Bob Blackman is the Conservative Member of Parliament for Harrow East & Chairman of the All Party Parliamentary Group for Equitable Life.
Six years ago today the former Chancellor, George Osborne, stood up to give the Comprehensive Spending Review under the then-Coalition Government. I was there for his statement to the House, in which he said about the Equitable Life scandal:
“So let me make it clear: I accept the findings of the Parliamentary Ombudsman in full… I agree with the Ombudsman that the relative loss suffered is the difference between what policyholders actually received from their policies and what they would have received elsewhere.”
That ‘relative loss’ was calculated to be £4.3 billion. Only £1.5 billion has been allocated to date. When we were last in Opposition many of my Conservative colleagues, including the new Chancellor, were very happy to sign the pledge promising to deliver justice for Equitable Life policyholders.
In the subsequent six years, Equitable Life aside, politics has moved on considerably. We now have a Conservative Government, new Prime Minister and Chancellor, as well as a departure from the austerity politics of George Osborne.
Theresa May very quickly announced her Government will not be sticking to Mr Osborne’s financial rule to run a budget surplus by 2020. She has put in place a new approach to foreign policy, a more interventionist economic strategy and pledged to build a “country that works for everyone”.
The Prime Minister has made clear that she is introducing a “different kind of Conservatism” and vowed to “take on vested interests and break up power”. She does not just believe “in markets, but in communities” and supports not just “individualism” but “society”.
The Equitable Life scandal stands out as an unresolved open sore in the politics of “Mayism” under which we now live. Justice for its victims would fit perfectly into the new Prime Minister’s agenda by ploughing money back into our local communities, benefiting some of the most vulnerable individuals who have been badly let down by the “privileged few”.
Minds may need to be refreshed, but the Equitable Life scandal is such a tragedy because people were induced into putting their life savings for retirement into it. It swept up enormous amounts of money and a huge number of people who were told by everyone it was a blue chip pensions company.
In reality, the company could not finance itself. It could never meet the commitments that it had made. The regulator knew what was going on, as did the Government and the Treasury. They even conspired to prevent it becoming public knowledge so that people carried on investing their money.
The number of victims amount to nearly two per cent of our population – hard-working people who did the right thing and invested their earnings and life savings in a pension scheme that they rightly expected to be properly regulated.
The average policy value was just £44,000 which at today’s annuity rates would hardly be enough to pay an individual’s food bill. These victims were not, as Gordon Brown believed, “fat cats”.
Let me leave the new Chancellor in no doubt that we will continue our campaign until we get justice for those who suffered as a result of that terrible scandal.
I am proud that it was the Conservative party that speedily legislated to put in place the Equitable Life Payment Scheme. But of the £4.3bn that our Government acknowledged were the ‘relative losses’ of policyholders, less than 35 per cent has been made available for compensation.
While some policyholders (people drawing annuities) have rightly received 100 per cent of their ‘relative losses’ in compensation, hundreds of thousands have received only 22 per cent of their losses. A gross unfairness therefore remains. Until it is resolved, responsible savers, their families, and friends will continue to have no confidence in our political and regulatory system.
As we reform pensions in other ways, we must send out the signal to the young and not so young that it is right to save prudently for the future and for retirement.
It is crucial we also signal that if such a scandal were ever to happen again, the Government would step in to protect the retirement incomes of those who do the right thing and save for their old age. We need to build an economy based on saving and confidence in our pensions system is a necessary prerequisite.
It is foolish to underestimate the ongoing damage to confidence that is being caused by the continuing failure to draw a line under the Equitable Life scandal.
The breaking down of conventional middle class job security has made ever more important the concept of trust in personal and company pension schemes. Until its collapse, Equitable Life was widely regarded as the foremost of retirement providers, but the failure of successive regulators to intervene showed that the rules in place to protect the consumer were not fit for purpose.
The increasing number of elderly people in our society makes it even more crucial that in the decades ahead the youngsters of today have enough faith in the financial system to put some of their hard-earned cash into a pension pot. Unfortunately, it is an indictment that those who had already taken responsibility to provide for their own retirement by investing in Equitable Life have been treated so shabbily.
The vast majority of people who lost out did not have the option of returning to work. When the scandal came to light, they were often in their 60s, 70s and 80s, and their Equitable Life money was the most important aspect of what should have been a comfortable retirement.
Tragically, an estimated fifteen policyholders every day die without ever receiving proper justice. The longer this matter is unresolved, the more the death rate will increase. It seems only right to me that those who have saved for their retirement get the full and proper compensation that they are owed.
As a Conservative Government with a new Prime Minister and Chancellor, it is high time we look again at this issue. The manifesto under which I proudly stood just last year declared that, “our pensioners have made this country what it is, and we believe that, in return, younger generations owe it to them to ensure they have dignity and security in their old age”.
I shall continue doing all I can to end this injustice. I urge more colleagues to join the existing APPG, with its almost 200 members, and lobby the Chancellor to finally do the right thing for these victims of a government scandal that should never have happened.
These people were the backbone of our society: self-reliant and prudent entrepreneurs, professionals and small business owners who were determined not to be dependent on the state in their retirement. The right thing to do is to ensure that they get what they paid for.