Liam Byrne
MP for Birmingham Hodge Hill and Solihull North · Labour · United Kingdom
“The loss of 4,000 jobs at Jaguar Land Rover is a body blow for workers, families and communities across the west midlands, so I commend Richard Parker, the Mayor of the West Midlands, for moving quickly on Monday to put £500,000 on the table to help ensure that everybody gets back to work.”
“I wholeheartedly welcome this well-rounded statement from the Foreign Secretary, and put on record my thanks to the new Prime Minister for the hard yards that I know he has put in over recent days and weeks.”
“I am grateful to my hon. Friend for giving way, and I offer my warmest congratulations to her on her appointment to the role; she will be a brilliant Minister.”
“Let me start with a word of thanks to my hon. Friend the Member for Chester North and Neston (Samantha Dixon), who is not in her place, who said quite rightly that an awful lot has changed since the Bill was first introduced to this House. Indeed, a lot has been revealed over the course of the summer.”
“The effect of new clause 34 would be to ban off-ramping, ban new forms of digital currency transactions and ban memecoins, which are exactly the kind of measures that Ministers now need to bring forward. If we want to take the crypto system out of political finance, this is what we need to do.”
“No doubt we will learn that Mr Cottrell was in fact on the electoral register when that money was passed. No doubt we will discover that his mother, Fiona Cottrell, declared and did not disguise the fact that the money had ultimately come from her son.”
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“I think I can promise that. The final report from the review of arm’s length bodies will be published at the Budget next year. The 123 arm’s length bodies that I set out this afternoon are merely an interim step.”
“I am happy to offer the clarification that that is my understanding. I spoke to Dr. Read last night and he made that point to me very clearly.”
“Since the pre-Budget report, more than 3 million people have been moved off unemployment benefits. Across the country, a targeted effort has been made to assist those communities most hit by unemployment, including initiatives such as the working neighbourhoods fund, which is worth more than £1 billion, and the new £1 billion future jobs fund designed to create 150,000 jobs.”
“As I am sure my hon. Friend would agree, the best route out of poverty remains the prospect of work, which is why we have been so determined over the past year to take combined action on monetary policy and fiscal policy, which together are now supporting about 500,000 jobs. However, in addition, we realise that some communities need targeted help, which is why the future jobs fund will seek to create more than 6,000 jobs in his region. On top of that, of course, is the important role of tax credits, which are now supporting 20 million people and helping the poorest families in this country to the tune of more than £4,500 a year.”
“The truth is that the recession is hitting different countries differently. If we look at the United States, the unemployment rate is 10 per cent; if we look at France, the unemployment rate is 10 per cent; and if we look at Germany and Japan, the fall in their respective gross domestic product is greater than ours. The fact that we have been able to put in place a fiscal stimulus worth 4 per cent. of GDP, as well as keeping interest rates low—together supporting up to 500,000 jobs—is in part because we went into this recession with the second lowest debt in the G7.”
“My hon. Friend has put his finger on precisely the point. Over the course of this year, the Opposition have said consistently that we cannot afford a fiscal stimulus. That was repeated month on month, until the shadow Chancellor’s recent speech, when he began to nuance their position. The truth is that without the support that we have put in place over the past year, the jobs that we are now supporting, such as the 150,000 jobs supported by the future jobs fund, would be in jeopardy.”
“None of the measures that the hon. Gentleman mentioned has been stopped. In the pre-Budget report and in the Budget, my right hon. Friend the Chancellor was clear when he said that the measures that we have put in place have to be targeted and have to last only as long as the problem exists. That is why it is quite right that as recovery returns to our economy, some measures should be retired. However, those that are still needed, such as measures to support jobs or businesses’ cash flow, are set to continue. Also, as the hon. Gentleman knows, the Bank of England is still to reach a decision on quantitative easing.”
“The Government have actually moved more jobs from London out into the regions than we set targets for, but that process needs to continue, and I am determined to see that it does.”
“Bringing forward capital spending is part of a response to the recession that is now supporting up to half a million jobs, helping 300,000 people stay in their homes and helping 150,000 businesses with their cash flow. We forecast that these measures will return us to growth by the end of the year.”
