Contribution
I will come to the hon. Gentleman’s last question towards the end of my remarks, but on his first point he is absolutely right to say that the then Government’s key consideration—when I referenced taxpayers—was the public finances. That is the point being made. That was the key driver in the decision by the then Government about how much money to allocate, rather than trying some kind of specific accounting for the impact of the maladministration per se.
Ministers at the time also noted the consistency of their decision with the ombudsman’s report—we have discussed a bit of that today—and the ombudsman subsequently wrote on this issue to the all-party parliamentary group, which I think several hon. Members present have been part of, confirming that the then Government’s decisions
“cannot be said to be incompatible with the report.”
As hon. Members know, following representations from groups such as the Equitable Members Action Group, the Government prioritised those acknowledged by all parties to be the most vulnerable—the with-profit annuitants. They received 100% of their losses. That meant that, of the £1.5 billion, £725 million was allocated to with-profit annuitants, to be paid annually over the duration of the annuity, which continues to this day. That included the £100 million contingency fund—that is the answer to the question put by the hon. Member for Strangford (Jim Shannon)—to ensure that the provision for the annuitants, should they live longer than expected, was there. That is obviously a standard actuarial process; it is what sits behind the regulation of the insurance sector when annuities are being sold. The remaining £775 million was allocated to be paid as lump sums to with-profits non-annuitants holding other products.
As for the details of how much has been spent, I can provide answers to the questions put by several hon. Members. As of 30 September 2026, the total value of payments made by the scheme was almost exactly £1.4 billion—it is just short of that figure—and that is an increase on the previous figure that the hon. Member for Christchurch cited.
I note the references in this debate to the pre-1992 with-profit annuity holders. The coalition Government excluded them from the scheme, not because they had not suffered real impacts from the collapse of Equitable Life—I think the then Government recognised that they had suffered real impacts—but because their purchase of those annuities, which is the point at which someone locks into the decision in the case of an annuity, was outside the period of maladministration, so the Government would have struggled to find a locus to make a payment in the terms of a scheme, because there was no maladministration to tie a payment to. Again, it is not for me to defend that Government. However, if they were here today, that is how they would explain the decision that was taken. That is why the 2013 decision, which was referenced by the then Government, to provide separate, tax-free ex gratia payments was the way in which the previous Government chose to proceed.
The scheme has now been fully wound down; it was closed in 2016 by the then Conservative Government. That is now over a decade ago. I suspect that hon. Members know that I cannot give all of them, or indeed all the impressive campaigners on this issue, the answer that they would like—a straight “more compensation”. I suspect that hon. Members know that that is the case. However, I want to give them what I think is the next best thing, which is a straight answer, and it is the direct answer to the question put by the hon. Member for North Bedfordshire (Richard Fuller), the Opposition spokesperson. It is that there are no plans to reopen the previous policy decisions taken by the previous Government. The previous Government made decisions given the public finances at the time. Those decisions were debated by that Parliament—some Members present were part of that Parliament, and the rest of us respect the decisions of that House.
The only part of the payment scheme in operation is the annual payments made to eligible annuitants. The scheme is on track to distribute the remainder of the funds allocated, as planned, on that basis. The right thing for this Government to do is to ensure that the ongoing payments to those eligible with-profit annuity holders—the group recognised, I think by all of us, to be the most vulnerable—continue to be made. I will finish by assuring them that the funding for those payments remains protected and again thanking all hon. Members who have spoken in this debate.