third interim report that Sir John published last week he highlighted that one group to have suffered a disproportionate impact from the failures at Equitable Life and from the failure of regulation was the so-called trapped annuitants. We are all mindful of the suffering that they face and of the fact that they have faced a loss of income. However, the challenge is this: if we make an interim payment now to the trapped annuitants, how much will that leave for the other policyholders? Surely the best thing to do is to move as quickly as possible to resolve the entire problem and then to consider how we prioritise payments, perhaps, once that settlement has been reached, so that the with-profits annuitants receive a fair deal then.

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Stepping back from all this, does the hon. Gentleman agree that we all know what the common-sense answers are? The obfuscation does not disguise them at all and if we are to see justice, the Government need to prove that they are not trying to save money by waiting for more people to die. Instead, they need to accept the clear guidance that we have already seen, which the hon. Gentleman is outlining and with which those on the Liberal Democrat Benches and the majority of the Government’s Back Benchers agree—they should pay out, sort it out and put an end to this utter tragic travesty.

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The problem is that this process has dragged on for far too long. All groups of policyholders have lost out as a consequence of the delays and we need to see a clear timetable setting out when payments will be made to them. It is very disappointing not just to Members of the House who have been part of this long fight for justice but to policyholders that the Government seem to be no closer to producing a clear timetable for payments to policyholders.

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My hon. Friend spoke about the good work done by the action group. Many of its key executives live in my constituency and I have worked with them for nearly 10 years now. Is he aware of their frustration at the progress made by Sir John Chadwick, who they feel is doing nothing but repeating the Government line?

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I understand the frustration that EMAG’s members feel about the process and the time that has been taken. The group announced earlier today or late last night that it had chosen to withdraw from further discussion of Sir John Chadwick’s work. I have some sympathy with its frustration about the process, but it is important that a strong voice on behalf of policyholders is party to the finalisation of Sir John’s report. Speed is of the essence because, as hon. Members have said in a number of interventions, the longer the process is strung out, the fewer the policyholders who will see justice.

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The hon. Gentleman rightly makes the point that time is ticking on. Some 2,500 policyholders might die in the coming year and is that not the reason why my hon. Friend the Member for Solihull (Lorely Burt) is right that we need interim payments to be made, which would, after all, represent a small fraction of the overall compensation that we expect to be paid eventually and could be deducted from any final rewards? That would at least give people such as the Rev. and Mrs. Littlewood, in my constituency, some hope of seeing some money in the near future.

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Of course, the truth is that we do not know how much compensation will be payable to policyholders. We will not know that until Sir John has completed his final report and his conclusions have been applied to the data supplied by Equitable Life. We need to bear it in mind that we do not yet know what the bill will be.

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I am grateful to the hon. Gentleman, who is being very generous, for giving way. I wanted to clarify one point that comes from his answer to an earlier intervention. Is he proposing that the Government drop the John Chadwick process and revert to the process set out by the ombudsman?

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I did not make that sort of comment at all. I am not quite sure what the right hon. Gentleman is referring to. I know that over the past few weeks he has adopted a habit of flip-flopping on a range of issues, but I am not going to flip-flop on this. We need to ensure that the process is completed as quickly as possible so that we get the right outcome for policyholders who have had to wait too long for justice. They have had to wait so long for justice because the Government have sought to block, frustrate and delay the progress on that report.

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I agree with everything that my hon. Friend has said so far. Does he agree that this debate is rather like watching paint dry but without the paint? According to the action group’s spokesman today, more than 1 million people have lost £4 billion, but it is estimated that only several hundred million pounds, at most, will be recovered. In those circumstances, it is a question not only of those who have died, of those who will continue to live. Under present arrangements, they will not get anything realistic.

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As I said earlier, we will have to see what the outcome of Sir John’s work is, and how his recommendations are applied to the information supplied to the Treasury by Equitable Life, before we can work out what the total compensation bill will be.

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I thank my hon. Friend very much for giving way. Does he agree that the extent of the problem is even greater than the statistics show? The policyholders who have died and not benefited have left behind widows and dependants who will never benefit from the investments that their husbands and spouses made over many years.

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My hon. Friend raises an important point. We need to think carefully about how we deal with the widows, widowers and dependants who have been left behind, and about the compensation scheme that they need.

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I am very grateful to my hon. Friend for giving way, as he has been most generous. Following on from the previous point, is it not all the more important that the Minister give the House two assurances today? First, he must assure the House that the full detail of all the actuarial reports and background material that have been made available to Sir John Chadwick will be published. Secondly, he should rule out, clearly and unequivocally, that any compensation will be subject to means-testing. I hope that he is moving in that direction, and that he will make it clear today that there will be no means-testing. For people who have suffered a great deal of delay already, even the thought that compensation might be means-tested would really add insult to injury.

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My hon. Friend makes an important point about the transparency of the process. We must make sure that Equitable Life’s policyholders have confidence in that transparency, and that requires a reasonable degree of disclosure about the basis for some of the judgments that have been made. That would help to reassure people that this is not a stitch-up but a proper and rigorous process.

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I thank the hon. Gentleman for giving way. I am listening very closely to his explanation of the process and the history of this matter. Many hon. Members have made excellent interventions, but is not the real shame of this the fact that this House has been completely unable to support the independent ombudsman against the Executive and so ensure that the matter was dealt with several years ago, as it should have been?

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The hon. Gentleman makes an important point. There is a quite a lot of frustration across the House about how the ombudsman has been treated. The hon. Member for Cannock Chase (Dr. Wright), the Chairman of the Public Administration Committee, has made comments along those lines—

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rose—

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In fact, I think that he is seeking to intervene on me at this moment.

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I am very grateful to the hon. Gentleman. As he says, I have been critical of the Government on this issue on behalf of the ombudsman, but I have never understood what the Conservative position is.

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The hon. Gentleman should read the motion.

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Having read the motion, I am even less clear. When the ombudsman’s report came out, it was widely estimated that it would cost about £4 billion to implement. I have never been clear as to whether the Conservative party was saying that that was a bill that it was prepared to meet. If the hon. Gentleman is not saying that, there will be a suspicion that what we are hearing is some kind of electoral noise.

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The hon. Gentleman refers to the bill for compensation, but no one knows how big it will be. That figure will be part of the outcome of the process that the Government launched back in January last year. He will know, from reading the ombudsman’s report, that her recommendations on compensation had two important caveats—that payments to policyholders should reflect relative loss but that the impact of any compensation bill on the public purse should also be borne in mind. That position was accepted by the hon. Member for Twickenham (Dr. Cable) in a debate last year, and I think that the Government also accept it, as do the Opposition.

What we need to do is find out what the compensation bill is. The sooner that that happens, the easier it will be to put a scheme together. However, people need a clear timetable for when they can expect to receive compensation payments for the losses that they suffered as a consequence of maladministration.

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I really appreciate the hon. Gentleman giving way again, as he has done so a great many times already. Is he aware that Sir John Chadwick’s third interim report raises a number of real issues, such as the assumption that the regulator would always do the absolute minimum of minimums? That suggests that the report and the final decision will be very heavily disputed, and that that dispute could drag on for a long time. Under those circumstances, does he agree that interim payments become more important, and that there should be a willingness to look beyond the exact words of Sir John Chadwick’s report?

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The willingness to look beyond the words of the report will depend, of course, on who is in government at the time and their approach; but whoever that is and whatever their approach, we want resolution of this process. It has been going on for far too long, and the longer the disputes are about Sir John’s report, the longer it will take for compensation to be paid to Equitable’s policyholders. We need to bear that in mind. I shall now return to my speech, because I am conscious that many hon. Members want to take part in the debate.

From the Penrose report onwards, it has been clear that one factor contributing to the problems of Equitable Life was the action of the regulator. In the concluding paragraph of his report, Lord Penrose said:

“Principally the Society was the author of its own misfortunes.”

