I beg to move, That the Bill be now read a Second time.
As elected representatives in this House, it is our responsibility to take forward legislation that protects the most vulnerable from all types of harm. I am privileged to promote this Bill, which will help individuals and businesses recover from the devastating impact on communities of widespread public disorder. I am the promoter of the Bill, but much of the work has been done by others. I owe a particular debt of thanks to officers and staff of this House and of the Home Office for the advice, help, support and industry that they have provided in preparing the Bill.
There are many features of this place that come as a surprise to newly elected Members, even those of us who took a close interest in Parliament before getting here. One of the most surprising of all is just how popular a Member who appears high up in the ballot for private Members’ Bills suddenly becomes. Unfortunately, that popularity dissipates almost as quickly as it arrived once the Member has settled on a Bill. Nevertheless, I am pleased to bring forward this Bill today.
As I am sure all Members will agree, this is a Bill that I hope will never be used, but it is better to prepare now by ensuring that we have the necessary rules, procedures and structures in place during a time of calm, rather than putting off such thoughts until those measures are urgently needed.
This issue has a particular personal relevance to me. Growing up as the son of a west midlands policeman, I was all too aware from a young age of the impact of riots on local communities and on those responsible for policing them. I remember as a nine-year-old child waking up to see the horrific footage of the Handsworth riots in September 1985. It brought home in the most literal sense the terrible reality of a breakdown in law and order. My father, as a mounted policeman, had been called into work early in response to the violence and destruction that I was then seeing on television. I remember coming home from school just as my father returned home earlier than usual, his hand bandaged and his face pale. I am sure that Members can imagine what was going through my mother’s mind.
As we are among friends—and, perhaps more importantly, as my father is not a regular follower of BBC Parliament—I might be safe in letting Members into his little secret. That day, he had gone into the police stables to prepare his horse, where I am afraid he was bitten by a squirrel. Fortunately, that was the most serious injury my father suffered in those riots.
Tragically, others were not so lucky: two brothers were brutally burned to death in the post office they ran. Two other people were unaccounted for and a further 35 were injured. More than 1,500 police officers were drafted into the area, potentially put in the line of danger. They each have families who I am sure are every bit as proud of them as I remain of my father. About 45 shops were looted and burned, and lasting damage was done to community cohesion in Handsworth. Other riots across the country that autumn, including the Broadwater Farm riot in London, showed similar violence and destruction.
Twenty-six years later, a series of riots, starting in Tottenham and spreading across much of London and then into other major cities, were a horrible reminder of just how fragile public order can be. The August 2011 riots left many vulnerable communities counting the cost of some of the worst and most destructive public disorder in a generation. The human and social cost was immeasurable, nowhere more so than in the senseless murder of Haroon Jahan, Shahzad Ali and Abdul Musavir, who were deliberately run down while trying to protect their community in the Winson Green area of Birmingham.
Here in Greater London we saw horrific images of the Reeves furniture store burning down. This family run business had been built up over years, but it was destroyed in minutes. The image was broadcast all over the world and it continues to haunt us. Elsewhere around the country, large cities experienced similar destruction, with businesses destroyed, property wrecked and dreams up in flames.
In the heat of the riots, many people were surprised to learn that, under current legislation, responsibility for compensating victims of riots lies entirely with local police forces. The legislation dates back to 1886 and is basically a consolidation of legislation going back to the 18th century, so the word “current” does not seem entirely appropriate. The system requires polices forces—the Metropolitan Police Authority, the common council of the City of London and, elsewhere in the country, police and crime commissioners—to pay out millions of pounds in riot compensation, much of it to large businesses and insurance companies, while lacking the flexibility to respond effectively and promptly to the needs of individuals and small businesses that need their payments, and need them quickly. Against a background of tight budget constraints, potentially limitless liability for police forces is unfair and unsustainable.
I thank my hon. Friend for promoting the Bill. If the police are to be held liable for the acts of third parties—of rioters—would it not be fairer for the victims to have to prove that the police were themselves at fault before compensation could be paid out of the public purse?
I will respond to my hon. Friend’s intervention in more detail later in my speech. Although I have some sympathy for that argument—the causes of riots can be extremely varied and in many cases they are not the direct result of police action or inaction—I think there are both principled and practical reasons to maintain the current principle of strict liability. One such practical reason is that, if someone is unable to afford insurance and has suffered losses during a riot, it is very unlikely that they would have the means to bring a court action to establish that the police had been negligent and thereby claim damages through the usual legal means.
My constituency was a victim of the riots in 2011, when there were huge disturbances on the streets of Enfield. For some businesses in my constituency and in Enfield North the problem was not just liability and who would pay, but the time it took to be paid. The delay was an ongoing victimisation of those businesses and their prospects of continuing. Will the Bill help to improve the decision-making process and lead to such businesses getting the money they deserve?
A key purpose of the Bill is indeed to have a more effective, streamlined and clear mechanism or procedure to enable those businesses and individuals to get the compensation they need within the timeframe necessary to make a difference in getting their lives and businesses back on track.
In 2011, the coalition Government responded to the riots by agreeing to cover the costs incurred by the police in compensating homeowners and businesses under the Riot (Damages) Act 1886. That was one part of the package that the then Government announced in response to the scale of the destruction suffered in some of our major cities. I am sure that Members on both sides of the Chamber recognise the importance of the creation of a high street recovery fund immediately after those riots, which helped local communities to decide for themselves on measures, specific and relevant to their area, that would get their high streets back on their feet. However, we cannot necessarily rely on future Governments choosing to underwrite police force liabilities or investing additional moneys in rebuilding areas hit by riots.
This issue is not just about the riots of 2011; many other localised riots have led to very extensive and expensive bills for local police forces. For instance, the total bill for the rioting in Bradford in 2001 amounted to £450 million, even though it was a localised riot.
I fully agree. In the region we both know best, the west midlands, there were the Handsworth riots in 1985, which I have already mentioned, and of course the riots in the same part of Birmingham in 1981 and 1991. Such localised riots have a huge impact on the local community, and cause huge cost to businesses and individuals directly affected.
We need to act now to build a new compensation system that works. As my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) said, that system needs to be fair to the people and businesses affected by riots and fair to the taxpayers who, ultimately, will always foot the bill.
In the wake of the 2011 riots, work was conducted by the independent Riots Communities and Victims Panel, which looked at both the root causes of the disturbances and the prevention of future riots. Other studies were conducted specifically to examine the response of the police. Although the Government have done a lot of valuable work on the causes and the immediate responses to the riots, now that we have had time to reflect on and learn from those terrible events, it is right and necessary to ensure that the current legislation is updated to make it fit for the 21st century and to enable the victims of riots to be adequately compensated.
Recognising criticisms of the limitations of the 1886 Act, the Home Office undertook an internal review, and my right hon. Friend the Home Secretary then commissioned a full, independent review of the legislation. The reviewer, Neil Kinghan, spent months collecting evidence from riot victims, the police, insurers, loss adjusters and many others before publishing his conclusions. He made recommendations concerning a number of areas of the existing framework. Many of those recommendations are brought forward in the Bill.
Neil Kinghan accepted that there remains a need for legislation that provides for riot compensation to victims, but that the existing legislation is simply not good enough. Fiddling around the edges of the legislation would not be enough to make it work for the 21st century. We need to repeal the 1886 Act and replace it with new legislation that reflects the world as it is now, rather than the world as it was in the 1880s. The Bill seeks to make that change by updating the legislation and modernising the compensation system, making it fit for purpose in today’s world.
This is not the first time that changes to the Riot (Damages) Act have been considered. Under the last Labour Government, there was a public consultation on full repeal of the Act, but in the end, no changes were made. I do not believe that simply repealing the 1886 Act is the answer. While there is a superficial attraction in removing the strict liability that police forces have for damage to property suffered during a riot, there is general acceptance that there are principled and practical reasons for its retention.
Neil Kinghan’s review agreed that the first duty of the police is to maintain law and order. When that law and order breaks down, resulting in a riot, it is right for the police to be held to account and to pay appropriate compensation. On a practical level, strict liability provides simplicity for the victims of riots and a clear framework for the police. Requiring victims to demonstrate negligence or other direct fault would not be equitable in the circumstances. It would require evidence that is often extremely difficult to collect in the immediate aftermath of a riot and would inevitably lead to increased conflict between local police forces and the communities that are hit by rioting.
The 2011 riots underlined the importance of maintaining this historic protection for the public, as it provided a number of people with a vital means of support when they needed it most. It is right that people are provided with the financial means to repair, renew and recover so that they have the confidence to return to their roles at the heart of our communities.
The independent review found near consensus in favour of retaining the police’s strict liability—a finding backed by the report of the London Assembly’s budget and performance committee on the aftermath of the riots. It is right that we protect communities from such shattering losses by doing what we can to help them back on their feet. However, what cannot be right are the lengthy bureaucratic delays suffered by those who need our help, to which my hon. Friend the Member for Enfield, Southgate referred, and the idea that the country has a bottomless purse to draw from to pay for damage caused by criminals.
The Bill makes much-needed changes to address those concerns, while still supporting households and businesses affected by rioting. Although, as I have said, I accept the arguments for retaining the principle of police liability for riot damages, I do not accept that we can continue with limitless liability. Whether through police budgets or central Government, the public purse cannot be expected to pick up costs that are the reasonable responsibility of private insurance.
The Bill proposes to end the unlimited compensation afforded through the 1886 Act. Instead, it will set a cash cap, set at the appropriate level of £1 million, on each individual claim. The Government determined in their early review that if such a cap were in place in 2011, 99% of the claims made after the riots would have been compensated in full, but the limit would have saved the public purse tens of millions of pounds in compensation for the very largest claims.
As prudent homeowners, most people hold some form of insurance for their property. The same is true of most business owners. In the most recent cases, more than 80% of the compensation has been paid as reimbursement to insurance companies. Despite that, measures to cap compensation have been supported in principle by their largest representative body, the Association of British Insurers.
Clearly, property values will differ throughout the country, and many members of the public do not read the fine print in insurance documentation. What is to stop insurance companies excluding riot from their cover? If that does happen, what will happen to those who suffer losses greater than the ones mentioned in my hon. Friend’s Bill?
Of course we recognise the difference in property values around the country, but we have to accept that basic responsibility for buildings insurance, and indeed contents insurance, needs to be with private insurers. I would certainly hope that we can work together with the insurance industry to make sure that there is a fair response so that the premiums that most people believe they are paying to cover them for damage, however it is caused, really do cover them.
