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Riot (Damages) Act

Volume 545: debated on Monday 14 May 2012

Motion made, and Question proposed, That this House do now adjourn.—(Greg Hands.)

I am very grateful to have the opportunity today to debate this issue, which is very important to my constituents and, I suspect, to many others in London. All of us in this House tonight, and others beyond, have insurance. We value our homes, our possessions and all the things we have worked hard to accumulate, and it is natural that we seek to protect them. Insurance exists to cover unforeseen events. Some events are more unforeseen than others. Although burglaries, house fires and floods are unfortunate in the extreme, they are all possibilities that insurance is intended to cover and they are, to some extent, foreseeable.

Living in a stable democracy such as ours, it is often easy to take the rule of law for granted. Last August, we saw that rule break down, with rioters destroying the homes and businesses of their neighbours, robbing them of not only their property, but their livelihood. In that context, it is the role of the police to maintain order, so it is to the police that we look when that has failed and we have paid the price for failure. Were the police and the state not to foot the bill, the costs would be passed to individuals and traders. That would result in rising premiums and entire communities losing out. It was not the fault of those who saw the riots, so it is right that the state helps to bring them back to a position where they can get on with their lives.

This evening, I wish to discuss four issues, the first of which is the overly bureaucratic and unprofessional manner in which the Riot (Damages) Act 1886 has been administered. The second is the hypocrisy of Ministers, the Mayor of London and even the Prime Minister himself in promising to support Tottenham’s riot damages—

Order. May I say to the right hon. Gentleman that he should not refer to identified Ministers using the word “hypocrisy”? He is a versatile individual and he has an extensive vocabulary. I am sure that he can find another way to make his point, and I trust that he will now do so.

I am grateful for that, Mr Speaker. May I therefore refer to the extreme inconsistency between the statements made to this House and the promises made to victims shortly after the riots by those I referred to, and what we actually see taking place?

The third issue I wish to discuss is that, under the coalition that champions the big society, philanthropic donations are now counted against riot compensation claims. Finally, I wish to draw attention to the differential treatment afforded to the Metropolitan police compared with that offered to police authorities in Merseyside, Manchester and Salford.

Although this debate draws on the experiences of riot victims in my constituency, I know for a fact that Members in other riot areas have been affected, and many are in the House as I speak. This is not the first time that compensation for riot victims has been discussed in the Commons. Some nine months ago, the Prime Minister made two promises, neither of which he has honoured. To the victims of the riots he proclaimed,

“we will help you repair the damage, get your businesses back up and running and support your communities.”

In the same debate, the Prime Minister promised that the Government would

“ensure the police have the funds they need to meet the cost of any legitimate claims”.—[Official Report, 11 August 2011; Vol. 531, c. 1053.]

Seven months later, the Leader of the Opposition pressed the Prime Minister, demanding that he provide proper, clear information about the processing of claims. I, for one, have heard nothing about that. The Prime Minister promised to put the process details in the House of Commons Library after that discussion with the Leader of the Opposition. I therefore ask the Minister when the Prime Minister intends to provide the House of Commons Library with that information.

Between 6 and 10 August 2011, more than 5,000 crimes were committed including five fatalities, 1,860 incidents of arson and criminal damage and 1,649 burglaries, 141 incidents of disorder and 366 incidents of violence against the person. In London alone, more than 171 residential and 100 commercial buildings were affected by fire at a cost of millions. The disturbances last August saw thousands of shops damaged and there were more than 3,800 claims under the Riot (Damages) Act in London alone, with liabilities estimated to be between £200 million and £300 million.

Some shop owners had insurance, of course, but others did not. In that regard the Act represents an important means of financial support. Sevill Hassan, who owns a hair salon on Tottenham High road, was away on holiday when the riots broke out in August. She returned to find her shop front damaged and equipment stolen and looted. She was between insurers at the time of the riots and had not yet sent off her cheque to her new insurer. Sevill did manage eventually to secure a £3,000 payment under the Act, but 18 months later she is still struggling to keep her business afloat.

Despite being labelled by many as arcane and out of date, the Riot (Damages) Act can and in many cases has helped victims of riots, particularly individuals and small businesses without a property insurance policy thanks to a clause added to the Act following the Brixton and Toxteth riots of 1981. Indeed, the Act was used as recently as 2001, following the Bradford riots, and so although the original Act might date back to 1886, there is no excuse for the Home Office’s failure to administer it in a clear and efficient way.

