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Terror Attacks: Government Financial Support

Volume 632: debated on Wednesday 6 December 2017

[Geraint Davies in the Chair]

I beg to move,

That this House has considered Government financial support for victims of terror attacks.

I believe this is the first time I have spoken with you in the Chair, Mr Davies. It is nice to see you. We do not have long this afternoon, so I want to focus on recent attacks within the UK and especially in my constituency, the immediate financial support available from the Government and the Government-backed Pool Reinsurance Company system.

Six months ago, on 3 June, my community was attacked by murderous cowards. Three men killed eight innocent people and injured many more before being shot by the police. The response of all our emergency services was absolutely phenomenal. It was a genuine honour to attend the tri-forces commendation service earlier this week, which acknowledged the valour and bravery of many of the police officers from the three forces and from members of the public. The wider public response was equally overwhelming. It included offers of somewhere safe to hide, somewhere to charge a mobile phone to keep in touch with loved ones, and free rides to safety from local cabbies.

There was also a huge effort to reclaim the area as quickly as possible and make it once again the most vibrant and dynamic food and drink venue in London. The whole team at Southwark cathedral and other local organisations deserve praise for their efforts to bring the community back together as quickly as possible after the attack. The Prime Minister talked about the attack on the night. She chaired Cobra the next day, but it took 26 days before the attack was officially certified as a terror incident. That had important ramifications for local businesses. The certification process must be updated. Given modern communications, that kind of delay is simply unacceptable.

In contrast, the police cordon was necessary for their investigation, but it meant that local businesses lost access to their premises for 10 days. The latest estimate is that their losses reach almost £2 million. That is due to direct loss of stock and produce, lost orders and at least one firm that lost a contract to supply restaurants and hotels across London. The cordon and the attack itself meant the loss of bookings and reservations at local restaurants and at the London Bridge Experience, for example.

The Borough Market Trust has done a huge amount. It has been a vast, incredible effort. It is running incredible events and has raised £50,000 from other member businesses to support those affected. A similar sum has been raised from public donations and £16,000 has been raised from #LoveBorough merchandise. The trust directly supports new and small start-up businesses and has been pivotal in keeping some of those microbusinesses afloat after the attack, with at least one person’s personal mortgage being covered through trust funding due to a lack of compensation available from central Government. The trust also suspended rents and worked with other local employers to drive up trade.

It will not be often that you hear Labour MPs praising News UK, Mr Davies, but its head office is at London Bridge, and some of its staff were affected on the evening of the attack and were locked in the building overnight. Since the attack, it has provided £25,000 through lunch vouchers for its staff to directly support Borough market. That has been incredibly well received by market traders, who are directly affected. My local Labour council has provided rates relief of £104,000, and the Mayor of London, Labour’s Sadiq Khan, has provided close to £200,000 in help.

The response from the public, businesses, councils and City Hall is very welcome, but is in stark contrast to our national Government. In the six months since the attack, I have met Department for Business, Energy and Industrial Strategy and Treasury Ministers, local traders and other representatives—I am grateful to the Minister for his time in those meetings—and the Prime Minister visited the area with me and the Australian Prime Minister, but sadly to date the Government have still not provided a penny of support to those directly affected.

Businesses are not currently covered for the consequent losses that my hon. Friend is talking about. There have been calls for that insurance gap to be closed. Given that the situation could be so substantially changed by such a small change to the Reinsurance (Acts of Terrorism) Act 1993, does he think that the Government should act? Are insurance companies doing enough to help the situation?

I will come on to talk about that point directly. The short answer is that yes, the Government should act and no, some insurers have not done all they could and should do to rectify the issue.

There has been an absence of immediate financial support and compensation for those affected. Were it not for business-to-business support and public donations, some of the businesses would simply have gone under and people would have lost their jobs. The lack of support has dismayed and distressed local employers. After terror attacks on British tourists abroad, compensation systems were updated in 2012. If we can update systems to ensure that innocent British civilians attacked abroad are better protected, we must be able to better protect British businesses and employers from terror attacks here. Terrorists should not be able to put British jobs at risk or force companies under owing to inaction on compensation. I hope the Minister will confirm today how the Government will compensate businesses still affected by June’s attack and those involved in any future incident.