“We are very proud of the fact that under this Government, the national health service now has 100 new hospitals, which have been built through the increases in capital expenditure. That means that the NHS estate is now in a completely different shape. We plan capital spending to continue at different kinds of levels in the future, but even by 2013-14 we expect capital expenditure to be higher than the levels we inherited. Of course, there will be trusts around the country that will also choose to use the different flexibilities that they have, such as the private finance initiative or internally generated resources, but our determination to carry on with the business of modernising the NHS is undiminished.”
“I will certainly be happy to consider evidence such as that the hon. Gentleman mentioned and any other evidence that he would like to bring forward.”
“As my right hon. Friend the Chancellor said, the fiscal stimulus that we have been able to put in place, because we went into this recession with low levels of debt, together with low interest rates, is now supporting up to 500,000 jobs. The disastrous thing to do would be to withdraw that stimulus too quickly. The Conservative party has set its face against a fiscal stimulus and it is for early withdrawal of that stimulus, which would be such a disaster for our economy.”
“Departmental budgets are set until April 2011 and, as the Chancellor has made clear, he will set out more detail on his spending plans in the pre-Budget report.”
“As my right hon. Friend the Chancellor has made clear, the public will be in no doubt about the choice between the two principal political parties and their spending plans at the next election. There is no precedent for when spending reviews should be carried out. They are an innovation that was introduced by this Government, and sometimes they have been produced a year before one spending review expires and sometimes two years before. At a time when there is a degree of uncertainty in the economy, as the right hon. Member for Bracknell (Mr. Mackay) would admit, it would wrong to be too hasty about what budgets will look like in the year of the Olympics and thereafter.”
“I know that this will sometimes cause a degree of anxiety but we have to get the balance between investing in public services and the pressures of public sector pay absolutely right.”
“We are very proud of our record over the past 10 or 11 years in fixing and improving the pay of some of the people in our public services who make the biggest difference and who work hardest on behalf of this country. However, as the Chancellor has said, once recovery is locked in it is important that we get on with the business of consolidation, which is why we have committed to halving the deficit over four years. We expect people in public services, particularly those who work at senior levels, to show a degree of leadership. That is why the evidence that we have submitted to pay review bodies calls for a 0 per cent. increase for senior groups and for increases of between 0 and 1 per cent. in 2010-11 for other public sector work forces who are not covered by three-year deals.”
“This is very much on our radar. I understand that the planning inspector’s report following the recent public inquiry is expected to be received in the middle of December. The recommendations will then need to be considered carefully by my noble Friend the Secretary of State for Transport before a decision can be announced. As is normal in these cases, a decision on funding will be taken at that stage. However, I am very grateful for the consistent lobbying that my hon. Friend has done on this subject.”
“As I said in response to an earlier question, the key route out of poverty remains connecting people with the opportunity to work. That is why, as my hon. Friend knows, we have been so determined to take steps to help make sure that people are kept close to the labour market. That is why we have put more than £1 billion into the working neighbourhoods fund, in order to help provide jobs where unemployment is high. It is also why the future jobs fund is so important. It creates more jobs, again targeted on those areas where unemployment is high. That, on top of our determination to see the tax credit system stay in place and on top of changes to the social fund, is making a real difference to those who are finding it toughest in this recession.”
“In preparing for this debate, I looked back over the comments that I have made in the House on this subject. I think that I underplayed and under-celebrated the role of the ombudsman in public life. This afternoon, I want to put on record my gratitude to her for her work, and I have made sure that that is underlined in the Government amendment. It was only right for the Government to make sure that our response to the ombudsman’s report on Equitable Life was based on a thorough examination of what she said. It is true that we did not wholly agree with her conclusions, but we did agree on many things. Indeed, in nine out of 10 of her findings we agreed wholly or in part with the charge of maladministration, and in five areas we believed that injustice followed.”