Normally, Ministers stop their quotation at that point, but Lord Penrose went on to say that

“it may be appropriate to comment that the practices of the Society’s management could not have been sustained over a material part of the 1990s had there been in place an appropriate regulatory structure”.

From that point on, it was clear that the failures of the regulator over a decade played a key role in the crisis at Equitable Life.

The Government could have responded to the Penrose report by accepting that there was regulatory failure and acting upon that failure then. If those findings had been accepted and acted upon, it could have led to justice being delivered to the policyholders many years ago. The crisis at Equitable Life could have been put to bed then. But the Government chose to ignore those findings, and then sought to block any further inquiry by the ombudsman into Equitable Life.

The Government said that the ombudsman could not investigate the Government Actuary’s Department—the Department that played the key role in the day-to-day regulation of Equitable Life—and therefore there could not be a second inquiry into the regulation of Equitable. The right hon. Member for Bolton, West (Ruth Kelly), the then Financial Secretary, stood firm on that until my hon. Friend the Member for Chichester (Mr. Tyrie) identified that the ombudsman’s remit could include the Government Actuary, thus clearing the way for the ombudsman’s second inquiry. That was a pivotal point in the process which led to the opportunity for the second inquiry into Equitable.

With the start of the ombudsman’s work, policyholders might have thought the end was in sight, but they did not take into account the ability of the Government to frustrate the ombudsman’s work. Documents previously thought lost were suddenly found, further complicating the ombudsman’s inquiry. The new documents were not the only barrier that the Government put in the ombudsman’s way. One might have thought that it was enough for the ombudsman to be bombarded with those documents, but then the Treasury decided to shower her with legal arguments on her findings.

When the ombudsman’s report was published, however, its conclusions were clear. There were 10 findings of maladministration in her report, and her recommendations were clear too: because the maladministration had caused injustice, there should be a scheme to make payments to the policyholders. That was where she added the two caveats that I mentioned in my answer to the hon. Member for Cannock Chase. The first was that the compensation paid to policyholders should be based on relative losses rather than the absolute loss. That means that market conditions at the time should be taken into account when calculating the losses suffered by the policyholders—an approach that Sir John Chadwick has adopted in his work. The second caveat was that the impact on the public purse needed to be considered when determining any compensation scheme. That is an important caveat, and it is accepted by all parties. The second recommendation called for the issue of an apology from the Government to policyholders.

We accepted the recommendations immediately. It was the right thing to do. Indeed, we made a commitment to respect the ombudsman’s findings during the cross-party campaign to force a second inquiry. But one voice was absent from the acceptance of the ombudsman’s findings. One voice remained silent: that of the Government. One would have thought that the Treasury would have known exactly what the ombudsman’s findings would be, given the arguments and debates between them. One would have thought that it would be prepared for her findings, prepared to give a response, but there was no immediate response—just silence.

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The hon. Gentleman just said that the Government—whichever Government—must take account of the impact on the public purse of compensating Equitable Life’s pensioners. Is that not a simple get-out for the Conservatives, and is there not very little difference between those on the Government Front Bench and the Conservative Front Bench on this? Is there not a moral obligation to pay the pensioners, whatever the cost to the public purse? It will not be in excess of the gross domestic product. But actually, if we collected a little more tax, we might be able to pay them quite easily.

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As I said earlier, we need to see what the bill is. There is a big difference between the Conservatives and Labour on this. In the past few years, the Government have sought first to block the second inquiry, then to frustrate the work of the ombudsman and then to delay their response and the payment of compensation to policyholders. The Conservatives have been clear from the outset, when the ombudsman published her report, that we accepted her findings and wanted justice to be done. That is the difference between the Conservatives and Labour, and that is why Labour Back Benchers should be wary of the Government’s amendment to the motion.

When the Government did not give an immediate response to the ombudsman’s report, we saw the third stage of their strategy on Equitable Life—delay. Despite the commitment that the Prime Minister gave to my hon. Friend the Member for Shrewsbury and Atcham that there would be

“a statement before the House rises at Christmas”—[Official Report, 3 December 2008; Vol. 485, c. 38.]

nothing happened until the middle of 2009, nearly six months after the ombudsman’s report was published. That is when we finally got their response, and we must ask why they did not respond more quickly to the report.

There was a time when the Prime Minister would have been very quick to criticise delays in responding to reports. In 1989, he said:

“I must ask why we have had to rely on the ombudsman to confirm the mismanagement, maladministration and incompetence that was widely known about more than one year ago.”—[Official Report, 19 December 1989; Vol. 164, c. 204.]

When he was in opposition, the now Prime Minister made his name by championing the cause of Barlow Clowes’ shareholders and investors. He made that statement calling for action when the then Government had announced their compensation scheme, but here we are, 18 months after the ombudsman reported maladministration in the regulation of Equitable Life, still awaiting the details of a scheme as well as a timetable.

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Will the hon. Gentleman give way?

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Let me just finish this point.

How times change for the Prime Minister: where he would once have urged quick action, he now seems happy to string things out for as long as possible. When he could have taken a decision, as Chancellor, to sort out Equitable Life, he chose to stand in the way of a solution. When, as Prime Minister, he could have put his foot on the accelerator to get a rapid solution, he found the brake instead. He has let the policyholders of Equitable Life down. I hope that the hon. Member for Coventry, South (Mr. Cunningham) can tell us why he decided to do that.

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I am not going to answer that question, but I will say that we have attended a number of debates on Equitable Life, yet the whole thing does not seem to be going forward as I am sure the hon. Gentleman will agree. The important point to make is that many people are utterly frustrated with our rehearsing the arguments over and again but never taking matters forward. I have some sympathy with the comments of the Liberal Democrats that some form of payment should be made as a demonstration of good will.

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I think that many people, including some of the hon. Gentleman’s Back-Bench colleagues, share his frustration that no real progress is being made despite policyholders having suffered a cut in their policy values in 2001 and despite Penrose having said in 2004 that regulation was a contributory factor to the problems at Equitable Life. We need to see some progress.

The reality is that the Government simply did not want to lift a finger to help those who had lost out because of the regulation of Equitable Life. They sought to block the second inquiry and they tried to deny that the ombudsman had the power to investigate the Government Actuary. When that tactic failed, they sought to frustrate the ombudsman with a barrage of documents and legal arguments, and when all that failed, there was delay. It is no wonder that we are not making the progress that the hon. Gentleman and many other hon. Members want.

Even when the Government published their response to the ombudsman’s report, their first act, after apologising for failing policyholders, was to reject a number of the ombudsman’s findings of maladministration. Perhaps, they had spent that six months of delay trying to wriggle out of their responsibilities to policyholders and finding loopholes to evade the course for justice. Of course, they were challenged by EMAG, and the High Court partially overturned the Government’s rejection of some of the ombudsman’s findings—another delaying tactic.

The Government’s response triggered a further delay, with the commissioning of Sir John Chadwick to advise on a number of areas such as calculating relative loss and establishing which groups of policyholders suffered disproportionate loss and what proportion of the losses could be apportioned to other bodies. Hon. Members will know that Sir John published his third interim report last week and that he expects to publish his final report in May. That is quite convenient is it not? There will be no formal response from the Government before the general election, no commitments and no guarantees.

Last month, at the meeting of the all-party group on Equitable Life policy holders, the Chief Secretary gave some hints of what he might do if the Government were re-elected, but there was no commitment to a clear timetable for making payments. There was no indication of when policyholders might see justice delivered or when they would know for certain just how much money, if any, they would receive from the Government. There were lots of hints but nothing specific—just like in their amendment today.

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rose—

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I will give way to the Chief Secretary in a moment. Labour Back Benchers, who have been seduced by the warm words of the Government amendment, might like to ask themselves a simple question. After years of standing by and letting policyholders suffer, can people trust the Government to do the right thing by policyholders once the election is over? Perhaps the Chief Secretary can answer that.

