PARLIAMENTARY DEBATES - United Kingdom Parliament

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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 <strong>Parliament</strong>, 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.
1537 Flood Insurance 26 MARCH 2013 Flood Insurance 1538 An applicant for a dementia care home in my constituency attempted to placate the planning committee by saying—I kid you not—that because the building was high-rise, if there were a flood the residents would be able to get to high ground. The application was approved. The advice of local planning committees and the Environment Agency is often ignored, or their decisions overturned. I hope that there could be an incentive for a slightly more responsible stance on these issues. There is a gap in the market for an “Environment Agency Says No” website, so that whether it is a house or a care home place being purchased, the consumer would be able to check whether the agency has given the site and the development the thumbs up. Nicola Blackwood: My hon. Friend is making some excellent points about Environment Agency approval of flood plains. She began by talking about dilapidated sewerage systems. Does she agree that we need to include Thames Water more in decisions about planning, because a lot of our drainage systems are causing problems with surface water flooding? Penny Mordaunt: My hon. Friend is right. The Environment Agency has told me that it would like to be more involved with such planning decisions and there are many other organisations that we should take advice from. The transparency that I have described would not deal with current cases, but it would head off future grief by providing an incentive for developers to behave more responsibly. The final issue that I will touch on is compensation for deliberate flooding. There have been cases in my county, although not in my constituency, of landowners having their land flooded deliberately by the local authority to prevent greater damage elsewhere. That is quite understandable, but in such cases the landowner should be able to access some form of compensation. I would be grateful for the Minister’s views on that. Finally, I congratulate the Backbench Business Committee, my hon. Friend the Member for Esher and Walton and all Members who have made possible this timely debate on an important issue. 4.15 pm Neil Parish (Tiverton and Honiton) (Con): It is a great pleasure to speak in this debate. I, too, thank my hon. Friend the Member for Esher and Walton (Mr Raab) for securing it and the Backbench Business Committee for holding it. Flooding has been a particular problem in the past year throughout my constituency. Tiverton, Cullompton, Seaton, Axminster and Uplyme have all been affected by flooding and Feniton has been flooded several times. We need to ensure that my constituents and people across the country can get flood insurance that they can afford. I have a great deal of respect for my hon. Friend the Member for Cardiff North (Jonathan Evans), but he speaks, naturally enough, on behalf of the insurance industry. It is a wonderful industry, but it is not terribly charitable. It is there to make a profit. There is nothing wrong with profit, but we must not set up a system that puts a levy on all insurance payers in order to pay for those in flood-risk areas. Jonathan Evans: I do not want my hon. Friend to miss the fact that the “Flood Re” scheme, about which everybody has spoken, is a not-for-profit scheme. It is important that everybody recognises that. Neil Parish: I thank my hon. Friend for correcting me about that being a not-for-profit scheme, but that was not the point I was making. My point is that when we levy all insurance payers to build up a fund that takes the risk of properties in high-risk areas away from the insurance companies, we should not be too generous because insurance companies are all about taking risk. That is what they are in business for. They should therefore be able to take their fair share of risk. I want to ensure that the insurance companies step up to the plate, but also that the Government help those who, in their areas, cannot get flood insurance under a private scheme on the free market. That is the balance that must be struck. Mr Andrew Smith: Does the hon. Gentleman agree that there is a precedent for the Government’s participating in the way that we are all advocating in the “Pool Re” arrangements that provide terrorism insurance cover? Neil Parish: I agree with the right hon. Gentleman that the Government can step up to the plate and be the insurer of last resort. However, the point I am making is that the Government must be the insurer of last resort, not the insurer of first resort. Because there has been so much flooding in the past year, the insurance companies have naturally been putting the maximum possible pressure on the Government. They are in business, so it is right for them to do so. However, given that everybody who pays insurance across the piece will pay for the scheme, the Government must ensure that everybody is dealt with fairly. It is essential that people who genuinely cannot get insurance—those who have been flooded two or three times, such as my constituents in Feniton—can get insurance in the future. The current statement of principles does not cover them. I am therefore looking forward to the Government putting in place a much better system so that people can access insurance irrespective of whether they have been flooded several times. It is not their fault that they live in a property that is flooding; in many respects, it is planning decisions that generate floods. In the village of Feniton, there have been appeal decisions allowing more houses to be built where the appeal inspector has actually recognised in his brief that the village will flood and might flood further as a result of the development, but has allowed the houses anyway because the district council has not got its five-year housing plan up to speed. That means that the poor people down the bottom of Feniton will get flooded even more. What is the logic of that? This must be not only about flood insurance but about a planning policy that says we do not build on flood plains or on hills above villages so that the water runs off and floods the people at the bottom end of the village even more.
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