The Earl of Lytton (CB)
My Lords, I had not intended to make any comment on this, but perhaps I ought to. I have one or two problems with the amendment. First, it appears to refer to any type of property, so it could be residential or non-residential. It appears to cover any type of tenure. The definition of “relevant premises” includes,
“any part of premises occupied”,
which presumably includes the garden. The requirement is for the landlord to hold insurance regardless of risk.
I declare an interest in that I am a landlord of a residential property that is let. It is not itself at risk of flood, but a stream crosses part of the garden. That does not put the property itself at risk, but if it was perceived by an insurer on the basis of the postcode lottery principle that it was somehow at risk and that ratcheted up my insurance premium—which, of course, I should be delighted to cover for all normal risks—I see that there might be a needless requirement to cover for a risk that was not there.
I do not know how that provision sits, because the terminology for “landlord” is wide and the amendment would probably include other properties without any streams in the garden that I might happen to let on a holiday letting, or something like that. I can see that tenants need to be protected in some way, but let us look at what the protection might mean in practice. There is a flooding event; there is insurance cover. Let us say the interior—the inhabitable bit—of the premises is rendered incapable of occupation, not only because of the effect of the flood-water, but also because of the filth and everything else, causing damage to fittings, de-lamination of kitchen units and all the other horrors. It will need a thorough clean-out, with bits replacing, probably a renewed kitchen, and certainly redecoration and drying out. That takes time. The tenant is inevitably going to have to move out. He is going to move to somewhere else. The consequential losses presumably do not cover the loss of the tenants; they only cover the damage to the property. If it needs shoring up then that is a consequential loss.
So with the greatest respect to the noble Lord, Lord Shipley, I am not sure that this amendment achieves what it sets out to do. Maybe I have got hold of the wrong end of the stick, but the landlord’s insurance does not enure for the benefit of the tenant. If you look at a commercial lease, for instance, it normally has a cessor of rent clause which causes the rent to stop being payable at a point where damage occurs beyond a certain level, so the property is no longer fit for occupation. But if it is not reinstated within a certain period of time, the tenant has the option to move out and determine the lease. The tenant, in the mean time, whether it is a business that needs to continue its business occupation, or a tenant in residence who actually needs a roof over his head, is going to have to move, so I am unclear about the mechanics of how this would really work in practice, because I do not see that it protects the tenant.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)
My Lords, Amendment 161ZA from my noble friend Lord Shipley seeks to make it obligatory for landlords to hold buildings insurance, including cover for flood risk. I can confirm to him, in answer to his question, that the cost of insurance premiums can usually be offset against profits for tax purposes. I am sympathetic to the intention behind this amendment although I am not sure that this Bill is the right vehicle for this debate.
I note that while this amendment refers specifically to flood cover, buildings insurance includes protection against a range of perils including, for example, fire and theft. Although there is no legal requirement for property owners to take out insurance for their properties in the UK, owner-occupiers and landlords generally choose to do so in order to benefit from the financial protection that insurance offers. In addition, and importantly, most mortgage lenders specify buildings cover as a mandatory requirement for providing a mortgage on a property.
The Government agree that it is very sensible for landlords to take out insurance, but are conscious that the decision is a matter of individual choice, based on a commercial decision to protect an investment made in property. We are concerned that making insurance compulsory across the board could create a regulatory burden, which could deter investment in the private rented sector. I strongly encourage tenants always to check with a prospective landlord that appropriate cover is provided for the property.
If I might pause specifically on the issue of support for tenants in the event of a flood, we appreciate the concerns raised recently by the National Flood Forum and others that tenants of properties not covered by insurance might be left homeless following a flood. I note that some insurance policies have an “alternative accommodation” provision, but I would also like to assure noble Lords that, even if this is not the case, tenants do have protection. All local authorities are required to provide accommodation for households who are eligible for assistance, homeless through no fault of their own, and have a priority need for accommodation—into which category flood victims would clearly fall.
As part of its role in promoting flood awareness, the Environment Agency strongly encourages landlords to make a flood plan and to make their tenants aware of what to do in a flood. I also remind noble Lords that all residential contents policies will be eligible for cover through Flood Re, including tenants of rental properties, so long as they are not in properties built after 2009 or in band H or their equivalents. I ask that the amendment be withdrawn.