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I will address that point in my own contribution, if that is okay with the hon. Gentleman. Before he concludes, what policyholders will want to hear from him is a clear statement about whether he supports the John Chadwick process or whether he wants it to be stopped, and the Government of the day to revert to the approach proposed by the ombudsman. It is a very simple question—it is imperative that policyholders know the Opposition’s position.

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The risk of stopping the process undertaken by Sir John Chadwick is that we further delay the payment of compensation to policyholders. I think that Members in all parts of the House want justice to be delivered to policyholders as soon as possible. The problem over the past few years is that, every step of the way, the Government have sought to frustrate that process and delay it. People want justice to be seen to be done. It is important that we make sure that we do all that we can so that the process on which Sir John Chadwick has embarked enjoys the confidence of Members in all parts of the House and, in particular, has some support from the policyholders who are most directly affected.

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It is no longer practicable to bring the Chadwick procedure to an end—a decision which is what the Government would like us to fall into—but that does not necessarily mean that it was a good idea to disrespect the ombudsman’s position.

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We are, as is often said in politics, where we are. The process could have been handled far more efficiently by the Government, and we could be in a better place if the Government had not sought to delay their response to the ombudsman’s report. If they had not waited six months, we might know just how much policyholders could expect to receive and when. The delays are a significant let-down for policyholders. We need to make sure that we move ahead with all due speed, and make clear the timetable so that policyholders know when they are going to get justice.

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The hon. Gentleman said that he would support the continuation of the Chadwick efforts. Would he add two further comments? Would he say whether he is committed to doing anything additional that might reflect the situation had the ombudsman’s report been able to continue. Would he also state his own timetable, to give policyholders a clear view of what a Conservative Administration would mean for them?

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The hon. Gentleman makes an important point about the timetable. My right hon. Friend the Member for Witney (Mr. Cameron) said last month:

“If we win the election, we’re going to sort out Equitable Life very early on.”

That is a clear commitment to make rapid progress on this issue. The other aspect is that Sir John Chadwick is advising the Government, who are in a position to take on board the concerns that have been expressed about the way in which the Chadwick process will reach a final conclusion. It is important that the Government listen to those concerns.

There is a demand, which has been voiced very clearly in today’s debate, for a clear timetable from the Government. We have to ask ourselves what the Government did last year to establish a clear timetable for payments. Has any work been done by the Government on how they might make payments to policyholders, or to determine how long it might take to make such payments? If it has, the Treasury should be in a position to set out an indicative timetable. If the Chief Secretary tells us that no work has been done along those lines, policyholders will have to wait even longer for certainty as the Government work through the mechanics of compensation.

Such failure to be up front with policyholders about a timetable is a reminder that throughout this process the Government have sought to avoid responsibility and tried to delay resolving the problems for as long as possible. If the Government had responded to the ombudsman’s report more quickly, policyholders would have known by now what the outcome would be.

Our response has been clear. We accepted the ombudsman’s findings at the outset, and we said that if the Government did not put a scheme in place, we would do so. I reiterate the comment of my right hon. Friend the Member for Witney last month, when he said;

“If we win the election, we’re going to sort out Equitable Life very early on.”

That is the right approach. The Government’s actions have delayed justice for far too long. If we form the next Government, Equitable’s policyholders have the commitment that we will sort out the mess that the present Government have left behind.

We need to act quickly not only to help Equitable’s policyholders, but to restore confidence in savings. The long drawn-out process for dealing with Equitable Life has helped to erode such confidence. The message that people hear is that the regulator failed and the Government have sought to wriggle out of their responsibility to Equitable’s policyholders. It is no wonder that five times as many people prefer to save for the long term by putting their money into their house, rather than into investments. We are not going to rebuild the savings culture in the UK and put the economy back on the right track until people are confident that the regulators are doing their job and the safeguards that are in place to protect consumers work when they are needed. The Government’s failure to deal with the aftermath of Equitable Life has undermined confidence in savings.

Equitable Life has been a tragedy for many thousands of policyholders who have been condemned to hardship through a cut in policy values, let down by the regulators and failed by this Government. At every step of the way, rather than doing the right thing by policyholders, the Government and the Prime Minister have tried to evade responsibility. They have tried to deny policyholders the second ombudsman’s inquiry and tried to frustrate that inquiry. Now, 18 months after the ombudsman has reported, policyholders are no closer to knowing when they will receive compensation. A problem that could have been resolved after Lord Penrose had highlighted the regulatory failings in 2004 remains unresolved six years later because the Government failed to act.

The Government’s handling of Equitable Life has caused misery to hundreds of thousands of people, and financial hardship to people who should be enjoying their retirement. The Government should be ashamed of themselves. The Government amendment today is no damascene conversion. It is a cynical attempt to fool Equitable’s policyholders in the weeks running up to the election. They are treating policyholders like fools and it is our responsibility to stand up for them, clear up the mess that the Government will leave behind, and ensure that after their long fight, Equitable’s policyholders receive the justice that they have been denied for so long.

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I beg to move an amendment, to leave out from “House” to the end of the question and add:

“recognises the vital role the Ombudsman plays in public life; reaffirms the duty of Parliament to support the office of the Ombudsman; notes that the High Court ruled that the Government’s response to the Ombudsman’s recommendations on Equitable Life, its establishment of an ex gratia payment scheme, and the terms of reference given to Sir John Chadwick were a rational response to the Ombudsman’s report; notes that Sir John expects to produce his final advice in May; welcomes the Government’s commitment to respond with details of a payment scheme within two weeks of receiving this advice; welcomes the Government’s determination to establish a scheme administratively quicker and simpler to deliver than that envisaged by the Ombudsman; further notes that to abandon the Chadwick process so close to completion would add delay and hardship for policyholders; welcomes the Government’s view that, while it cannot prejudge Sir John’s final advice, there is a strong case for policyholders who have passed away to be included in the scheme and that it is neither desirable nor administratively feasible to means-test every individual policyholder; and recognises the impact and significant distress that maladministration and injustice have caused in respect of Equitable Life.”

I, too, welcome the chance to debate Equitable Life today. I am grateful for some—not all—of the remarks that the hon. Member for Fareham (Mr. Hoban) made. In particular, I am grateful for his clarification that it is the position of the Opposition at this stage to support the Chadwick process. Perhaps later contributions will help me to reconcile that with the sentence in the motion that he moved, in which he seeks to set a clear timetable for implementing the ombudsman’s recommendations, rather than acknowledging support for the John Chadwick process. Perhaps we can return to the matter over the course of the afternoon.

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I think I have an interest to declare as a former Equitable Life policyholder. How can the Chief Secretary promise to give a response to Chadwick in two weeks, when it took more than 10 times that long to give a response to the ombudsman? Is it because he has 10 times more confidence in the Government to be formed in May?

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The ombudsman’s report is pretty substantial. It involved four years of work, and it was right that the Government considered it carefully. I wanted to give a commitment to respond to Sir John Chadwick’s final report within a couple of weeks because of the sentiment that has been expressed in the House, which I have witnessed at close quarters since I became Chief Secretary.

Since the debate last October, I have laid two written ministerial statements to keep hon. Members up to date with the progress of Sir John Chadwick’s work. Last month, Sir John Chadwick and I had the opportunity to discuss the issues, some of which I hope will be aired this afternoon, with the all-party group on Equitable Life Policy Holders. I should like to record my thanks to my hon. Friend the Member for Leeds, North-East (Mr. Hamilton) and the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) for organising such an excellent event.

This afternoon, I want to set out the Government’s approach and put on the record in Hansard my response to some of the questions that have already been flagged up by right hon. and hon. Members.

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I thank the Minister for the letter that he sent to each member of the all-party group, which I found quite useful. In that response he states:

“I am currently of the view that it is neither desirable nor administratively feasible to means test every individual policyholder.”

