Water Bill

Baroness Bakewell of Hardington Mandeville Excerpts

Tuesday 11th February 2014 Lords Chamber

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I speak to Amendments 161B and 161C in this group. Although welcoming the introduction of Flood Re and accepting that it is essentially a scheme for domestic premises, I remain concerned about the exclusion of small businesses, especially in very rural areas. I refer specifically to those which are mixed hereditaments. The key question appears to be: what happens to mixed hereditaments in terms of qualifying for inclusion in Flood Re?

There are two scenarios for mixed hereditaments. The first is where the business element is deemed by the valuation to be de minimis. This means it forms such a small part of the overall hereditament that it appears only in a domestic list for council tax. The second is where the business element is more significant, and is therefore liable to both council tax and business rates. If the property does not appear in the waiting list for business rates as well as for council tax, the liable party may qualify for business rate relief. This could be small business rate relief, where it is their only business premises.

I understand that, currently, if the rateable value is less than £6,000 the relief received would be 100%. Rateable values between £6,000 and £12,000 receive relief on a sliding scale. This enhanced small business rate relief scheme has been extended until 31 March 2015, and not beyond that at the moment. The standard scheme allows a relief of 50%. In a rural settlement it might be the case that a village shop or post office is part of a mixed hereditament. In this case it would qualify for rural rate relief. Also, in a rural settlement, a pub with living accommodation above could qualify for rural rate relief on the pub element.

I am extremely concerned about excluding mixed hereditaments from access to Flood Re. This could have a dramatic impact, not just on the business owner but on those residents who use the business. If that business cannot get flood insurance it may remain unviable and may be forced to close prematurely if flooded. Where, for example, this is the last shop or post office in the village this could have a significant impact on the villagers.

[Earl Cathcart (Con)]

My Lords, I congratulate my noble friends Lord Moynihan and Lady Parminter on tabling Amendment 155, as it has given us a good chance to debate flood insurance for businesses, whether in Flood Re or in another mutual set up specifically. We are all under pressure to include small businesses under the Flood Re scheme. That is quite understandable. If I had a business in a flood risk area, I would want to insure it under the Flood Re scheme. I know that the Association of British Insurers and the Government looked at whether businesses could be included within the Flood Re scheme, but found that it threw up more problems than it solved. This is best illustrated with an example.

I am a free range egg producer on my farm in Norfolk, and when it came to buying insurance for the business, I was presented with a long shopping list of types of cover relevant to my business: property; business interruption; loss of profits; contractors “all risks”; terrorism and malicious attack; livestock, including theft, worrying, death after straying, accidental or malicious death; deterioration of stock, in my case probably due to bad feed or electrical failure; perils and fatal injury; livestock in transit; disease, in my case probably something like bird flu or salmonella; goods in transit; motor, for lorries, trucks, vans or cars; employers’ liability; public liability; product liability or environmental liability; legal and professional expenses.

The list goes on, but I hope that gives your Lordships a flavour of the range of commercial insurance on offer. I, of course, had to cherry pick the cover that was most relevant to me. For instance, I did not buy livestock or goods in transit cover, because this is the responsibility of third parties with whom I have a contract. Also, I have no vehicles in that business, so motor insurance was not an issue. However, salmonella is an issue for my business, but because the insurance is so costly I chose not buy it. I hope that I got that one right. I have to choose not only the type of cover that I think is appropriate to my business but how much cover to buy for each category, the cost and the level of excess necessary to reduce that cost. The excess across my shopping list varies from £100 to £20,000.

Although there are hundreds of egg producers up and down the country with identical businesses to mine, I very much doubt that there is another that has commercial insurance exactly the same as mine. They will all be different, and that is the problem: all businesses, whether a corner shop, a pub, a guest house, a property investment company, a hotel or guest house, a manufacturing company or an engineering firm, will buy commercial insurance to suit their particular circumstances. The whole point of a mutual, whether Flood Re or one geared specifically to small businesses, is that the conditions are common to all. The price, the excess, the cover and the conditions must be standardised. This can be done for homeowner insurance—it is pretty bog-standard—but sadly, as I have tried to illustrate, not for commercial insurance. You just cannot standardise it. If it were standardised, virtually all commercial members of that mutual would end up with a policy that did not give them the cover that they wanted.