Lord Shipley
My Lords, I am grateful for the two contributions. I am reassured in part by the Minister’s reply. This is about tenants who have an entitlement to know whether or not they are in a high-risk area; indeed, we have already had discussions today about how people find that out. Tenants in private residential properties are often on low incomes, and it is reasonable that they should be told formally if they are renting a property in a high-risk area. That seems to be a basic entitlement if someone signs a lease. It is right that they should know and be given a copy of the buildings insurance with flood cover that the landlord has, so that if the landlord does not have that then the tenant is aware of that fact.
The amendment is not about contents insurance; I fully understand the law in that respect. However, we need to be very careful if there is going to be a rising incidence of flooding that means that some private tenants find themselves flooded but do not have contents insurance because they did not think they were in a high-risk area or were not aware of it, or thought that the landlord would cover it even though the landlord would not be responsible for their contents insurance. With this amendment I am seeking better clarity, given that there have been cases in recent months where flooding has occurred and tenants have in practice had a cost to bear. Of course there are costs involved in moving out that fall on the tenant, not the landlord, unless the tenant is prepared to sue the landlord. They could do that but it is very complicated for a private tenant to do.
I note the Minister’s concern and will think further about this. For the moment, I beg leave to withdraw the amendment.
Lord De Mauley
“(b) the revocation of a scheme’s designation under section 51(1)(b) without a new designation being made under that provision, at any time before sections 51 to 56 are repealed,”
Lord De Mauley
Lord De Mauley
My Lords, I thank my noble friend for raising the issue in Amendment 165ZA. We value and support the work of internal drainage boards and I agree with my noble friend that we should act to remove unnecessary barriers where it is clear that these are preventing boards getting on with their important work. It is for this reason that we have included provisions in the Bill to streamline the legal processes for internal drainage boards, making it easier and quicker for them to amalgamate or to make other structural changes.
My department has a close and constructive working relationship with the Association of Drainage Authorities, which represents internal drainage boards. Officials meet the ADA regularly to discuss a wide range of issues related to the work of IDBs, and the ADA has not highlighted this previously as one of significant concern to it. Until my noble friend’s recent communications with me, which resulted in the tabling of this amendment, we were not aware that this issue had been identified as a potentially widespread problem.
The concern that has been raised is that some internal drainage boards may no longer have access to the rating lists referred to in Section 37(5) of the Land Drainage Act 1991, and that this could present a barrier to boards wishing to extend their boundaries. However, I am concerned that the amendment of my noble friend is a tad premature, given that we have not yet received evidence on how widespread and significant this problem may be. If there is evidence to show that it poses a significant practical problem, we must consider whether it could be addressed through other means, potentially without recourse to legislation.
I am particularly concerned that the amendment has the potential to give rise to significant unintended consequences that might impact adversely on some internal drainage boards and local authority rate payers. For example, if rating lists to be used were revalued, this could have the effect of increasing special levies on some unitary and district authorities and in turn increase council tax in those areas. The amendment also appears to provide for the creation of a two-tier system whereby some internal drainage boards would continue to use existing rating lists for the valuation of urban land while others would potentially use a different measure where those rating lists are unavailable. This could result in different levels of charge being levied on local authorities in different parts of the country. It is important that a transparent and consistent approach to calculating internal drainage board levies and rates is applied across the country.
I hope that my noble friend is prepared to withdraw his amendment. However, I will consider carefully any further evidence brought forward by my noble friend or the Association of Drainage Authorities on this issue.
Lord Howard of Rising
I thank the Minister for his comments. It is interesting that he wants to see the expansion of internal drainage boards, as my amendment is there only to facilitate that. It is very nice that he has been in touch with the association, but it is not all-knowing. Few people are.
I cannot see how there would be unintended consequences. We merely seek to give the Secretary of State the power to take action should it be so needed. If he were to take the wrong action, there might be unintended consequences.
If there are no rating lists available, what are the Government going to do—absolutely nothing? Or will they agree that the Secretary of State can produce a method of valuation that is as close to other people as is possible? The whole point of the amendment is not to tell the Government how to do it; it is merely to give Her Majesty’s Government the power to do it so that there is no blockage on what the Minister has said is their intention.
