The Minister for Policing and Criminal Justice (Damian Green)
I thank the hon. Member for Croydon North (Mr Reed) for raising this important subject. I take this opportunity to pay tribute to his predecessor, Malcolm Wicks, who was extremely assiduous, as all those who knew him would expect, in representing the victims of the riots in his constituency before his very sad death.
I am, of course, aware that the Croydon North constituency was one of the areas most severely affected by the riots of August 2011. I, like everyone in the House, sympathise with the individuals and businesses in that area, across London and across the country that experienced losses because of the riots.
Given the tone adopted by the hon. Gentleman, it is important to make sure that we have the facts and figures on the record. I note, for example, from local media coverage in March 2013, that it was claimed that as many as 40 claims for compensation under the Riot (Damages) Act 1886 appeared to be outstanding in Croydon alone. It is simply not the case that there are 40 outstanding uninsured cases in Croydon, as only 11 uninsured cases remain unresolved nationally, nine of which are in the Metropolitan police area.
The hon. Gentleman quite reasonably brought up some figures, so I am sure it will help him and the House if I quickly run through the latest statistics on compensation payments. They show that 577 uninsured claims were originally made, of which five remain outstanding—about 1% of the original total. A further 716 uninsured claims were later received by the Metropolitan police. These were largely made after insurance companies had repudiated claims. Only six of that latter group of claims are unresolved, which is again around 1% of the original total.
The largest category of outstanding claims represent insurance companies seeking compensation from police and crime commissioners for reimbursement of settlements paid to policyholders. This does not affect individuals or businesses who have received some form of payment from their insurance company: 3,935 of these types of claim were made and 270—about 7%—are outstanding. So far, PCCs, and in London the Mayor’s Office for Policing and Crime, have paid out just over £30 million in claims.
The hon. Gentleman brought up the Government’s initial response to the riots. Indeed, through the Department for Communities and Local Government, the Government quickly set up funds to help individuals and businesses to get back on their feet, and these schemes paid out £10.8 million.
With specific reference to compensation payments under the Riot (Damages) Act, the Government took swift action by extending the application period from 14 to 42 days, by replacing the antiquated prescribed form with a simple claims form and by setting up a Home Office bureau to act as a single point of contact to advise claimants and take in applications.
From recent correspondence with Members, I am aware of a few individuals—the hon. Gentleman mentioned them—who have had to continue making mortgage payments on properties left uninhabitable by the riots. I should say that this type of loss is not covered by the Riot (Damages) Act, and I shall come on later in my speech to the inadequacies we have identified in a what is a rather old Act. I have recently written to the Council of Mortgage Lenders, which has agreed to liaise with lenders to see whether a more sympathetic approach can be taken. I am happy to assure the hon. Gentleman and other Members that my officials are working closely with them. In the end, this is a commercial decision for mortgage lenders, but as I say, we are taking action on this.
Mr Lammy
My hon. Friend the Member for Croydon North (Mr Reed), other Members and me have pressed this case for years with the Association of British Insurers. It must be unacceptable that people still find themselves in receipt of insufficient funds to get back on their feet.
Damian Green
As I say, particularly in the case of the mortgages, it is for the mortgage lenders to decide in the end, but I have explained that I am doing what I can to persuade them to take a sympathetic attitude to individuals who deserve help.
As the House will know, all those who made claims under the Riot (Damages) Act were offered sums in settlement. In case they were unhappy with their offers, the PCCs—and MOPAC in London—established a right of appeal, which a number of people have exercised. At the outset of the riots, the Government made a commitment to back the costs incurred by police forces in meeting Riot (Damages) Act costs, because that was another potential problem. We have provided that backing, and will continue to do so until the few remaining claims have been settled. So far the Government have paid some £30 million to forces to meet Riot (Damages) Act costs, as well as meeting the operational costs of policing the riots, which totalled £97 million.
Frank Dobson (Holborn and St Pancras) (Lab)
As the Minister knows, I think well of him. Last time I inquired, however, officialdom did not know how many claims had been met in full and how many had been met partially. Do we know yet?
Damian Green
I do not have the figures to hand, but if the Department has them, I will write to the right hon. Gentleman and place a copy in the Library. I assume that he is referring to insurance claims rather than to Riot (Damages) Act claims. When it comes to insurance, there are three distinct classes. First, there are the people who are fully insured and who may over-claim, As we know, there are people who always over-claim. Secondly, there are the people who have insurance but subsequently find that they are underinsured. I consider many of those cases to be among the most complex and difficult. Thirdly, there are those with no insurance. It is the second and third groups who are eligible for compensation under the Riot (Damages) Act.
