On Wednesday, protesters will gather at the Houses of Parliament. Led by the actress Honor Blackman, they will wear campaign T-shirts and bear placards saying “My glass is 80 per cent empty” and “Treasury settle your debt”.
At a rally in nearby Central Hall they will hear speeches from a number of MPs, including Tim Farron, Cheryl Gillan, and Fabian Hamilton, and view a new film about their struggle. For the victims of the Equitable Life scandal, who include the former Bond girl, Blackman, it will mark the latest round in their battle to secure full compensation for the loss of their savings in the near-collapse of Equitable Life.
For 14 years, they’ve fought to get their money back. Equitable Life hit the buffers in 2000, in a nutshell, because of two failings: by the company, the oldest life assurer, in promising to pay annuity rates it could not meet; and by the regulators for not doing their jobs properly.
That much has been established in repeated inquiries since. It’s even been agreed between the Government and the 945,000 policyholders, represented via the redoubtable Equitable Members Action Group, that the appropriate level of loss caused by regulatory maladministration is £4.3bn.
In the decade following the downfall, Labour regimes did everything they could to avoid paying up. As Chancellor in the new Government in 2010, George Osborne said “the last Government dithered, delayed and denied” the Equitable Life pensioners justice.
Amid great fanfare in the Comprehensive Spending Review, he said they would receive £1.5bn. He acknowledged the finding of the Parliamentary Ombudsman that the true figure was £4.3bn but said “a balance had to be struck between being fair to policyholders and being fair to taxpayers”. Osborne said the £1.5bn was “the fair amount to pay out”.
Osborne may now regret that decision. He may have thought it smart, alighting on Equitable life, turning the firm’s near-demise and derogation of duty towards its customers into a political football. The Equitable Life victims, by and large, would be Tory sympathisers so it seemed like a clever ruse at the time. Unfortunately, footballs have a habit of being passed, of being grabbed by someone else.
To find that Nigel Farage has taken up the Emag mantle must be galling. The Ukip leader says his party “will certainly back [the] campaign for compensation and find, yet again that… successive governments have been complicit in trying to dupe the man in the street into being given a fraction of what he is owed”.
Douglas Carswell, who won Clacton for Ukip after defecting from the Tories, said in a separate letter to a constituent that “what the Government said they would do and what they have done are not the same thing”.
Presumably, given the present febrile nature of politics, and the influence Farage enjoys, we can expect Labour to come out in favour of fully compensating the Equitable Life pensioners.
Both main parties have some soul-searching to do – as yet again, Farage shows an instinctive ability to leave them gasping. Labour has never justified its inaction in the years following the crash. It tried to behave as though there was some principle at stake. Quite what that was, apart from reluctance to pay up to anyone, was hard to fathom. Certainly, there was no difficulty in finding the money – the public finances were healthy, and the cost of settling in full the Equitable Life policyholders could easily have been absorbed.
The suspicion with Labour was that the Equitable Life clients were not their cup of tea, that they were predominantly middle-class Conservatives. Labour did seem extraordinarily unmoved by their plight.
For years, Equitable Life stood alone, as one broken large financial company. Until 2007 that remained the case. Then Northern Rock fell, followed by RBS, HBOS and Icesave. Suddenly, Labour was hit by the demise of much bigger organisations in the case of the banks, ones with branches on every high street, with Labour supporters and numerous small businesses among their customers.
The Government was facing a possible run on the banks, a full-blown economic crisis, and the total shattering of consumer confidence. Its response, at huge cost to the taxpayer, was to launch 100 per cent bailouts. A chance to wrap up Equitable Life in those rescues could have been taken but was allowed to pass.
Cue Osborne. Seizing what he imagined to be the political initiative, one involving almost one million mainly Tory voters and their families, he made a song and dance about reimbursing them. Except he didn’t pay them in full: they got only 22.4 per cent of what had been agreed they’d lost.
The Chancellor’s excuse was that the public purse was being heavily squeezed, that in a period of austerity he could not hand out £2.8bn. What caused that crunch, of course, was the previous administration’s inability to regulate the banking sector, a failure that included, as a first warning as to what was to come, Equitable Life. The cost of those bailouts, coupled with the downturn that followed the 2007 crash, put an enormous strain on the Exchequer, and severely limited the Chancellor’s room for manoeuvre.
Ironically, it did not do the Equitable Life savers any favours that they were Tories – weighing on the minds of Osborne and his advisers was the likely severity of the storm that would ensue if they were seen to be receiving their cash at the point when much-needed community services were being cut back.
Emag was stuck, caught in a vice of political expediency. To their rescue has now stepped the irrepressible opportunist, Farage.
Timing is everything, and the Ukip leader can point to a recovery in the fortunes of the UK economy – an improvement brought about in part by the austerity measures in addition to the global upturn.
While Osborne can argue his hands were tied, they were, but only to an extent: earlier this year, the Court of Appeal ruled in favour of disabled benefits claimants who saw their payments reduced by Government cuts. The judges’ view was that: “Equality is not an option to be removed just because there are times of austerity.”
In what is becoming a pattern where the two main parties are concerned, Farage is having the last laugh.Reuse content