Water Bill

Debate between Earl Cathcart and Lord Campbell-Savours

Monday 31st March 2014 Lords Chamber

[Lord Campbell-Savours]

My Lords, I am taken a bit by surprise by this amendment. I had not intended to speak at all but as the noble Lord was developing his arguments I began to realise what the value of this could be. I have a letter here from Keswick Flood Action Group which I referred to in Committee. It makes recommendations on the question of the reinstatement of homes and resilience. I want to read on to the record what it says because most of my contributions on this Bill up to now, certainly in Committee, have drawn on information that has been brought to me by people who have been flooded, because very often they know more than anyone else. Lynne Jones, chair of Keswick Flood Action Group, says that the Government should,

“pass legislation so that insurance companies are required to reinstate homes in a flood resilient/resistant way. Insurance companies, quite rightly, will not pay for ‘betterment’ but these days they have to reinstate with insulation to regulatory standards, even if no insulation was present before, because they are required to do so by law. So why can’t flood measures be treated in the same way?”.

She goes on to make a very simple proposition which, when I think of the flooded properties that I surveyed when I was an MP, seems to me quite logical:

“For example dropping the electrics down from the first floor so raised sockets rather than rewiring from ground up; replacing wood floors with solid waterproof concrete etc”.

Then she goes on to suggest that the Government,

“provide people with independent advice on property reinstatement, maybe via Local Authorities’ Buildings Regulations Officers”.

If there is a surplus, why not consider spending some of it in this sort of area? She goes on to say:

“What people need is knowledgeable counsel from somebody who isn’t going to profit from the works. Flood victims are the target for every rogue trader under the sun post-flood and not everyone knows what products are available/would most suit their needs. Such decisions come at a time when they are exhausted, stressed and suffering financial hardship, they are truly at their most vulnerable”.

As I said, when I was an MP and also afterwards I visited homes where people had been flooded and we know there is tremendous distress. If there are these surpluses, perhaps we should ask whether they can be deployed as part of the process of advising people so that the rogue traders do not go in and do the work and rip people off. That is a far more professional approach. The simple idea of feeding electric wiring upstairs as against downstairs seems absolutely elementary. I wonder how many properties have been done up with grants from government and bills paid by insurance companies over recent years where those very simple, remedial steps to dealing with problems in particular homes have not been taken.

In many ways I think this is a very interesting amendment. I had not really thought of the surpluses. We do not want to waste money but surely it can be used in such a way as to promote the policy of developing actions for resilience.

[Earl Cathcart]

My Lords, I am afraid I cannot support this amendment. To me it shows a misunderstanding of the role of insurance more generally and of Flood Re in particular, which must build up its funds from premiums to cover current and future losses smoothly. The scheme already has five-yearly reviews so that all assumptions can be reworked and contributions adjusted, either upwards or downwards. Diverting funds into the totally separate adventure of pre-emptive risk mitigation is not a function of insurance and nor should it be for Flood Re. The analogy is asking car insurers to invest in better road signs or road infrastructure. It might help mitigate the risks but it is not the role of the underwriting industry; it is the role of government, national or local.

Water Bill

Debate between Earl Cathcart and Lord Campbell-Savours

Tuesday 11th February 2014 Lords Chamber

[Earl Cathcart]

My Lords, I will speak to Amendment 160A. I will be interested to hear the Minister’s response to the question asked by the noble Lord, Lord Shipley, but I shall speak to the amendment as it is written. The Flood Re scheme should be eligible for all houses built and occupied before its introduction.

We live in a blame society. Even now, the media are trying to pin the blame for the current flooding on someone. Is the worst rainfall for 200 or 300 years the fault of the Government, the Environment Agency or local government? It must be somebody’s fault.

With Amendment 160A, we are debating whether houses built after 1 January 2009 should be included in the Flood Re scheme. As was said earlier, PPS25 has made it quite clear that development should not take place in flood risk areas, and yet we all know that it still goes on. One has to ask why. Who is responsible for the houses built on flood risk areas when the rules are quite clear? Everyone is trying to pass the blame on to someone else—“It’s not my fault, guv”. Who is at fault? Is it the Government for not ensuring stricter adherence to PPS25? Is it the Environment Agency? That may be the case. Although 97% of applications that it objects to are refused, it looks at only 6.6% of the 450,000 applications, which is quite clearly not enough.

Is it the fault of local government planners? That is probably the case. One has to ask why they continue to pass applications on flood risk areas contrary to PPS25. Is it the fault of the owner for buying a home built after 1 January 2009 on a flood risk area? It probably is. Caveat emptor, or let the buyer beware: he should have known. If he did not, is it the fault of his conveyance lawyer when carrying out the searches? It raises the question of whether lawyers should be required, as a matter of course, to inform buyers if the house is on a flood risk area and, in this case, when it was built.

One can lay the blame on homes being built on flood-prone areas on any or all of the above but, as sure as eggs are eggs, it is not the fault of the insurance industry. Why should insurers pick up the tab? They have been quite clear on this. Indeed, they are the only ones who have drawn a line by saying that, if a home is built in a flood risk zone after 1 January 2009, under the statement of principles, flood cover will not be available and the property will not be eligible for the Flood Re scheme. Underwriters were quite clear that they did not want to encourage unwise and irresponsible development. Why should underwriters or contributors to the scheme pay for other people’s stupidity? The Government must decide whether PPS25 is to be adhered to or not.

[Lord Campbell-Savours]

My Lords, there is an element of confusion both outside and inside this House as to where the words which define the exclusion of leaseholders are to be found. I understand that Defra put out a notice in which it excluded leaseholders, but can the Minister tell us where this provision is made? The public are confused. The assumption when anyone reads this Bill that freeholders are included will be interpreted by flat-owners who have purchased their freehold but manage their blocks through leasehold companies—companies which have been established to manage the freehold, owned by the residents who have 999-year leases—to mean that they are also included. They will assume that because they are freeholders they are included. My understanding from my reading, although, as I say, I have not found the authoritative piece of literature, is that they are not included. In other words, people out there who believe they are included—freeholders of blocks of flats; not corporate interests but individual share-of-freehold owners—will think that they are included when they are not. That needs to be sorted out.

I cannot understand why they are excluded. Indeed, I would argue that they are probably less of a risk to insurance companies, even though they may well live in buildings on flood plains, because very often you find blocks of flats where no one is living on the bottom floor at all and the first flat in the block is on the first floor, above the area at risk of being flooded. If I am correct in what I am saying, will the Minister tell us why share-of-freehold owners in blocks of flats are being excluded when, in fact, they are freeholders and when, as I say, people reading the Bill will presume that they are included?