It would be good if everything could be included in Flood Re, whether owner-occupied houses, rented homes or small businesses, but the line must be drawn somewhere. It has been agreed that those with homeowner insurance, buildings and contents, will be included and that commercial insurance will not be. If I had a property in a flood-risk zone that was deemed to have commercial insurance with it and was therefore excluded from the mutual, I would ask my broker to split my insurance cover into two separate policies: one for the bog-standard homeowner cover, buildings and contents, to ensure inclusion within the Flood Re scheme, and the other to include all elements that made my cover commercial, such as owner’s liability or public liability cover. That might be a way forward for many of those finding themselves excluded from the Flood Re scheme because of the commercial element of their policy.

Flood Re will help up to 500,000 homeowners who cannot currently buy flood cover, but I am sure that with a little bit of inventiveness, many, although I am afraid not all, small businesses, including buy-to-let and leasehold properties, can buy their insurance in such a way as to be included in the scheme.

--- Later in debate ---

[The Earl of Lytton]

My Lords, we have discussed the substance of Amendment 160B already so I do not propose to move it. However, while I am on my feet, I will comment on Amendment 160A and the terms in which the noble Lord, Lord Shipley, moved it. I received a different narrative on this. The circumstances of the post-2009 cut-off, as explained to me, were that that was the time when Planning Policy Statement 25, in relation to construction on flood risk areas, came into being. As the story went, therefore, everybody was on notice that that was an issue, so that was the cut-off point. However, it occurs to me that the noble Lord, Lord Shipley, has raised rather an interesting issue.

It is fair to say that the end of summer 2008 was when the wheels came off the banking system and, with it, the property development system. If anybody had a planning consent that he was hoping to implement in 2008, he would have found that there was no money or funding to implement it—nothing would be forthcoming. Many of these schemes were put on ice. Indeed, there was a government recommendation—I do not know if you can call it an instruction—to the local planning authorities that they should look favourably on extending the three-year life of these. As I am sure noble Lords are aware, detailed planning consent has a three-year life, so it would have run out and would have had to be reapplied for. Due to the circumstances of having to reapply—maybe there are a new lot of regulations and so on—you can run into a whole raft of cost, time and delay.

The idea was that those things should be perpetuated, and with very good reason. They underpinned balance sheets, loans and all sorts of things. If they were to be effectively prejudiced by the loss of a planning consent, so that you had a property with either no verifiable development value or a lower development value, that had repercussions for precisely the sort of reasons I outlined earlier this afternoon in another context. So it is perfectly possible that a planning consent that was negotiated on the basis of rules in 2006 or 2007 would not have got going by the end of 2008 or 2009, and would have had to be preserved. The houses would not have been constructed until some time later, but the circumstances relating to that consent would have related to the antecedent circumstances at the time of granting of planning consent. I can see that there is an issue here.

I am always a bit frightened by development land values anywhere. I am even more frightened when things go wrong and people start reaching for their lawyers. What are they going to start looking at? Will they say, “The house is now constructed, it was built on what might be called an old technology basis pre-2008, and, lo and behold, it has flooded”? If they are excluded, it may have a material effect on the value. Who will they look to for recompense—the local authority or the fact that Planning Policy Statement 25 did not apply, or should have applied in some other form? This makes me think of the time-honoured American superfund arrangements, where most of the money went not to environmental clean-up but into the pockets of lawyers trying to attach liability. I do not wish to see that sort of thing happening here. Some careful thought has to go into the date and where the cut-off should be. I know it is not easy. I am happy to believe that the account of the reasons and circumstances given by the noble Lord, Lord Shipley, is the correct one, but I am slightly surprised that it seems to be a little at variance with the one that I have. I would be very interested to hear what the Minister has to say about this.

[Baroness Bakewell of Hardington Mandeville]

We have had a good debate on this issue, so I will be brief. I am concerned, like others, at the exclusions from Flood Re. My concerns are that many households may have no idea that their property is in a high-risk area or that they are excluded from Flood Re. Like the noble Earl, Lord Lytton, I am interested to hear from the Minister how many properties were built before 2008 but were not occupied until 2009 or after. The people living in these properties may well get a nasty shock when they realise that they are not able to do anything about it.

