Skip to main content

Flood Insurance

Volume 563: debated on Thursday 16 May 2013

We are at an advanced stage in negotiations with insurers towards producing a successor to the statement of principles. Today, the Association of British Insurers has written to say that insurers will continue to abide by the current agreement for a month beyond the end of June to allow further time for the outstanding issues to be concluded. I am placing a copy of the letter in the Library of the House. We are aiming to conclude negotiations as soon as possible to ensure that households can continue to access affordable flood insurance.

Home owners in flood-risk communities are becoming increasingly anxious about this Government’s failure to get a deal on flood insurance. Two hundred thousand properties in flood-risk areas face the prospect of either higher premiums or not getting insured at all. Extending the talks is fine, but when are we going to see a deal on this issue?

The current arrangements are not guaranteed to hold premiums down. We are seeking an arrangement that will last well into the future, will deliver affordability and comprehensiveness, and will not impose a huge burden on the taxpayer. The hon. Lady may wish to pop into the Library, or, if she comes to see me later, I will give her a copy of the letter from the ABI. She will see that the tone of the letter demonstrates that we are very close to an agreement, although there are still some important issues to be resolved.

A one-month extension is simply not good enough. The Government have had three years in which to sort out the problem, and, in the meantime, householders and businesses in Exeter and throughout the south-west face huge hikes in their premiums because of the uncertainty. Can the Secretary of State assure the House that both the Prime Minister and the Chancellor understand that no country in the world has a free market in flood insurance, and that there will have to be some sort of underwriting if there is to be a deal?

Having seen the floods in Exeter, I know that this is a key issue there. I hope that the right hon. Gentleman will welcome the new schemes, which will be of great benefit to many thousands of his constituents. I cannot negotiate with him on the Floor of the House, but we are fully aware that a great many people are vulnerable to increases in premiums, and we view this as a real priority. I think that the fact that the ABI has told us that only one month is needed for us to conclude our important discussions shows how close we are to an agreement.

I welcome the news about the ABI, but can my right hon. Friend reassure us that enough time is available for the introduction of the legislation that will be required to replace the statement of principles, given the time frame involved? Can he also reassure us that it will cover home contents insurance for those who live in rented accommodation that is flooded?

As my hon. Friend—who chairs the Environment, Food and Rural Affairs Committee—is aware, we will be presenting a water Bill in the summer, and we shall have an opportunity to include clauses that will lead to the legislation that is required. We are convinced that, whatever happens, there will have to be some form of legislation to ensure that the arrangement is comprehensive. The detail to which my hon. Friend refers will be dealt with in the negotiations.

17. I pay tribute to the Secretary of State and his Ministers for the hard work they have been doing. Does the Secretary of State share my frustration over the fact that it seems to be the ABI and the insurance industry—one of our great successes in this country— that are exerting the pressure, and holding out for some sort of subsidy from the taxpayer in order to secure an agreement? (155351)

Having visited my hon. Friend’s constituency during the floods, I am fully aware of the importance of the issue to her constituents, but it is a complex issue. We are trying to find a long-term solution, and to sort out the conundrum of affordability, comprehensiveness, and not imposing a long-term burden on the taxpayer. I pay tribute to the ABI for the constructive manner in which it has engaged in the regular meetings and discussions that have taken place. We are not quite there yet, but I hope to be able to come to the House soon to announce a resolution of the problems.

14. Has the Secretary of State seen a report, published this week, which suggests that rather than there being a once-in-a-thousand years chance of the Thames barrier being overwhelmed by rising sea levels, the statistic could be once in a hundred years or even once in 10 years? What are the implications of that for insurance costs in London? (155348)

We have begun preliminary investigations of the prospects of long-term flooding. As the hon. Gentleman knows, there is a possibility of major construction projects which may help.

I welcome the Secretary of State’s announcement. Residents of Pagham and Middleton-on-Sea, in my constituency, greatly valued the visit by the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Newbury (Richard Benyon), on 29 April. Surface water flooding was a huge problem in my constituency on 10 June last year, and it is now becoming clear that silt build-up in the Pagham and Aldingbourne rifes exacerbated that flooding. Will my right hon. Friend encourage the Environment Agency to give greater priority to routine clearing and dredging of the main river water courses that are so important in preventing and mitigating flood damage?

I shall be brief, Mr. Speaker. My hon. Friend has raised a very important point. I think that the Environment Agency has a role to play in clearing major waterways, but I am also talking to the agency about speeding up the ability of landowners to look after low-risk waterways, where there is also a problem in rural areas.

The Secretary of State has been given a welcome breathing space with the month-long extension of the statement of principles negotiated by the Labour Government. That, however, will come as little consolation to the company in Calderdale that is facing an increase in its flood insurance excess from the current level of £500 to a staggering £250,000, putting jobs and the local economy at risk. Does the Secretary of State really believe that that is a price worth paying for his ideological support for a free market in insurance?

That is a glorious question, because the hon. Gentleman could not be more wrong. He describes the problem with the existing system left because of the incompetence of the Labour Government, who made such a mess for 13 years. We are trying to bring forward a better system that will deliver affordability to some of our most vulnerable citizens. We will deliver; they didn’t.