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Flood Insurance

Volume 547: debated on Thursday 5 July 2012

The availability and affordability of insurance in flood risk areas is an important issue for the Government. We are at an advanced stage in intensive and constructive negotiations with the insurance industry on alternative arrangements for when the statement of principles expires. I will be providing a further update to the House shortly.

Simon Douglas, the director of AA Insurance, believes that some homes will not be able to renew their flood insurance this year because their new policy will extend beyond the life of the statement of principles. The situation is now urgent. The Secretary of State must resolve it. When is she going to sign the deal?

I took the trouble to find out the situation in the hon. Lady’s constituency. The Environment Agency has confirmed that it has received no reports of flooded properties there, notwithstanding the surface water pressure over Bolton in June. None the less, the issue is important.

On the urgency, I gently remind the hon. Lady that her party had two years in government from the time when it agreed that the statement of principles would not be renewed. It found no solution, leaving this Government with a ticking time bomb in the safe where no money was left.

In answer to a previous question, the Secretary of State said that she was keen on evidence-based policy. All the evidence suggests, and everybody knows, that in places such as Yorkshire, which have been hard hit by the floods, the relief that comes from insurance or any other help takes too long. During that time, individuals, families and small businesses suffer dreadfully. This is not party political. Will the Secretary of State do something to help those people?

As the hon. Gentleman will know, DEFRA Ministers have visited each part of the country severely affected in the sequence of heavy rain that we have had. I went to Gateshead last Saturday. A number of Government Departments can be engaged in providing help. Most importantly, the Department for Communities and Local Government has a formula—the Bellwin formula—that I urge local authorities to apply to for funds. Before the recess, I shall give hon. Members the opportunity for a briefing on how we can provide further assistance.

May I commend the report on the water White Paper published today by the departmental Select Committee? We stand ready to assist the Secretary of State in reaching a deal. Will she give the House an assurance that the cohort of tenants on low incomes will be granted affordable insurance where they are at risk of flooding?

Yes, I can give that assurance, which is very important. The deal that we are in the process of negotiating with the insurance industry tackles for the first time the question of affordability, which the statement of principles—the previous scheme—did not.

As the Minister will be aware, flood insurance is a vital issue for many people in my constituency. In 2007, the previous Government agreed with the industry the statement of principles, which, as we all know, expires next year. Will she advise the House on what work was carried out by the previous Government in preparation for that?

None. I could stop there, but I would also like to point out that this Government will be spending over £2 billion on flood defences and that the flood defences in Carlisle held despite the fact that the rainfall was heavier than in 2005.

15. Of course, this is a massive issue for the householders affected. It is also a big issue for the local authorities, which often have to face massive clear-up costs and help people who are left destitute. Will the Secretary of State now commit, as the Labour Government did in 2007 and 2009, fully to reimburse local authorities for those costs? (115228)

The hon. Gentleman’s question gives me the chance to place on the record my appreciation to the local authorities in different parts of the country which have done an excellent job in implementing the emergency plans that they prepare for flooding. The Prime Minister, no less, when visiting the north-west, urged the Department for Communities and Local Government to be generous when applying the Bellwin formula to assist local authorities in the way that the hon. Gentleman requests.

Does the Minister agree that rather than the short-term measure that was put together in 2007, we now need a long-term approach that addresses affordability and availability? That is surely something that colleagues in all parts of the House could support.

Yes. The successor to the statement of principles must address both universality and affordability of insurance in a way that the statement of principles did not. As I said, we are very close to reaching agreement on that. It is of great importance to the Government that we do so, and I will shortly inform the House of more details.

16. I am grateful to my hon. Friend the shadow Secretary of State for attending a flood summit in Hull last Friday. It was clear from that meeting that people are very concerned about flooding and flood insurance. Is it not time that the Government reached an agreement with the insurance industry that will guarantee that our constituents’ homes are protected in future? (115229)

Mr Speaker, you can understand that the Ministers who inherited from the previous Government the ticking time bomb of having no way forward on the statement of principles are frustrated by the suggestion that we get a grip on this. We have, and we are close to an agreement that will provide both universality and affordability of insurance. That underlines the significance of the dereliction of duty by the hon. Gentleman’s party when in office.

In thanking the Secretary of State for her Department’s help with flood management issues in my constituency, does she agree that flood risk assessments should include natural and man-made defences in any planning?

Putting sustainable development at the heart of the planning reform means that flood-affected and flood-prone areas now give greater consideration to their sustainability. Natural and man-made flood defences can both help to make an area prone to flooding more sustainable.

17. The relaxation of planning rules in the national planning policy framework has meant that planning consent was recently granted at Damfield lane in Maghull, which is on a flood plain. The town already has an overstretched drainage system—a situation that can only be made worse following recent additional developments. What discussions has the Secretary of State had with her colleagues about the impact of the new planning policy framework on flood protection insurance? (115230)

I do not know the detail of that case, so I do not know whether the planning permission was granted by the council before or after the planning reforms were made. As I have said, putting sustainable development at the heart of the planning system means that greater consideration is given to sustainability in flood-prone areas. A number of things can be done to improve sustainability in flood-prone areas but, without knowing the specifics of the case, I cannot answer the hon. Gentleman’s question.

I am very disappointed at the party political nature of the right hon. Lady’s comments. My right hon. Friend the Member for Leeds Central (Hilary Benn) behaved admirably after the 2007 and 2009 floods, not least through the flood recovery grant. We are still waiting to hear from the right hon. Lady whether any money will go to the people who have been left homeless and destitute by the recent floods. She lit the fuse on the expiry of the statement of principles by cutting flood defence spending by 27%. She uses the figure of a 7% cut—

The right hon. Lady promised an update on flood insurance in the spring. She has talked about vouchers and now she is finally talking about insurance. Will she get a deal with the Treasury before the recess?

The hon. Lady clearly prepared that question before I gave my answers. I will give a detailed reply to the House before the recess. We are close to the end of the negotiations. As a former commercial negotiator, with experience in such matters, I know that one does not provide a running commentary on the state of negotiations.

Homes across the country are facing another night of severe rain and more homes are at risk of flooding. People are very anxious and upset because of the right hon. Lady’s total lack of progress on this issue. She has not given an answer. The deal runs out on 1 July 2013. Will she get a deal with the Treasury, and will it happen before the recess—yes or no?

How can I have lit a fuse underneath this problem when I am not a Labour politician and it was the Labour Government who agreed with the Association of British Insurers that they would not renew the statement of principles? That is when the fuse was lit. They placed a smoking bomb in the same container that said, “Sorry, there’s no money left.” We have found a way forward that will provide for the affordability and universality of flood insurance.