Does that mean that the payment, whenever it comes, will directly relate to the pension that policyholders paid for and expected but did not get, or can we anticipate some other artificial reshuffle of the moneys paid?

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I will come to that point directly slightly later in my remarks.

First, I want to repeat the apology to policyholders for the delay. This was an apology first made by my predecessor, now the Secretary of State for Work and Pensions. I would also like to repeat what I put on the record in our first debate in October, which was a word of thanks to the parliamentary ombudsman for her work. It is right and appropriate for the Government to record our gratitude for her work. Her report was substantial, careful and sympathetic, and it contained a weight of analysis that reflects the complexity and scale of the issue. It took the ombudsman four years to put together, but it demonstrated a commitment to get to the heart of a difficult issue.

It is also fair to say that we did not wholly agree with the ombudsman’s conclusions, although on many things we did agree. In nine out of 10 of her findings we agreed wholly or in part with the charge of maladministration, and in five areas we said that we believed that injustice followed. So it was not to provide a compensation for regulatory failure, but to answer an ethical demand for help that the Government proposed an ex gratia scheme be set up.

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I am grateful to the Minister for reiterating his apology and it is accepted in the spirit that it is offered. He will know that sadly some policyholders will have passed away, so they will not hear that apology. Will their estates be in receipt of any compensation that is eventually given?

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Again, if the hon. Gentleman bears with me I will come to that point directly.

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If the Government accept that there has been maladministration, surely the victims of that maladministration are entitled to compensation. Yet instead the Government have gone down the route of a simple ex gratia scheme, with no right to compensation for that maladministration.

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There is a principle, long accepted and indeed long debated in the House, that there is not an automatic right or an entitlement to compensation for regulatory failure. That was a characteristic of the compensation scheme that was put in place for failures as far back as Barlow Clowes. None the less there is an ethical demand to have a compensation scheme set up. I have sought to deliver a payment scheme that meets the imperative to act, to deliver it swiftly and to ensure that the right people are included.

I want now to say a word or two about the approach that the Government have pursued and the rationale for it. All hon. Members agree that we need to establish a fair payment scheme as quickly as possible. The ombudsman suggested a scheme that in her view could be up and running and complete its business within two and a half years, but her proposal relied on looking at regulatory returns. That has two consequences. First, it would entail a case-by-case review to understand who lost what and why. That would involve looking at 30 million investment decisions by 1.5 million people over 20 years.

Secondly, and to my mind more problematically, individuals would have to prove that they relied on regulatory returns. As the ombudsman said:

“I find that injustice was sustained by any policyholder who relied on information contained in the Society’s returns for 1990 to 1996”.

The Government simply did not think that such an approach would work. We therefore wanted Sir John Chadwick to look at a more expeditious and less risky way of setting up a payment scheme. Rather than a case-by-case analysis, Sir John has proposed that we look at different classes of policyholder—about 20 in total—and then, for each class, assess relative loss with a comparator on which he has gone out to consultation.

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The Government’s amendment states that

“Sir John expects to produce his final advice in May”.

When did the Government discuss with Sir John the likely return date of his report? Surely it would have been a better and more just result had his report been produced well in advance of May, so that the public could have studied it in the run-up to the election, rather than in the confusion after the election.

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I am not sure that I accept that there is confusion after an election, but the hon. and learned Gentleman will accept that Sir John’s approach must be faster and simpler than looking at 30 million different investment decisions. In my conversations with Sir John Chadwick, when we discussed his timetable and, indeed, the resources that he needed, I wanted to ensure that he had the time and space to do a thorough job, so that once a scheme was set up it could be completed as rapidly as possible. I do not think that I met Sir John without asking him whether he had all the resources that he needed.

Some right hon. and hon. Members will be much more familiar than I am with compensation schemes that have been set up over the years, whether for Icelandic fishermen—a scheme that dates back two or three decades—or for injuries sustained in the coal mining industry. What characterises many of those schemes is that they take years and years—sometimes decades—to run all the way through to a conclusion, and that sometimes they cost billions of pounds to administer. I wanted to ensure that we had a payment scheme that was up and operating quickly, and got through its business as fast as possible.

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I understand all that, but the Government stand charged with cynicism over the whole Equitable Life saga. Surely, however, they could have avoided that charge at least in relation to the date on which Sir John reports. It is no secret that there is likely to be an election in early May, and Sir John’s proposed report date is likely to be after the election. The Government are falling into their own trap: if it can be shown—and the suspicion must exist—that they have deliberately decided to push back Sir John’s report until after the election, they are going to land themselves with further accusations of cynicism.

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I understand the hon. and learned Gentleman’s point. I have not approached the question with cynicism. I have approached the exercise, which has been one of the hardest I have had to confront since I have been at the Treasury, with only one concern: how we get a payment scheme up and running quickly, in a way that minimises risk and allows us to complete the exercise as rapidly as possible.

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I had two policies with Equitable Life, and I am dismayed at the delay by the slothful ombudsman and the Government’s delay. In seeing the matter through, however, I am resigned to the Chadwick process and, as such, will vote with the Government tonight. I am pleased that the process is likely to include deceased policyholders, but will my right hon. Friend indicate by what date he expects the first payments to be made, and by what date he expects the scheme to have been concluded and all the payments to have been made?

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Again, I shall come on to that point in a moment.

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rose—

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rose—

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I shall make a little more progress before I give way.

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On the question of speed.

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I shall come on to the question of speed and say a few things that will provoke a few more—

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Will the right hon. Gentleman give way on the question of the method adopted?

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indicated assent.

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I am grateful, because the right hon. Gentleman said that he had decided to adopt a different route from the method proposed by the ombudsman—that is to say, the route proposed by Sir John Chadwick. Given that, and if there is to be no suggestion of cynicism, is it not all the more important that the right hon. Gentleman takes on board the comment that several people made when he was present at the meeting of the all-party group on Equitable Life Policy Holders—namely, that there should be the maximum transparency in disclosing the report’s methodology and the other working documents that were made available to Sir John Chadwick? If there is to be less than full recompense, it is important that people know the basis on which the pay-out—whatever it is—is ultimately arrived at.

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Of course. Along with his third interim report, Sir John has published some detailed actuarial studies. In some quarters—EMAG in particular—there is concern that that is not enough detail. If there is a demand among right hon. and hon. Members for more information, I will discuss with Sir John how we should make that available. Obviously, he and I will be legally obliged to protect personal information, but I am sure that there is a way to accommodate the hon. Gentleman’s point.

If we compare the two approaches that the ombudsman and Sir John Chadwick are taking, we understand why Sir John concluded that the approach suggested by the ombudsman was at best unsatisfactory and—more likely—impossible. On that basis, I am unable to agree with the ombudsman’s assessment that her scheme would take only two and a half years to deliver.

I think that Sir John’s approach will be better and faster, but his task is still difficult. He has to analyse about 2 million policies, to look at information dating back two decades on about 20 different types of policy and to review about 200 different financial products. None the less, his approach avoids some of the more difficult aspects of the ombudsman’s proposal and it will lead, I think, to a simpler and administratively quicker scheme.

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My right hon. Friend has estimated that the ombudsman’s report would have taken two and a half years to implement. What is his estimate of the time it will take to implement Sir John Chadwick’s report?

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Let me come directly to that point. I do not think that we can estimate when the first payments will begin to arrive, or when the process will be completed, until we have Sir John’s final report in May. I say that for a simple reason. Until we are able to estimate, and hear from Sir John about, the total bill and what the right kind of compensation looks like, it will be difficult for us to know or guess—and it would be wrong for us to attempt it—whether the right kind of compensation is cash or a different kind of financial services product. Equally, until we know who Sir John thinks it is appropriate to include in the final design of the scheme, we will not know whether the scheme that we are running will be paying out to hundreds of thousands of people or to millions.