These new provisions are not just about saving money; they are also about improving and modernising the claims process. The short timescales in the old Act for submitting and evidencing a claim were not feasible for many potential claimants. The original 14-day period was extended to 42 days under the Government’s emergency amendment for the 2011 riots. Those riots demonstrated that the period was not long enough in certain cases. Many homes and places of business were inaccessible because they were designated crime scenes. In a number of claims, full details could not be provided because of a dependency on external processes as seemingly unrelated as planning permission.
The Bill will allow regulations to be made to extend those periods. Initially, a claimant need only lodge notice of a claim 42 days after the incident. By lodging notice of a claim, they will then have another 90 days to gather the evidence to substantiate the quantity and nature of the losses. That means that riot victims can focus on their most immediate needs in the shortest term and worry about paperwork further down the line when they are in a better position to deal with it.
Regulations to the Bill will change the way that compensation is calculated from the old-for-old replacement payments system, based on the current value of property, as depreciated, to a new-for-old system to allow people in the majority of circumstances to replace their property in full. That will considerably ease the decision-making process.
Does the hon. Gentleman accept that the areas that experience riots are often the most deprived in our country? In those communities, increasingly, particularly in London—in the constituency of my hon. Friend the Member for Croydon North (Mr Reed), and certainly in mine—many constituents speak English as a second language. I can think of a constituent who had a heart attack after the riots. Forty-two days is still a very short time after experiencing shock of this kind.
I recognise the right hon. Gentleman’s point. It is important that alongside any new legislation and regulation we have the co-ordination at a community level to support the people he mentions, who, as he says, are often in our most vulnerable communities.
The basis for switching from old-for-old to new-for-old is one of basic fairness for riot victims. It cannot be fair for them to be expected to engage in extensive negotiations on the book value of a three-year-old dry cleaning machine, as was the case in one claim in 2011, and then to have to search for such a machine at the specified price just at the point when they are trying to rebuild their homes or their businesses. A new-for-old system is already used in most private insurance policies, and it would mean that victims could set about the important business of getting their lives, homes and businesses back on track.
My hon. Friend is right to say that new-for-old replacement will be welcomed by businesses that are affected by a riot, but often the most worrying and biggest problem for such businesses is the consequential losses that arise from that destruction and loss of property. Will he explain why those losses will not be covered, and why they are expressly excluded?
As my hon. Friend says, the Bill would explicitly restrict a police force’s liability to direct losses, and it would exclude the consequential losses to which he refers. This is a question of fairness and affordability, because the potential impact on the public purse would be enormous should the riot compensation scheme be extended to cover full consequential losses.
There is a cap, so any claims would be limited and caught by that cap. Bearing in mind that that exclusion exists, does my hon. Friend agree that it is extremely important that all businesses—especially small businesses—are made aware of the limitations of the Bill, and the need for them to take out insurance to cover otherwise uninsured losses?
My hon. Friend makes an excellent point, and businesses need to do as he suggests. This is about what private insurance should reasonably cover. Although direct losses tend to be relatively easy to quantify, consequential and other indirect losses can be more difficult to quantify, and they cause much more difficulty for public authorities when assessing and paying for those claims.
It has been interesting to listen to my hon. Friend’s contribution so far. Does he agree that the limit is about finding a balance between what is legitimately covered by private insurance, and compensation for those who were caught up in a riot through no fault of their own? Does he also agree that not many people would have been aware of the Riot (Damages) Act 1886 until after the 2011 disturbances?
My hon. Friend is right, and in conversations I have found that a surprising number of right hon. and hon. Members from across the House were similarly unaware that police forces bear those liabilities. We should be under no illusions that most members of the public are much better informed.
Let me return to the principle of switching to a new-for-old system. From the perspective of public finances, much of the additional cost of such a change can be expected to be offset through savings on spending on the loss adjusters needed to calculate second-hand values. It is much simpler and more efficient to assess the cost of a new replacement product, which is why so much of the insurance industry has moved to such a process.
Was the hon. Gentleman referring to the case in Croydon North of Mr and Mrs Hassan? They had recently bought a dry cleaning business with old dry cleaning machines. It was burned to the ground, but because they were offered only like-for-like funding they could not re-establish their business or get their livelihood going again. They went into serious arrears and were threatened with the loss of their home because they could not pay the mortgage. Surely that is unacceptable and needs to change.
The hon. Gentleman puts his constituents’ case far better than I could, and he is absolutely right. New for old makes sense—it will save time and make the process simpler, fairer and less labour-intensive for local police bodies.
I am grateful to the hon. Gentleman for giving way again. His point about new for old is incredibly well made.
There are many small business owners in areas that have experienced riots. I think of my area in particular, which is unfortunately one of the few areas of the country to have experienced two riots in a generation. Those small businesses are under-insured because of the cost of insurance, which is because those areas have had riots. Unless we want such areas to be completely boarded up, like cities in the States such as Detroit, we ought to think carefully about consequential loss. We should not place further insurance burdens on the private sector. After all, the fact that a riot has occurred is not the fault of a business.
Many insurance policies already have business disruption cover, and focusing on direct losses, with a fair cap of £1 million, will allow businesses or individuals to reclaim quickly the significant sums that they need to get back on track.
I give way to my hon. Friend, who knows a lot more about this.
Does my hon. Friend hope, as I do, that if the Bill moves forward today it will encourage the industry and the Association of British Insurers to engage further with business owners and make them aware of such things as business disruption cover? In addition, they could make them aware of the Bill’s provisions.
That is precisely what I have been calling on the ABI and other insurance bodies to do leading up to today’s debate.
I turn to the Bill’s provisions on a riot claims bureau. It sets out that the Secretary of State may assume responsibility for managing riot compensation claims. That is appropriate if rioting spreads across more than one police force area, as it did in 2011. It may also be appropriate at the request of a local policing body, particularly in one of the smaller police force areas, should the volume of compensation claims prove challenging to manage and be beyond its capacity. It is not about taking away local policing bodies’ financial autonomy. It is merely about providing capacity, consistency and additional oversight where necessary.
I am grateful to the hon. Gentleman for being so generous with his time. He mentions compensation being paid to victims. Is he aware that when local communities came together to raise and distribute funds to support businesses, families and individuals who had been financially affected by the riots, those funds were then deducted from the more official compensation payments? Does he agree that that was completely wrong and went against the intentions of people who generously donated to help their fellow citizens recover from the terrible circumstances in which they found themselves?
I would certainly hope that money raised to support local communities would be used for that purpose. Of course, we would want to avoid double compensation, with damages being repaid twice so that people were not just put back in an equivalent position to before the riots but received additional payments on top of that. I do not think that that would be appropriate. I do think that after a riot money should be retained more at a community level and invested in rebuilding community cohesion.
The structure of a riot claims bureau would include, in its running and financial decision making, a role for a police and crime commissioner or equivalent, or their designated representative, as well as insurers and loss adjusters. The Bill would allow local policing bodies to place the day-to-day management of claims into the hands of experts in the loss-adjusting profession. That is clearly a better alternative to expecting police forces to retain such responsibility in-house. Companies already have the capacity available to manage major insurance-related incidents, as has been seen in their response to major weather-related events. Moving responsibility for the management of the process to those who understand it best would allow police and crime commissioners to utilise fully industry experts, while retaining full control of the financial decisions for which they are democratically accountable.
The Bill provides, for the first time, cover for some motor vehicles. Understandably, motor insurance and damage to motor vehicles was not considered in the 1886 Act. It is time, nearly 130 years later, to address that. Most insurance companies cover riot damage in comprehensive motor vehicle policies, the type held by the overwhelming majority of the country’s motorists. The Bill would not seek to replace that coverage. The intention is to provide compensation for motorists not covered by comprehensive insurance. Where the vehicle is held in accordance with the law, it would be covered under the Bill: it would cover third-party claims that meet basic minimum legal requirements for insurance, or vehicles that are exempt from requirements for insurance.
My hon. Friend is being extremely generous in giving way. Does he agree that part of the reason for updating the legislation is to address its core purpose, which is to compensate those who might lose their business and equipment? In the modern era, as opposed to 1886, many people will have their tools and their business based in a motor vehicle.
My hon. Friend is absolutely right. In fact, I wonder if he has read the next passage of my speech. The Bill is indeed about creating a safety net not only for vulnerable people but small businesses and the self-employed.
The purpose of the compensation scheme is not to pick up unlimited bills related to criminal activities, but to provide a vital safety net. We should recognise the serious implications for communities recovering from major public disorder. They include many of my constituents who work in Birmingham and were affected by the 2011 riots and earlier riots. It is the role of Government to protect the most vulnerable and ensure they are not unduly disadvantaged, whether at home or operating their businesses. It is not reasonable to expect a statutory compensation scheme backed by the taxpayer to provide the same coverage as insurance for which one pays considerable insurance premiums. Since 2011, the Government have done significant work on the causes and effects of the riots, but it would be wrong to hand over millions of pounds of public money to individuals and businesses that should have insured themselves against losses, and likewise, insurance companies that benefit from the premiums paid by millions of households every year should not expect the public purse to indemnify them against limitless losses.
The Bill would allow for a balance between the responsibility of the police to maintain order and the responsibility of the Government to protect the vulnerable and make adequate provision for insurable risks. It would retain the principle that the police are responsible for maintaining order, provide that local accountability remains in place and ensure that communities have the right mechanisms in place to recover quickly from serious disorder. It seeks to make an outdated 19th century Act relevant to the world in which we live, and to create a fairer, faster and more affordable system. I commend it to the House.
Just as everyone from an earlier generation remembers where they were when JFK was assassinated, everyone from Ealing remembers where they were when riots hit our corner of west London, which is known, justifiably, as the queen of the suburbs. [Interruption.] It is, yes, and correctly so.
Footage of the shop front of Helen and Stuart Melville’s Bang & Olufsen franchise on Bond Street in Ealing went viral. It showed rioters trying to smash the glass several times before giving up and scurrying off. Helen, who had had warning through the grapevine, told me recently that, at 5 pm, she was on her way back from Peppa Pig World, when she was given a tip-off that rumours were circulating on Facebook. That shows the modern nature of the 2011 riots. She could not believe it. She thought, “Why Ealing? Why us? I don’t believe this.” The same sentiment of incredulity also hit Ravi and Amrit Khurmy, of Ealing Green local store, who said that the word of mouth was that something might happen.
Both were small businesses into which the proprietors had sunk everything they had, and both, like Ealing itself, were rocked by the 2011 riots. Sadly, the initial prophecies became a reality. Both received a phone call from the company that maintained the alarm system saying, “Something’s up. Can you come?”, and both returned to scenes of destruction and carnage. Mr Melville said it was like something out of a zombie movie: “28days Days” comes to Ealing—is that the one?
“28 Days Later”.