“However, today is the first opportunity for a debate since the judgment in the judicial review brought by the Equitable Life members action group—EMAG—was handed down last week. I promised the House last Monday that I would reflect on the court judgment as quickly as I could. I did that, and I updated the House on the matter yesterday. I should like to elaborate on that statement this afternoon, and try to address the three points that I think are now uppermost in the minds of both Equitable Life policyholders and hon. Members—the scope of the proposed ex gratia scheme, the speed with which we can act, and the fairness of the approach that we propose. Before I go into that, perhaps I should first say a word about the role of the parliamentary ombudsman.”
“Member for Twickenham (Dr. Cable), and the fact that he has triggered this debate. This is a very proper subject for today’s Opposition day debate, and I want to set out a number of responses to some of the points that he made. First, however, I want to echo the apology on behalf of this and previous Governments made by my predecessor, my right hon. Friend the Member for Pontefract and Castleford (Yvette Cooper), who is now Secretary of State for Work and Pensions. I have made two statements already since the House returned earlier this month, as I want to keep right hon. and hon. Members up to date with the Government’s work to clear up the problems of Equitable Life’s past.”
“I beg to move an amendment, to leave out from “Life” to the end of the Question and add: “also notes the Public Administration Select Committee’s Sixth Report Justice denied? The Government’s response to the Ombudsman’s report on Equitable Life ; recognises the vital role the Ombudsman plays in public life; reaffirms the duty of Parliament to support the office of the Ombudsman; recognises the Government’s determination to introduce an ex gratia payment scheme that is administratively quicker and simpler to deliver than that envisaged by the Ombudsman; further welcomes the Government’s decision announced to the House on 20 October 2009 to widen the ex gratia payment scheme to include trapped annuitants who took out policies after mid-1991; urges Sir John Chadwick to report as quickly and expeditiously as possible; and recognises the impact and significant distress that maladministration and injustice have caused in respect of Equitable Life.’.” I start by genuinely welcoming the speech made by the hon.”
“I think that the two things are quite different, and I shall explain why in a moment. As I was saying, we agreed with the charge of maladministration in nine out of the 10 findings, and thought that injustice followed in five areas. To address that injustice, we proposed that an ex gratia payment scheme should be put in place.”
“Therefore, we have asked Sir John Chadwick to consider injustice arising in the period from mid-1991. What will be of interest to many right hon. and hon. Members is that that decision ensures that a number of the policyholders who are often called “trapped annuitants” are now likely to fall within the scope of the ex gratia scheme. The fact that the scheme has been widened means that something like up to 1 million people could be covered.”
“I think that it takes us one step closer to a swift resolution and the provision of support for those who are suffering. The court recognised that the Government’s basis for a payment scheme was lawful, and it accepted that the Government were entitled to seek Sir John Chadwick’s advice in establishing the scheme. We very much welcome that confirmation of the legal basis of our approach, but the hon. Member for Twickenham was right to go on to say that the court also concluded that in two areas we focused too narrowly on the question of regulatory compliance. Having considered that judgment very carefully, and because I am ambitious for a speedy resolution to the matter, we took the view that the scope of the ex gratia scheme should be widened.”
“The question then becomes, “What is the rational basis for the operation of that scheme?” Having considered that question carefully, we concluded that the right approach was to look at where we agreed with the ombudsman in thinking that injustice had arisen. We decided that that should be the foundation of the ex gratia scheme that we put in place. We lacked the information about Equitable Life policyholders needed to understand exactly who would be embraced by such a scheme. That is why we asked Sir John Chadwick for his advice on the fastest and fairest way forward. That approach was then challenged in judicial review proceedings by the Equitable Life members action group. The hearing took place in July, and the judgment was handed down last week. It is an important ruling.”
“My hon. Friend is absolutely right, and I am grateful to him for that point. I shall say something in a moment about how many people I think are now within the scope of the ex gratia scheme, but I hope that he will allow me to take a short run-up to that. The starting point for the debate about scope is the fact that the ombudsman acknowledged—I think in her evidence to the Public Administration Committee—that the Government could have chosen not to make any payments at all. She also recognised that the Government have a responsibility to balance competing demands on the public purse, a point that was underlined by the court last week. That said, however, there is clearly a moral and ethical case for the Government to provide an ex gratia payment scheme from the public purse.”