It may well be that the claims of some of those people will not be met in full. No doubt the hon. Member for Croydon North will be aware that some people in Croydon have withdrawn parts of their claims. It would obviously be inappropriate for me to comment on individual cases, so I shall not do so, but I am happy to discuss the matter with the hon. Gentleman privately.
Mr Reed
I agree with the Minister that it is wrong to refer to individual cases, but let me draw his attention to the overall statistics. The total amount claimed was £250.1 million, and nearly two years later only £35.8 million has been paid. Is the Minister not concerned about the fact that that is a far lower proportion than would normally apply to claims for damages, even if allowance is made for normal loss adjustment?
Damian Green
It would concern me more if part, or all, of the claims of a large number of people had still not been met. The figures that I have given, however, show that the number of such claims is very small. Ideally, of course, we would have resolved all the claims by now, but I think that that is the key statistic. One of our main aims is to secure a complete resolution of the remaining few cases, but when there is a large batch of claims, some of those claims will always be more complex than others, and will take longer to resolve.
As I have said, many of the outstanding cases relate to claimants who were underinsured. It took time for the insurance element of those claims to be settled before the underinsurance element was submitted to PCCs or to MOPAC for consideration under the Riot (Damages) Act¸ which is why 5% of the insurance claims from small and medium-sized businesses remain outstanding after the 2011 riots.
Let me now focus specifically on what I take to be the hon. Gentleman’s central point, which is that some people have received smaller amounts of compensation. It is important to bear in mind the fact that such compensation is ultimately paid for by the taxpayer, and that claims therefore need to be properly substantiated. All uninsured claims were reviewed by loss adjusters using standards applied in the insurance industry. All victims were dealt with sympathetically. Where documents such as receipts for goods purchased were destroyed, secondary evidence was requested, such as bank statements, to substantiate lifestyle.
In addition to losses that cannot be substantiated, there are other reasons for individuals and businesses receiving less compensation than they sought. A number of claimants sought compensation for things not covered by the Act, such as personal injury, vehicle damage and business interruption. Excluding the costs associated with the reinstatement of buildings, adjustments were made downwards because claims made under the Act were assessed on an indemnity, rather than a new-for-old, basis. I take on board the point that that causes much of the disappointment, but that is the way the law is framed. In some ways this issue directly links to the purpose of the Act.
Mr Reed
It is more than a matter of disappointment for people who are unable to re-establish their livelihood and are therefore facing the loss of the family home because they can no longer meet the mortgage payments. The Government stood up after the riots and said nobody would lose their business or their home, so they did not intend for this to happen. Surely the Minister should act.
Damian Green
I was about to come on to that point. The Act is a safety net, which exists to provide some level of compensation. It should not be seen as a direct replacement for an insurance policy. The aim now is to encourage as many people as possible to obtain insurance, and we will need to look at any difficulties in that regard.
Turning specifically to Croydon, I am aware of the claims relating to the terrace on London road. The situation there is complex because of the number of people who were underinsured and because of the sums of the losses involved. Before rebuilding work can commence, it is important that most, or all, of these claims are resolved.
In recent months, the Home Office, Croydon council, the Metropolitan police, MOPAC, the insurers and the loss adjusters have been working together to finalise settlements on these claims. At the local level, Croydon council has been working with the landowners on London road to try to bring forward a suitable and appropriate development. They have already engaged with an architect to assist in this process. Meetings have also taken place between officials and MOPAC and the insurers, and the offer of a further meeting chaired by the deputy mayor for policing and crime has been proposed if it is thought that that will help speed things up. MOPAC and Croydon council, as well as the Home Office, are therefore doing their best to speed things up.
Frank Dobson
Surely the principle should be that if anyone lost their property or business as a result of this criminal activity, which we all deplore, the Government should say that the minutiae of the law should not be used as a way of weaselling out of compensating people, so no one loses out.
Damian Green
That is part of the principle of the Act, but it is not the whole point of it. The right hon. Gentleman has been a Minister and he knows that Ministers have to obey the law like everybody else.
I take the point about money, and MOPAC has been making some interim payments. I understand that about £10 million has been paid out, including some to residents of London road.
Underlying all this is the unsatisfactory nature of what is 19th century legislation. As I set out in a written ministerial statement last month, we have appointed Neil Kinghan to conduct an independent review of the Act. That has already begun and is expected to be completed by the end of September.