The answers to these two questions have important consequences for how delivery arrangements should be set up. A smaller scheme could probably be delivered quite quickly—through the Department for Work and Pensions, for example. A more complicated scheme that involved, for example, distributing financial services products to Equitable Life policyholders, could require the Government to secure a delivery partner in another financial services company. That is why the answer to my hon. Friend’s question is difficult.

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Is not the Minister himself making the argument for an interim scheme, at least as soon as Sir John Chadwick’s report is laid? When it is, at least some groups will be clearly identified as covered.

Surely the Minister also recognises that Sir John’s conclusions are likely to be challenged, as some are extremely contentious. I point again to the assumption that, having opened a can of worms, the regulator would have taken only the lightest-touch action, that the society would respond only in the lightest way and that most of the mess would have been left in place. Many of the assumptions are likely to be challenged through judicial review, but people’s essential payments, at least, should not be delayed for that process.

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As I promised, I asked Sir John Chadwick’s advice on interim payments following our October debate. The difficulty is that when a scheme is produced there will be a cap on it—to cap liabilities to the public purse more generally. The difficulty with making interim payments is that it is impossible to estimate, until the final scheme is designed, whether the person has too much, too little or about the right amount. I would not want to embark on an exercise where people were being overpaid, because it would be impossible, and quite wrong, to ask them for money back; that would be seen as reprehensible by all Members of this House. Sir John Chadwick therefore examines in his report a proposal for potentially expediting payments to particular groups once the scheme design is finalised, and suggests two such groups, as the hon. Lady will have seen.

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I was pleased that when the Minister came to see the all-party Equitable Life Policy Holders group, he said that the election date would not delay the proceedings that are going on in the background. However, the all-party group also heard from some of the victims, who asked why no work was being done in parallel to clean up the data, as that would speed up delivery once the decision was made on the criteria for who was going to be eligible. Could he give us a little more information about why that work is not being done? That work would ensure that, having stopped one set of proceedings, we do not then come up with another lengthy procedure that needs to be gone through before anyone gets a penny.

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That is an excellent point, and I will try to ensure that we respond to it over the course of the debate. Some preparatory work is ongoing—for example, discussions with the DWP about possible delivery options. I have also asked the Treasury to ensure that any clearing of the ground that is required for a procurement process is undertaken.

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Has the DWP talked to the Financial Services Compensation Scheme, which has enormous experience of data cleansing and rapid processing of large volumes of claims, as with the Icelandic banks?

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Let me seek to provide an answer over the course of the debate.

I want to turn to two important points that hon. Members raised earlier. The first, which also came up in the all-party group, is whether payments should be made to the estates of policyholders who have passed away. As promised, we have reflected on this. Based on the evidence that I have seen to date, I feel strongly that they should be included in any scheme. I cannot see any rationale for treating their estates differently from those of any other policyholders. I think that is a view that the House will share. We cannot pronounce on this categorically until we see the final design of the scheme, but I thought it important for the House to know the direction of travel.

Secondly, several hon. Members have asked about means-testing. My assessment so far is that means-testing would be neither administratively feasible nor desirable. It would be an unwelcome complication that cannot, at this time, be seen in a positive light. Again, a final conclusion has to await Sir John’s final report, but I do not think that means-testing should be our direction of travel.

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I am grateful to the Minister for having gone as far as he has. However, given that the Public Accounts Committee said that compensation was not a matter of charity but a matter of justice to rectify a wrong, would it not be right for him to rule out means-testing at this stage instead of giving qualifications about awaiting Sir John’s report?

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I am being a realist about it. Having contemplated what kind of administrative procedure would have to be put in place to go through means-testing, I cannot see how in the world we would do it.

The third question, to return to the point raised by the hon. Member for Richmond Park (Susan Kramer), was about urgent payments. In the final scheme design, we should prioritise payments to those who have been particularly severely impacted by what has happened. In his latest report, Sir John Chadwick provisionally identified two groups: trapped annuitants and late joiners.

That is all that I wanted to say by way of response to the hon. Member for Fareham.

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rose—

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Before I conclude, I will give way one last time.

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The Minister has nicely said, as far as I can tell, that he is not interested in means-testing. However, does he envisage a payment that is directly related to that which the policyholders anticipated but did not get, even if it is a proportion of the amount, or does he have some other artificial way of changing it?

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The answer is yes—Sir John Chadwick has tried to compare the relative losses of different classes of policyholders.

Let me conclude by saying that all Members of this House will have constituents who have been affected by the injustice of Equitable Life, which now stretches back almost two decades. We are committed to acting urgently and fairly, even in the current fiscal climate. That approach is reflected in the Government’s proposed amendment to the motion.

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rose—

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Before I finish, I will give way one final time.

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Forgive me, because I may have missed it, but can my right hon. Friend say when he expects payments to start and when he expects them to be finished?

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As I said a moment ago, I cannot this afternoon set out when payments will start, or when they will finish, but I can commit to ensuring that the Government’s response to the John Chadwick report, which will be published within two weeks of the report being handed in, will include a delivery timetable, which will answer that question.

We have drafted the proposed amendment in a way that reflects the debt that we owe to the ombudsman and accepts the obligations of the Government, but that none the less reaffirms our commitment to an approach that we think will remedy this injustice as rapidly as possible.

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rose

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Order. Before I call the hon. Member for Twickenham (Dr. Cable), I had better advise the House that the 15-minute limit on Back-Bench speeches is no longer appropriate in the light of the numbers of hon. Members seeking to catch my eye, so I give notice that it will be reduced to nine minutes.

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I will try to make your task a little easier, Mr. Deputy Speaker. I had the privilege of introducing a debate on this subject on 21 October 2009, when I set out in considerable detail the Liberal Democrats’ views on how the problem should be dealt with, and I do not need to rehearse those arguments and the history again. There is a fair degree of consensus, which was summed up by early-day motion 1423 in the last Session. The motion was signed by 351 Members, from all parties, which I believe is the largest support for any such motion. On my quick arithmetic, that means that 70 per cent. of Members who are not on the Government payroll supported it. A considerable amount of work has been done since by the all-party group to reinforce that.

I shall first discuss the practical issues raised by the exchanges between the hon. Member for Fareham (Mr. Hoban) and the Chief Secretary. Since October, as the Chadwick process has ground on—we have now had the third interim report—and in the past few days, there has been a breakdown in the relationship with the policyholders group, which has consistently defended the interests of policyholders throughout the process. Initially, it worked in a constructive and positive way with Sir John Chadwick despite having reservations about how the process was being conducted, but that relationship has now broken down. I do not believe that the Minister addressed that problem.

I have two suggestions for the Minister. First, nobody is suggesting that we now go back and throw the work of the Chadwick commission into the waste-paper basket and start all over again. To be fair, as the hon. Member for Fareham said, we are where we are and we have to operate from the current position. The legitimate concern of policyholders is the lack of independence in the process and the role of the auditors, which I believe are appointed and paid for by the Treasury. If there were greater confidence that that process was genuinely independent, much of the lost confidence could be restored. Will the Minister consider how independent auditors who have the confidence of the policyholders can be introduced to the process, perhaps alongside those already designated by the Treasury, to bring the policyholders group back on board in the process?

We can argue whether it would have been better to have gone down the tribunal route than the ombudsman report route, but the policyholders group vehemently denies that matters are as complicated as the Minister made out. We can go over the history, but—given where we are—the key need is to establish the independence and integrity of the process. Confidence has broken down, and we need to find a simple way in which that can be remedied.

The other issue that has arisen—and it is an immediate and practical one—is that of interim payments. All three of my colleagues who have intervened—my hon. Friends the Members for Cheltenham (Martin Horwood), for Richmond Park (Susan Kramer) and for Solihull (Lorely Burt)—made that point, and I heard the Minister’s reply. I can understand the theoretical problem—that the interim payments might collectively be greater than a cap that might be imposed—but it is a rather academic objection. We are, after all, talking about a narrow category of people whom we all agree should be compensated—the trapped annuitants and the late entrants. Nobody is now disputing that. It also concerns a modest part of the compensation to which they will ultimately be entitled. So it is not clear why this relatively modest but rapid intervention of making interim payments should hit the financial ceiling, unless the Government envisage a ceiling that is ridiculously and unreasonably low. I hope that the Government will take a fresh look at the interim payment issue, because the objection advanced is not very credible.

