Forest Holidays: Forestry Commission Stake

Debate between Lord Campbell-Savours and Lord De Mauley

Tuesday 17th March 2015 Lords Chamber

[Lord De Mauley]

We have not given particular consideration to that, although the House will be aware of the background and the report of the Independent Panel on Forestry. It is important that we continue to increase the amount of woodland cover generally in the country. That is under way, principally funded through the rural development programme.

[Lord Campbell-Savours (Lab)]

My Lords, will the Minister answer the second part of the question asked by my noble friend Lord Clark of Windermere? If the private sector sells its share, does the Forestry Commission have to do likewise?

[Lord De Mauley]

My Lords, I did actually answer that. There are circumstances in which the Forestry Commission’s share is sold with that of the majority shareholder.

Lake District National Park Authority

Debate between Lord Campbell-Savours and Lord De Mauley

Thursday 5th March 2015 Lords Chamber

[Lord De Mauley]

My Lords, I know that my noble friend is intimately involved in these matters. I assure him that I have obtained confirmation from the Lake District National Park Authority that it recognises the legitimate interests of stakeholders. It has consulted and continues to consult widely in a number of ways ahead of any final decisions. That includes liaison with parish councils, public notices advertising its intention to invite offers for some of the properties, direct consultation with a number of neighbouring landowners and so on.

[Lord Campbell-Savours (Lab)]

My Lords, I have spent most of my life living in the Lake District National Park, which formed the greater part of my former constituency. Can we have an assurance that there will be no interference at all with existing rights of way? What is the position on the maintenance of those rights of way and bridleways which the national park carried out previously? Can we be assured that the new private owners will maintain them to the previous standards?

[Lord De Mauley]

I can absolutely assure the noble Lord that there will be no lessening of rights of way. Indeed, in one instance, there will be an improvement in rights of way as a result of these sales.

Thames Tideway Tunnel

Debate between Lord Campbell-Savours and Lord De Mauley

Wednesday 14th May 2014 Lords Chamber

[Lord De Mauley]

My Lords, we are still working on that, but I thank my noble friend for the opportunity to say that independent financial advisers have confirmed that no water company—whatever its financial structure—would have been able to access sufficient finance at an acceptable cost for such an exceptionally large and complex project without some contingent support from government. It is important that, when offering contingent support, taxpayers’ interests remain a top priority and that the taxpayer is appropriately protected by measures that minimise the likelihood of these exceptional risks.

[Lord Campbell-Savours (Lab)]

My Lords, have the Government made concessions to the green environmental movement, which has, throughout the country, opposed the construction of this tunnel and come up with alternative solutions? Have any compromises been made with what it wants?

[Lord De Mauley]

My Lords, going back to the initial point made by the noble Lord, Lord Berkeley, who talked a bit about green infrastructure and science, we should not lose sight of the fact that these are important tools that will be used, but we cannot manage without the tunnel. In addition to the Environment Agency, a key supporter of the tunnel is a group called Thames Tunnel Now, which describes itself as a coalition of environmental, wildlife and amenity groups promoting the case for the tunnel. Its supporters include key groups such as RSPB, WWF, the London Wildlife Trust, and the Angling Trust.

Water Bill

Debate between Lord Campbell-Savours and Lord De Mauley

Tuesday 8th April 2014 Lords Chamber

[Lord De Mauley]

I thank the noble Lord, Lord Campbell-Savours, for his amendment and I thank him even more for reminding me that, in my excitement over my earlier amendments, I have so far omitted to declare my interests, and I should do so. I own a farm, through which a tributary of the River Thames runs, I have an extraction licence, a bore hole, a house which was flooded in 2007 and a minority stake in a lake. I am glad to put that on the record.

As I explained in previous debates, Flood Re will be subject to regular review. We expect these formal reviews will take place at least every five years. These formal reviews will need to consider the effectiveness of Flood Re in discharging its purpose and functions. Importantly, the reviews will also need to consider the levy and premium thresholds, particularly in relation to its capital model, which we debated in detail earlier in relation to the amendment from my noble friend.