Baroness Northover (LD)
My Lords, I thank my noble friend for her amendment. We agree with her that it is important for the necessary information to go to the relevant people and for the relevant groups to be consulted in the way that she says. I emphasise that we are here retaining all the powers that are already in place; this is just about not having to publish in local newspapers. I will just go through that: I think she has picked up on the key points anyway.
We consider that the requirement for the internal drainage boards and the Environment Agency to advertise a range of notices, procedures and orders in newspapers is inflexible, out of date—given the range of media now available—and often wasteful of public funds. We are therefore introducing more flexibility to the advertising arrangements. This is in line with recent legislation, such as the Marine and Coastal Access Act 2009 and the Flood and Water Management Act 2010, which allows relevant authorities to publish documents without being prescriptive in how they do so.
Internal drainage boards have complained that advertising in local newspapers can be costly and that, in some areas, it does not represent best value for money in reaching out to the relevant communities. We also understand that some local newspapers may not be widely distributed in rural communities, or in some cases may no longer be published. Our changes will allow for both a wider and a more targeted distribution of notices. This could mean, for example, distribution through the use of electronic means, parish notice boards or, in the way that she indicated, school notice boards and so on, while retaining a fair, open and inclusive process.
The Environment Agency and IDBs will still have a requirement to publish notices and bring these notices to the attention of the people who will be affected by the changes; I hope that is the reassurance that the noble Baroness needs. We are, however, keen to take full advantage of the extensive local knowledge and experience of internal drainage boards and the Environment Agency by enabling them to reach out to the communities affected by any changes in the most cost-effective way.
Therefore, I can assure my noble friend that we are not telling internal drainage boards and the Environment Agency not to use local newspapers. If they consider this to be a cost-effective way of getting their information out, they may still do so, as well as making use of other media. We agree that local people should be consulted in the way that my noble friend suggests. I hope that I have reassured my noble friend and that she will be content to withdraw her amendment.
Baroness Bakewell of Hardington Mandeville
I thank the Minister for her comments. I welcome the increased flexibility on advertising that she detailed and accept completely that, if the internal drainage boards are the bodies that decide how to advertise the alterations, then I should be happy with that. It seems that a wider and targeted approach is going to come forward, so I beg leave to withdraw my amendment.
Lord Grantchester (Lab)
As my noble friend Lord Whitty said in relation to an earlier amendment, it is vital that there is clarity on aspects of the scheme, especially on defining the scheme concerning the inclusions and exclusions of property and responsibilities or liabilities around flood risk.
There appears to be a lack of clarity as regards the situation concerning owners of river banks and whether they are responsible upon the withdrawal of the Environment Agency from funding many aspects of flood prevention and the consequential third-party losses. The amendment seems to assume that the responsibilities of the Environment Agency will be reduced, as well as the funding. While there may be recognition that owners should be responsible for their own situations, it is nevertheless recognised that covering third-party losses could be severely onerous to riparian owners. This amendment seeks to limit their liability. Nevertheless, a limit to their liability begs the question of who would then take it on.
Even at this late hour, perhaps I may tempt the Minister. As regards limiting the liability of riparian owners, could they claim that a flood was an act of God? Is the Minister able to pass judgment on such things? However, this serious situation needs clarity, as landowners, farmers and even boating sports clubs could find themselves in severe difficulty alongside more affluent band H properties.
Baroness Northover
My Lords, far be it from me to judge upon acts of God or even the implications of the Equality Act.
I thank the noble Earl for his amendment, which I will address at a little length, as I think he would probably like to hear my comments. He speaks of instances where the Environment Agency might decide to withdraw from maintaining some flood management assets and suggests that this could create a challenging situation for landowners, residents and others affected. He will probably know that we are discussing those concerns with the Country Land and Business Association, to which he referred, and that my honourable friend the Parliamentary Under-Secretary of State met it on 23 January.
We share the noble Earl’s wish to reduce the possibility of litigation, which is an aspect that is implied by some of the concerns expressed by the noble Earl. That is why we are promoting the asset maintenance protocol published by the Environment Agency. We strongly believe that developing partnerships and working arrangements between local parties to guarantee future maintenance is the best way to prevent problems arising that could lead to claims of liability.
The Environment Agency and other authorities maintain many thousands of flood defence assets. The situation to which the noble Earl refers is not one which is affected by this Bill. He is picking up instances where the Environment Agency may decide that it is no longer going to support certain flood defences and the responsibility for that would fall to others. So I would separate this issue from the Bill, as the noble Lord, Lord Grantchester, sort of did.