If those two steps could be taken—a greater degree of independence in the auditing process, which is very complex and which no hon. Member is equipped to deal with technically, to restore the confidence of the policyholders, and the introduction of an interim payments scheme—much of the current suspicion about what is happening would be defused, and we would be back on track. That is the substantive point that I wish to make, but I shall briefly summarise the two overriding concerns that Members have expressed throughout the debate.

The first is the cumulative delay. We can argue about whether a particular step was reasonable or not, but it is the cumulative impact of a decade of delay that has caused so much anxiety and anger. The second is the integrity of the ombudsman process and our responsibility as a House for upholding the ombudsman’s authority.

On the first issue, it is worth—without going into the long and sordid history—recalling the milestones in this decade-long process. We had the four years to Penrose, who indeed criticised the delays in establishing his report. Then there were the three years to the ombudsman’s report and then the 18-month delay in the publication of the ombudsman’s report through the Maxwellisation stage, followed by the Government’s response, which was not satisfactory. Then came the ombudsman’s response to the Government, then the various challenges, including judicial review and the Public Administration Committee’s report. Then we had the six-month delay until the Chadwick process got under way, and the next series of steps that we are now encountering. Any one of those delays could be excused and explained, but the cumulative effect of the Treasury foot-dragging is great ill will and is the reason why Members on both sides of the House keep returning to this issue. It is also why the 1 million people affected by this issue are so frustrated.

The second overriding issue is the authority of the ombudsman. It is worth recalling that 351 of us said, when we signed the early-day motion, that this House

“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”.

We can argue about whether the ombudsman’s process was the best, but its principles were clear, and one of them was that compensation was right, and that it should take place according to the principle of remedies: we are not talking about arbitrary compensation with figures plucked from the sky, but about a carefully thought out procedure. The ombudsman also made the specific recommendation of an independent tribunal-like process. We know that the Government have rejected that, but the key point was independence, and that is what is lacking from the present proceedings. We then had talk about “rapid”, “transparent” and “simple” solutions to compensation, but again, we have not had “rapid”, we probably have not had “transparent”, and we certainly have not had “simple”. The question is: how do we get past that stage?

I will leave the Minister with the thought that introducing an independent element into the actuarial process at this stage may restore some of the confidence that has been lost. If the Government are now willing to look at interim payments through the Chadwick process, that would go some way—probably a limited way, but some way at least—to stemming the anger and frustration that a lot of policyholders feel.

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We are here again to debate Equitable Life because we all have constituents who continue to suffer, as hon. Members have said throughout the debate. However, I am a little dismayed and disturbed that the issue is becoming a party political football, although I suppose that that is inevitable with a general election fast approaching. I remind all right hon. and hon. Members present for the debate—instigated, I accept, by the Opposition—that we are here today for one reason: to ensure that those who have suffered as a result of the Equitable Life scandal are properly compensated and that they stop suffering. For the 15 policyholders a day who are dying— 15 policyholders who will never see justice—we know that their estates are compensated, as I believe the Chief Secretary indicated, and as the Government amendment certainly indicates.

It is a real shame that the issue has become so partisan. I thank the hon. Member for Fareham (Mr. Hoban) very much for his kind remarks, but he said that the Government were trying to block, frustrate and delay the process. That might have been the case in the early days, and we all regret that. I certainly made it clear in my Adjournment debate last June that I regretted it, and my hon. Friend the Member for Cannock Chase (Dr. Wright), the Chairman of the Public Administration Committee, has done so too. However, we now have a process that perhaps many of us would not have wanted, but which is none the less approaching its conclusion. I am glad that the hon. Gentleman made it clear that the Opposition would see that process through, should they win the general election.

We had an Opposition day debate on 21 October last year, to which the hon. Member for Twickenham (Dr. Cable) referred. My debate, which was an hour and a half long in Westminster Hall, was held on 24 June last year. The all-party group on justice for Equitable Life policyholders held a meeting on 24 February —less than a month ago—which Sir John Chadwick was able to attend, thanks to a little pressure from me and the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski), co-chairman with me of the all-party group. Chadwick answered some questions—some Members got some answers—but I share the view expressed by the hon. Member for Twickenham that the lack of independence of which EMAG has been so critical was quite evident in Sir John’s remarks on 24 February. It was a shame indeed—we have already made our view clear—that the room was so inconvenient that not all Members who wanted to ask questions were able to do so.

As hon. Members know, I have been very critical, but the aim of my criticism—I hope that this is the aim of everybody’s criticism of the Government—is to improve the chances that those who have had justice denied as a result of what happened at Equitable Life will get that justice. That is what we are here to do, and we must not forget that.

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I am grateful to the hon. Gentleman for giving way, but after 10 years of obfuscation and delay, which have caused mass injustice to so many people, is it not right that, as we approach a general election, people should be able to look at Labour’s record on this issue and come to the same conclusion that we do, which is that if people want justice, they need to vote for a change? We have had 10 years of a failure of justice, and the hon. Gentleman has been honourable in pointing that out, but it is also worth pointing out that it is his party—the Government—who have carried out that injustice.

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We now have a chance to put things right and do what we have not done so far. I think that that is finally happening on this side of the House, and that is why I want to see the Chadwick process completed. The question about timing that my hon. Friend the Member for Wolverhampton, South-West (Rob Marris)—who has now left the Chamber—put to the Chief Secretary is critical.

I thank the hon. Member for Fareham for his kind remarks about the work that the hon. Member for Shrewsbury and Atcham and I have been doing in the all-party group. I also commend the Chief Secretary on his openness. I think all Members will agree that he tried hard when he attended a meeting of the group. He listened to what we had to say, but it was clear that he was also attempting to make up for the years in which nothing had been done—although we should bear in mind that it took the ombudsman four years to complete her report.

I strongly support what the amendment says about compensation. It states that

“there is a strong case for policyholders who have passed away to be included in the scheme”.

That point also arose when the Chief Secretary addressed the all-party group. However, one word is missing from the amendment. It ends with the words

“and recognises the impact and significant distress that maladministration and injustice have caused in respect of Equitable Life”.

The missing word is “policyholders”. We seem to be forgetting that individuals are involved, and we should not do so.

I thank EMAG because although—as the hon. Member for Twickenham reminded us—it has pulled away from the process following Sir John Chadwick’s third interim report, it has constantly reminded every single Member that this is an issue for his or her constituents and is crucial to many of them. As I said during my Adjournment debate, EMAG told the Public Administration Committee that

“the majority of Equitable Life's policyholders had modest sized pensions and were not ‘fat cats' who ‘risked their money to get above average returns'. In particular, the average investment of the half million individual policyholders amounted to £45,000 each, which in today's money would buy a pension paying around £75 per week”.

That is why it is so important that EMAG continues to support, lobby, push and, ultimately, try to obtain justice.

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The hon. Gentleman has praises EMAG. Does he share its concern about the way in which the Chadwick process is evolving? That is underlined by its submissive language, which refers to

“what factors the Government may wish to take into account when considering which policyholders have experienced disproportionate impact”.

That does not sound as directive as we would wish. We may end up with a process that will not lead to the quick resolution that we all seek.

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I hope that the hon. Gentleman is wrong, and I hope that EMAG is wrong. I was about to say that I did not approve of EMAG’s recent action in pulling away from the Chadwick process. I think that many Members share my belief that, however much we regret the fact that the Treasury introduced the process, the fact is that we have the process now and we must see it through to its conclusion. I believe that that is the only way in which we can secure the compensation that policyholders need and deserve as quickly as is humanly possible from this moment onwards, whatever has happened in the past.