The reviews will also need to consider Flood Re’s effectiveness in managing the transition to risk-reflective pricing over the operation of the scheme. As I said earlier, the secondary legislation will set out in more detail the points that Flood Re’s transition plan should cover. Flood Re will have to lay its accounts in Parliament on an annual basis, and its responsible officer will be directly accountable to Parliament. The Comptroller and Auditor-General will examine Flood Re’s economy, efficiency and effectiveness as well as its propriety and regularity.

It is also important to note that there is nothing to preclude the formal reviews taking place more frequently, which the noble Lord, Lord Whitty, asked me to confirm, should concerns be raised; for example, if it is seen that excessive surpluses are being built up.

I hope that it is clear that Flood Re is going to be regularly reviewed and closely scrutinised, but we need to strike a balance and, in particular, I am concerned about significant risks to the certainty and stability of Flood Re income if it is under constant review. Flood Re, the insurance industry and policyholders need to have some degree of certainty about its operation and Flood Re must be allowed to plan for transition accordingly. Insurance is a long-term business. An annual review of the scheme would be resource intensive and I am not clear what added value it would bring in addition to the current arrangements for parliamentary scrutiny.

In addition to the formal review process which will be carried out at least every five years, as I have described, both the Government and the Association of British Insurers have committed to monitoring the market for flood insurance and will publish the results of that monitoring.

[Lord Campbell-Savours]

Will the Minister ask his officials to contact the ABI and ask it, prior to our meeting, how it responds to the cases that I have brought forward of people who say that they cannot find insurance or that their insurance premiums rise five times over, or whatever? I would like to hear its response prior to the meeting.

[Lord De Mauley]

I will certainly do that. I, too, would like to hear the answer.

This ongoing monitoring will enable us to identify trends and any potential issues in the market, including in the leasehold sector, to which the noble Lord referred. We have discussed the rationale for the scope of Flood Re at length and in detail in your Lordships’ House. The design of Flood Re was guided by three principles: affordability, progressivity and fairness. We have been clear that Flood Re should not increase the cost of insurance for those at low or no flood risk so it is fair to all households. To achieve this, Flood Re will replicate the cross-subsidy that currently operates in the domestic market. The benefits of Flood Re will be targeted at lower council tax bands, where affordability is more likely to be an issue.

In previous debates, I have gone into some detail on the thought process behind the leasehold sector; if the noble Lord will forgive me, I will not reiterate those arguments. I am, as he knows, sorry to hear about the specific examples he cites. As I have said, I would be happy to speak to the ABI about the initial case to which he referred. It would be helpful to me to have some more details; perhaps we could discuss that.

The noble Lord also asked about the letter from Otto Thoresen. I am sorry that he feels that the assurances from the ABI are inadequate. We have previously asked for evidence of problems and, to date, have had nothing but anecdotal evidence. Again, however, if the noble Lord would like to share the details with me, that would be helpful and I would be happy to take the matter forward.

I have a number of notes here which deal with matters that we have dealt with at some length in earlier debates; I hope that noble Lords will forgive me if I do not simply reiterate old arguments. It might be helpful if I deal with the issue of maps, which some noble Lords have raised. It was probably the noble Lord, Lord Campbell-Savours, who asked what happens if a property is not proven to be at risk. If a home owner has evidence that the maps do not accurately reflect their level of risk, they can provide it to their lead local flood authority or the Environment Agency for review.

There was a complaint that it takes too long for the Environment Agency to update maps and then share them with insurers. The Environment Agency—and I see the chairman in his place—revises the rivers and sea flood risk maps on a quarterly basis. It is possible that some insurers do not choose to receive updates as regularly as that, which could explain the time lag that some people have experienced. It almost always pays to shop around or to contact a specialist broker to explore ways of reducing premiums. This is important: there is a competitive market in the United Kingdom which will and does help to keep prices low. From personal experience, I know that different insurers take different approaches to pricing risk, which is, as I say, why people should be encouraged to shop around. One of the benefits of Flood Re is that it enables the provision of claims data from the insurance industry to the Environment Agency to help improve risk mapping in the future.

Under the statement of principles, people had to stay with their existing insurer to benefit. Therefore, they were prevented from shopping around for the best price—something I have been going on about at some length. Once Flood Re is up and running, people will be able to shop around, with those in scope knowing the maximum they should expect to pay for the flood risk part of their premium. Insurers have estimated that only 1% to 2% of the market would expect to pay prices higher than the proposed premium thresholds which were set out in the impact assessment. These are the people who will need Flood Re. The majority of the market is expected to be covered by prices lower than those offered through Flood Re. I hope that that is helpful and that, on that basis, the noble Lord will feel able to withdraw his amendment.