Future incidents are relevant. On the many screens in this building, we are told every day that the threat level remains severe. We are told that another attack remains very likely, yet no effort has been made to ensure that businesses are protected in the event of a future attack. The Government have yet to act to prevent delays to the certification process. In relation to the point my hon. Friend raised, some insurers used the 26-day delay in certification to avoid making payments initially. That was unacceptable. Some refused to make payments initially due to the way legislation and associated insurance clauses are drafted. Most insurers have now paid out, following interventions from me and the Borough Market Trust acting as a broker. AXA and RSA and others have made payments to some of those affected. The only insurer I am aware of that has failed to pay out is Aviva. It has let my community down, and that has left a nasty, negative stain on its corporate conscience. I hope it will re-examine that.

My hon. Friend is absolutely right that the UK’s current insurance framework dates back to the Reinsurance (Acts of Terrorism) Act 1993, which established the Pool Re system. That system was built following Provisional IRA attacks on infrastructure that were designed to hit the UK economically. The Act was deliberately drafted to cover physical damage to property and buildings following such incidents as the Manchester Arndale and Canary Wharf attacks. Today’s risks are very different. The kind of terrorism we have seen more recently is designed to target how we live and who we are, and specifically targets innocent civilians and uses vehicles and knives. We know this—sadly, we have seen it—and the Met, the Home Office and wider Government know this, yet for two years Ministers have apparently ignored requests to update the system. Government action is required. Where Pool Re can act on its own, it has. It has extended terror insurance to cover cyber-attacks from next year. It can do that within the powers it has, but to change the definition of physical damage requires legislation and Government action.

Physical damage is not the only thing that needs to be covered. Knife attacks must be incorporated. When introducing legislation, I hope that the Government will look at defining what represents terror and what represents business interruption more tightly to distinguish between payments. The Government could also oblige large employers or those with higher turnover to have better or more extensive coverage, and look at why many small and medium-sized enterprises do not have terror insurance coverage, even in high-risk areas. However, none of those issues can be addressed if legislation is not introduced. I should add that introducing legislation and making those changes will not result in new costs to taxpayers, who would be covered by the pooled system.

For my part, I commit to helping to close this loophole in any way I can. Sadly, I have seen the impact on local businesses of the current inadequate system. I am really grateful to the Association of British Insurers, the British Insurance Brokers’ Association and all others who have worked with me on this issue since June. There is widespread acknowledgment of the need to close the loophole. However, just as public and other financial support for the area should be matched by Government compensation, recognition of the outdated insurance model should now be matched with the political will for modernisation from the Government.

As things stand, if another attack occurred today, six months after London Bridge and Borough market were so brutally attacked, employers would face exactly the same problems. In failing to act, we have a Government that risks undermining their rhetoric about not letting terrorists win. If terrorists truly are not to win, action is needed. I hope the Minister will be able to tell us today that the Government will introduce measures to deliver belated compensation to those affected in my constituency. I hope he can also tell us how the Government will administer future compensation, improve the certification process to prevent future delays, and improve the Pool Reinsurance system. I look forward to the Minister’s response.

It is a pleasure, as always, to serve under your chairmanship, Mr Davies. I thank the hon. Member for Bermondsey and Old Southwark (Neil Coyle) for introducing this important debate. The House is united in our condemnation of the atrocity that was committed against his constituents and those of a number of other colleagues.

The hon. Gentleman expressed his understandable concern about the number of days taken in responding to the certification of terrorism, and what he perceived to be a delay by the Treasury. To clarify, the Treasury responded to the certificate within 48 hours of its receipt. Clearly the police were focusing on the investigation, and that may have played a part in the number of days that it took for the Treasury to receive that certificate, but the Treasury did respond within 48 hours of doing so.

I am very aware of the impact on businesses in the hon. Gentleman’s constituency following the attacks—indeed, he and I met to discuss it with a number of his affected constituents. As he set out, traders in Borough market have had a number of difficulties, particularly in accessing their insurance payments.

