Equitable Life

Part of the debate – in Westminster Hall at 9:52 am on 27th November 2002.

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Photo of Mark Lazarowicz Mark Lazarowicz Labour/Co-operative, Edinburgh North and Leith 9:52 am, 27th November 2002

I congratulate Dr. Cable on securing the debate. The subject is of deep concern to many constituents who have contacted me over the past year.

I must declare an interest, although it is fairly marginal. I have a term life policy with Equitable Life that has only a couple of years left to run. The irony is that I probably would not have had to declare it a year ago, when the issue was the with-profits fund. Now, however, the problem extends from the fund's viability and the interests of fund policyholders to the viability of the whole company. I now have an at least theoretical interest in the issue, which demonstrates how the problem has grown from one that could have been managed, albeit with difficulty, to one with much wider ramifications. The extension of the problem demonstrates the seriousness of the situation and the need for action even at what might be described as the eleventh hour.

I shall make only a brief contribution. I agree with most of the comments made by the hon. Member for Twickenham. The failure of the regulatory agencies to take action at an early stage has created a crisis. If the governmental and non-governmental bodies that have a role in regulating the financial services industry had taken a more proactive role earlier in the crisis, it would have been easier to manage; now it will be much harder.

I endorse the view that although a rescue package of some sort may now be much harder to put together, there is a strong case for such a package and for the agencies involved, including the Government, to take an active role in putting it together. That rescue package, or lifeboat, is needed now. We cannot simply wait for the conclusion of the Penrose inquiry. I agree with the hon. Member for Twickenham that it may take several months for that inquiry to come to a conclusion. In the meantime, the possibility of insolvency becomes greater, and not only will policyholders lose out but there will be a knock-on effect on the pensions and savings industry as a whole. The entire culture that encourages people to save and invest in their pensions will be seriously jeopardised. The hundreds of thousands of people who work in the financial services industry will also be affected. Many of them live in my constituency, where the industry is the biggest private sector employer.

For all those reasons, I ask the Minister to assure us that the Government will take a proactive role in resolving the crisis, even at this late stage, and to encourage the establishment of some form of rescue package, as the hon. Member for Twickenham suggested.