§ 7.30 p.m.
§ Baroness NoakesMy Lords, I beg to move that this Bill be now read a second time.
Before I speak to the Bill, I offer an apology to the House for causing the adjournment 10 minutes ago. I have found that it is impossible to be in two places at once. At the time, I was in the Grand Committee.
I am very pleased to have the opportunity to bring this Bill to your Lordships' House. It is a very short Bill, with one substantive clause. That clause does two very simple things to the Parliamentary Commissioner Act 1967. First, in subsection (2) the Bill extends the circumstances in which the Parliamentary Commissioner, who is better known as the Ombudsman, will investigate a complaint; and, secondly, in subsection (3), it adds the Government Actuary's Department to the list of bodies that are within the Parliamentary Commissioner's remit as set out in Schedule 2 of the 1967 Act.
Before explaining those two subsections, it might be of assistance to the House if I paint a little of the background that has led me to introduce the Bill for consideration. The Parliamentary Commissioner has an important role in carrying out independent investigations into the administrative actions of government departments and other public bodies. The Parliamentary Commissioner is an important part of the framework of checks and balances in our constitution and is held in very high regard. My Bill extends the scope of the Parliamentary Commissioner's work.
The real background to my Bill is the sorry story of Equitable Life Assurance Society, which was closed to new business in December 2000. I am extremely pleased to be able to report to the House that I have absolutely no interests to declare in this regard as neither I nor any of my family invested a penny piece in Equitable. But I feel sure that many noble Lords join me in having at least second-hand experience of the sense of outrage felt by those whose financial security was removed or severely dented by Equitable.
I shall not delve into the fall of Equitable itself. Earlier this year, we had the very extensive study into Equitable by the learned Lord Penrose, and we have had the opportunity to debate that. The driving force behind my Bill is the role of government departments in the financial misery meted out to Equitable policy holders. The Penrose report highlighted the management and governance failures that beset the conduct of the company's affairs. But the report also singled out the role 81 of other agencies involved, notably the Financial Services Agency, the Treasury and the Government Actuary's Department.
The Penrose report did not, of course, opine on maladministration as such, but it offered much evidence to contribute to a judgment about the relevant administrative actions—that is, it is very relevant to a consideration by the Parliamentary Commissioner.
As would be expected, the Parliamentary Commissioner received many complaints from aggrieved policy holders. Having resisted initially, the Parliamentary Commissioner eventually decided in October 2001 to examine one representative complaint. That investigation was to cover only the work of the FSA and only for a period of a little less than two years from 1 January 1999.
In November 2002, a new Parliamentary Commissioner was appointed and she confirmed that the investigation would not cover a longer period. She repeated that conclusion in June 2003, when her report on the representative complaint was eventually made to Parliament. She also stated that she had no legal power to examine the Government Actuary's Department as it was not listed in the 1967 Act.
It was not surprising that those Equitable policy holders who lost so much financially could not comprehend the Parliamentary Commissioner's decision, and could not understand why she would not look at the whole sorry history of Equitable, as the learned Lord Penrose did. They also did not understand why the Parliamentary Commissioner would not look at the Government Actuary's Department along with the DTI and the Treasury before 1999. Honourable and right honourable Members of another place could not understand it either, which is why there was much pressure for the Parliamentary Commissioner to think again.
In April this year, the Parliamentary Commissioner said that she would look again at whether she should re-investigate matters related to Equitable Life. A few hours ago she announced her decision, which is that she will re-open the case and investigate the period before 1999. That is a welcome decision for all those who have suffered because of Equitable. But the bad news is that she confirmed that she had no power to examine the Government Actuary's Department, although she has asked the Treasury to extend her powers in that regard.
I now turn to the specifics of the Bill. Under the 1967 Act, the Parliamentary Commissioner may conduct an investigation outside the normal time limit for complaints if he considers that there are special circumstances that make it proper to do so. The Bill that I present to the House goes one step further and says that the Parliamentary Commissioner shall conduct an investigation if the House of Commons so resolves.