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I asked the Chief Secretary why there was not a parallel process of cleaning up the data, but I did not receive an answer. The hon. Gentleman praises the Chief Secretary for trying to put things right. Cleaning up the data would be a simple way of trying to put things right. A Labour Member—the hon. Member for Northampton, North (Ms Keeble)—asked whether the Treasury was liaising with the Department for Work and Pensions, but again there was no answer. There are more things that could be done. Let us be critical about this, in a cross-party way.

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I entirely agree. I am not suggesting for a moment that everything that the Chief Secretary has done is perfect. The cleaning up of data was raised at the all-party group meeting, but we have not received a definitive answer, and we need one. I hope that we will be given that answer in the winding-up speech, because it is important that the data is cleaned up so that the people who need and deserve compensation receive it when we finally have a scheme. The issue today, however, is what resolution we secure in the House, what debate we engage in and what decisions we make will best achieve our common aim, which is to ensure that compensation is paid as rapidly as is humanly possible from this day forward.

We have not yet had an answer on when the scheme will begin and end. The Chief Secretary made it clear that he could not answer that question until he had seen Sir John’s final report, which is a great shame.

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The hon. Gentleman says that we do not know when the Chief Secretary will be able to give an answer, but the Government’s amendment contains a commitment that they will

“respond with details of a payment scheme within two weeks of receiving this advice”,

and we are due to receive that advice at the end of May, are we not, whatever the failings of the process?

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I apologise if the hon. Gentleman has misunderstood the point I was trying to make. I am very pleased that the Government are committed to giving a response within two weeks, but my point is that we do not yet know when the payments will begin—indeed, we will not know that until they begin—or when they will be completed.

I recently met Chris Wiscarson, the new chief executive of Equitable Life, and I know that other Members have also met him. I thank him for his engagement with Parliament and hon. Members in order to ensure that, as leader of Equitable Life, he is focused on the policyholders and on trying to reduce his overheads and what he calls the bottom line—the expenses involved in running the organisation—to the absolute minimum, so that the maximum amount is available for policyholders. I commend him for that.

Turning to the Chadwick process, Sir John will give his final advice to the Government in May. He is looking into the details of 2 million policies, so he has to get this right. As we are dealing with about 2 million policies, the data must be clean. The Government said they will respond to Chadwick within two weeks of receiving his report, but a literal interpretation of the ombudsman’s findings would mean excluding at the very least trapped annuitants, which—

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Order. I must interrupt the hon. Gentleman’s speech now. He was, perhaps, a little too generous in allowing interventions.

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I shall endeavour not to use up my nine minutes, but let us see how we go.

First, may I declare an interest? I am a current Equitable Life policyholder, and also a former one, in that I held other policies that I managed to extract from that bottomless pit and move to other pension providers. Like so many other Members, I also represent a large number of constituents who have been grievously affected by this saga. Although I speak with a degree of disappointment on my own behalf, I speak with a great deal of anger on behalf of my constituents, many of whom have very little apart from their defunct Equitable Life pensions and other small pension entitlements from either the state or company pension schemes. They are on their uppers. They are really struggling to make ends meet, and they are having to do so at a time when interest rates are historically low and therefore such other savings that they have are producing a very low return. That is the backdrop against which my constituents are having to watch the Government continually delay this process.

This entire episode is not only bad in respect of the facts of what has happened, but it stands as a metaphor for the way in which this Government behave. We have a Government who appear not only to be prepared wholly to ignore or sideline the decisions of the ombudsman, an office set up by Parliament to protect the interests of the citizens of this country. They are also prepared to suggest in their amendment that the Government recognise—although they pretend that it is the House that recognises this—

“the vital role the Ombudsman plays in public life”

and reaffirm

“the duty of Parliament to support the office of the Ombudsman”.

If that were actually true—if the Government actually believed what they had written in the motion—we would not be where we are now, as this matter would have been resolved, if not in exactly the same way that the ombudsman suggested, at least through something a little more similar to it and many years ago.

Not only are we left waiting for Sir John Chadwick’s final review to report—I appreciate that a number of interim reports have been published—but, as I said to the Chief Secretary to the Treasury, the Government have cynically adjusted the timetable so that the review will be published or will apparently at least come to be considered by the Government after the likely date of the general election. Nobody is in any doubt as to the likely date of the election, nor have they been for many months. I have no doubt that the Treasury, at both official and political level, has so adjusted Sir John’s timetable and so constrained his remit to enable the Government to shuffle off into opposition after 6 May with a view to washing their hands completely of this terrible saga.

Meanwhile, my constituents and those of many other hon. Members will have to deal with the human problem: the loss of their pension rights and their investments, which they so carefully placed into Equitable Life. These people are not spendthrifts; they have deliberately attempted to save for their old age. These are the people this Government have let down. One again places this issue in the context of the first decision made by the then Chancellor of the Exchequer when he arrived in No. 11 Downing street in 1997 to adjust—I put that neutrally—the whole matter of advance corporation tax. That, together with what has happened in this case, illustrates this Government’s view of the private pensions sector.

When one looks at our motion, which I wholly support, one sees a collection of facts, at the end of which one sees a conclusion based on those true facts. The conclusion is that an “injustice” has been done and it needs “remedying”. The Government seem to be reluctant to do anything practical about it. The anger, frustration and the slow process that the public suffer as a consequence of the Government’s cynical attempt to delay things until after the election is not just something that comes out as a rhetorical flourish during the debate—it is real. I suggest that those on the Treasury Bench should acquaint themselves with what the public actually feel. Given the all-party concern about this issue, I suspect that plenty of these poor Labour Members of Parliament who represent the governing party but who have the honour to represent people whose Equitable Life investments have been completely scythed are having to describe to their constituents what the Government are doing in words in which they have little faith.

The Chief Secretary, in his usual way, spoke quietly and with apparent understanding of the plight of policyholders, but if one analyses what he said during the 20 or 30 minutes of his speech, one finds that he said nothing. A proper deconstruction of his speech will lead one to the conclusion that he was almost playing a game with the public and policyholders; it was as if somebody was reaching for a prize only to see it pulled a little further away each time they got within six inches or so of it. Likewise, we see the outcome of the Chadwick review being pushed and pushed further away from not only resolution, but from this Government’s responsibility. I suggest to the House that the Government’s conduct is not just cynical, but irresponsible, and deliberately so.

There is no question but that much of what the Government say in their amendment is deeply questionable. I have already referred to the cynical way in which they have attempted to support the ombudsman, despite the fact that their actions demonstrate an entirely different motive. However, the amendment goes on to state that the House

“notes that Sir John expects to produce his final advice in May”

and

“welcomes the Government’s commitment to respond with details of a payment scheme within two weeks of receiving this advice”.

My suspicion—I have some knowledge of the workings of government—is that Sir John’s recommendations will be known to the Government in advance of the general election. They will be preparing their response—probably now, in advance of Sir John’s recommendations being produced—but they will stick it in a cupboard and wait to see what the result of the election will be. If they win, they will further delay the Government response and produce a timetable for implementation that will take us still further away from May. If they lose, they will be able to say, “Well, we are no longer the Government. It is up to the Conservative Government.” It will be up to my hon. Friend the Member for Tatton (Mr. Osborne) to sort this out, and the Government will swing quietly off into the distance. The Government kindly state that they note that

“to abandon the Chadwick process so close to completion would add delay and hardship for policyholders”.

We know that that is impractical. There is no way an incoming Conservative Government could in fairness or in practical terms do away with the Chadwick process.

This whole saga demonstrates to me a lack of good faith, a lack of planning and a lack of appreciation of the plight of innocent policyholders. It is utterly shaming.

