Flood Reinsurance (Amendment) Regulations 2025

Baroness Bakewell of Hardington Mandeville Excerpts

Monday 10th March 2025 Grand Committee

[Baroness McIntosh of Pickering (Con)]

My Lords, I thank the Minister and congratulate her on bringing this instrument forward, which I wholeheartedly support. I want to press her on a number of issues arising from it.

In the last Parliament, the Minister had the grace and good sense to support an amendment of mine to what is now the levelling-up Act. It stated that there should be no homes at all built on functional flood plains after 2009. As the Minister will be aware, and as this instrument states, there is no insurance cover for homes built on functional flood plains after 2009.

At the time, I was delighted that Flood Re was set up, with the support of the present Government, by the then Conservative Government. However, the mapping is not as tight as it might be. As we discussed during the passage of the levelling-up Bill, we are dependent on local authorities to home in on the crucial area of zone 3b. If the Minister and her Government are committed, as they seem to be, to continuing to build on functional flood plains, which we recognise are not covered by Flood Re, can she tell the Grand Committee the average cost of insurance for those home owners to insure themselves, particularly where they may have been flooded on one or more occasion since they moved into a home which was built after 2009?

I believe that we should look at this in the context of Flood Re and the housebuilding programme. I know the Minister will probably tell me that I must be patient and wait for the planning and infrastructure Bill to come out—perhaps she could give us a date for when to expect it. That is my first and key point: what insurance cover there is, the cost for individual households and to what extent they might benefit.

Has the department done an impact assessment on the instrument as it stands? Is the Minister able to say what plans the Government have to extend the scheme in a number of ways—first, to cover homes built on flood plains after 2009 going forward, but also to extend it to cover businesses in particular? I am not entirely sure what the position is as regards farms, which are partly a business and partly a residence, but there are other businesses as well—many owner properties—where the business and the home are shared.

When will the Government have a view on what the future of Flood Re should look like when it reaches the end of its natural life? When this instrument was discussed in the other place, my honourable friend Dr Neil Hudson, who speaks for the party there, asked about the frequently flooded allowance, which was introduced by the last Government as a ring-fenced fund of £100 million to protect areas that had been affected by repeated flooding. Is the Minister able to say whether the Government are minded to continue that programme going forward?

I am sure that, when responding, the Minister will say that the Government have improved the resilience of properties and therefore are quite entitled to encourage local authorities to build on functional flood plains. She was, sadly, unable to attend the launch of the report by Westminster Sustainable Business Forum—Policy Connect—in which we looked at flood and coastal erosion risk management policy for the new Government. I do not know whether the Minister has had a chance to look at this, but will her department especially consider our recommendations to ensure the uptake of property flood-resilience measures, some of which come under Build Back Better, to which she referred—but they also go beyond that? Will the Government be minded to allow for the installation of both resistance and resilience measures as part of property flood-resilience schemes funded by the Environment Agency? Will she also review the eligibility criteria and distribution process for the property flood-resilience repair grant scheme to make it more widely accessible and streamlined? Further, will the Government align all property flood-resilience funding resources—including those from the Environment Agency’s property flood-resilience framework, Flood Re’s Build Back Better and Defra’s flood-resilience repair grant—to the same amount, so that all the funding resources would be aligned at £15,000, possibly as part of the forthcoming multiyear spending review? I realise that these are very technical recommendations and that the Minister may not have the answers, but they relate to the instrument and the forthcoming spending review.

Finally, the recommendation that I press to the Minister today would be to normalise the use of property flood resilience in both new and existing properties. Part C of building regulations should be updated to require the installation of basic property flood-resilience measures for properties at risk of flooding and the installation of very basic no-regret measures for all new homes, irrespective of risk.

These recommendations go to the heart of my belief that, if we continue to build properties that are not covered by Flood Re, we owe this to the people who will buy those properties. I find myself not needing a mortgage: I had sold a property, and I was in a position to have bought, and I almost did buy, a property without a mortgage—this is going back to the 2000s. No one would have told me that I could not be insured. I know the Minister will say that they can be insured, but I would be interested to know how affordable it is for these properties not covered by Flood Re and built after 2009 on flood plains. How expensive is that insurance? If the Government are going down this path, we must have more resilient houses built in those areas. That said, I welcome the opportunity to debate the instrument today. I hope it will have a fair wind and be approved.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I thank the Minister for her introduction to this short but important statutory instrument. I was assisting on the Water Bill in 2014-15 when Flood Re was first debated to provide insurance to properties that were uninsurable due to constant flooding, the main insurance companies not being willing to take any of the risks on those homes and dwellings.

This SI is quite simple: it raises the levy that insurance companies can indirectly pass on to their customers from £135 million to £160 million. The £135 million level was set in 2022, when the levy was reduced from £180 million. The Explanatory Memorandum quite rightly states the importance of not having a levy that is higher than it needs to be, but I stress that there is a danger in setting it too low.