Accessible insurance is vital for businesses and individuals. It protects them financially from life-changing losses and gives firms extra security and confidence when going about their regular business. That is why, in 1993, when the insurance market stopped offering terrorism cover following the IRA attacks, the Government stepped in to establish Pool Re. That move was made to provide reinsurance cover, to stimulate the private market and to ensure that businesses could access protection again. Pool Re is now widely regarded as the global leader in the sector, shaping international standards for terrorism insurance cover. Since its launch, Pool Re has successfully reinvigorated the terrorism insurance market in the UK. Pool Re has also protected businesses, paying out more than £600 million, including for the recent attacks in Manchester, for example. The Government are committed to ensuring that Pool Re continues to protect businesses and enables effective terrorism insurance cover. We regularly monitor Pool Re in that context, and agree that in recent years a gap has appeared in its coverage. That is the legitimate point which sits at the core of the hon. Gentleman’s rationale for calling today’s debate.

The gap means that some businesses may not be insured for a loss of income in specific circumstances, where losses are incurred due to a terrorist attack but there is no physical damage. The lack of physical damage is particularly material in this instance. The Government recognise the need to address that, and I can therefore confirm that we are exploring options, including legislation, and aim to confirm our next steps early in the new year.

We have already shown that we are prepared to take action to modernise Pool Re and to support businesses in the UK. We recently finalised changes to the scheme, meaning that it will include cover for physical damage caused by a cyber trigger. That precautionary measure helps to future-proof Pool Re, and demonstrates our commitment to maintaining the UK’s position at the forefront of those nations reinforcing their economies against terrorism risks. In terms of Government funding in response to terrorism, we are ensuring, across Government, that affected communities have the right support in place to rebuild and recover from such attacks.

I thank the hon. Member for Bermondsey and Old Southwark (Neil Coyle) for securing the debate. I am the Member for Manchester, Gorton, and this year we experienced an attack in which 22 people were killed. Manchester then set up the “We Love Manchester” emergency fund in conjunction with the council, which raised millions of pounds. Communities and faith groups provide assistance after attacks, not just the Government and non-governmental organisations—something that will be highlighted in the all-party parliamentary group on British Muslims’ upcoming report on faith as an emergency service. What support is being given to those groups to continue their work, and what is the Minister doing to combat fake charities set up to raise funds after attacks or tragedies?

The hon. Gentleman raises a legitimate point. None of us wants to see charities being set up to defraud by exploiting the good will of our constituents in response to such atrocities. He may be aware that the Prime Minister has established a Cabinet Office taskforce to co-ordinate the cross-Government response, to oversee progress and to expedite payments when necessary. She has recognised the issue and is engaged in addressing it.

I am also pleased to confirm that NHS England has made money available to the NHS north region to reimburse it for its efforts in respect of the Manchester attack. Unfortunately, some of the health effects will be long term, as I am sure the hon. Gentleman recognises. That is why another £1.6 million will be made available to provide mental health support for those affected. NHS England has also provided £1 million to the NHS London region for 2017-18 to assist the health system with meeting the costs of the additional mental health support required following the unprecedented level of major incidents that have occurred in London recently, including, of course, Grenfell—a further tragedy that we have debated in the House.

Although we must respond and have responded robustly to the immediate fallout of such atrocities, we must also focus on reducing the terror threat. Cross-Government spending on counter-terrorism is increasing by 30% in real terms from 2015 to 2020, and £700 million has been allocated to counter-terrorism policing this year. Furthermore, the Treasury has provided £24 million of additional funding to help meet costs arising from this year’s terror attacks that have affected police forces.

To conclude, I commend the hon. Member for introducing the debate, and for campaigning on behalf of the affected businesses in his constituency. The Government recognise the issue and are working closely with the relevant bodies to reach an appropriate solution. We always hope that we will never have to deal with yet another atrocity, but we must be prepared so that our communities, and the businesses and individuals who make them, do not unduly suffer from horrific attacks on our democracy.

Question put and agreed to.

Sitting suspended.