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This Government have done many, many things of which I am immensely proud. They have done nothing of which I am more ashamed than their handling of, and prevarication over, Equitable Life. The problem with Equitable Life was always to balance speed with fairness and to ensure that the scope of the compensation was correct. The hon. Member for Fareham (Mr. Hoban), who spoke for the Opposition, was correct to criticise the Government’s failure adequately to grasp the urgency with which the Government ought to have responded to the ombudsman’s report in July 2008.

The Government amendment states that the

“establishment of an ex gratia payment scheme, and the terms of reference given to Sir John Chadwick were a rational response to the Ombudsman’s report”.

How weak. They were a “rational” response. They were not appropriate, or sympathetic, or moral, but they were rational—if the end that one wished to achieve was to minimise the cost and delay the payments. Rationality is always important and necessary, but it is scarcely ever sufficient in matters of public policy.

In 2002, I believe, I spoke in the first debate on Equitable Life and urged swift action then. In 2008, when the ombudsman presented her report, the Government were wrong to consider that it was reasonable to delay a further six months before responding and then to challenge her findings in the court. The Government acted as though they believed that the clock started when the ombudsman produced her report in July 2008. In fact, for policyholders the clock had started in 2001. It has now been running for nine years and during that time many policyholders—some 40,000, according to Treasury advice—have now died. The Government have suggested in their amendment that

“there is a strong case for policyholders who have passed away to be included”.

It is of course right that the estates of the deceased should benefit, but that is of little comfort to those who each month draw closer to the end of their lives without the financial means for which they had prudently planned and saved.

The hon. Member for Fareham has indicated that he accepts that we are, in his words, “where we are”. He also made it clear that an incoming Conservative Government would accept and continue with the Sir John Chadwick process. Insofar as that is the case, I find the Opposition motion as it stands to be somewhat confused, because it refers to implementing “the Ombudsman’s recommendations”.

Earlier, I asked the hon. Member for Fareham to clarify the matter by saying whether his party intended to do anything in addition to Chadwick, perhaps by implementing elements of the ombudsman’s recommendations on top of Chadwick. I also asked what the timetable might be. The answer that I received was that it would be Chadwick, and that implementation would occur early in the life of the next Government. That strikes me as the common position of both the Government and the official Opposition. That being the case, I would simply press for additional steps to be taken, and in particular for interim payments to be made to surviving policyholders as soon as possible after we have all seen the Chadwick report.

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Many of my constituents in Shrewsbury who are Equitable Life policyholders have come to see me in my surgery. Their sheer frustration and misery as a result of what has happened led me, together with the hon. Members for Leeds, North-East (Mr. Hamilton) and for Richmond Park (Susan Kramer), to set up the all-party group for justice for Equitable Life policyholders. I am very grateful that various people have referred to the work that we have tried to do on a cross-party basis to bring this issue to the forefront of parliamentary debate. I am particularly pleased that we are having this debate today, and that the Conservative party should have used one of its Opposition days to enable us to discuss these issues still further.

To begin with, I was extremely concerned that Sir John Chadwick would not come to see us and interact with us. I was appalled that a person in his position could disregard Parliament and parliamentarians and behave in such a way, but we finally managed to get him and the Chief Secretary to the Treasury to speak to the all-party group on 24 February.

I have never seen a room more crowded than on that day. It was standing room only. It was so encouraging to see how many Members of Parliament, from all political parties, tried to attend the meeting on behalf of their constituents. They wanted to put questions directly to the Minister and Sir John Chadwick, and I am very pleased that we have been able to distribute to every Member of Parliament copies of the questions posed and of the replies that we received from the Minister.

What concerned me profoundly is that, when the Minister left the meeting, we then interviewed the current chief executive of Equitable Life, Mr. Chris Wiscarson. He said, in front of all of us, that he had written repeatedly to the Minister asking to interact with him and his Department. He wanted various forms of communication to take place between Equitable Life and the Minister’s Department, but he told all of the MPs assembled that not only had he received no reply, he had received no acknowledgement whatsoever.

The Minister stood at that Dispatch Box this afternoon and said repeatedly how important the process is, and how passionately he believes in trying to resolve it in a speedy and timely manner. However, if those are his genuine views, he needs to sit down with Mr. Wiscarson very soon: he must afford the current chief executive of Equitable Life the opportunity of a meeting to put forward his concerns and suggestions.

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Does my hon. Friend agree that that only adds to the anger, frustration and increasing cynicism of my constituents and many others around the country?

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Yes, absolutely. Far more transparency is needed throughout the process.

We saw what happened when the Government decided to bail out the individuals, councils and other institutions who had invested in an Icelandic bank—Icesave. Huge amounts of effort went into supporting those individuals and organisations. I simply do not understand why that level of urgency and commitment has not been forthcoming on this issue.

I pay tribute to Mr. Paul Braithwaite of EMAG. He is a gentleman with whom I have interacted repeatedly on this issue and I pay tribute to his hard work and dedication in pursuing this matter. He has sent me a few points which I should like to raise in the debate. EMAG issued a press release, explaining why

“we are walking away in disgust, after active engagement for months acting in good faith, from ‘The Chadwick process’.”

I would highlight the phrase,

“walking away in disgust”.

The word “disgust” is critical.

“Careful evaluation of his convoluted 109-page third interim report…demonstrates he’s not listening to any representations other than those of the Treasury—his paymasters—and he’s merely re-trying the case which was done independently and well by the parliamentary ombudsman. It’s as if the judicial review hadn’t happened.”

There Mr. Braithwaite makes a critical point. We have had the adjudication of the parliamentary ombudsman. As various hon. Members have stated, we have repeatedly rehearsed the arguments as to what should be done, and yet in my opinion the Chadwick process is a classic way of kicking things into the long grass.

Mr. Nick Bellord, an EMAG director, says:

“In summary, ‘The Chadwick Process’ has been a shameful charade to which EMAG is surprised that a retired Appeal Court Judge (albeit hand picked) has lent his name. The regulators allowed a Ponzi fraud to develop over nine years. The Treasury fathered and nursed a fraudulent reassurance treaty when the crisis arose in 1999 and ever since has not failed to stoop to every kind of cover-up, delay and low trick to escape the full truth being revealed—it is not just the failure to pay any compensation after a further decade—but the hiding of disgraceful behaviour by a major Office of State.”

Everyone who has spoken in this debate has spoken about the need to continue with the Chadwick process. The Minister challenged my hon. Friend the Member for Fareham (Mr. Hoban) as to what the Conservative party would do, should we enter office after the next election. Interestingly, it would appear that there is no alternative now, given where we are, but to continue with the Chadwick process. But so frustrated and demoralised are members of EMAG—the key words that I want to use are “frustrated” and “demoralised”—that Mr. Braithwaite says in his note to me:

“The right thing to do is to disregard the remit given to Sir John, although keeping the database developed by the Treasury’s actuaries, establish the independent tribunal as recommended by the parliamentary ombudsman and commit to the compensation process that the parliamentary ombudsman proposed. That’s an urgent priority for the next Parliament.”

So I am getting from Mr. Braithwaite a slightly different understanding of the situation, because I believe that he and other members of EMAG have lost so much confidence in the Chadwick process that even at this stage they may be prepared to throw it out and go back to the parliamentary ombudsman’s findings.

I am very heartened that my hon. Friend the Member for Fareham has stated that the Leader of the Opposition is determined to sort this matter out very quickly should we be elected to office. I suggest to my colleagues on the Front Bench that, should the Conservative party be elected to office in May, an urgent meeting be set up with EMAG at the earliest opportunity so that we can work with it constructively to sort the process out once and for all.

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May I, too, declare a modest interest in Equitable Life, having made some additional voluntary contributions under the parliamentary scheme at the beginning of my time in the House? No doubt, I have made a small loss, but that is not why I am speaking today. I am speaking on behalf of the millions of people who have lost substantial sums and will be seriously affected. People in our position who have made small losses can bear them, but others cannot. We must all be aware that the difference between having a basic state pension and having a basic state pension plus £75 a week is e