Mr Lammy
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.
The Minister for Immigration (James Brokenshire)
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.
Mr Lammy
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.
Kevin Foster
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.”
Kevin Foster
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.
The Minister for Immigration (James Brokenshire)
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.
James Brokenshire
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.
Bob Stewart
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.
James Brokenshire
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.
Mr Lammy
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?
James Brokenshire
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.