My concern with Amendment 160A is that all classes of people, whether they are freeholders, leaseholders or the owner of a commonhold tenancy, should be treated equally. Other noble Lords have covered this area in detail. If properties are on the flood plain, whether they are 200 or five years old and whether they are owned or rented, they should be able to access affordable flood insurance. Anything less is invidious. There will be households where a newly married couple have taken on the leasehold of a property, raised their children, lived in it all their working life and now seek to retire there. When they first took up occupancy of the dwelling, there would have been no hint of it ever flooding. However, with changes in the jetstream and continuous and persistent rainfall year on year, they now find that they and their neighbours are suffering from flooding. Are these residents now to be excluded from Flood Re? The Bill is not clear on who the person with the “qualifying interest” is. Will the Minister clarify this situation?

Water Bill

Baroness Bakewell of Hardington Mandeville Excerpts

Tuesday 11th February 2014 Lords Chamber

Moved by

[Baroness Bakewell of Hardington Mandeville]

165ZB: Schedule 9, page 218, line 6, leave out sub-paragraph (2)

--- Later in debate ---

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, the three amendments in this group deal with a specific area of the Bill, as we have heard: that surrounding the internal drainage boards. IDBs are very local partnerships, including landowners, farmers and local councillors, which work with the Environment Agency and Natural England to draw up plans to keep ditches and rhynes clear so that water can flow freely, thus minimising the impact of flooding. IDBs are well respected by local residents and these residents should be consulted on any impending changes to their local internal drainage board.

Farmers and landowners themselves are supposed to keep their ditches and streams clear for drainage, but this is not always done well. Those with river frontage have the responsibilities of the riparian owner inasmuch as they are responsible for the banks and clear flow of the river on their side for the length that they own. In some cases, this duty is not exercised and is sometimes ignored. A much stronger regime of these duties must be enforced by the IDBs and councils. The IDBs are responsible for the rhynes. There is a clear need for IDBs to be able to access money to keep all these channels open.

While I understand the need to keep council tax down to a reasonable level, if I were to ask the residents of the Somerset Levels whether they would rather have paid a little more council tax which went directly to the IDBs, or whether they wanted to take the risk of being underwater for six weeks, I am not sure what that answer would have been. However, I do not think that it would have been not to have paid more council tax.

IDBs need to have the power to act and to act quickly for the benefit of those in their communities. I am fully sympathetic to speeding up the process for publication of requirements under the Land Drainage Act 1991. However, any proposals for amalgamation or reorganisation of IDBs must be consulted on with those most affected. I agree that taking nine to 12 months for such consultation is neither efficient nor wise and I support reducing that time. I also understand that provincial newspapers have limited circulation. However, it is often the case that the local newspaper might be the only newspaper that some households read. They read it because the articles and news have relevance for them personally. These people will not be reading the London Gazette, however strange your Lordships may find this.

Everything we see on our television screens, read in our newspapers and hear on the radio indicates that these people who have been flooded feel disempowered and disillusioned. It would unwise to do anything in the Bill that might increase that feeling. It is essential that local people are able to have a say in what happens to their IDBs and, to do that, they need to be able to access the consultation when it takes place. Reducing the time during which an advertisement may be placed is reasonable, so long as it is advertised in locally accessible media, and placed in libraries, schools or other public meeting places as well as the local provincial newspapers. There is a financial cost to this, of course, but that is small compared to the value of local people feeling that they are being consulted. I beg to move.

[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.

Amendment 165ZB withdrawn.

Flooding: Somerset

Baroness Bakewell of Hardington Mandeville Excerpts

Thursday 6th February 2014 Lords Chamber

[Lord De Mauley]

I, too, have seen the clips that the noble Countess is referring to. What is really important at this stage is that when people are asked to evacuate by the Environment Agency, the emergency services and the police, they must listen to the advice that is given. We are also facing some potential tragedies with our farms and animals on those farms. The county council and the emergency services are working as best they can but people must come first.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, the floodwaters are now beginning to affect people who were previously on the periphery, bringing increased demand on the scarce resources of the fire and rescue and Army services, as we have heard. Where drivers recklessly enter floodwaters by removing “Road Closed” barriers, will the Minister join me, a resident of Somerset, in supporting the emergency services in charging those thoughtless people who have to be rescued, sometimes more than once?

[Lord De Mauley]

What I can do is share with my noble friend her rap on the knuckles for those who do that and do not take the advice of the emergency services.