Sorry, I am not into zombie movies. It was Mr Melville’s example. They found cars burning and other such things one does not expect to see in Ealing. Bang & Olufsen closed early, as a precautionary measure, but even so, the glass was shattered and the footage attracted many millions of views on YouTube. Ravi found his store in flames. The London fire brigade was in attendance for 24 hours. It was not just the shop; there were flats above as well.
The Bill attempts to redress some of the imbalances in the current legislation and revamp the compensation provisions, as the hon. Member for Dudley South (Mike Wood) described. The existing legislation is on the aged side, if that is not too much of an understatement. Very few statutes—very few anything—dating from 1886 continue completely unaltered today. It was a time when Queen Victoria was on the throne, and I think both Lord Salisbury and Gladstone had turns at being Prime Minister that year. A house dating from 1886 would at the very least have needed a bit of updating: a lick of paint, central heating and other mod cons. Riots in the UK are, thankfully, relatively rare, but the legal framework needs to be brought into the 21st century, as the hon. Member for Dudley South said.
A lot of people called the riots of four years ago the social media, high-tech riots. Some commentators even likened them to the contemporaneous Arab spring, which I think is going a bit far—the riots in Tunisia and those countries had a different cause. To pursue the parallel, if we were updating an 1886 house in line with what the legislation needs, we would need several coats of paint, not just a lick of paint, and total rewiring and heating, with a new boiler and radiators. The cumulative effect is that it becomes too much of a job to stick with the existing structure, so we do need new legislation. It makes perfect sense, and I congratulate the hon. Gentleman on bringing the Bill to the House today, because we need to bring that Victorian legislation kicking and screaming into the present day.
Ealing council’s riot scrutiny panel report from 2012 stated that over 1,000 999 calls were made on 8 August 2011, many of which went unanswered. The report states that there was damage to 100 shops and businesses and that “one supermarket burnt down”—Ealing Green Local, which I referred to. It took 18 months to reopen. It now has half its original footprint and has been rebranded as a SPAR. When the riots happened, I was cowering indoors watching Twitter, but I remember going the next day and seeing an Edwardian turret from the roof structure of that building being lifted away by crane. It was quite surreal.
Ravi outlined what happened in the aftermath and told me what he would like to see in future riot compensation legislation. He said that the insurers had paid out, but that the process was painfully slow. He reckoned that his claim was accelerated somewhat because he knew someone on the inside. That should not be so: we should be a nation above corruption in those things. He pointed out—the hon. Member for Bury North (Mr Nuttall) also made this point—that consequential loss should be covered as well. Ravi said that, at present, compensation covers only fixtures and fittings, whereas he would like loss of earnings to be included.
Ravi’s other point was that the role of the council was relatively limited. Ealing’s report said:
“Feedback on the Council was very positive—the payment of £1,200 was delivered promptly, and the named officer had been in frequent contact with advice and support.”
That is what the council said.
If Ealing is the queen of the suburbs, Croydon is surely the king. There was another role for councils, in the receipt of riot recovery funds. Croydon council—run by the Conservatives at the time—received more than £20 million from the Greater London Authority, spent half of it in an area that was not affected by the riots and left the rest in a bank until the GLA tried to claim it back. Does my hon. Friend agree that there should be a bigger role for communities and victims in overseeing how such funding is spent, so that the worst affected areas can recover faster?
My hon. Friend makes an excellent point. He anticipates what I was going to say about the Ealing example, but he is correct that these decisions should be taken at a local level.
Ravi said that the council was very good initially, but that
“after 18 months their door was closed.”
He also praised police actions after the event, but recognised that their role too was limited. His was a flat with a shop beneath, and both were subject to an arson attack, as in probably the most extreme case, which was in my hon. Friend’s constituency—or was it in Croydon Central?—with the famous picture of the girl jumping out of the burning building.
That was at Reeves Corner in Croydon Central.
He’s not here, is he?
No, Gavin Barwell is not here.
Never mind. Not to worry.
Order. We cannot have conversations between Members. If the hon. Gentleman is intervening, that is absolutely fine, but we cannot have a running commentary between Members.
Thank you, Madam Deputy Speaker. I will continue.
Now the place is half the size and split into two units, although the takings are thankfully back to normal. As my hon. Friend the Member for Croydon North said, further follow-up financial support should be considered at local government level. I have not found any measure proposing that in the Bill, although perhaps I have not looked at it closely enough. Ealing council’s panel report said that larger sums were available in subsequent phases—£157,426 of allocations in total.
I accept that the problem with these sort of events is that they are unforeseeable. Nobody would have guessed on 7 August that this would have happened by 8 August: these things occur out of the blue. We are living in a time when local government budgets are being squeezed like never before, so I would be interested to hear how this Bill fits with local government provision. Ealing is losing £96 million in this parliamentary term.
Clause 8 sets the limits for damages at £1 million, as the hon. Member for Dudley South described. Disappointingly, however, subsection (2) states that the
“compensation must reflect only the loss directly resulting from the damage”
to the property and
“not…any consequential loss resulting from it.”
That is disappointingly short of what Ravi and others said would have made a real difference. Perhaps in extreme cases such as these, an agreement could be reached with the insurers for a limited amount more. It need not all come as a burden to the public purse, as some allowance could be made for special cases.
I certainly understand the hon. Lady’s point on behalf of her constituent, but will she recognise that the independent reviewer specifically considered the issue and concluded that extending the scope of the Riot (Damages) Act 1886 to cover consequential losses would be a step too far currently and might leave the door open for far greater liabilities?
I thank the hon. Gentleman for his intervention. I would feel happy if this issue were addressed to some limited extent. One would expect the Association of British Insurers to be on the side of the insurance industry, but it has found this aspect left wanting in this legislation—it could perhaps be explored at future stages.
I declare an interest as a commercial business owner and property owner. Most insurance companies insure the buildings and the contents separately. That may not be under discussion in this context, but normally claims for buildings damaged through rioting as separate from contents claims.
I am talking about loss of earnings. The store owner, his wife and two kids had to live off their savings for 18 months. It is an extreme case: 18 months is not the norm, and riots are not the norm. We do not usually expect these occurrences. Let us hope they never happen again.
Helen from Bang & Olufsen remarked that the shop front had not been smashed. The video was shared so many times because people were saying that the rioters had been defeated, along the lines of “Hooray: victory against the rioters”. In the end, she faced a bill of £10,000 for the glass splinters. High-end products were involved, as expensive televisions behind the glass were also damaged. Helen’s point was that a cheque had to be written from the firm’s business account, which caused a problem for cash flow afterwards. She said that she had sunk all her savings into the business, which had been open only for six years, and when it started there was a massive recession. The hit to cash flow to pay the glazier was huge. She suggested that a temporary loan would have been helpful in that instance. It was a frightening time for her: she had a little kid and a second one was on the way.
It was not just Reeves Corner that was affected. Nine businesses and 40 flats were destroyed in London road, west Croydon. Some of the businesses had to continue to pay mortgages or rents on properties that had been destroyed, which is enough to put businesses or individuals who are not wealthy in severe financial difficulty. Does my hon. Friend agree that riot compensation should apply to those who have suffered serious losses of that kind?
That is an excellent point. There were the headline cases that got all the attention and went viral, but I believe that the proprietors of many small Asian shops in the London road have been waiting a long time to be compensated. I am not sure whether they have received any compensation yet. We may focus on the headline cases, but these are all tragic stories.
I understand that local authorities have discretion to deem domestic and commercial properties exempt from council tax and/or business rates in the event of, for instance, floods, fires or riots. Authorities are aware of those powers, and should use them to help people.
I believe that the hon. Gentleman is right, but local authorities live in ever more straitened circumstances, and are trying to do more and more with less and less. I am surprised that the Bill does not mention that, and I should be interested to hear from the Minister what provision will be made for it in future legislation.
Helen also referred to
“just the amount of time it took and the amount of paperwork to submit.”
I understand that the Bill would simplify such processes. Claims can, of course, be made online nowadays, although that was obviously not a possibility in 1886. The Kinghan report, to which the hon. Member for Dudley South referred earlier, recommended that the processes should be speeded up, observing that
“none of the police authorities had any experience of claims handling”
or of the demands,
“or the resources to meet it. They also had to cope with legislation written 125 years previously”.
My right hon. Friend the Member for Tottenham (Mr Lammy) mentioned language difficulties. Those difficulties are compounded by the archaic language to be found in a lexicon that was used in 1886.
The Ealing report commented that the public had been reassured by the fact that shops and businesses remained open—that it was business as usual. I remember passing a hairdresser’s shop where all the glass had been blown out. Presumably the clients were being given blow dries “au naturel”! However, although that “business as usual” spirit was reassuring, we need to help businesses to get back on their feet more quickly.
The Bill contains much that is of merit. Clause 4 creates a new body, the riot claims bureau, which the Minister can direct to delegate decisions on claims that are taken to it by local police authorities. While the hon. Member for Dudley South was speaking, however, it occurred to me that if the police are to decide these matters in the first instance and are also to be liable, it is possible that those roles are too close to each other. The Association of British Insurers has referred to a direct conflict of interests, and, although it may have misunderstood the position, the police certainly should not be both judge and jury. The hon. Gentleman did say, however, that if a case straddled two separate police authorities, the Secretary of State would make the ultimate decision.
The highest bill was run up in London, where policing is devolved, and I believe that the Sony warehouse claim is still being contested. The London Assembly welcomed the Bill in its pre-general election version as recently as March; in 2012, it had produced a report entitled “Picking up the pieces”, which recommended an overhaul of the current Victorian legislation.
The 1886 Act was instituted after the Trafalgar square riots, at a time when there was no provision for motor vehicles. I did a Google search to find out how many people in the country owned cars in 1886, and discovered that it was the year in which Benz trialled the first petrol engine, which had just been invented. The Act places the onus on the police, but as early as 9 August 2011, Rob Garnham, chair of the Association of Police Authorities, warned that
“in a context of cuts the public will see little sense in a shrinking police fund being diverted to pay for criminal damage.”
Touch wood, God forbid, let us hope and pray the frightening disturbances of 2011 never happen again, but we do have a duty to learn from precedent and we need to bring the law on these subjects into the 21st century. We need to defend and protect small businesses. I am a child of small business—that is what my dad did. Small business owners sometimes take enormous risks: they sometimes do not eat to put food on the table for their kids and do not take holidays. They are not even SMEs; they are microbusinesses, and people such as Stuart and Helen, whom I described, and Ravi and Amrit need our support as they are key drivers of regional economies and pillars of our local communities.
It was not just the glass at the Bang & Olufsen franchise in Ealing that shattered; it was also the notion of suburban calm in our area. It shocked me and many other long-standing residents. This Bill is a good start, but there are still little bits and pieces that could be improved, such as the issues of leaving small businesses out of pocket when cash flow is difficult and the speed at which claims can be processed.
