PARLIAMENTARY DEBATES - United Kingdom Parliament

1535 Flood Insurance
26 MARCH 2013
Flood Insurance
1536
Stephen Gilbert: My hon. Friend pre-empts the point
I was about to make, and which I have made before. We
need to review the Bellwin scheme in order to take
account of different types of local authority structure,
whether single-tier, such as Cornwall’s unitary council,
which I believe gives Cornwall a stronger voice overall,
or two-tier, such as Devon, with its district council and
county council, which has a lower threshold for activating
Government support. In Cornwall’s case, the threshold
is £1.4 million of expenditure, which needs to be defrayed
before the Bellwin scheme provides any central Government
support. If that threshold is not met, the whole bill
must be picked up by the local authority. Even if it is
met, the local authority will still have to pick up 15% of
the additional total.
There are very strange rules relating to different types
of expenditure. Although the immediate response to
incidents—the £181,000 for the fire and rescue service
and the cost of advice to residents and of housing
support, for example—might fall within the Bellwin
scheme if the threshold is crossed, the repairs to highways
and other capital expenditure to put right what the
flood damage put wrong are not covered. I say to the
Minister that as well as ensuring that flood insurance
for homes and businesses remains affordable and available,
and recognising that we are all in it together, local
authorities need to know that the Government stand
behind them, too. With climate change happening, it is
clear that flooding will continue, but we must not leave
people, businesses and councils hung out to dry when
the waters recede.
4.8 pm
Jonathan Evans (Cardiff North) (Con): I begin by
drawing attention to my entry in the Register of Members’
Financial Interests and to my chairmanship of the
all-party group on insurance and financial services. It is
in that context that I think it is helpful to share with the
House some of the observations that have been made
by the insurance press about the discussions with the
Government over recent years, which Post magazine
has described as “negotiations to nowhere”.
It is astounding that it was in 2008 that the insurance
industry made it clear that it would be withdrawing
from the statement of principles. May I make it absolutely
clear that it is important that it should do so, because
many of the individual cases that Members have drawn
attention to here are not covered by the statement of
principles? They are not in this jeopardy because of the
expiry of the statement of principles; the statement of
principles does not have an “all circumstances” provision.
That is why it is necessary to address the matter.
In 2008 I was in the European Parliament, and I was
surprised to see that no progress had been made by the
time I came here in 2010. I am astounded, frankly,
that here we are in 2013, barely weeks away, and still
there is no progress to announce. It is not as though we
have not dealt with these issues before. The insurer of
last resort is, in fact, the Government. They took on
that role in relation to “Pool Re”, when we needed to
create terrorism insurance, and it was done in a matter
of weeks. The Lloyds-Equitas debacle, which I had
ministerial responsibility for resolving, was resolved
within 12 months. Following 9/11, no insurance was
available to the aviation industry in this country, and
that matter was resolved by Government within a matter
of days. Yet here we are, years and years later, with no
progress to announce.
I commend my hon. Friend the Member for Esher
and Walton (Mr Raab) for securing this debate and for
his speech. He has called for good faith on the part of
the insurance industry and for a Government contribution.
That has also been said by other Members and in The
Times leader to which reference has been made.
On good faith in the insurance industry, the all-party
group on insurance and financial services has held three
meetings since the election specifically on these issues.
People have attended from the Association of British
Insurers, on every occasion, from the British Insurance
Brokers Association, on every occasion, and from the
National Flood Forum. People from Aon, from Guy
Carpenter and from Marsh have outlined the range of
proposals that they have been making to Government.
In an all-party group meeting on 12 October, Aon
raised for the first time a variation on the “Flood Re”
proposal, but we do not know what the Government’s
response has been. In November, there was a bit of a
spat when the ABI thought that the Government were
not going to make any contribution. In response, it was
claimed that it was nonsense to say that there was an
impasse. Yet here we are, approaching the Easter break,
and we still seem to have an impasse.
I do not blame the Minister. He attended a flood
summit back in 2010, and he absolutely understands all
the issues. However, I wonder to what extent his hands
are tied elsewhere, perhaps not so much by the change
in Secretary of State but by the involvement of the
Cabinet Office in some aspects of these discussions. It
is said that the Government may have been spooked by
the original discussions, which had been going
constructively, when they looked at the overall cost of
flooding. However, that is not good enough. We have
heard it suggested that there could be an extension of
the statement of principles, but that is a voluntary
agreement with the industry, and it is not going to
happen; we can rule it out. The reality is that we will
either see a return to the free market or the Government
will have to get their act together, and soon.
4.12 pm
Penny Mordaunt (Portsmouth North) (Con): I, too,
congratulate my hon. Friend the Member for Esher and
Walton (Mr Raab) on securing this debate. I am grateful
for the chance to speak, because many of my constituents,
especially in Paulsgrove, Cosham, Drayton and Farlington,
have been affected by these issues.
We have good sea defences in Portsmouth, but we
have a very dilapidated sewerage and drainage system
that has caused many of the problems on and around
the Portsdown Hill area. A programme of works is now
in place to rectify those problems, and so far we have
been able to protect local people from the increases in
their insurance premiums as they have had to submit
repeated claims for repeated flooding and sewerage
leaks.
I agree with many of the points that have been made,
and I will not go over them again. I wish to touch on
two additional issues that add insult to injury. The first
of these is planning. Planning applications are approved
even when the new build is on a serious flood plain.