[Lord Campbell-Savours]

I thank the noble Lord for his response. I do not want to detain the House. As I say, we will have to come back to these matters in the future. I hope that, in light of what the Minister said, he will be looking for further information. Those who are watching this debate on the internet might well send me their concerns about it, and I will forward them to the Minister. On that basis, I beg leave to withdraw the amendment.

Water Bill

Debate between Lord Campbell-Savours and Lord De Mauley

Monday 31st March 2014 Lords Chamber

[Lord De Mauley]

My Lords, I thank the noble Earl, Lord Lytton, for his Amendments 89 and 90. He raises issues which I know are of concern to people and I thank all noble Lords who have spoken on all sides of the argument.

Amendment 89 to Clause 51 would require that all properties included in the calculation of the levy are eligible for the scheme. It is important to remember that while many homes in the United Kingdom are at some risk of flooding, Flood Re is designed to address an affordability issue for the 1% to 2% at the highest risk of flooding. The levy will provide Flood Re with a funding pool which will be combined with the premium income from those policies which are to be ceded to Flood Re. This will be used for the purposes of the Flood Re scheme, including the purchase of reinsurance and payment of claims. The purpose of having a pool, as is the case for much of our taxation, is that costs are shared by many so that those most in need can benefit. If everybody who paid the Flood Re levy stood to gain, there would be fundamental implications for the required amount of the levy. Alternatively, if the levy was limited to flood-prone households, the pool would not be large enough to have a significant impact on prices and therefore on the affordability of flood insurance.

The insurance industry has been clear that low-risk and no-risk householders have historically subsidised flood insurance for those at a higher risk of flooding and that the move to risk-reflective pricing will over time remove this cross-subsidy from the market. The levy simply replicates and formalises this existing cross-subsidy. Indeed, the ABI has assured us that the levy can be introduced without having an impact on bills in general for householders at a low risk and no risk of flooding, for those in band H or for those with properties built after 1 January 2009—that is, those outside the pool.

If I understand the noble Earl’s intention correctly, I think he is particularly concerned to ensure that those properties which are not eligible for the scheme—such as band H properties, properties built after 1 January 2009 and certain leaseholders on commercial policies—either stand to benefit from Flood Re or do not pay the levy. While I understand that cross-subsidising something from which you will receive no benefit might be perceived as unfair, I have explained why there always have to be some net contributors to make a pooling system work, and this includes the overwhelming majority of households at low risk or no risk of flooding. We discussed the rationale for the scope of Flood Re at length in Committee, and I explained that we think that we have got the balance right. The Government’s approach was widely supported in the response to the 2013 consultation. This approach means that those who are most in need of support will receive it to enable a smooth transition to the free market.

The noble Earl commented on the complexity of the scope of Flood Re. The proposed criteria reflect the current situation for purchasing a domestic insurance policy. We are not seeking to change the circumstances under which insurance is purchased through Flood Re. We must remember that Flood Re is designed to help those people at the highest flood risk, which we estimate could be around 500,000 households. I have heard some very fanciful numbers being bandied around, and they all miss this point. I am not saying that the Government are not still listening to the debate. We will monitor the market, as will the ABI, and we will publish our findings. Should the evidence point to specific issues with insurance for particular sectors, we will discuss with the insurance industry what might be possible.

[Lord Campbell-Savours]

The Minister referred to fanciful figures. The figures I produced on behalf of the lady in Thirsk were real figures showing a five-times increase. She and the 11 other people in flats in the same block are not covered. How can the Minister give an assurance that it will have very little impact on these sorts of people?

[Lord De Mauley]

My Lords, I was not for a moment suggesting that the lady to whom the noble Lord referred was one of those bandying around that sort of figure—by no means. It is difficult for me to speak about a very specific instance but, if I can, I will come back to that later. I was referring to estimates of the number of households involved. I hope the noble Lord understands that.

Several noble Lords referred to band H properties. In designing Flood Re, we have been very clear that we want to target the benefits where they are most needed while not increasing the costs for those not at flood risk. On that basis, we believe that it would not be justified for band H and equivalent properties to be included. The progressive nature of Flood Re received wide support in the public consultation.