The Parliamentary Commissioner reports to the House of Commons and receives complaints via MPs, so it seems right that the other place should be able to direct that the Parliamentary Commissioner carries out an investigation, even if it is outside the normal 82 timeframe. That deals with a general frustration that has been felt that the other place ought to have a little more say in what cases the Parliamentary Commissioner should investigate. It is a modest extension of the powers of the other place.
Subsection (2) brings the Government Actuary's Department within the scope of the Parliamentary Commissioner Act 1967 by adding it to Schedule 2. The Penrose report describes the Government Actuary's Department as "persistently naive" and "complacent". In her report today the Parliamentary Commissioner says at paragraph 33:
I consider there is sufficient initial evidence to suggest that the actions of GAD are key to an assessment of whether maladministration by the prudential regulator constituted an unremediated injustice to complainants".As I said earlier, the Parliamentary Commissioner has asked the Treasury for her jurisdiction to be extended to cover the Government Actuary's Department. My Bill is directly in point. I am delighted that the Minister is here this evening to respond to the Bill. I hope that he will say that the Government support my Bill. If the Minister cannot say that, I hope that he will at least indicate how the Government intend to respond to the Parliamentary Commissioner's request. I commend the Bill to the House.
§ Moved, That the Bill be now read a second time.— (Baroness Noakes.)
§ 7.38 p.m.
§ Lord NewbyMy Lords, I congratulate the noble Baroness, Lady Noakes, on bringing forward the Bill today. Whether she is unusually prescient or whether she has precipitated the ombudsman to bring forward her report, I am not sure. The timing is absolutely perfect.
We, on these Benches, have supported the ombudsman route as the most likely way, post Penrose, of achieving progress on Equitable Life. Therefore, we are extremely pleased that the ombudsman has decided, in principle, that she would like to investigate Equitable. However, the question is whether the Government will allow her to do so by extending the scope of the Act that we are discussing tonight to bring the Government Actuary's Department within it. A failure by the Government to agree fairly rapidly to do that would suggest that they are obstructing a possible definitive ruling on at least one aspect of the Equitable Life debacle. Therefore, I hope very much that they accede to the ombudsman's request.
Given that we have a Bill before us which does that—here is one that the noble Baroness prepared earlier—it would seem that the sensible way forward from the Government's point of view is just to agree to it and be done with it, save the time and let the ombudsman get cracking. One of the main problems with this whole sorry story is the amount of time that has passed since the problems arose and even the possibility of any redress.
83 So I hope that the Minister will be very forthcoming this evening. If not, I hope that the Government will come forward with a speedy response. It is a very simple request. The legislation required is short and sweet. There can be no "in principle" argument against introducing it. So I am afraid that it is over to you, Minister.
§ 7.41 p.m.
§ Lord Bassam of BrightonMy Lords, I congratulate the noble Baroness on her prescience in bringing this Bill before your Lordships' House and on pursuing this matter with her usual vigour.
As the noble Baroness said, the parliamentary ombudsman has this afternoon announced that she will conduct a further investigation into the prudential regulation of the Equitable Life Assurance Society—Equitable Life.
I know that the House is aware of the background. The ombudsman agreed to give further consideration to the position following the publication of the Penrose report and the Government's response to that report. In the special report laid before Parliament today, the ombudsman makes clear the reasons for her decision. Her decision was reached following an extensive consultation exercise. In her report, she states that she,
received approximately 2,000 responses, including 211 from Members of Parliament, 1,603 from policyholders or former policyholders, three from policyholder action groups, and responses from Equitable Life, the Treasury, the Financial Services Authority, the Government Actuary's Department and the Department of Trade and Industry".So I think we need be under no illusion that there is considerable concern about the whole issue—a very sorry saga, as the noble Baroness described it.As part of the consultation exercise, the ombudsman also invited a number of interested parties to meet her, and the details are set out in the report.