When one speaks to individuals and businesses who have submitted claims through the Act, its limitations become apparent. A number of the limitations relate to the manner in which it is administered and the majority could have been avoided or minimised had the insurance industry processed its own claims. Why have the Home Office and the Metropolitan police been unable to process their claims as successfully? Perhaps that is why, when representatives of the insurance industry went to the Home Office on 18 August, after the riots, they offered to do the job for the Met. Why was that offer from the Association of British Insurers and the industry rejected out of hand? The industry processes claims every day of the week, but the Department said, “Oh no, we can do it.” Nine months later, that has not happened.

Loss adjusters were appointed by the Home Office to manage claims. On making their claims, a number of individuals were treated insensitively by insurers and loss adjusters, many of whom failed to appreciate the devastating impact of the damage caused during the riots. Victims of the riots tell me that they were asked to provide receipts, and ask how they can do so when their business has burnt to the ground. That was the insensitivity shown to them. I have heard from traders in Tottenham who claim to have been treated like criminals, rather than victims of crime.

People with insurance were able to claim directly through their insurers, but in a constituency such as mine many people found themselves having to submit through the Act—if they were underinsured, for example. That is why this is so important. The Home Office did well to extend the period in which to make a claim from 30 to 42 days, following lobbying from the ABI. However, it took a long time to update the claim form from the 1800s. Many constituents were unable to understand the archaic language and the requirements, or did not know whether to use the form at all. As of 9 May, the Metropolitan police had received a total of 3,427 claims. Just over a quarter of those claims—912 of them—have been settled to date, and a total of just over £6 million has been paid out to victims. That works out at an average of just £7,000 per claim. There are 707 ongoing claims. I can only assume that the remaining 1,800 claims —52% of claims received—were rejected. I would be interested to know whether the Minister can reconcile the figures and say what has happened to the claims that have not been dealt with.

My right hon. Friend is making a powerful speech on behalf of his constituents. Does he share my concern that some people, including my constituents Sue Murphy and Peter Turnbull, whose car was smashed up by the group who attacked Nottingham’s Canning Circus police station, are being offered nothing more than warm words by the Government, because vehicles are not covered by the Act? Should the Government not have done more?

Yes, and my hon. Friend will recall the burned-out cars on Tottenham’s High road. Many of my constituents have raised the same point. That is why we need an updated Act. I hope that the Government will not recoil from having an Act at all, because it is important that in such circumstances, victims are compensated by the state.

My hon. Friend will also recall that on 27 February, Boris Johnson said:

“All uninsured claims submitted under the Riot Damages Act have been processed through a bureau set up by the Home Office.”

He said that Met

“officers have been instructed to treat these applications as a matter of priority and they guarantee that once a completed and documented claim is received, an offer (Discharge Form) will be sent within five working days.”

For more than 707 people in London, that has not happened, so why was that claim made in February? Bad bureaucracy and poor administration is more than inefficiency; it prevents business owners, many of whom have dedicated their working lives to running a business, from picking up the pieces and moving on. For many riot victims—I stress that they are victims, not simply clients—an unprocessed claim form means a loss of income, sleepless nights and the brutal reality of losing a business or shutting up shop.

The Minister knows my constituency well. I have had constituents who have ended up having heart attacks as a result of their business going under with no compensation. That is how serious this is for small businesses, which are finding things hard because of the double-dip recession.

In response to questions on 13 March, the Home Office Minister, Lord Henley, told peers that 90% of businesses and individuals who had insurance had “received full or part” compensation. By the same date, just over half of uninsured victims had received money under the Riot (Damages) Act. Why the discrepancy between those who had insurance and had their claims processed by private insurers on the one hand, and those who were reliant on the state on the other? Their experience was completely different. It is often the most deprived, and those with the most marginal businesses, who are still waiting to receive money. That includes, of course, home owners who are relying on the Act. Given that both insured and uninsured businesses were victims, how does the Home Office justify the discrepancy in their treatment? If private insurers were able to process claims more efficiently, why did the Home Office decline the offer from the ABI?

Does the Prime Minister agree that nearly eight months after the riots, it is unacceptable that only half of the uninsured claims in London have been paid out? Nine months on, there is a significant lack of information in the public domain regarding processing and payment of the claims. Unfortunately, no statistics on claims made in Tottenham have been released. Many aspects of the Act are still shrouded in mystery. There is a significant grey area surrounding the relationship between philanthropic donations and compensation received under the Act. According to the Act, all philanthropic donations should be deducted from the eventual compensation settlement.