Let us be clear that the exclusion of band H properties was set out explicitly as part of the June 2013 memorandum of understanding. This document reflects the needs of both parties and was agreed by the Government and the ABI on behalf of its members. In designing the scheme, the Government and the industry needed to ensure that the pool was viable and affordable. Including band H properties would increase the costs of Flood Re overall, which could result in a reduction in the benefits to households in lower council tax bands or an increase in the levy for all households. We stand by the decision to target support to those in lower council tax bands, as reflected in the memorandum of understanding.

Responding to the points raised about affordability for those in this council tax band, our analysis suggests that relative to other bands, a move to risk-reflective pricing would have limited impact on the affordability of a combined insurance policy for band H households. The noble Lord, Lord Whitty, referred to concerns that those households, which might be asset-rich but income-poor, would be at risk though this approach. We looked closely at this. According to the 2011 living costs and food survey published by the Office for National Statistics, 85% of those who live in band H properties and hold a combined insurance policy are in the top 30% of earners with 48% in the top 10%. More significantly, perhaps, only 0.5% of such households are in the five lowest income deciles, which translates to roughly 45 properties in flood risk areas. I think my noble friend Lady Parminter mentioned that.

The noble Earl, Lord Lytton, the noble Lord, Lord Whitty, and others referred to small businesses. As I said in Committee, we gave careful thought to the scope of the Flood Re scheme and consulted on the proposed figures on the domestic insurance market, which received broad support. The consultation responses did not provide evidence of widespread problems for small businesses with secure and affordable cover, although anecdotal examples of problems in some specific geographical areas were put forward. A government survey of more than 9,000 small businesses in England found that less than 1% of businesses had experienced difficulty getting property insurance in the past year due to the risk of flooding, and that no businesses had been refused insurance cover due to the risk of flooding.

--- Later in debate ---

[Lord De Mauley]

My Lords, I am grateful for the opportunity provided by the noble Lord, Lord Whitty, to discuss the eligibility of leasehold and tenanted properties for Flood Re. In Committee, I said that we would take more time to look at the issue for lease- holders with the ABI and that we would provide further information on the scope of Flood Re.

We have developed with the ABI a briefing note that sets out the scope of Flood Re and covers proposed new subsection (1) in the noble Lord’s Amendment 89B. In summary, the note, which is available online, confirms that domestic contents policies will be available to all under Flood Re, regardless of whether properties are leasehold or freehold, rented or owner-occupied, except those properties in band H and those built from 1 January 2009.

Leasehold houses will also be in scope of Flood Re, provided that the leaseholder lives in the property and purchases the buildings insurance in his or her own name. Flats will be eligible, provided that there are not more than three flats in the building and that the freeholder, or one of those with a share of the freehold, lives in the building and takes out the cover. Setting the eligibility to a maximum of three flats reflects the general limit that the insurance market is willing to cover under a domestic or personal lines policy. There is already a competitive market for insurance for properties with four or more units, which we expect to continue. As I have already said, we and the ABI will monitor the market to ensure that that remains the case. We believe that a significant proportion of the leasehold sector will be in scope of Flood Re, but I should emphasise here that we expect most properties will not need to be in Flood Re and will find better prices through normal routes.

The noble Lord, Lord Whitty, suggests that that is all very complicated and does not go far enough. We have looked carefully at that with the ABI. Flood Re should be available only to those who need it. Indeed, in an earlier debate the noble Lord to some extent agreed with that. The ABI has assured us that the same systemic issues relating to availability and affordability do not exist for larger-scale leaseholders and commercial managing agents as in the domestic home insurance market.

The insurance industry has recently written to assure the Government that it does not expect there to be widespread issues over access to the insurance market for those parts of the leasehold sector which will be out of scope of Flood Re, which I am sure that noble Lords will agree is very welcome reassurance. The industry is clear that there is plenty of capacity to continue to provide insurance on a competitive basis.

I turn to the tenanted sector. As we discussed at some length in Committee, landlord insurance is out of scope for Flood Re for buildings cover. Landlord insurance is classified by the insurance industry as commercial. However, again, we have been assured by the industry that the majority of landlords will be able to find a more competitive rate outside Flood Re.