The ombudsman states in her report that the new investigation will focus on the actions of the government departments responsible under the relevant legislation for the prudential regulation of Equitable Life. She makes clear that her investigation will, subject to the approval of a request she has made of the Government, also include the actions of the Government Actuary's Department.
This afternoon the Government received a formal request from the ombudsman to make the necessary arrangements to include the Government Actuary's Department within her jurisdiction. We have only just received this request and we will give it urgent consideration, not least because of the time that has elapsed since the onset of problems with this particular issue relating to Equitable Life. We will reply to the ombudsman as soon as we possibly can.
I have been invited to make some observations on the noble Baroness's Bill. I shall keep these brief. First, if the Government agree to the request to include the Government Actuary's Department within the ombudsman's jurisdiction, Section 4(3) of the 84 Parliamentary Commissioner Act 1967 provides that public bodies which meet certain criteria can be added to her jurisdiction by Order in Council. Bodies not meeting those criteria could only be added by primary legislation.
Therefore, if the Government agree to the ombudsman's request to include the Government Actuary's Department within her jurisdiction, they could be expected to do this by Order in Council rather than primary legislation. The Government are therefore not convinced of the need for this part of the Bill.
Secondly, in addition to including the Government Actuary's Department within the ombudsman's jurisdiction, the noble Baroness's Bill also proposes amending Section 6(3) of the 1967 Act. That section of the Act provides that, where there are special circumstances which make it proper to do so, the ombudsman may consider complaints more than 12 months old.
The amendment proposed by the noble Baroness would add a new paragraph, which would provide that the commissioner,
(b) shall conduct an investigation pursuant to a complaint not made within that period if the House of Commons so resolves".At present, the ombudsman decides what cases to investigate. To give the other place the power to tell the ombudsman that she must investigate would, I believe, have implications for the operation of the office of ombudsman. I also think it unlikely that the ombudsman herself would support a Bill that sought to fetter her decision-making powers.I make these observations on the noble Baroness's Bill, not in the spirit of great hostility because I recognise the spirit in which the Bill has been constructed. I am prepared to give an undertaking, which is a quite easy one to give, that we will reply to the ombudsman on the issue of including the Government Actuary's Department within her jurisdiction as soon as possible because we recognise the urgency of the issue.
The ombudsman's report is most helpful. We will make a rapid response. While we are not hostile to the Bill, it is deficient in the ways we have described. So, it is not for us obviously to deal with that matter today. Much as we welcome the opportunity to make our views known with regard to the usefulness of the ombudsman's report, it is probably best if we leave it there.
§ 7.46 p.m.
§ Baroness NoakesMy Lords, I thank the noble Lord, Lord Newby, for his support for the Bill and I thank the Minister for his response. Perhaps I may say to both noble Lords that I do not feel that I had prescience in the matter; I think I was lucky with my timing.
The Minister used the sorts of formulations that we often hear from the Government Front Bench—that the matter will be given urgent consideration and that a reply will be made as soon as possible. We know that that can mean many things to many Ministers. I hope that the Minister will send a message back to 85 colleagues in the Treasury that this really is an important matter which needs to be dealt with earlier.
If the Government do agree, I accept that the simplest procedure would be to add the Government Actuary's Department by Order in Council. But until we see the Government's response we must wait and see.
I hear the Minister's comment that the additional power to the other place may well be deemed to be excessive, but I would say to the Minister that the purpose of the existence of the parliamentary ombudsman is as a check on the executive, not as a 86 check on the other place. If we can improve ways in which the executive can be held to account, then I cannot see that anybody really can object to that.
Inevitably, today's report of the parliamentary commissioner has changed the scenario. Over the summer obviously I shall be considering what to do with my Bill alongside consideration of any government response.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
§ House adjourned at eleven minutes before eight o'clock.