I want to pay tribute to the work of people such as Sir Bill Castell and the Prince of Wales, both of whom rang me up within hours of the riots, offering their help. Sir Bill set up a big high street fund, working with big business to help small business, only to find that that money has now been offset against the Riot (Damages) Act. Either we believe in the big society or we do not. What is the answer? What kind of society are we living in, when many victims of the riots who have had barely a few hundred pounds from that grant are still waiting for payment to get their businesses back on track?

People say to me that when we see a tsunami or an earthquake in a developing country, we are able to act and get the funds there. Why is it any different in a major democracy and a major developed country such as ours? It must be totally unacceptable that nine months later people are expected to wait. Of course they are not waiting. They are seeing their businesses destroyed and the high road lose its vibrancy. They are feeling abandoned. I remind the Minister that the cry that we heard after the riots right across the country was, “Where are the police? Where are they?” Now we are hearing a similar cry, and I hope the media will remain true to those people and continue to press their case. They want to know where the state is, or have we rolled the state back so far that for true victims it no longer exists?

Can the Minister assure me that measures will be taken to ensure that individuals and organisations are not put off making philanthropic donations to businesses affected by the riots, given the situation that we are in? Can the Prime Minister assure the House that information on payments made under the Riot (Damages) Act, as he said to the Leader of the Opposition, will be put in the House of Commons Library or, as he said, that he will return to the House to make a statement as swiftly as possible? I want to allow the Minister ample time to come back to me on these points, but I end by reminding her of the case of Niche Mufwankolo, who is the landlord of the Pride of Tottenham pub.

On the night of the riots, Niche fled through an upstairs window, while downstairs rioters smashed windows, looted televisions, broke and stole his sound system and set fire to furniture. He escaped from the roof of his pub at knifepoint, and the Metropolitan Police Authority responded to him by offering just £22,000 of compensation, some £70,000 less than the claim that Niche had submitted. It should be noted that VAT was excluded from claims relating to building damage, loss and damage of contents and loss of stock, just one of the reasons given for Niche’s payout being dramatically less than anticipated. To add insult to injury, the Met lost the original invoices submitted by Niche, preventing him from making further claims.

There is a huge disincentive to appeal against any offer of compensation, as people have been waiting for months to get back on their feet, and small businesses do not have the time to be caught up in such bureaucracy.

Many of us will have had different views about those involved in the riots, but I hope that all of us support the victims. That is why I have brought the debate to the House this evening. I look forward to hearing what the Minister has to say.

I thank the right hon. Member for Tottenham (Mr Lammy) for raising this subject. I am mindful that this is the first debate secured specifically on riot damage compensation, and I apologise on behalf of the Minister for Policing and Criminal Justice, who is unable to attend.

The right hon. Gentleman’s constituency, like my own, was one of the areas severely affected by the riots last August, and I sympathise with individuals and businesses in his area and others across the country that experienced losses. He has been extremely proactive in aiding his constituents in the aftermath of the riots and helping those who were adversely affected by the events last August.

The Government have come under considerable criticism, both during the recovery period and this evening, for the length of time that it has taken victims to receive compensation through the Riot (Damages) Act and for the perceived bureaucracy around processing claims, which has been singled out as the problem. Typically, this has been portrayed as a problem caused by the Home Office, with Opposition MPs for the most part helping to promulgate the myth. Most notably, as the right hon. Gentleman mentioned, it was referenced by the Leader of the Opposition in Prime Minister’s questions on 21 March.

It may help to inform the debate if I present a true and current picture of the progress that has been made, but first, in case I run short of time, I want to respond to several of the points raised by the right hon. Gentleman. He asked why the Government did not take up the insurance industry’s offer to process the Act’s claims. As the right hon. Gentleman knows, under the Act, liability for claims rests with police authorities, and passing on the handling of decision making on all claims would have required a change to primary legislation. We did not want to wait for primary legislation, and the simpler option, which took less time to put in place, was to draft in expertise from leading loss adjusters to the Home Office bureau. That did help in resolving and processing the claims.

The right hon. Gentleman asked why loss adjusters insist on continually asking for outstanding documents or evidence. I had a case myself where a constituent came to me about documents that were required for a building that had been burnt down. Documentation is important to ensure that losses are substantiated as far as possible. It is not a new issue for the insurance industry and for loss adjusters who have been employed by the police authorities and the Home Office bureau, and I can confirm that reasonable loss of documentation is taken into account in the reports produced by the loss adjusters. They are aware of the issue. That is not to say that they have not asked for documentation on occasion, but if the reply is that it has been lost or burnt, they make a reasonable adjustment.

On the question of the Prime Minister placing in the Library a document on the processes involved in processing claims, we will check whether it is in there; if it is not, it will be by the end of the week. I would be grateful if the right hon. Gentleman wrote to me with some details on the philanthropic questions that he raised, because this is not a matter that has come to my attention to date. I will be happy to look into that.