I emphasise that the proposed scope was not developed on the basis of cost: it is the nature of the policy which is key. The Government are clear that it would not be appropriate for landlords, who gain commercially from renting properties, to benefit from a subsidy on other households.

[Lord Campbell-Savours]

The Minister referred to the fact that the ABI has given assurances that that insurance will be available at competitive rates. Were they oral or written assurances? If they were written, is it possible for those assurances in writing to be put into the public domain so that interested parties can examine the assurances that the ABI has given to the Government?

[Lord De Mauley]

That is a very good point, my Lords, and I will see what I can do.

The Government collect certain information and data as part of the English housing survey. However, the granularity of data on the different parts of the sector sought under the amendment is not currently available. Data are collected from owner-occupied homes on whether the home is owned leasehold or freehold, but not from homes that are let in the private rented sector or from the social rented sector. In the past, those partial data have been used to estimate the total number of leasehold domestic properties in England across all tenures, although I understand that the methodology used is currently under review.

The 2011 census provides some information about whether people live in a flat or a house and whether they own it or rent it, but did not collect data on the number of leasehold domestic properties. There are also no data sets that would distinguish between smaller landlords and large multisite commercial operators, as far as we are aware.

The insurance industry could provide information which would help with a general estimate of the cost of including additional properties to Flood Re. However, the value of that would be limited without the numbers in each of the categories specified in the amendment and how many of those are at sufficient flood risk to be ceded to Flood Re. We have looked at a range of potential address-level data sets to try to map their records to flood risk, but again the data are unsuitable.

The conclusion has to be that what is specified in the amendment is unachievable to any degree of accuracy. It would also be only a snapshot in time and would quickly become out of date. The Government and the ABI have committed to monitoring the market—including for both domestic and business premises.

The noble Lord, Lord Whitty, suggested that there had been no direct engagement with the property sector. We consulted publicly on our proposals and received representations from the property sector. Indeed, I met representatives of the leasehold sector and asked them to come forward with evidence that the same problems exist in the commercial insurance market. I must say that evidence received to date is very limited, but that offer remains.

I therefore argue that reporting as set out under the amendment is not needed, as the market monitoring already planned will provide data on how the market is operating. I assure noble Lords that we will keep this matter under careful review. As I said, the Government also plan to publish the findings and make them available to Parliament.

The noble Lord, Lord Cameron, asked why we cannot treat landlords of just one or two properties differently from the more large-scale landlords. We have not heard evidence of widespread problems for smaller landlords in securing affordable insurance and there is therefore no apparent need to extend the scope of Flood Re to include them. Furthermore, it would not be practical to ask insurers to try to distinguish between different types of landlord. With the exception of policies purchased in a block or those purchased under a business name, many insurers would find it difficult to tell whether landlords have a large or a small property portfolio. This is not just about pricing policies: it would also make it more difficult for insurers to work out the market share when paying their share of the levy.

Turning back to the point made by the noble Lord, Lord Campbell-Savours, I understand that it was made in a letter to the Secretary of State, and I can provide a copy of that to noble Lords who have participated in this debate. That might be helpful.

For the reasons that I have set out, I hope that the noble Lord will be prepared to withdraw his amendment.

Flooding: Agricultural Areas

Debate between Lord Campbell-Savours and Lord De Mauley

Monday 3rd March 2014 Lords Chamber

[Lord De Mauley]

My Lords, as my noble friend knows, we have huge sympathy for those who have been affected and we are doing what we can to help. In my supplementary answer to my noble friend Lord Shrewsbury, I outlined a number of the schemes that are available. I suspect that I am going to need a bit more information about this specific case, and if my noble friend would like to get in touch we will see what we can do to help.

[Lord Campbell-Savours (Lab)]

My Lords, is there not an argument for turning agricultural land that floods into reservoirs, thereby providing upstream storage of water which would help alleviate flooding problems, particularly in the Thames Valley?

[Lord De Mauley]

My Lords, we are looking at a number of possible ways in which we can do this. The noble Lord will know that these things are not simple. I will have to ask him to have some patience while we look at the various options.

Water Bill

Debate between Lord Campbell-Savours and Lord De Mauley

Tuesday 11th February 2014 Lords Chamber

[Lord De Mauley]

My Lords, I recognise the high degree of interest in the policies that will be covered by our proposals, and those which will be out of scope. I hope that I can provide some clarity today on what is intended and the reasons for this.

