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Insurance: Flood Risk Areas

Volume 745: debated on Wednesday 22 May 2013


Asked by

To ask Her Majesty’s Government what proposals they have to ensure insurance cover for property in flood risk areas, in the light of the reported lack of progress in talks with the insurance industry.

My Lords, we are at an advanced stage in negotiations with insurers towards a successor to the statement of principles. Insurers have voluntarily agreed to abide by the current agreement until 31 July to allow time for the outstanding issues to be concluded.

My Lords, will the Minister confirm that there were 500,000 insurance claims for flooding last year and that 2.5 million properties are deemed by the Environment Agency to be at risk of flooding? He will know that the negotiations have gone on for a long time. Does he accept that it is vital that they are brought to a rapid conclusion to safeguard the position of many homes in the country and to ensure that people can sell their houses, which at the moment may prove impossible?

My Lords, I broadly agree with the noble Lord that negotiations must be brought to a satisfactory conclusion as soon as possible. That is what we are working on, as I have said. It is worth saying that the Secretary of State has received a letter from the ABI—I have ensured that a copy is in the Library—in which it confirms that its members agree to continue to meet their commitments for a further month to enable the resolution of negotiations. To me this clearly demonstrates its good intentions and its determination to reach an agreement.

My Lords, given the scale of the problem that already exists, will my noble friend make certain that no planning permission is granted to any developments of residential property in flood areas in future, because there are plenty of those bids in place?

My Lords, my noble friend makes an important point. He should know that the National Planning Policy Framework seeks to ensure that development is located away from flood risk wherever possible.

My Lords, the Minister will be aware of the considerable number of floods along the Welsh coastline—Dyffryn Clwyd, the Conwy Valley, Ceredigion —over recent years. Some of these locations have had, twice in recent years, a one in 1,000-year event, making insurance virtually impossible. Can he guarantee that when this agreement has come into force after 31 July, or whenever, none of these households will be unable to obtain the necessary insurance cover?

My Lords, my heart, and I am sure the hearts of all noble Lords, goes out to those who have suffered from these events. It really is a horrible thing to happen. It has happened to me, so I sympathise with them. Our view is that action taken to reduce flood risk is the best way of keeping insurance available and affordable, which is why we are spending more than £2.3 billion over four years to tackle flooding and, indeed, coastal erosion risks. I have a lot of sympathy with what the noble Lord says.

It is very welcome that the ABI has agreed to extend by a month the operation of the statement of principles, but this has been going on now for a long time. It is at least a year since I first asked a Question about it, and Members of this House and of the Commons have been asking questions at almost weekly intervals ever since. We were told that the negotiations were “constructive”, then that they were “arduous and difficult”, then that they were “urgent”. Now we are told that they are “at an advanced stage”. Will the Minister explain to the House, in words of one syllable, just what the problem is?

I am not sure about words of one syllable, my Lords. Negotiations, and I know that some noble Lords opposite are very experienced in them, are very complex things, and this is a particularly complicated subject. We are working on it. The letter from the ABI is a good demonstration that we are close to a solution.

My Lords, how are the Scottish Government involved in these discussions, since the insurance industry stretches throughout the United Kingdom?

I absolutely agree with the noble Lord that this problem affects the whole of the United Kingdom. The devolved Administrations are closely involved in the discussions.

My Lords, is the Minister having discussions not only in England but in Wales, Scotland and Northern Ireland? As my friend the noble Lord, Lord Wigley, has indicated, we have suffered from serious flooding and that is going to increase as climate change becomes more severe. Is there not a new urgency in this and a necessity to work together to resolve this question?

My Lords, I agree with that. To answer my noble friend’s question and to add to my answer to the noble Lord, Lord Foulkes, I should say that we have regular ministerial meetings with Ministers from the devolved Administrations—in fact, I attended one this week—and this subject regularly comes up.

My Lords, has the Minister himself been directly involved in these negotiations? If he has, does he know what the obstacle is? What is the problem? What is holding them up?

I have to admit to the noble Lord that this is not in my policy area, so I have not. I attend the regular ministerial meetings so I know a certain amount about what is going on. In negotiations, it is very important that the intricate details are kept confidential, and I hope that the noble Lord will understand that, but, as I say, I am confident that we are working towards a solution.

My Lords, the noble Lord, Lord Greaves, is right that the time that it has taken to reach this agreement is unacceptable. Last week we discussed the Defra delays over doing something about plastic bags. This week we return to this question. I declare my interest as someone whose home was flooded last July. Why do we keep having these Defra delays? Is it that Ministers are not showing leadership and providing a sense of urgency, or is it that right now it is impossible for this Government to agree about anything?

My Lords, whenever we talk about flood insurance, the noble Lord leads with his chin. I just say this to him, once again: the statement of principles, which his Government put in place, did nothing about affordability. That is what we are seeking to tackle this time.

My Lords, given the information in the press at the weekend showing the vulnerability to flooding in urban areas—I do not know whether the Minister saw that information, but it was really quite alarming and a lot of it was about London—does he agree that many people who are in fact vulnerable to flooding probably do not know that they are, because they do not live near a river or on the coast? They are vulnerable to the breakdown of the infrastructure that allows waste water to be taken away when there are heavy rains. What have the Government been doing to encourage local authorities to prevent people from, for example, tarmacing over their front gardens, which makes the likelihood of flooding in those circumstances much greater?

On the noble Baroness’s specific question, it is one of a panoply of issues that need to be addressed. I will write to her further on that. She specifically mentioned London. London is a very important component of this. The Environment Agency has a plan to tackle the issue, called the Thames Estuary 2100 Plan. A key strength of the plan is its adaptability, which allows us to deploy different options to manage flood risk as new climate change guidance emerges.

My Lords, could my noble friend throw a little light on his answer to my earlier question, which I interpret as meaning that permission to develop residential property in a flood plain would be denied wherever possible? Can he tell us in what circumstance it might be impossible to deny such permission?

My Lords, development in areas of flood risk is permitted only exceptionally, where there are wider sustainability considerations. In all cases, it must be safe and not increase flood risk elsewhere. And, where possible, overall flood risk should be reduced.