Order. I am afraid that we cannot have interventions from the Front Bench in a half-hour Adjournment debate.

There are two types of victim, the uninsured and the insured, although, as I will explain in more detail shortly, some overlap has been created by insurance companies repudiating claims, which can lead to further uninsured claims subsequently being submitted.

For the uninsured cases—those people who never had insurance—most of the claims originally made went to the Home Office bureau, which the Government set up in the wake of the riots in order to facilitate the process for individuals who were struggling to come to terms with the damage caused to their property and loss of possessions. The Home Office bureau received 1,261 cases. As of last week it had 68 cases left—about 5% of the original total. Of those cases, 39 have been classed as inactive. Despite repeated attempts to contact claimants or their representatives, no response has been received for a substantial period. The other 29 cases are largely waiting for documents to be submitted, which the bureau chases up regularly.

The bureau has rejected 837 cases and sent 356 to the police authorities to make decisions on payments. Typically, the reason the claims were rejected is that they were not within the scope of the Act, which covers business interruption losses, personal injury, and vehicle damage, as mentioned by the hon. Member for Nottingham South (Lilian Greenwood). In some cases, the claims were rejected because individuals already had insurance cover.

Given that the number of cases with the bureau is now relatively small, the Policing Minister has agreed that the bureau will shortly cease operations. The small number of remaining cases will be passed to local police authorities, where a more co-ordinated approach will be taken to get them resolved in the local area. The police authorities originally received 480 claims, including the 356 sent to them by the Home Office bureau. I am pleased to announce that only 26 claims are left—that is 26 too many, but nevertheless that is down to 5%. Police authorities have rejected 159 claims and settled 295 cases.

That is not the complete picture of uninsured claims, because a number of cases were subsequently received, predominantly in the Metropolitan Police Service, where insurance companies had repudiated claims or refused to pay out because their assessed value of the claim was below the policy excess; a claim under the Act was then made directly to police authorities. A specific example of that is the case, raised by the Leader for the Opposition at Prime Minister’s questions, in which an uninsured claim was not received in the police authority until December 2011. A further delay then occurred as a result of documents not being sent to the police authority until late March, after which the claim was settled in a matter of days. Unfortunately, that case is not untypical, so the delay is not always on the part of the Home Office, the Home Office bureau or the police authority.

To return to the “new” uninsured claims, I can also report that good progress has been made in resolving those cases. The Metropolitan Police Service received 642 such cases and has 133 left. Around half those cases have been delayed due to documentation that has been requested by police authorities from claimants or their representatives not being submitted. Claims made to other police authorities are negligible. The category in which the greatest amount of payments remains outstanding relates to insurance companies. The Act provides for insurance companies to seek recompense from police authorities for the compensation they pay out to policyholders.

I am running out of time and really want to get some of these figures on the record for the right hon. Gentleman, so the hon. Gentleman must forgive me.

Police authorities have received 3,883 insured cases, of which 1,063 remain. The police authorities have rejected 1,967 of these cases and 853, worth a total of £4.3 million, have been settled. A number of the outstanding claims, although not many, are of the higher value because they are the more complex claims. Claims for recompense from insurers do not affect the vast majority of individuals and businesses who held insurance at the time of the riots. The most up-to-date information from the Association of British Insurers indicates that more than 95% of individuals have had their claims settled in full or received an interim payment, and 92% of small and medium-sized businesses have either received an interim payment or had their claims settled in full.

Specific reference has been made in the media—I mention this because the right hon. Gentleman did—to the fact that 700 cases in London remain outstanding. Although that headline figure is correct, it is important to provide some context. Of the 707 cases outstanding in the Metropolitan Police Service, 571 are claims from insurance companies for reimbursement of payments that they have made or will make to their customers, not claims outstanding to an individual or company. Those cases do not affect the majority of individuals and businesses who made the original insurance claim, as they will already have received interim or full settlement. Of those 136 claims—707 minus 571—only three of the original claims remain; the others are new.

The Government are committed to reviewing the Riot (Damages) Act. The right hon. Gentleman is right that it is an old Act and we need to ensure that the legislation is fair and reflects a modern policing world. We are considering holding a public consultation, which will provide an opportunity for all interested parties to give their views on the current system and potential options for handling riot claims in future. He makes a powerful case and the Government want to settle all claims and ensure, as many have said, that victims are compensated as soon as humanly possible.

House adjourned without Question put (Standing Order No. 9(7)).