The Flood Re proposition we are debating today was carefully designed to address specific, medium-term issues in the domestic insurance market. It was not, of course, designed in light of the immediate crisis that we are facing. I heard the passion and concern from your Lordships last week, yesterday and, indeed, today, about the specific, frustrating issues affecting the broader community, including small businesses and the farming industry. It is clearly a distressing time for many, and I know that they are in all our thoughts. Again, I pass on my thanks to the Environment Agency, the emergency services and the many volunteers, including the churches, who are working tirelessly to help.

However, it is not immediately apparent that there is an insurance angle to the current situation. Those who have insurance will be covered by their insurer. I am grateful, too, for the efforts of the insurance industry, which has been working hard in communities to ensure that damage is assessed and that claims are paid quickly. Until Flood Re is in place, insurers will continue to provide insurance cover. We have no understanding with the industry about expanding the scope of the scheme. I therefore ask that your Lordships forgive me if I combine my response to this debate to the specific proposition before your Lordships today.

I turn first to Amendment 155 of my noble friend Lord Moynihan, which would require the Secretary of State to publish a report on the ability of businesses in high flood-risk areas to secure flood insurance. I emphasise that decisions about the scope of Flood Re have been evidence-based. Compared to the household sector, there is not the same evidence of market failure in the commercial sector, where the insurance market is different. Bespoke policies are more routine—as my noble friend Lord Cathcart so eloquently explained—and they are already priced to risk. I listened with interest to what he, my noble friend Lord Ashton, and the noble Lord, Lord Whitty, had to say.

Businesses, unlike households, have a de facto income stream to cover their costs and can offset the cost of their insurance for tax purposes, so they are different. Flood Re, I emphasise, is concerned with helping to protect those relatively few low-income households from high insurance premia. My noble friend Lady Parminter was, perhaps, sceptical of the suggestion of a lack of evidence. A government survey of more than 9,000 businesses in England estimated that fewer than 1% of businesses had experienced difficulty obtaining property insurance in the last year due to the risk of flooding, and that no businesses had been refused insurance cover due to the risk of flooding.

For these reasons, we do not think that Flood Re would be the right solution for this diverse sector. While there does not appear to be a systemic problem with small businesses being able to obtain flood insurance—and our public consultation endorsed our approach—I recognise that some in areas of high flood risk may face specific issues. As my honourable friend, the Parliamentary Under-Secretary of State for Water, Dan Rogerson, said in Committee in the other place, the Government and the Association of British Insurers have both committed to monitoring the market for flood insurance, including that for small businesses. If sufficient evidence emerges of a problem for businesses, then we have both agreed to look at possible solutions. This research will be published and I will be happy to place a copy of that report in the Library when it is published.

Amendments 160 in the name of the noble Lord, Lord Whitty, and Amendment 160ZA in the name of the noble Earl, Lord Lytton, seek to require the Secretary of State to prepare and publish reports on the numbers of properties which would be out of the scope of Flood Re, including properties built after 1 January 2009, band H properties, leasehold properties and private rented properties. It is very clear from his amendment that the noble Lord, Lord Whitty, has clearly understood that any increase in the amount of policies ceded to Flood Re would need to be funded by others. Indeed, he explained that in his speech on the amendments. It is important that helping households at high risk does not lead to price rises for others.

My honourable friend the Parliamentary Under-Secretary of State for Water set out indicative numbers and costs for including in Flood Re band H and equivalent properties and properties built after 1 January 2009 in a letter to the Committee examining this Bill in the other place. I would be happy to ensure that this letter is made available to noble Lords who have participated in this debate today. However, I would not want noble Lords to think that the impact on the levy is the only reason for post-January 2009 and band H or equivalent properties being ineligible. As I noted, we were very clear in designing Flood Re that we wanted to target the benefits where they were most needed, while not increasing the cost of living for those not at flood risk. That is the basis on which we made the decision that it would not be justified for band H and equivalent properties to be included.

According to the 2011 living costs and food survey published by the Office for National Statistics, 85% of those who live in band H properties and hold a combined insurance policy are in the top 30% of earners, with 48% in the top 10%. More significantly perhaps—and this is in response to the noble Lord, Lord Campbell-Savours—only 0.5% of such households are in the five lowest income deciles, which translates to roughly 45 properties in flood risk areas.