“I shall deal with that question immediately. Speed, as the House has urged, is now of the essence. My goal, with the benefit of Sir John’s advice, is to deliver an ex gratia scheme that is administratively quicker and fairer than the approach proposed by the ombudsman, and in a way that puts less of a burden on policyholders.”
“That is an important point, which was acknowledged both in the Bradley judgment and again in the court last week. There is no legal obligation on Government to compensate people for a regulatory failure that, in large part, was caused by a failure of regulators in the early 1990s, extending up to 1998. Also, as Lord Penrose says, the company itself was the architect of the failure. Although there is no legal obligation on the Government to provide compensation for such regulatory failure, there clearly is an ethical and a moral demand for Government to provide some kind of ex gratia payment scheme. The question then becomes what is the rational basis for that scheme. The Government’s conclusion has been that the only rational basis for the scheme is where we agree that injustice was caused through maladministration.”
“What we have asked Sir John to do is to undertake a better way of securing ex gratia payments for policyholders. The approach that Sir John proposes is to look at different classes of policyholders and understand what the relative losses may be, in order to make sure that a much swifter and policy-based compensation payment can be made. That will be faster than a case-by-case review of 30 million investment decisions.”
“Member for Twickenham and is recommended in his early-day motion entails a case-by-case review by a tribunal or another body of the evidence of loss from individual policyholders. If we believe, as the hon. Gentleman says, that there are up to 1 million policyholders, and if we had to consider each of their investment decisions in the period that we are talking about, we would have to review something like 30 million different investment decisions. The approach proposed by the ombudsman puts the burden on the individual policyholder to show how regulatory failure created a loss. Then the policyholder would need to show what kind of relative loss they had suffered, which would require them to say something about a counterfactual.”
“Dates will come in a moment. When the ombudsman reported in July 2008, she suggested that a scheme could be established within six months and that, once established, such a scheme could conduct its work over the course of a further two years—in other words, taking us to December 2010. But we concluded that the approach that was recommended could be better. Indeed, when Sir John Chadwick, who is an independent judge of some repute, looked at the question, he described the ombudsman’s approach as “at best unsatisfactory and more likely impossible”. The reason for this is that the approach that was proposed by the ombudsman and that has been rehearsed again by the hon.”
“There are two points there, as the hon. Lady said. First, on the question of relative loss, it will be important to look at what policyholders would have made if they had put their investments into a different organisation, rather than a trade-off between different policies. All parties will have to come to a view about how what will ultimately be a fixed pot of money is shared between policyholders. That is one of the questions that Sir John has to consider, and it rightly should be a matter for further debate in the House.”
“The only way to do this is to assess the performance of the rest of the industry at the time, a process that will demand some pretty difficult actuarial calculations and the testing of a number of assumptions, not least how to make payments most easily and what their tax treatment should be. We have asked Sir John to finalise the design of his scheme by spring 2010.”
“I am grateful to my hon. Friend for that point. It allows me to say that work is well in hand. Sir John has already set out his approach and he is already a long way through the work. It is worth the House reflecting on the scale of the task that Sir John is working through. He has to consider information on 2 million policies and information dating back to around 1990 on payments and investments for over 20 main types of policy. That demands a review of several hundred specific policy products. It requires that data be checked by both his actuaries and those of Equitable Life. Sir John then has to give advice on how to assess the relative losses of the varied classes of policyholder.”
“I cannot second-guess what was in the minds of EMAG, but I think there were two concerns in particular, both of which it was legitimate to test. The first was the legal basis for the Government’s approach, which the court was happy to confirm. The second, rightly, was for policyholders to test the scope of the ex gratia scheme.”
“That is one of the questions on which we have asked Sir John Chadwick to advise. When the next stage of the report is finished, which I hope will be in the next week or two, that may be something that I could lay before the House so that we could test some of the conclusions in debate.”