Riots in this country are, thankfully, pretty rare. I remember them in my lifetime two or three times. In 1981 it was Brixton, Toxteth and Moss Side; then in 2001 it was Bradford, Burnley and Oldham, where we had a very good result for the Labour party last night; and then in 2011 it was Ealing, where I was and where I always thought it would never happen, and other compass points in London—Croydon in the south, Tottenham in the north—and Manchester and Birmingham as well. So we do not know when they are going to happen, but there is a likelihood they will. There is a more than zero probability that in the next 130 years we will see some sort of urban, or suburban, disorder again, so we must never say never.
The 2011 riots were noteworthy for various reasons. Some of the commentary talked about the role and function of social media, and the issues of youth justice and the sentencing process were also raised. Some people saw the looting and violence as spelling the end of society as we know it, while others saw it as solidifying social bonds because of the “broom armies”—the community-led clean-ups that happened the day after. Some of the points that arose are addressed by the legislation: the motives of the perpetrators; whether it was a riot or not; whether it was a consumer orgy or a shopping spree. There is a new definition of riot in this Bill, which I am pleased to see is based on the Public Order Act 1986.
There are still bits and pieces that my residents and businesses would like to see addressed, and I could mention many more such businesses: the Red Lion pub, Santa Maria Pizza, the Hare and Tortoise, Visage Hair, and the Baby Boutique, whose proprietor went on television a lot in the heat of the moment blaming “feral youths”. It has since closed its doors and is now an online business only. Most of the measures they would like to see are here, but one or two could be added at a later stage.
In conclusion, this Bill is a vast improvement on the existing provisions, but if history repeats itself and this little known piece of legislation does have to be dusted down in the next 129 years, we might as well get it right now. On the whole, however, I commend it, and the hon. Member for Dudley South (Mike Wood) for bringing it to the House today.
It is a great pleasure to follow the hon. Member for Ealing Central and Acton (Dr Huq). A lot of the points she made were very poignant, especially in this debate on how we amend legislation to compensate businesses or individuals, or even where there has been damage to a home, when there has been a riot.
I must make a declaration: I am a commercial property owner. I congratulate my colleague and friend, my hon. Friend the Member for Dudley South (Mike Wood), on bringing this Bill to the House, as it is timely that we look at what we should do now compared with 1886. I should make another declaration: I am the small business ambassador to the Government, and I want to touch on how this change in legislation would help the self-employed.
Let me consider the issue in hand. Currently, if there is a riot, the police must pay. I think that is absolutely bonkers, because we are expecting the police to work harder than ever in this time of austerity when budgets are capped. We must look sensibly at what the police’s role is and what is expected of them, and at the responsibilities of society at large. We ask the police to pay with the budgets they have, but those budgets are correctly defined by the Government and do not cover compensation for individuals’ loss of property, whether that is business or private property.
It is timely that we stop that practice, but I am concerned by the sharp practices of insurance companies and what they might do in respect of insurance for businesses, small businesses and the self-employed. I was once a small businessman. In my experience, most insurance companies have policies that are broken up into various areas. I had to insure the glass of the building, the fabric of the building and loss of earnings, and the fixtures and fittings within the building. When riots occur—thankfully, we do not riot often in this country—there is no one-size-fits-all of damage. The hon. Lady mentioned a shop where there was no shop-front damage, but where inside there was total carnage. That shop was not covered. We should look at those aspects.
If we change the legislation so that insurance companies have to provide policies to business owners or individuals, the loss of earnings, fixtures and fittings, the fabric of the building and glass—the whole premises—should be covered under one clause when damage occurs. That is partly why businesses cannot get compensated quickly enough. The loss adjusters look into things separately and it takes them a long time to come to the right conclusion.
I know a lot of small businesses that utilise reconditioned machinery. It is a problem when an insurance company says, “We don’t do new for old,” and all the rest of it. In that limit of £1 million for the fabric of the building—I think I am correct in saying that—if everything comes under one banner when riot damage occurs and all insurances are grouped together, compensation should go up to a certain percentage of what the machinery would cost new. We could go round and round in circles—I saw it done many times when I was in business when people had robberies and machinery was damaged. They could not get compensated quickly enough through their insurance company.
Yes, a cap is welcome—I agree we should have caps—but if we go down that route, insurance companies should address responsibly the value of buildings. Most of my buildings were insured for up to £2 million. In that case, £1 million would not be adequate as a blanket cap, so there should be scope to allow insurance companies to value buildings and to say that a building must have a higher cap for insurance purposes.
However—I will say it as it is—I do not trust insurance companies. Insurance companies will try their damnedest to get out of paying in certain circumstances. Some insurance companies are more reputable than others. Hon. Members know them and hear of examples of sharp practices through our constituents. We must make it clear that, if there is to be a new law, the insurance companies cannot see it as a milch cow and start increasing the cost of policies. Businesses and the self-employed could be at the mercy of the insurance companies in conducting their livelihoods from thereon in.
The hon. Lady made a very interesting point. In 1886, we did not have cars or mobile businesses. Most self-employed people in this country today are mobile in that they do not operate from premises. Something should be incorporated in the Bill so that the self-employed—white van man, to coin a phrase and a category —are insured adequately. Most mobile businesses—those white or whatever colour vans—carry £50,000 in the back. That must be addressed. It should be pushed through to the insurance companies that, should there be a change in the law, mobile businesses affected by riots should be compensated by the same criteria as businesses with fixed fabric premises.
I do not want to take too much time in summing up. I am absolutely elated that the Bill is before the House again. I once more congratulate my hon. Friend. He has worked very hard on the Bill—he has hardly been out of his office these past few weeks because he has been putting so much work into it—and I commend him wholeheartedly. I hope that, after this grown-up debate, we see a change to our laws that encompasses what we do in our modern society.
I am grateful to have the opportunity to speak in the debate and congratulate the hon. Member for Dudley South (Mike Wood) on bringing the Bill to the House. I have reservations that I want to put before the House, but I agree with the general consensus that the 1886 Act is in serious need of review and change. It is right and appropriate that we have arrived at that point today.
The starting point for any discussion on riots is understanding that the basis of our policing in this country is consent—it is a source of great pride, and countries throughout the world look at policing in this country and try to learn from it. That is the idea that our police do not routinely carry guns and do not police by force. They police alongside the general public, and the general public act as citizens alongside them in the matter of policing. When that consent breaks down in a catastrophic way, we experience riots, which we do from time to time in our communities.
Because we all pay our taxes, and because we supply the uniforms and the badge and contribute to the training of our police officers, we rightly and appropriately say that, when the consent breaks down, people should be compensated for their loss—obviously, in our country, the vast majority of us do not participate in that consent breaking down and would not dream of participating in a riot. The detail of what that compensation should be is described in the 1886 Act.
It was a devastating four days for my constituency. It was a devastating moment. In constituencies such as Tottenham, we do not want another riot in a generation. Fortunately in Britain, we do not have areas that are so crippled by social unrest that the prospect of regeneration and a future looks bleak. Parts of the United States—I think of the city of Detroit—effectively went bankrupt when industry left, people fled, populations fell and buildings lay derelict for year after year. We do not want that in any community in this country, which is why the subject of the debate is so important.
When catastrophic riot occurs to a community, we must do all we can to put that community back together as quickly as possible, so that we do not see business and industry flee such that economic activity can never occur in that community again. I said this at the time of the 2011 riots: the vast majority of my constituents, including the vast majority of young people, were terrified in their homes. They did not participate in the riots. Indeed, because of the nature of the 24-hour media these days, with flames going up and the same scenes being repeated over and over again, it was a red rag to criminals all over London to participate in those riots.
I spent a lot of time with those small business owners on Tottenham High Road. I also spent some time with small business owners in communities such as Croydon. These were the most decent people, people who get up very early in the morning and finish work very late at night and who, frankly, do not rely on the state at all other than when they are ill. They were devastated by what had happened to them in the rioting over those four days.
For the first time, we saw riots in parts of London—Clapham, Ealing, in the constituency of my hon. Friend the Member for Ealing Central and Acton (Dr Huq), and Enfield—in which we might not previously have thought we would see them. Somehow, this was a moment in time when we needed to take stock and to ensure that the arrangements were right not only for those individuals who lost their businesses but for those who lost their homes. I pay tribute to the men and women of my constituency who, the morning after the riots, standing only in their pyjamas, holding their children, had had their homes burnt to the ground. At the time, promises were made. A riot was declared, and it is appropriate that we return to the circumstances in which a riot is declared as that is covered in the Bill. The assumption is that that decision will be made by the police.
The Government then said, quite rightly, tough things about those who had rioted and said to the victims, “We will compensate you. We will put you back to where you were.” That was said by the Prime Minister, by the Mayor of London and by other city leaders across the country. Sometimes, when we see a terrible event, usually in a country a long way from here—an earthquake, a tsunami, a flood, a terrible and horrific natural event that disrupts lives and causes damage—we can go to a bank and contribute a little bit of money towards a relief fund. One gets the sense that the whole world combines so that people affected by the event can be brought back to normal. Why, then, did small business owners up and down the country find that three months, four months, six months, a year, two years or three years after the events of 2011 they still had not been compensated? I can think of one business in Tottenham that still has not been compensated.
It was a shocking example of bureaucracy out of control. The performance was patchy across different police forces, and patchy in partnership with the insurance industry. I was very critical of the insurance industry at the time, and the insensitivity of loss adjusters was extraordinary. People were weeping because of the hurdles they were being put through and how they were made to feel as though the rioting was somehow their fault. I must put these comments in the strongest terms because if I had some of those small business owners standing by my side they would expect me to say this. It was not a pretty sight. They said to me time and time again that if their business had been caught up in a tsunami in Thailand, they would have been better treated. They have said to me: “This was no fault of mine. I pay my taxes, I do not rely on the state, but my business is gone, I have had a heart attack. I can’t eat. I keep seeing flashes of the fire. Everything has been destroyed and a year later I have nothing.” Time and time again those were the stories we heard across the country.
I strongly agree with what the right hon. Gentleman is saying, but does he recognise that the key part of this Bill, putting the riot claims bureau on a statutory footing, will address exactly the kind of issues that he identifies, such as the unnecessary and unacceptable delays in getting the money that is needed to the people who are trying to rebuild their lives and their businesses?
The hon. Gentleman is right, of course. The riot claims bureau will be a step forward, but let us be absolutely clear about it. It sounds good, does it not, the riot claims bureau? We get the sense of bureaucrats hard at work somewhere in the Home Office as we speak. No one is staffing the riot claims bureau as a result of the Bill; I suspect it will be brought together rapidly in the event of a riot.