The 2009 cut-off date recognises that new housing developments should be located to avoid flood risk; or where development in a flood-risk area is necessary, they should be designed to be safe and appropriately resilient to flooding and not to increase flood risk elsewhere, in line with the national planning policies in place. This date therefore reflects the fact that homes built since then should already be insurable at affordable prices.

As noble Lords may know, when the agreement between government and the insurance industry, known as the statement of principles, was signed in 2008, it was agreed that there should be a cut-off date, which was set at 1 January 2009. That marker has been in operation for several years and has been maintained under Flood Re proposals. To be clear, there has been no change in policy. Therefore for the reasons that I have set out, we believe that the proposed exclusion of properties built after January 2009 and band H properties is fair and in line with the Government’s objective.

[Lord Campbell-Savours]

I just want to press the noble Lord on band H. As I said, I myself have no interest in it. However, in light of what has happened in the Thames Valley, is there not an argument for reviewing those figures that the Minister has just given to the House, particularly as regards the percentage of people on lower incomes who by chance happen to live in those rather expensive properties?

[Lord De Mauley]

I am of course quite happy to review the figures and to write to the noble Lord on that.

On Amendment 160ZA on reporting on leasehold and private rented sector policies, I see that we will also discuss the proposals in this regard on Flood Re later on today. However, before I come on to the specific subject of reporting, I remind noble Lords that the key issue in determining the scope of Flood Re is whether the policy for a particular property is treated as commercial or residential by the industry. Commercial policies are out of scope of Flood Re, which is designed to support households. We believe this approach is fair and practical, and it was supported in the public consultation. However, we recognise that the leasehold sector presents a more complex situation, where the contents policy is classified as domestic but the buildings policy could be classified as either commercial or domestic and could cover multiple dwellings.

I have listened to representatives of the property sector who have come forward with concerns about the impact of the proposed approach on the leasehold sector. They highlighted in particular that those in a smaller building might find it difficult to afford cover in the open market. The ABI has assured me that there is no evidence of a systemic problem with freeholders being able to obtain insurance for their leasehold properties, which I am sure noble Lords will agree is very welcome. However, given the strength of feeling on the matter, particularly in light of the ongoing extreme weather conditions, we need to take time to consider it in more detail, although without evidence of market failure it will be difficult to justify action. We will examine the evidence further with the ABI and hope to provide an update on Report. We will also continue to monitor this sector over time, as a part of the commercial insurance market.

I will focus briefly on the subject of the private rented sector. I take this opportunity to explain that it is proposed that buildings insurance cover for landlords would be out of scope for Flood Re, although contents cover for tenants would be eligible. At this stage I reiterate my declaration of an interest as owner of a property that flooded in 2007. The reason that landlords’ policies are out of scope is primarily because insurers classify all types of landlord insurance as commercial business, while Flood Re is designed for the domestic market. However, it is also important to recognise that the inclusion of landlords would effectively mean that people who do not own their own home could, through their contents premium, subsidise people who own several.

Flood Re targets support towards those least able to pay, through council tax bands. A landlord’s ability to pay cannot be judged against the council tax band of the property he lets. For example, the landlord of a council tax band A property could receive the maximum support if landlords were to be included, even if they were perfectly able to pay. Landlords already benefit from tax relief on the cost of their buildings insurance policy. They can offset many of their costs through taxable allowances which can significantly reduce their tax bill.

--- Later in debate ---

[Lord Whitty]

My Lords, I think my noble friend Lord Campbell-Savours is going back to a point that I raised earlier—namely, that the Flood Re parts of the Bill may have been produced relatively late in the Commons. However, the dividing line between what is included in terms of property and what is not is not as clear as it should be. My noble friend has just identified a group for whom this issue is particularly confusing, but in any case the distinction is not in the text of the Bill. As I said earlier, there is slight confusion about the various bits of paper that Defra has produced on this matter, so we need clarity one way or the other as to which groups are included and which are not. We have heard various bits of clarification from the Minister today. I think that most of those should end up in the Bill before we finalise it and I look to the Government to come forward with amendments on Report or at Third Reading to make sure that the position is clear.