Winter Floods

Baroness Bakewell of Hardington Mandeville Excerpts

Thursday 6th February 2014 Lords Chamber

[Lord De Mauley]

My Lords, I certainly will. It is an interesting and important point.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I welcome this Statement and will try not to repeat what others have said. In particular, I welcome the additional resources for emergency repairs. As the Minister has indicated, the full extent of the damage will not be known until the water subsides. The announcement on the review of the Bellwin scheme is encouraging and I look forward to hearing the detail on this. The Minister has referred to the partnerships working on the ground, and I am proud of the work and intervention in respect of this of South Somerset District Council, of which I am a member. It will take a lot more hard work and co-operation in partnership before we are through this current process. As with previous speakers, I am concerned for the future livelihoods of those living on the Somerset Levels, particularly the farmers. The debate about how to take this forward has to be started soon. Overall, however, I welcome the steps in the right direction made by the Government, but there is still some way to go.

[Lord De Mauley]

I share my noble friend’s concerns absolutely.

Water Bill

Baroness Bakewell of Hardington Mandeville Excerpts

Monday 27th January 2014 Lords Chamber

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, we have had a wide-ranging debate today covering the many aspects of this important Bill. I will try to be brief and my comments are concentrated on three areas. While the majority of the Bill is concerned with the supply of water and ensuring that all households throughout England have a steady supply of fresh water—and this is vital—today I am addressing the issue of the surplus of water: that is, flooding.

As has been said already, the Bill makes provision by Flood Re for those properties at risk of severe flooding to get affordable insurance following the end of the statement of principles with the insurance industry that has been in place since 2000. As others have commented in the past, my accent betrays my heritage. In Somerset, as all can see from television and newspaper coverage, especially today, the landscape changes dramatically in winter, sometimes for short periods but currently for much longer ones. This has always been a problem for the levels, but it is definitely getting worse. In the winter of 2012-13, the village of Muchelney was cut off for weeks, and it is now cut off again. The fire brigade has done a brilliant job ferrying people to and fro, and the county council has assisted in building a pontoon for villagers to access boats so that they can do their shopping and get to work. The great British community spirit has risen above all the difficulties. Nevertheless, residents in long-term flooded areas are suffering stress and the beginnings of mental health problems.

While welcoming the proposals for Flood Re, like others, I am concerned about some of the exclusions. Many small businesses that operate on the Somerset Levels will find it impossible to get insurance if they are not included in Flood Re. At a time when the economy needs every job it can get, it seems short-sighted in the extreme to be putting the viability of those businesses at risk. As I understand the Bill, some mixed hereditaments are included in Flood Re, but this seems to be dependent on whether they are assessed for business rates. Similarly, private rented and leasehold households are excluded. When everything we know about housing is that it is in short supply, to again jeopardise that supply by pushing private landlords out of the market could be discriminatory. It is generally a requirement of mortgage lenders that insurance is in place. To have insurance that excludes flooding is not wise. Are the flood-prone areas therefore to become devoid of population as people are forced to move to higher ground in order to be able to get the insurance cover needed to have access to a mortgage?

Internal drainage boards comprise local people who know their area and its problems. They can often see what solutions might be needed and could implement fairly low-cost works to alleviate some of the flooding. Disaggregating the drainage board levy from local authority council tax is vital to enable the boards to operate effectively and efficiently. Enabling them to assess what is required and then raise the necessary levy in order to carry out remedial works is key in helping to restore public confidence that the issue is being taken seriously.

Lastly, I wish to raise the issue of the value placed on agricultural land. As can be seen on our television screens, acres of agricultural land are underwater for large portions of the year. This is affecting farmers’ ability to earn a proper living and placing their families at risk. Again, there is a risk to mental health as well as to health and well-being. When it comes to flood defence works, to what extent do the loss of earnings and devaluation of the land figure in the calculations about which areas qualify for flood alleviation works and which do not? How does adequate funding for repairs get taken into consideration? Some form of financially sustainable system needs to be in place in order for the land to be farmed effectively. Land cannot just be left fallow year after year. Land does not look after itself, as I am sure all the farmers here know. It needs constant managing in order to get the best out of it. Farmers need encouragement, not obstacles and difficulties. This is a very real issue and one that I hope we can address during the passage of this Bill.

I am encouraged by much of what is included in the Water Bill, and I hope that we may be able to address many of the points made by others, with which I agree, over the coming weeks.