David Prosser: Equitable solution pleases no one

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Outlook The Equitable Life scandal is never going to be possible to resolve satisfactorily for the parties concerned. The policyholders who lost out when the insurer almost collapsed – up to a million savers – believe they are owed compensation of £5bn, an impossible sum for the Treasury to countenance in these days of austerity. Its offer yesterday of a deal that may be worth as little as £400m, on the other hand, was seen as insulting by many Equitable victims, particularly as they're not going to get any money until next year.

In making the promises it did to Equitable policyholders – the Conservatives and Liberal Democrats promised a speedy resolution of the affair in their first coalition agreement – the Government set itself up for a fall. Though both parties were quite happy to make hay with Labour's failure to offer proper compensation when they were in opposition, now they are in power they are confronted with the high passions – not to mention costs – that the scandal arouses.

Let us give credit where it is due. Mark Hoban, the Treasury Minister responsible for yesterday's announcement of a compensation package, has taken swift action on behalf of Equitable savers. And that speed stands in stark contrast to the foot-dragging of the Labour administration.

Against that, why does Mr Hoban insist Equitable savers must wait until 2011 to start receiving redress? Many of the victims are elderly – one pressure group estimate as many as 15 victims are dying every day – and cannot wait for the money the Treasury admits they are owed. It should be possible to make some interim payments straight away, even if the argument about the total value of compensation continues for some time yet.

As for that debate, Equitable's victims may just have to accept they are never going to win the full compensation they were hoping for. That said, even in the context of the lowest estimate of their loss – the £2.3bn to £3bn Sir John Chadwick suggested yesterday – £400m does not look generous.