It is important to ensure that the expertise and knowledge are present, that there have been practice exercises and that there is understanding of the sorts of communities that experience such things. There must be a sense that we must put small businesses first on these occasions, because often the big businesses can defend themselves. Members might remember from the riots the atrocious behaviour of the head of JD Sports, who said that it was great that people were breaking down windows to grab trainers because it showed how important his products were. I would suggest that that chief executive can defend himself, but he was in a very different position from those on the high street.
I pay tribute to Sir Bill Castell, chair of the Wellcome Trust and one of the great industrialists of our country. He was chair of the High Street Fund, which did so much to support small businesses across the country. I will never forget Sir Bill ringing me up just a day after the riots, determined to make a difference and to bring big business together to support small business and to bring those funds to individuals. I will also not forget Bill’s consternation that months later funds had not been paid out under the Riot (Damages) Act and that when those funds were paid out, despite the fact that the High Street Fund was a charity relying on contributions from big business, they were discounted against that money. I say to the hon. Member for Dudley South, will we see that happen again?
In these circumstances, when there is philanthropy and charity and when human beings come on side and say that they will support somebody, that should not be discounted against the obligations of the state. We should not be saying that it is for charity to pick up the tab and reduce the burden that we all face as taxpayers when consents break down in this way. I know that Sir Bill felt very strongly about that and I hope that we might get an answer about what will happen in the future in this regard.
I come back to the point about the expertise. Will the bureau have the expertise? How many people will staff it? How will it be brought together? How will it be different from the patchy performance we have seen? For example, I understand that the police in Manchester performed quickly and were able to pay out quickly, although they had a smaller group of businesses involved, whereas the Met were woefully slow in paying out. That led to the then Leader of the Opposition coming to the Dispatch Box during Prime Minister’s questions and asking when businesses would receive their funds. He did that well over a year after the riots—the Met’s performance was that poor. It is important to understand what the bureau will look like and to make sure that it is not just a fancy name, but will work effectively.
I come to the role of loss adjusters. The hon. Gentleman is right that new-for-old compensation will mitigate some of the insensitivity that so many business owners said they experienced as they were quizzed about the age of their products, whether they were sure those products were in the premises, where they were in the building, why they could not get into the building, why their English was not good enough to fill in a form, and so on. I hope new for old will lead to a better system.
In these circumstances there should be a loss of earnings component. If we were able to pay out relatively quickly, the loss of earnings component would be reduced, which was not the case last time round when the process was so poorly handled. Many of us may not be here for the next set of riots in our country. I hope we are not here—I hope it is that far away—but if the claims process goes on for a long time, there is a terrible loss of earnings for small businesses. I can think of a wonderful mechanic’s business that was burned to the ground. It sat next to the iconic Union building in Tottenham that was also burned to the ground. I think of the wonderful Cypriot owner. He came to see me, devastated by the flooding and destruction of his family business. The road was shut off, the building next to it had been burned down and it was months before he could get into his business premises. He had a heart attack. He was laid low at home, panicking about the pressure of finance and money. I will remember that man and his family for the rest of my life. So I believe that loss of earnings should be a component of the compensation. Consequential earnings are also fundamental when the state breaks down in this way.
The cap of £1 million is right and totally understandable. It is important, though, that that cap is sufficiently high to compensate the vast majority of businesses. I think that that probably is the case, but I would like reassurance that it is index-linked and will rise. It is £1 million today, but what will it be in 50 years or 100 years? In areas of the country that are fragile, where there is deprivation or pockets of deprivation, we must not scare big business away because it fears that it would not be adequately compensated in the event of a riot. We must not do what has happened in other parts of the world, particularly the United States. It is important that private insurance is available for larger businesses for which, if they were to suffer a loss, it would be substantially more than £1 million.
It is easy to see how a relatively small business with stock could lose more than £1 million over several months in the circumstances. I am a little bit nervous about what the effect of the cap may be and whether it will harm regeneration and the prospect of those communities moving forward towards prosperity through regeneration. On the whole, people do not tend to riot if they have a job and a mortgage, but in parts of the country that cannot always be guaranteed, so it is important that big business is there, small business is supported, the £1 million cap is not too low, and that we are sure the insurance industry will provide support beyond that £1 million.
We need to be clear that under-insurance is common in the kind of communities that saw rioting in 2011 and communities where riots have historically taken place in this country. Because of the delicate margins with which businesses operate in such communities, there is often under-insurance. It was the people who were under-insured who paid the heaviest price last time round. They were able to claim from the High Street Fund, but that was discounted down the line. They were the ones who found it hardest to get payments under the Riot (Damages) Act in good time.
The 42 days feels like a long period. People know the riot has happened to them. They must know that there is some means of compensation. People say that on the news, but it does not reach them because they are in shock, because everything they own has been burned to the ground, and they have no paperwork, they have no ID, they do not know who they are. This is not just about shops; it is about homes as well. I am worried about the 42-day period. I can think of many constituents who would not meet that.
It might help the right hon. Gentleman to know that if the Bill were to pass, that would be dealt with in regulations. Our intention is that the 42 days would be a notification period—a time for people to give notice that they were going to make a claim—but there would a further 90-day period to quantify that claim and provide further details. I hope I can offer him some reassurance that we are thinking carefully about lessons from 2011 and about time periods that will allow people to gather paperwork and quantify the amounts that they are claiming for.
I am grateful for that indication. My hon. Friend the Member for West Ham (Lyn Brown) on the Opposition Front Bench also has the kind of constituency where I am sure she would recognise that, in our multicultural London, many businesses are run by people who speak English as a second language and who, in times of riots, are a long way from the state. That is because they do not rely on the state very much at all. Even notifying their intention to make a claim is not something that they would understand. Many of my constituents did not understand that they could make a claim. They simply sat with their head in their hands, under-insured and not aware that the state would support them in this way. They got to the understanding that they could make a claim because word about the High Street Fund spread quickly among the businesses alongside theirs. That was how they started to realise that they, too, could make a claim. I am grateful that the Minister has indicated some flexibility on that, but I wanted to stress my concerns that people might be caught out of the system.
I broadly welcome what has been said today, with some reservations about the nature of the bureau and the expertise that it will need, and real concern that we should understand the sort of areas that can experience riots in our country and why it is important that, as a nation, we support those communities.
There is a potential conflict between the Met declaring a riot and the fact that the budget comes from the declarer. I hope that the Minister will say a little more about the circumstances in which a riot is declared, because in 2011 the situation was so patently clear that it would have been very hard for the Met not to declare a riot, but that is not always the case. I remember just a few hours into the rioting the former Member for Holborn and St Pancras said to me, “Watch and see if it actually declares this to be a riot.” I would therefore like some reassurance about the circumstances in which a riot is declared, because that could be a source of contention.
When the London Assembly looked into the 2011 riots, it came to the view that the police were handling the situation so badly that the money ought to be in the local authority’s pot. There is some merit in that, because local authorities are much closer to local businesses and can liaise very intently with Government. The money is coming from the Treasury anyway—let us be clear about that—but how it works within Government is the big question. I had sympathy with the London Assembly’s view, although I think that it is important that the police understand that consent must not break down and that, if it does, it comes from their budget stream. There is a discussion to be had about that potential conflict. The Bill is settled on the money coming from the police. It is therefore important to understand the moment at which a riot is declared and how that decision is reached.
There was a sense in those early months that the Met was losing money as a consequence of having to give money out—that there was no extra money from the Treasury. We need our most deprived communities to be policed; we do not want all the money available to go to compensation. That is a complexity in the Bill that I think requires further explanation.
It is a pleasure to follow the right hon. Member for Tottenham (Mr Lammy), particularly given his wide experience, his knowledge of the current legislation and the many concerns he has highlighted about it.
It is worth considering just how ancient the current legislation is. In 1886 Queen Victoria was on the throne, the Severn railway tunnel had just opened and, as the hon. Member for Ealing Central and Acton (Dr Huq) mentioned, Mercedes-Benz was experimenting with the first petrol engine, never mind thinking that someday there would be millions of them on the roads. There were also riots that year: one in west London and a couple in Northern Ireland, as we now know it, over proposed legislation for Irish Home Rule. It is also interesting to read the language of the 1886 Act. It refers to
“persons riotously and tumultuously assembled”.
I wonder whether many people might think that I could make a claim if my phone was damaged during Prime Minister’s questions on a Wednesday.
It is clear that the current legislation has come to the end of the line and desperately needs an overhaul. We all hope that riots do not happen and that order is kept, but it would be unrealistic to believe that there will not be another incident in the next 20 or 30 years that requires modern riot damages legislation. As several Members have noted in interventions, the age of the current legislation means that it is no longer fit for the modern age. For example, many small businesses depend on a van or mobile equipment. Even if they were compensated for damage to a shop or to putative premises, the loss of a van or vehicle would cause far more damage.
What struck me when I was self-employed is the fact that rioting, terrorism and even political activity—that could cover what we do in this Chamber—are excluded in certain forms of insurance for commercial properties, especially for the self-employed. Does my hon. Friend agree that that should also be considered?
My hon. Friend makes a strong point. That partly reflects the change of era. There was terrorism in the 1880s, but its impact was very different from what a Semtex explosion would do today. The nature of terrorism has changed so greatly, as we saw in the recent attacks in Paris, with the use of automatic battlefield weaponry. In 1886, an automatic weapon was a Gatling gun, which needed a crew to operate it. Sadly, today’s automatic weapons can be carried quite easily. It is therefore absolutely right that we update the legislation. We should give the Bill a Second Reading and then in Committee look in detail at how we can make it suitable for the modern era. On political activity, for example, were the recent events at the Cereal Killer Cafe a disturbance or a riot? My hon. Friend sums up the issues perfectly. In Committee we will look in detail at where we should draw the lines, using modern language, not language that was suitable in the late 19th century.
It is also worth dwelling on the fact that the current legislation—it seems laughable to describe something from the 1880s as current—means that there is strict liability on the police. As has been mentioned, the areas that have been affected by rioting tend to be those areas that rely most on their local police force. If the local police force ends up picking up the bill for a very large amount of riot compensation, ultimately that is likely to be paid for either by putting additional taxes on communities that are least likely to be able to afford them, or by cutting police provision, and that would be in an area that had just suffered rioting and might therefore require more police provision. I respect the Government’s intervention after 2011 to prevent that from happening, but that is not guaranteed for the future. That is another reason why it is vital to update the legislation so that it is not just one community taking the risk.
