Treasury financial secretary Mark Hoban has placed the blame for any reduced Equitable Life settlements on the Labour government.
Taking questions in the House of Commons yesterday, Hoban stressed that the coalition would deliver a “swift resolution”, that is “transparent and fair”, but would not confirm that Equitable Life investors would be reimbursed in full for the £4.8bn losses set out by the Parliamentary Ombudsman in 2008.
Hoban said: “There are two decisions to be taken. One is on the loss figure and the other is on the amount of compensation that the taxpayer can afford to pay.
“But the bill for the taxpayer would have been much less if, rather than waiting until now, the matter had been resolved under the last Government. They had 10 years to resolve it.”
Hoban told MPs that the final compensation figure will be found by assessing the recommendations of the Parliamentary Ombudsman and also the recommendations in the independent report by Sir John Chadwick.
Chadwick’s report was branded a Treasury “stitch-up” by the Equitable Members’ Action Group earlier this year after the report recommended a significantly reduced payout to victims.
Several MPs challenged Hoban’s pledge to find a middle ground, citing his previous pledge to give fair compensation to victims.
Conservative MP for Shipley Philip Davies said: “I hope that the Government, having made commitments to people while in opposition, will not use the argument that there is no money in order not to pay a fair settlement. After all, we all knew that there was no money when we were in opposition.”
Hoban said: “We have to sort out not just this mess, but the mess that Labour left behind in the state of the public finances. That is the problem that we have to face in dealing with the Equitable Life issue.”
The final payout decision will be announced on October 20 as part of the Government’s comprehensive spending review.