Fabian's Blog

The Coalition is letting down Equitable Policyholders

Wednesday 15th September 2010 11:51 AM

On the 14th September 2020 the House of Commons debated the Equitable Life (payments) Bill, an innocuous measure designed to pave the way for a compensation scheme for the long-suffering victims of the failure of Equitable Life, Britain's oldest Life Insurance company which effectively ceased trading in 2001 after it was unable to meet its commitments.

A report by the Parliamentary Ombudsman was scathing about the catastrophic failure of regulation by the complacent Financial Services Authority and recommended that the Treasury design a scheme of compensation for those who had lost out. Like many non-investors, and most Labour MPs, I thought that investors in Equitable had been well-off people who were trying to get a higher than average market return on their large investments. I was wrong.

When constituents started coming to me with their stories of small monthly investments in one of the most respected financial institutions in Britain, paid over forty years to save for a modest pension, I realised that this was not just a bunch of rich people complaining about losing a percentage of their wealth through poor decisions or market fluctuations. More than a million and a half people in this country had been advised to invest in Equitable as a sure way of getting a decent return when they retired. The average 'pot' was just £45,000 - a lot of money to most, but as the accumulated savings of a lifetime of work, it was worth just £300 a month after retirement - not a fortune, but often the difference between poverty and making ends meet.

The more I looked into it, the more it seemed almost like a conspiracy to defraud the ordinary honest citizen. Financial advisers, banks and even the government all advised and encouraged investors to put money into Equitable. For some time, even the Parliamentary Pensions Scheme was run by Equitable. Ann Abramson, the Parliamentary Ombudsman was scathing and our Labour Government tried to push the issue into the long grass for fear of the enormous cost of making good the disastrous regulation which allowed the Equitable scandal to happen in the first place. I don't blame individual Ministers, the whole system conspired against dealing with this for fear of opening the floodgates to further claims against the government every time an insurance policy or investment lost money, but clearly Equitable was different.

One constituent told me that she had worked for forty years to earn herself an additional pension of £400 a month. Now it is worth £180 and she can no longer manage. Her life's savings had more than halved.

Incensed by the injustice I saw, and which every MP in the country has had to deal with, I introduced an Adjournment Debate in the Commons in June 2009. My debate sparked a flood of interest and I found myself becoming joint Chair of the All-Party Group on Equitable and speaking at rallies organised by the Equitable Members' Action Group (EMAG). The trouble was, most of the other MPs involved were Tories, people like Mark Hoban, who is now the Minister responsible in Treasury, and they were hammering our Government for its inaction on this issue.

Now the tables have turned. Grand promises to 'sort out' the Equitable scandal when they came into office turn out to be a continuation of the Labour Government's policy. If Labour MPs have the temerity to point this out, they get blamed for the mess by Tory MPs. None of this, however, is bringing a compensation scheme any closer for the victims, fifteen of whom die every day. Equitable must not be used as a political football, however irritating some of us find the Tory sanctimony. Equitable policyholders need a solution now, not in ten years time, and perhaps the Bill last night which Labour supported might be the first step. As I said in my brief contribution to the debate, the Bill is a building block, even if it's just a lego-sized one at the moment. Time is not on their side and as the Ombudsman said: "justice delayed is justice denied".

Whilst Labour did a lot to save the economy when the banks collapsed, and helped out investors in the Icelandic banks when they failed, we did little for this rapidly shrinking group of citizens. However annoying the coalition's sanctimony might be, let's hope that for the sake of the Equitable victims, this government does get them the compensation they so clearly deserve. Parliament owes them that much and must ensure that this scandal cannot be allowed to happen again.

The full account of the debate is available in Hansard starting here. (Go down the web page to the section headed Column 758)

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Why David Milliband must tackle Trident

Sunday 12th September 2010 11:56 AM

If David Miliband is elected as the new Leader of the Labour Party after the polls close on 22nd September, he must be bold and radical in order to capture the imagination of the British public now that the Coalition Government is beginning to look a little tarnished.

So many voters opted for the Liberal Democrats on May 6th this year, thinking that they were the radical alternative to Labour after thirteen years in Government . Most voters were aware that one of the LibDems' flagship policies was to cancel the Trident Nuclear Submarine replacement programme, last debated in the House of Commons in March 2007.

Trident replacement means spending billions of pounds over the next twenty years on an 'independent' nuclear weapons system which is heavily dependent on the USA for its use. However, were it ever to actually be used, we would of course all be in serious trouble.

In January of 2007, in order to try and persuade me to support the Government and vote for Trident replacement, I was invited to the Faslane naval base on the banks of the Clyde, near Glasgow. It was a fascinating and highly educational experience and I met some very professional and impressive naval officers who were happy to carry out any decision made by Parliament to either abandon Britain's nuclear deterrent, or to replace it. They made it clear that they would do whatever we decided was best for our country's defence. We were taken on board one of the amazing Trident submarines, which were more like I imagined a spaceship to be than a naval vessel. We were told what the procedures would be for firing the missiles at a given target and I found that very scary.

The visit to Faslane gave me more ammunition to argue against Trident renewal. I felt more than ever that this was not only an enormous waste of money but that continuing the myth of an independent nuclear deterrent was unsustainable and morally wrong. I voted against the Government in March 2007 and have never regretted it. I am not at all sure that the public are still wedded to a British nuclear arsenal, especially in the era of radical cuts to public expenditure. Surely the £100bn or so could be better spent on essential services for our citizens?

Liberal Democrat voters must be feeling very angry with the party's leaders who have sold out their principles for a taste of office. LibDem voters did not vote Conservative, yet they have a Conservative Government and Prime Minister, thanks to Nick Clegg. And one of the LibDem policies to be compromised is the abandonment of the Trident replacement programme.

If David Miliband can grasp this policy and become the new champion of a phased reduction and ultimately the abolition of Britain's nuclear arsenal, then I believe he will capture the imagination and support of many voters who previously voted LibDem and former Labour voters who did not vote at all, or who deserted Labour for another party. The policy can be justified alone for its sensible cost saving at a time of fierce cutbacks, never mind the moral imperative. Imagine just how much more powerful our arguments against Iranian nuclear weapons development would be were we to tell the world that Britain no longer wanted its own nuclear arsenal. Labour could offer a genuine radical policy which could re-direct scarce public money to the people of this country who really need it instead of slashing our public services as the coalition government is so determined to do.

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