As we heard in an earlier speech, some police forces could be bankrupted by a large-scale riot that affected particular commercial interests in their area. That is just not a sensible position to be in. That could also act as a disincentive to have economic activity in the local area. If we know that for some reason there might be a public order disturbance—even a once-in-100-years scenario —and that a particular economic interest could be damaged or destroyed, we would know that ultimately we might end up copping the whole bill for compensation. A review of that situation is long overdue.
Therefore, I also think that it is right to include the £1 million cap. Statistics from the House of Commons Library suggest that about 99% of claims made in 2011 would be covered under these proposals. To be clear, this will not be denying justice to thousands of interests; it is about having fairness between the large interests that are the most able to protect themselves and the smaller interests that find it the most difficult.
Not only would 99% of the claims that were paid following the 2011 riots have been unaffected by the £1 million cap, but over 80% of the claims paid in 2011 paid for insured claims, so that money was effectively going straight to the insurance companies.
I thank my hon. Friend for that intervention. As he says, the result is that a lot ends up going to the insurance companies, although I think that we will need to consider carefully the impact of any change, because, as my hon. Friend the Member for Morecambe and Lunesdale (David Morris) and the right hon. Member for Tottenham have pointed out, ultimately insurance is based on the premiums paid by people, so there is a balance to be struck. If the risks to insurers increase and the amount they have to pay out increases, much of that will likely be recovered through increased premiums. That is why we will need a good discussion about that in Committee. [Interruption.] I see the hon. Member for West Ham (Lyn Brown) nodding. It makes sense to update the legislation.
I was particularly struck by an intervention by the hon. Member for Croydon North (Mr Reed) on my hon. Friend the Member for Dudley South (Mike Wood). He said that people who had tried to help out their neighbours with a charity collection found that they had probably ended up helping out those responsible for paying compensation. The Bill Committee should look at that. People who give money and assistance voluntarily and out of the goodness of their hearts would not want to think that they were, in effect, saving money for the person who was supposed to pay compensation. They are de minimis amounts, but the details should certainly be looked at in Committee.
On limits placed on compensation, it is right to discuss the role of the taxpayer in protecting people against the breakdown of public order and the legitimate role of private insurance. There are other crimes whereby, if someone is not insured, they will not be compensated for their losses. Nobody chooses for their shop or premises to be affected by a riot, or to have their home burgled or for someone to steal large amounts of money from them. Nobody chooses for someone to commit arson and set fire to their business, potentially causing huge amounts of losses and, in some cases, putting them out of business. It is important that we look at the traditional approach taken to riots, but we must also balance that with what is appropriate for private insurance, particularly with regard to consequential loss. It is difficult to know where to draw the line, which is why it makes eminent sense to have a more modern definition.
The current time limit is also a subject of debate. It has been proposed that there should be a 42-day limit during which people could make an initial claim. As I said in an intervention, I suspect that not many people, including virtually everyone in this House, were aware of the impact of the Riot (Damages) Act 1886 until after the 2011 riots, which brought the issue suddenly to the fore. It would probably be much easier for various communities to understand modern legislation. I was reassured to hear the Minister say in an intervention that, under the 42-day limit, people could simply say, “I am likely to submit a full claim.”
The Minister nods. It makes sense that people should not have to get absolutely everything together and that they would then have a further 90 days to make the full claim. That could be explored further in Committee, but it will give anyone affected by a riot, who will clearly be going through emotional distress and experiencing financial problems, the opportunity to flag up their claim and then submit the detail. That is far fairer than the current situation. If we do not agree to give the Bill a Second Reading, we must remember that we will end up not in a better position, but with that laid out in 1886, which has made it extremely hard for many people who are not conversant with the financial system. Unlike larger businesses, many smaller businesses do not have an accounts department to file a claim for the compensation they are due. That is another good reason to support the Bill.
On the provision on the replacement of property, it is bizarre to argue in favour of old for old. As my hon. Friend the Member for Dudley South touched on in his introduction, that means that people have to find something that matches what they have lost. It is unlikely, particularly in the aftermath of a riot, that they are going to find a five-year-old piece of equipment of exactly the same make and in exactly the same condition as that which has been lost. That is why insurance has changed from an old-for-old and like-for-like approach, as was the case in the Victorian era, to allowing people practically to replace an item.
On the limitation of damages, I suspect that many businesses that get same-for-same compensation end up using consequential loss compensation to find the piece of equipment they need to replace the item for which they are being compensated. Businesses in more deprived communities are less likely to have the most modern, advanced and expensive equipment, so they spend a lot of time trying to find a new piece of kit, whereas a large business can bring in replacement equipment from elsewhere as part of its existing renewal process. The proposed reform is eminently sensible. It will put smaller businesses in the same position as their wealthy counterparts. They will be able to buy a replacement and avail themselves of the compensation at a later date. Many Members have indicated how important that is and I think it is the most sensible change among a raft of very sensible changes proposed by the Bill.
It is also appropriate to introduce a structure to decide what constitutes a riot. I also agree with the proposal to transfer claims nationally if more than one area is affected or there is a particularly significant riot. Clearly, the Committee will discuss the detail—it is not a matter for the Second Reading debate—but the proposed provisions make eminent sense. I look forward to them being fleshed out in more detail in Committee.
It has been a pleasure to speak in this debate and to have heard some of the other comments that have been made. I thank my hon. Friend in particular for the work he has done in promoting the Bill. We should give it a Second Reading so that we can have riot damages legislation that is fit for the 21st century, not the needs of the 19th century.
It is a great pleasure to follow my hon. Friend the Member for Torbay (Kevin Foster), and I congratulate my hon. Friend the Member for Dudley South (Mike Wood), who is the proud son of a west midlands police officer. I know from my dealings with him on matters to do with West Midlands police and fairer funding that he is a strong advocate for law and order and justice in the west midlands.
I commend and support the Bill. The right hon. Member for Tottenham (Mr Lammy), who is no longer in the Chamber, made a powerful speech in the shadow of the 2011 riots, which were obviously a great shock. What started as a local, limited protest burst into rank criminality. Ordinary individuals going about their daily lives found themselves embroiled in terror, violence and damage to property on an unprecedented scale in my lifetime. Even in daylight hours, ordinary people were being abused by feral elements in our society.
At the time, the police cautiously and correctly went about extinguishing those four days of violence in our society. Following on from that, the Prime Minister made many telling remarks, including that we would hunt down those responsible and bring them to justice. That is exactly what happened. I was pleased that the judiciary listened to the public voice on that occasion and handed out some exemplary sentences to those who had rioted. There was much talk in the newspapers about people being sent to prison for stealing relatively small items such as bottles of water, but it was the aggravated nature of the criminality that counted in this respect. Our authorities did their job and correctly followed through on what they had promised. The only area where there were problems—this has been mentioned by many hon. Members—related to compensation and delays to compensation. One of the main reasons for that was that they were acting under the auspices of antiquated and outdated legislation.
The Bill, which I hope will proceed to the Committee stage, correctly defines “riot”. It gives it a much more modern, telling and understandable definition. It tidies up much of the antiquated language used in the late 19th century. As the right hon. Member for Tottenham mentioned, it is difficult for people who do not have English as their first language to understand what constitutes a riot and to apply for compensation under the 1886 Act.
I am sure my hon. Friend would agree that many people for whom English is their first language would find it difficult to understand the definitions in the 1886 Act.
English is my first language, and I, too, find it very difficult to understand fully the wording of the Act. That is not the only reason, but it is another reason why we need this update. Let us not forget that the Bill comes after very extensive, independent reviews, such as the Kinghan review. I welcome the fact that there is a lot of thought and consideration behind the Bill. We can see that in the careful way that many of its measures have been drafted and in the way it has been promoted by my hon. Friend the Member for Dudley South, who has worked incredibly hard on it.
My hon. Friend the Member for Torbay focused extensively on the provision of new for old, and I completely agree with him. As someone who worked on a range of financial matters, particularly personal finance, for the best part of a decade and a half, I must say that I know of no insurance policy that would replace items on an old for old basis. That almost disappeared 20 or 30 years ago, so to continue to insist that an item is replaced by one of a similar age is, frankly, ridiculous and completely out of kilter with modern society and modern insurance practices. The provision of new for old will give greater clarity and certainty for all those affected by riot, including small businesses.
The cap of £1 million per claim is eminently sensible. As I understand it, if there is a claim of £1 million for a building, there may be a separate claim by another individual for the loss of its fabric and other elements. That aspect takes good account of rising modern property prices. The advent of a riot claims bureau is also welcome. I want to know a bit more detail about exactly how it will work, but I am sure that that, like many other elements of the Bill, will be examined in Committee.
The Bill reflects the reality of modern insurance patterns not only in the provision of new for old, but, frankly, in recognising the existence of the motor car, which did not exist in 1886. I believe it does not make provision for third-party cover. As someone who has written about insurance and other financial matters, I know that third-party car insurance is almost extinct. In fact, if someone applies for a quote on a website, they will almost invariably find that car insurers’ quotations are higher for third-party cover than for fully comprehensive cover. To be honest, car insurers think someone taking out third-party cover is a bad insurance risk per se, so they are unlikely to write the business. It is good that the Bill covers the modern car, as well as tools and other items that may be left in vehicles overnight.
The Bill will allow for compensation to be paid more quickly, which we all desire. The proof of the pudding will of course be in the eating, but as my hon. Friend the Member for Torbay said, if the Bill does not go into Committee, we will simply be left with the 1886 Act and we already know how it works—or does not work—in relation to compensation. I do not agree with the idea that legislation should be introduced just because something must be done, but the fact that the Bill has already been considered extensively by an independent review reassures me that such matters will be looked at further.
I share some of the concerns expressed by the right hon. Member for Tottenham about the 42-day limit, so I welcome the Minister’s comments. I look forward to seeing how that plays out in Committee in catering for those who, as the right hon. Gentleman said, may be suffering a great deal of shock, may not have English as their first language and may need a gentler approach to time limits and more understanding in relation to time barring.
My hon. Friend the Member for Torbay asked whether the Bill would lead to increased premiums. Most claims will be paid out up to the £1 million cap, but, knowing the insurance market, I genuinely believe that the effect on premiums would be very marginal. Home insurance is in fact a very profitable business, unlike—strangely enough—car insurance. In the past 20 years, the car insurance industry has made a profit from writing its policies on only four occasions. Home insurance is generally quite a cash cow—a Steady Eddie, as it were—for the insurance industry. Let us not forget that there are moves ahead to help out on insurance premiums, such as by clamping down on the compensation culture and the no win, no fee blight in our society. Looking at it in the round, the effect of the Bill will be very marginal and will not be felt to the degree that some people fear.