“However, even though there is no legal obligation to provide compensation, all parts of the House agree that there is a legal and moral demand for the provision of some compensation. The question then becomes, what is the rational basis on which to put in place that scheme?”
“It is, and my hon. Friend might want to intervene again. However, the Bradley judgment and last week’s court judgment confirmed the legal basis of the Government’s ex gratia proposal, and that brings us to the point that there is no legal obligation on the Government to provide compensation for regulatory failure. The ombudsman appeared before my hon. Friend’s Committee, and it may have been him who asked her directly whether she would have been content for the Government to accept all the recommendations and then provide no compensation whatever. I think that it was question 29 of the relevant report, and her answer was yes: she would have been, perhaps not satisfied, but content that it would have been perfectly legitimate for the Government to provide no compensation whatever.”
“Perhaps the hon. Gentleman will want to intervene again if I pose this question. How much faster does he think that compensation would flow to policyholders if an independent process were set up that then reviewed the investment decisions—all 30 million—of 2 million people? Will he intervene again and tell me how much faster he thinks that compensation scheme would be up and running?”
“Member for Cheadle prepared to intervene again and say that that is the wrong approach and that we should consider providing compensation for different classes of policyholder, which is of course Sir John Chadwick’s approach?”
“I am glad that the hon. Gentleman says that a better approach is to review different classes of policyholder, because that is exactly the approach that Sir John Chadwick recommends. Perhaps the hon. Gentleman will answer the following question by intervening again. What is at stake is a test of approach, and the hon. Member for Twickenham prayed in aid the ombudsman’s report, citing paragraph 9.27, which says: “My second—and central—recommendation is that the Government should establish and fund a compensation scheme with a view to assessing the individual cases of those who have been affected by the events covered in this report and providing appropriate compensation.” Is the hon.”
“All I can do is point to the ombudsman’s recommendation for, and assessment of, when her proposed compensation scheme would be up and running and have concluded its business. That best-case assumption was December 2010. When we and, indeed, Sir John Chadwick looked at what running that scheme would entail, we found that it was a pretty conservative estimate of how long it would take to get through the business. I think that Sir John’s approach is right and offers a swifter route to justice.”
“As I say, my goal is to ensure that a scheme is up and running within a timetable that is administratively quicker than the ombudsman’s proposed approach, and I know that the House will hold me to account for delivering that proposal.”
“That, I know, is the million dollar question, which I cannot answer this afternoon. [ Interruption. ] I know. Until Sir John has finished looking at the principles of how we calculate relative loss and assess disproportionate impact, both of which we will want to debate in the House, I cannot answer that question. I can commit to a date for the next stage—the scheme’s design.”
“He will not want any short-circuiting during the review; he will want us to ensure that all the records are checked.”
“As I have said, the regulatory failures of the 1990s, which we are now attempting to clear up, unfortunately entail Sir John having to go back over 2 million policies and information going back to 1990, to review several hundred different products and to assess the relative losses that people may have suffered. That will entail, quite obviously, an assessment of the money that people could have made by putting their cash into alternative products. If a fair system is what we want, a fair system will require a thorough examination of the records. The hon. Gentleman will share my ambition and determination, given his party’s responsibility for and involvement in some of the regulatory failures of the past, to ensure that the ex gratia scheme is fair to policyholders.”
“My assessment is that payments can begin moving quite quickly once the final design of the scheme is understood and provision is made from the public purse.”
“I did not quite follow the hon. Gentleman’s argument. I said that requiring individual policyholders to come forward and provide an explanation to a tribunal about how they relied on regulatory decisions that turned out to be erroneous, and then show how losses were entailed, would place an undue burden on them. That is why the proposal from Sir John Chadwick is quite different—it is to look at different classes of policyholders to understand what their relative losses are and to propose an ex gratia payment scheme on that basis.”
“In essence, relative loss is about losses that are suffered by policyholders once one has stripped out factors such as market movements, and disproportionate impact is about the effect of those losses on policyholders. As I said in an earlier answer, those are questions on which we have asked Sir John’s advice, and I will bring those conclusions back to the House at a later stage.”