The Environment Agency is looking to withdraw maintenance of some of these assets where maintenance is no longer economically justifiable or where the work may not have a high enough priority for central government funding over the longer term. Examples of such assets are embankments in rural areas that protect grazing land or small flow control structures such as gates or penstocks.
Understanding these concerns, the Environment Agency has published, and recently updated, a protocol explaining the processes it will follow. The agency is committed to bringing together landowners and other affected parties to make sure that they are clear on their respective roles and responsibilities and that they understand the range of options that may be available to them for future management of the assets and their likely costs, benefits and impacts. This may include options for continued maintenance of assets by local groups and options involving less or no maintenance. The agency will then work with all the interested parties to help them reach agreement on how the parties involved will take forward maintenance of the asset in the future. It is possible, for example, for the landowner on whose land a defence is situated to enter into an agreement to secure contributions from his neighbours towards the costs of maintenance and repairs.
We understand the noble Earl’s concerns about whether these agreements will be possible. However, it is important to remember that third parties are also expected to play their part. If third parties refuse to make reasonable contributions for the maintenance of a flood defence asset that is protecting their property, they could diminish the success of any future claims against the landowner.
The noble Earl has suggested regulations should be drawn up to set out what actions a landowner should take in order to meet any claims of liability. This would not be the simple clarification that the noble Earl might have been expecting. Such regulations would need to cover many types of assets, the type of location, as well as a list of all possible activities that might be appropriate for their maintenance. The regulations would need to address the range of impacts of flooding, ranging from a garden becoming waterlogged to flooding of many buildings and possible loss of life. Most importantly, the regulations would need to address such complications as a flood asset being owned by one or more landowners or a number of different beneficiaries of different means. Such regulations would be complex and, to be proportionate, would need to have an element of subjectivity to what a landowner would be required to do to avoid liability.
For that reason, we do not believe that such regulations could give significantly more certainty than the current case law. We firmly believe that use of the Environment Agency’s protocol gives all the parties involved a chance to ensure an outcome that reflects the particular situation and circumstances of each individual case, while avoiding the need for litigation between landowners. For these reasons I encourage the noble Earl to withdraw his amendment.
The Earl of Lytton
My Lords, at this hour of the night it is not my intention to press the amendment; as I said at the outset, it is a probing one. I am grateful to the Minister for her explanation. I am aware of the ongoing discussions and I appreciate that this matter sort of sits outside the Bill. I suppose that if I have a hook to hang it on, it is the situation where somebody might be protected by such works and finds they are no longer protected and unable to get full cover insurance. They then go looking for the next deep pocket in order to press a claim, so the geometry of the circumstances might change.
However, it is right that the matter should be discussed by the industries concerned. I would hope that the protocol would at least give some protection in the sense that, if one had done something in accordance with the protocol that was agreed between the parties, that would be a reasonable defence in law. However, I do not think that I can ask the noble Baroness to go into that sort of detail. I would like to reserve my position in case it is necessary for me to come back to this at a later stage of the Bill but, in the mean time, I beg leave to withdraw the amendment.
Baroness Northover
My Lords, I am grateful to my noble friend for raising an issue which is clearly of no small importance to any community affected. Section 101A relates to a “Further duty to provide sewers” to relieve environmental and amenity issues caused by inadequate sewerage. This section applies to “premises” and “buildings” and the amendment seeks to change that to make the duty apply to structures which may not currently be considered buildings for the purposes of this duty.
In the case of Traveller sites, such as the one she referred to at Chesterton Fen near Cambridge, when considering an appeal in respect of a decision not to provide a sewer under Section 101A, the Environment Agency will look at the case for each individual caravan on the basis of its size, permanence and degree of physical attachment to the land. To vary the definition in this section would potentially have far-ranging and unintended consequences. We feel that the best route is to meet my noble friends to discuss their concerns further. On that basis, I hope that she will be prepared to withdraw her amendment.
Baroness Humphreys
I thank my noble friend for her reply. Given the degree of reassurance she has given me, I beg leave to withdraw the amendment.
Lord De Mauley
“(b) section 76;“(ba) section 77 and Schedule 11;(bb) sections 78 and 79;”