Some legislation is brought forward almost because it is said that something has to be done and this feels as if we are doing something—I always vehemently oppose that aspect of lawmaking—but the Bill advances and upgrades the law, makes it more relevant to our society and sets us on a new footing so that if such an awful eventuality happens again, we can, I hope, respond more quickly and in a better manner.
I draw the House’s attention to my entry in the Register of Members’ Financial Interests. I hope that none of the properties I own is ever affected by a riot, but that is a theoretical possibility.
I rise to speak briefly in support of the Bill. I congratulate my hon. Friend the Member for Dudley South (Mike Wood) on introducing it this morning. It is a pleasure to debate a Bill that does not seek to add further cumbersome regulations or which creates more problems than it seeks to solve.
We have heard a lot about what happened in London in 2011, but, as the right hon. Member for Tottenham (Mr Lammy) mentioned, Manchester and Salford were also affected by riots in the summer of 2011. In August 2012, it was reported that Greater Manchester police had paid out £442,000 for uninsured claims and £584,000 for insured claims under the Riot (Damages) Act 1886. It was a very big story locally. The right hon. Gentleman mentioned JD Sports, which has its headquarters in the borough of Bury. It was one of the companies affected when its store in Manchester was looted.
As hon. Members have said, the riots demonstrated the need to look again at the 1886 Act and to update what is widely accepted to be archaic and out-of-date legislation. While updating it, however, we will still maintain the principle that as the police are responsible for the maintenance of law and order, they should be liable if law and order breaks down and a riot breaks out. The Kinghan review, which was set up to look into how the 1886 Act could be improved, decided that maintaining such a statutory principle was the best way forward, but we could have provided for these losses to be dealt with as losses for uninsured motorists are dealt with through the Motor Insurers Bureau. I agree that we should maintain the existing principle from 1886.
The legislation has to deal with the competing interests of taxpayers, whom the Government want to protect by restricting the amount that is paid out, and uninsured businesses and individuals, who need to be protected when they are affected by loss. It makes absolute sense in the 21st century that the legislation should cover vehicles.
I agree that there is a simplicity in having a cap on claims of £1 million, but the amount needs to be kept under review. We do not want to think in 40 or 50 years’ time, “Oh dear, we should have reviewed that £1 million limit because it is woefully inadequate.”
To reassure my hon. Friend, there is provision in the Bill for the sum to be amended by regulation, without the need for primary legislation. The intention is very much for the £1 million to increase as appropriate.
My hon. Friend is right that that ability is written into the Bill, but it requires the Government to take a proactive approach and make use of it.
On the very sensible point that the hon. Gentleman is making, is he worried, as I am, that the Government will recognise that £1 million is inadequate only after another riot? It is very unlikely that the Government would return to the limit between riots, because there would be no reason to do so.
That is my concern. We need an assurance from the Minister that someone will look at the limit every few years because, as the right hon. Gentleman says, there is a danger that the legislation will be dusted down and looked at only after the event, as happened after the 2011 riots, when everybody realises that it is woefully out of date. A proactive approach is therefore needed.
Where I perhaps part company with the right hon. Gentleman is on whether the riot claims bureau should be a permanent body. Was he suggesting it should be?
No, he was not suggesting that. I would not have agreed with that. I do not think we could set up such a body and have it permanently in operation.
Given the infrequency of riots, it would be quite a nice job to have, because someone would not work very hard, would they?
That is the point I am making. Thinking back to the Toxteth riots in the early ’80s, they are mercifully infrequent.
In urban areas that are seen as most at risk, it would make sense to have a stand-alone leaflet available that could be distributed in the event of a riot, so that business owners and affected individuals could be given information simply and straightforwardly in the immediate aftermath to put their minds at ease. They would then know what they needed to do and that they needed to do it within 42 days, or whatever the limit was. They would be aware straight away of the need to take action. In this day and age, there could also be a permanent website after the Bill reaches the statute book, as I hope it will, that can be found easily by somebody who does a search on the internet.
I am certain that when the right hon. Member for Tottenham (Mr Lammy) went around all the destroyed buildings and spoke to the people whose livelihoods had been ruined, he told them, “This is what you’ve got to do.” I entirely endorse the point that an aide memoire should be available immediately to people who wanted to help, particularly Members of Parliament. This is a situation where Members of Parliament can help out big time. When there is a riot, it affects us directly, and that goes straight the way through local government. MPs should be there in protection of their constituents. They should have an aide memoire in their pocket that says, “Sign there”.
I am grateful to my hon. Friend for his support on that point.
In conclusion, I congratulate again my hon. Friend the Member for Dudley South on introducing the Bill. He is absolutely right that the legislation should be updated and the archaic language replaced. It is one of the key requirements on us as legislators to produce legislation that can be understood not just by us, but by those who have to use it outside this place—in this case, by the police and members of the public who may be affected in the event of a riot. That is what the Bill seeks to do. I wish it well and hope it has a speedy passage through this House. [Interruption.]
Sorry, Madam Deputy Speaker; I was sat quite comfortably, waiting for the hon. Member for Bury North (Mr Nuttall) to perform his usual tour de force to the Chamber, and thought I had more time.
I congratulate the hon. Member for Dudley South (Mike Wood) on bringing the Bill before the House. I was saddened to hear that his popularity has declined. I hope that it does not spoil his Christmas. I was rather worried to hear the story about the rogue squirrel. As a city girl who has only just started to experience these creatures in her back garden, it has made me a little more wary of coming into contact with them.
The riots that blighted many of our cities and towns in August 2011 were a truly destructive event. More than 5,000 crimes were recorded in just a few days, five people lost their lives and it has been estimated that the material cost of the London riots alone was over half a billion pounds. That material cost has fallen on the public, local businesses, the police and the taxpayer during a period of harsh economic conditions.
As we have heard today, the existing legal framework for compensating the victims of riots has proven to be inadequate. It is therefore right that we consider carefully how the financial burden of any future riot events should be shouldered.
The House has heard that there is an established principle that the police are liable for damage incurred during riots. There is an implied contract between the public and the police: the public will respect the authority of the police and, in return, the police will secure law and order for the public. It has been contended that when riots break out and property is damaged, the police have failed to keep their end of the bargain and are therefore strictly liable for damages incurred.
As we have heard a number of times today, that principle is enforced through the Riot (Damages) Act 1886. It was perhaps inevitable that a 130-year-old piece of legislation did not prove to be up to the task of handling the aftermath of the 2011 riots, which were as widespread and destructive as any we have seen for a generation. The language of the Act, as Members have said, is archaic, defining riots as
“persons riotously and tumultuously assembled together”.
That sounds like a decent football match.
Only West Ham.
That’s when we’re happy.
Which is not very often.
No, we are doing quite well.
The 1886 Act pays no consideration to what are now important questions for any legislation dealing with insurance and compensation. For understandable reasons, there is no mention of motor vehicles. There is no consideration of interim compensations for victims while claims are being processed or of the new-for-old replacement of damaged goods, and there are no powers for the police to delegate administering the compensation process to experts in legal claims. As a result, in 2014, three years after the 2011 riots, victims were still waiting for over £40 million of compensation to be paid out. This is an inordinately long wait for compensation. The existing legislation has therefore been shown to be not fit for purpose, and so the hon. Member for Dudley South is doing the House a favour today.
I pay tribute to my hon. Friend the Member for Croydon North (Mr Reed) for his work on this issue. His constituency was hit as hard by the 2011 riots as many others, and he has worked tirelessly highlighting the difficulty that locals have had in receiving the compensation that they should be entitled to. He used the Freedom of Information Act to show that three years after the riots, 133 victims in London had yet to receive a penny in compensation from the police. Just 16% of the requested compensation had been paid out at that point. These victims of rioting must feel badly let down considering that the Prime Minister had promised they would not be left out of pocket. Without his tireless work and that of my right hon. Friend the Member for Tottenham (Mr Lammy), I gently say that I doubt this Bill would have been before the House today.
To be fair to the Government, being even-handed on a Friday, they have recognised the problems that people have had in receiving compensation. They commissioned an independent review of existing legislation chaired by Neil Kinghan. The Kinghan review was published in September 2013, and it made a series of recommendations. It recommended that the principle that the police are strictly liable for damages incurred during riots ought to be maintained; that legislation ought to protect insurers so as not to deter people from taking out insurance policies, or to inflate the cost of insurance; and that payments to insurance firms should be limited to businesses insured with an annual turnover of less than £2 million. It suggested that legislation should allow the police to delegate the administering of claims to a body made up of insurance professionals rather than the police having to take on that complex administrative task themselves. A further important recommendation was that allowance be made for compensating at the cost of replacement goods—old for new—as is the case in most modern insurance practice. The review judged that new legislation replacing the 1886 Act would be necessary.
The Government ran a consultation exercise after the publication of the Kinghan review, and the Bill before us, as we have heard, has the support of the Government and takes up many of the review’s recommendations. This includes a number of provisions that are uncontentious but nevertheless important, such as including cars within the scope of compensation and providing for interim payments. Given the clear need to update the legislation that governs riot compensation, we welcome this Bill and believe that it ought to move forward to Committee, where it can receive further scrutiny.
While we support the principle that the police ought to be strictly liable for damages incurred during the course of a riot, it is important that our police forces are not asked to promise a blank cheque. It is impossible for police forces to plan and budget for the possibility of having to compensate victims of riots without some understanding of the likely costs to be involved. This is particularly true when our police forces are still absorbing the 17,000 police officer cuts from the previous Parliament. It might be Friday but this is not politics-free.
To deal with this problem, the Kinghan review originally proposed that insurers would be able to claim only for businesses with an annual turnover lower than £2 million. The Bill instead places a £1 million cap on the total claim that can be made, and removes any reference to company turnover. The Association of British Insurers estimates that 99% of commercial property claims for material damage from the August 2011 riots would have been fully covered by this new £1 million limit. The Home Office makes similar estimates, and the impact assessment that accompanies the Bill suggests that just 19 of 1,988 impacted businesses would wish to claim over £1 million in the case of large-scale rioting. This appears to be a significant improvement on the turnover-based model suggested by Kinghan. According to the ABI, only 33% of commercial property claims for material damage during the August 2011 riots came from businesses with a turnover of less than £2 million. There were serious fears that the £2 million turnover limit would have therefore created a disincentive for large businesses to set up in areas that they would possibly consider to be susceptible to rioting, and that some businesses would be left unfairly out of pocket. These details need to be looked at very closely as the Bill moves through Committee, particularly as the £1 million limit represents a departure from the recommendations by the Kinghan review and may have an impact on insurance premiums. I want to ensure that the Government are taking seriously the competing interests of the insurance industry, businesses, the police, and the public finances.
