Date: 15th November 2010
Subject: MP defies whip to stand up for local Equitable Life pensioners.
Local MP Gordon Henderson has again defied Government whips and voted for an amendment to the Equitable Life (Payments) Bill which called for any payments authorised by the Treasury to with-profits annuitants to be made without regard to the date on which such policies were taken out.
The amendment was made because the Government has decided that compensation should be paid only to those people who took out policies after September 1992, rather than include with-profit annuitants who took out policies before 1992 and yet were also subject to the regulatory failure surrounding Equitable Life pensions which is at the heart of the scandal.
The Government opposed the amendment on the grounds firstly that it believes the 1st Sept 1992 cut off point is a reasonable place in which to start, because policy holders would not have been aware of the regulatory failures until that date and secondly because it claims that with-profits annuitants prior to 1992 received more from Equitable Life than they would have done had there been no maladministration.
Mr Henderson explained why he defied a three-line whip to vote for the amendment:
“Both the justifications put forward for objecting to the amendment are ingenuous; the former because, whether or not they knew about it, pre-1993 with-profits annuitants were subject to the same maladministration as those after that date who will be receiving compensation, and the latter because if the Government believes that pre-1993 policy holders would not be able to make successful compensation claims, they why won’t they include them in the scheme?
“Unfortunately, when a vote was taken on the amendment the Government was able to win easily by 301 votes to 76. I was one of half a dozen Conservative members to defy the whips and support the amendment and I did so because before the General Election I, like many of my Conservative colleagues, signed a pledge to uphold in full the recommendations of the Parliamentary Ombudsman.
“That pledge was made to all Equitable Life policy holders who were affected by regulatory failure, not just those who found out about in when the scandal was publicised in 1992.
“When it came to the substantive motion, originally I was not entirely happy with the amount the Government has set aside for compensation which is £1.5 billion. One of Ombudsman’s recommendations was that policy holders should be compensated using their “relative loss” as a starting point. Everybody agrees that the total “relative loss” was between £3-£4.2 billion and policy holders were expecting to receive at least the lower of those two figures.
“However, the Ombudsman did qualify her recommendations by saying that any eventual payment should take account of the public purse. With this in mind I think it would have been appropriate for the Government to have reduced the figure of £3 billion by 25%, in line with the cuts it is making in Government departments in order to tackle the huge deficit we inherited from the previous Labour administration. That would have given a total of £2.25 billion.
“In the event I was delighted that the Government announced during the debate that any payments made under the scheme would be tax free. That is at least some good news for Equitable Life policy holders because it effectively pushes up the total net compensation package close to £2 billion.
“Despite my reservations about some aspects of the scheme, the Coalition Government must be commended for tackling this issue with such speed.
“The previous administration continually ducked the difficult decisions that had to be taken, which resulted in thousands of policy holders dying before a penny of compensation was awarded.
“Perhaps now those still left alive will get some compensation for the losses they suffered because of Government maladministration.”