I spoke in the Back Bench Business Debate on ‘Justice for Equitable Life policy-holders.’

Below are the key points made during the speech:

I am pleased to be called to contribute to this debate.

In 2010, when standing for election in North East Derbyshire, I engaged with many policy holders in Equitable Life. I engaged similarly prior to my election as MP to Bexhill and Battle.

All of those I have interacted with put their positions with clarity and understanding of the economic challenges which the Government faces in balancing the books.

Given that they had planned to save so sensibly for their own retirement, these are constituents to whom prudence and budget planning is second nature.

I would also like to pay tribute to My Hon Friend, the Economic Secretary to the Treasury, who has responded to my correspondence on this subject in person and in writing.

Her explanations, and the time she has taken to explain, have helped me to communicate with my impacted constituents and for that I am very grateful.

As I interpret a recent letter from the Treasury, prompted by my constituents, I understand that the Government has closed the Scheme to new compensation claims and will reallocate unclaimed monies remaining in the pool to those policyholders who are on Pension Credit.

I had understood, by the words ‘I am sorry to say that no changes to the funds allocated to the Scheme are planned’ to mean that there will be no new monies added to the pool and that the £1.5bl paid out would be the final payment (in light of the Parliamentary Ombudsman’s direction that the Government should have regard to the impact on public finances).

However, my policyholders have read the words to mean that, whilst the manner in which the funds within the pool are to be allocated is fixed, it does not expressly rule out that new funds could be added to the pool, and towards the £2.6bl shortfall which comprises (a) the £4.1bl total amount of policy losses less (b) the Government payment of £1.5bl.

I would be grateful if the Minister can clarify if any further funds to the pool are expressly ruled out. Many of my policyholders would be accepting of this position because they are at the stage where they would like absolute finality and to know whether it makes sense for them to continue funding the fight.

My second contention is around the stated position for With-Profits policyholders. The letter I have received states that these individuals were compensated in full.

I understand that, for pre-1995 With-Profits policyholders, the proxy value of their pension was calculated by virtue of a benchmark from Prudential, which was considered to be a similar proxy for their own policies.

However, for post-1995 With-Profits policyholders, the proxy value was taken by benchmarking not only Prudential but also Scottish Widows. As the latter was disputed by some of my constituents as an appropriate benchmark, being a poor performing policy, these policyholders dispute that they have received full value and have drawn distinctions between their own policy (and that of the Prudential) versus the policy of Scottish Widows.

I would ask the Minister to comment on why the Scottish Widows’ policy was seen as a fair benchmark for this exercise.

I should add that I empathise hugely with all policyholders who have been impacted by the losses to their policies. Whilst they have been compensated in full, for these prudent individuals to lose out is incredibly unfortunate.

However, I am conscious that this matter was determined prior to my election and that I was elected on a manifesto which promised to deliver a budget surplus.

To add a further £2.6bl would mean other constituents having to provide.

I also have to consider constituents who cannot afford to save to buy a property for their own; increasing their taxes to pay for this extra compensation is going to set them back further.

I therefore support the Government in its approach to this difficult issue and ask only for confirmation on whether (a) the funding of the Scheme is final and (b) the usage of the Scottish Widows policy benchmark is justifiable. 

Minister answered the following questions I raised from the Despatch Box:

1. I was asked by impacted constituents to gain clarity on additional funding. I recognise that this is not the answer which impacted constituents wanted to hear but some wanted finality on this point so this is now delivered.

The Minister confirmed that no extra money would be made available to fund the £2.6bl shortfall.

2. I recognise that the relevant point was as to why Scottish Widows was used as a benchmark. Impacted constituents know, as do I, that it did not exist prior to 1995 but the key question was why it was used thereafter. I shall write specifically to the Treasury on this point and confirm the answer.

The Minister Confirmed that the Scottish Widows benchmark was not available prior to 1995.

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