Another area of concern that we will pursue in Committee is what constitutes a riot and who decides when a riot has taken place. At present, the Bill empowers police and crime commissioners to determine whether there has or has not been a riot, which they must do in accordance with the definition of a riot provided by the Public Order Act 1986. It is the budgets of police and crime commissioners that will ultimately be hurt if they do judge that there has been a riot, so we might, in effect, be allowing the police to mark their own homework. This was raised by Mark Shepherd of the ABI, who has called for
“a more independent determination of when a disturbance is a riot”.
That might be appropriate given the quasi-judicial nature of the decision.
My final area of concern is that the Bill does not cover loss of trade for businesses, loss of rent for landlords, or the cost of alternative accommodation needed in the wake of a riot. These are all instances of what insurers call consequential loss. Many of those most severely impacted by the 2011 riots would therefore not have been be fully compensated through the provisions in this Bill. That is particularly true of businesses with small capital holdings who rely on trade that has been disrupted by rioting. This needs to be carefully looked at during the next stages of the legislative process so that we can provide the most equitable deal possible between the police and the community in the unwelcome event of future riots.
The current arrangements for dealing with compensation after riots is clearly inadequate, and a new framework is required. I look forward to going through the details of the Bill to make sure that we can have a system that commands the support of the public, business, and the police alike. That will mean looking carefully at the caps on compensation, the process of determining when a riot has taken place, and the clauses setting out which losses are, and which are not, eligible for compensation. We must make sure that we try to minimise the numbers of people who fall victims of future riots, as, unfortunately, so many did in 2011.
I thank hon. Members from both sides of the House for an informative and passionate debate that has reflected the interests of their constituents on the issue of riot compensation. I particularly commend my hon. Friend the Member for Dudley South (Mike Wood) for his hard work, his approach in bringing the Bill before the House, and the way that he has sought to conduct this morning’s debate. He has achieved consensus on the need to move forward and the need for change, and I know how hard that can be. He stated that as a new Member, he has become popular ever since he was successful in the ballot to introduce a private Member’s Bill, but given how he has conducted himself thus far, I suspect that he will remain very popular in future, and I commend him for that.
I have listened to the speeches made during this debate, and there is no doubt that the 2011 riots remain fresh in the minds of many. As my hon. Friend said, it is important that we respond effectively and promptly to those whose lives have been wrecked as a consequence of the riots. I share his hope that this Bill will never be used, but it is right that we prepare for such eventualities and learn the lessons of the past to meet the potential challenges of the future. The Government acknowledge that payment of riot compensation in the aftermath of August 2011 was not as streamlined as it could have been, first because processes had to be put in place at short notice, and secondly because decision makers were required to work with a piece of legislation that is almost 130 years old.
We may not have “riotous” assembly in this House—we certainly do not—but we might have “tumultuous” assembly. The sense that that terminology may remain—and indeed was—relevant when claims were being considered after the August 2011 riots, underlines the need for us to improve and modernise the way that we approach the payment of compensation to individuals and businesses who experience losses or damage to property caused by riots. I therefore commend the hon. Members for Ealing Central and Acton (Dr Huq) and for West Ham (Lyn Brown), the right hon. Member for Tottenham (Mr Lammy), and my hon. Friends the Members for Torbay (Kevin Foster), for Solihull (Julian Knight), and for Bury North (Mr Nuttall), who broadly welcomed the need to move forward on this issue.
The Minister may recall the former Member for Croydon North, Malcolm Wicks, who is no longer with us. He made an important contribution to the Croydon community immediately after the riots.
The right hon. Gentleman is right to remember Malcolm Wicks, and the steps that he took in his community. That is reflected by the hon. Members who represent Croydon today and who are following through on that tradition of representing their constituents at what was an extraordinarily difficult time. That shows how we as Members of Parliament can respond and be community champions in seeking to provide aid and assistance to our constituents at times of significant trouble in their lives. The right hon. Gentleman is right to remember those who have served this House with dignity and honour in achieving that, and I underline what he has said.
We recognise that change is needed, and in keeping with the overall objective of modernising riot compensation arrangements, the Bill simplifies the definition of a riot that is to be used when determining claims. Currently, decision makers must consider the definition in the Riot (Damages) Act 1886, and the Public Order Act 1986 when determining whether individual claims should be considered as relating to a riot. The Bill would introduce such simplification, for which there is a clear need.
If the Bill is enacted, guidance will be produced to better inform decision makers about how to apply the right definition. That will help when dealing with more difficult scenarios, such as whether all members of a riotous group must have entered a building where damage occurred in order for it to meet the definition. There will always be claims that are likely not to qualify, and guidance must be included to enable decision makers to weed out opportunistic claims. We are clear about the need to provide further guidance, which we hope will assist with that.
Huge damage was done in areas such as Tottenham and Croydon, but in Beckenham just three businesses were damaged. The riot was not as big, but those affected suffered just as much. When we define a riot, we must be careful about the language we use so that those people can be included in compensation arrangements.
My hon. Friend rightly makes a point about the need for certainty and clarity, and that is precisely what the Bill provides. Clause 1(6) seeks to achieve that by reference to the 1986 Act, and it is right to provide the sense of certainty outlined by my hon. Friend. The right hon. Member for Tottenham and my hon. Friend the Member for Bury North mentioned the need to inform the public about this issue, and if the Bill is enacted we would produce guidance to inform the public about the process and entitlements in the Bill, and subsequent regulations.
There has been some debate about why the Bill seeks to set the cap at £1 million. Alternative proposals were considered, but I think my hon. Friend the Member for Dudley South has captured well the analysis that informed his thinking, which I know is based on research. Such a cap would have dealt with around 99% of claims made after the 2011 riots. We have also discussed the fact that the Bill does not provide cover for consequential loss. The independent reviewer thoroughly considered that issue when considering recommendations, but believed that that would be a step too far in a Government scheme. We agree with that analysis, particularly given the potential impact on the public purse, which is likely to run to tens of millions of pounds. The Bill is not intended as a catch-all, but it was right to raise the issue of its inter-relationship with insurance. This is intended as a safety net, not as an alternative to insurance provision.
We have touched on how the Bill would seek to cover motor vehicles—an issue that, as we have heard, could not have been captured by the original 1886 Act. Again, the cover is not intended to replace insurance, and any claims would be checked to ensure that the vehicle was maintained in full compliance with the law. My hon. Friend has struck the right balance in bringing forward those provisions.
The Bill would also make provision for a riot claims bureau. It is not intended for a bureau to be in place for every instance of rioting—for example, it would not be efficient to make such arrangements where a small-scale disturbance occurred that was perhaps confined to one force area. Experience has highlighted the approach that should be taken to allow for a speedier, more efficient and effective response. The Bill provides for that flexibility, as well as allowing for further regulation.
The right hon. Member for Tottenham talked about how the arrangements would differ from those in the past. If the Bill were to proceed, our approach would be to create regulations setting out the detail of the bureau. The Home Office has had discussions with the insurance industry, police and loss adjusters, and I anticipate that there would be a management board made up of relevant experts, overseeing contracted loss adjusters who would have the capability and capacity to respond quickly. Again, that reflects some of the lessons we have learned.
I am grateful for that reassurance. The management board sounds very sensible. There has been some suggestion from the Home Office that some of the expertise that existed following the Bradford and Oldham riots in 2001 has been lost. Might there be a mechanism to contact staff with previous experience of riots—or indeed of floods, after which similar issues come up—so that their expertise can be drawn on quickly?
The right hon. Gentleman makes an interesting and fair point. Should the Bill proceed, there will be an opportunity to reflect on such experience when we form the regulations that will set out the structure of the bureau. I hope that we will be able to learn the lessons not only from 2011 but from other times when compensation has been paid. The parallel that he draws with a flooding incident is important.
We believe that the structure of primary police liability, albeit that it was set out in 1886, remains valid. When the police fail to prevent the breakdown of law and order in such a way that a riot occurs, we judge that they should provide compensation to those who have suffered financial loss through no fault of their own. I have sympathy with the arguments that have been made about that strict liability approach, but the independent reviewer came to the same conclusion after much consideration and discussion with police and other stakeholders.
The Bill will bring much-needed reform by ensuring that after future riots, there will be modern, transparent and fair arrangements for individuals and businesses that have experienced losses through no fault of their own. Important points have been made today about payment arrangements, including points about charity payments by the hon. Member for Croydon North (Mr Reed) in an intervention and by the right hon. Member for Tottenham and my hon. Friend the Member for Torbay in their speeches. It is our intention that charitable donations should not be deducted from compensation, but that formal aid such as that funded by local government should be. I think that clarity can be provided.
The hon. Member for Ealing Central and Acton talked about the police marking their own homework, and other Members developed that theme. We expect claims, other than those of relatively low value, to be subject to a loss adjustment-type process, as most insurance claims are. I also underline that clause 9 provides for a reviews and appeals mechanism, which gives an important assurance about how claims will be addressed.
My hon. Friend the Member for Morecambe and Lunesdale (David Morris) rightly focused on small business, and he asked whether mobile businesses might be covered. That is an interesting question that may be worthy of further development in Committee. Members also mentioned the compensation cap, and as we have heard, there is provision for it to be extended. Any legislation requires regular Government assessment, and there are processes in place for that, which I hope will allow for reflection on the level of the cap. I am sure that that point, too, will be subject to further examination in Committee.
Several of the proposals in the Bill will make compensation arrangements more generous. The way compensation has been paid in the past has created hardship for some vulnerable people and businesses, and it is right to ensure that those in the greatest need can recover more easily from the impact of riots. We are mindful of our responsibilities to protect public money, and the proposals to limit payments to large businesses and to apply excesses to compensation will help balance out the impact of increased compensation.
Ultimately, however, the purpose of the Bill tabled by my hon. Friend the Member for Dudley South is to protect vulnerable people from hardship. The current provisions may have been suitable to provide for the living standards of Victorian Britain, but they do not reflect the needs of our modern society. That is why I agree with him about the need for change. I commend him again for bringing the Bill before the House. In the light of today’s debate and the clear need for reform, I hope that the House will not just commend him but give his Bill a Second Reading.
With the leave of the House, I would like to thank right hon. and hon. Members from both sides of the House for the positive and constructive points they have made in the debate. I will certainly reflect on those points, and I look forward to discussing them in more detail should the Bill proceed.
Given that the debate has already run for rather longer than I expected, I will not repeat the important points that have been made in the debate and in my right hon. Friend the Minister’s response to it, except to say that we all pray that the measures in the Bill will not be needed, but we must never allow hoping for the best to prevent us from preparing for the worst. I hope that Members will support the Bill, and I commend it to the House.
Question put and agreed to.
Bill accordingly read a Second time; to stand committed to a Public Bill Committee (Standing Order No. 63).