I am afraid that I confused the amendment of the noble Lord, Lord Shipley, in this group with an amendment in an earlier group and commented on it earlier. However, whereas I have great sympathy with a lot of the other excluded groups, I have virtually none with those who built on and developed land in high-risk areas after 2009 because it was already clear from the previous agreement between the Government and the ABI that new insurance would not be given for those developments. Like the noble Earl, Lord Cathcart, I do not think we should give those people leeway retrospectively. If we shift the deadline now, somebody will argue for a deadline at a later stage to allow yet more development in inappropriate places, and that will skew the insurance figures and the whole calculation behind Flood Re. Therefore, I do not support the noble Lord on this occasion.

[Lord De Mauley]

My Lords, my noble friend’s Amendment 160A seeks to make all houses built and occupied before its introduction eligible for Flood Re. This amendment would move the cut-off date for inclusion of properties in the scheme to the start of Flood Re, rather than from 2009, and would also bring band H households in scope of the scheme.

I apologise to noble Lords as I suspect that I may be repeating what I said earlier today and, indeed, we may repeat it yet again later. First, I reiterate why we intend that properties built before 1 January 2009 and those in council tax band H and the equivalents would not be eligible for the scheme. However, before I do that, I shall respond to my noble friend Lord Shipley and a number of other noble Lords who asked what state the property must have been in at 1 January 2009 in order to qualify. It must have been in possession of a council tax band, which would imply that it was habitable at that date. I hope that is helpful.

The 2009 cut-off date recognises that new housing development should be located to avoid flood risk, or where development in a flood risk area is necessary, it should be designed to be safe, appropriately resilient to flooding and not increase flood risk elsewhere, in line with the national planning policies in place. This date therefore reflects the fact that homes built since 2009 should already be insurable at affordable prices. As the noble Lord, Lord Whitty, said, that marker has been in operation for several years, and it has been maintained under the Flood Re proposals.

The noble Lord, Lord Shipley, asked about surface water mapping. The new mapping has shown that the total number of properties affected by surface water flooding is lower than previously thought.

Band H properties are not included in the scheme because, as I explained in some detail earlier today, Flood Re is designed to target support to those who need it most.

The noble Lord, Lord Campbell-Savours, raised the issue of leasehold properties. As we have discussed, commercial policies are out of scope of Flood Re, which is designed to support households. We believe that this approach is fair and practical, and it was supported in the public consultation. However, the leasehold sector presents a more complex situation, where the contents policy is classified as domestic, but a buildings policy could be classified as either commercial or domestic and could cover multiple dwellings. As I said, I recognise the strength of feeling on this issue, particularly in light of the ongoing extreme weather conditions, and I feel we need to take time to consider it in more detail, although, without evidence of market failure, it would be difficult to justify action. However, we will examine the evidence further with the ABI and I hope to provide an update on Report.

[Lord Campbell-Savours]

Will the Minister comment on the issue of share of freehold?

[Lord De Mauley]

If I may, I will include that in that consideration. I hope that my explanations have provided some helpful reassurance. I am happy to ask my officials to work with the ABI to set out the proposed scope of Flood Re in more detail before Report, as that is something noble Lords have asked for. On that basis, I ask my noble friend to withdraw the amendment.

Thames Tideway Tunnel

Debate between Lord Campbell-Savours and Lord De Mauley

Wednesday 24th July 2013 Lords Chamber

[Lord De Mauley]

My Lords, while I agree with my noble friend on many things, I do not agree with him on that. After years of work by Governments of both hues, we do not consider that there is a viable, cheaper solution that would simultaneously address the current sewer overflow problems relatively swiftly for the foreseeable future and deliver value for money.

[Lord Campbell-Savours]

Is not the question asked by the noble Lord, Lord Deben, the question being asked by the whole of the British environmental movement, which says that this was the wrong solution and that sustainable developments were possible as an alternative? Why are we wasting £4 billion on this project when there was another solution?

[Lord De Mauley]

My Lords, over the past decade studies have looked at options which include green infrastructure solutions such as sustainable drainage systems. The purpose of the Thames Tunnel Evidence Assessment, published by my department in 2012, was to ensure that due consideration had been given to the full range of evidence available on all the proposed solutions to address sewage in the Thames and to provide an assessment of the nature of that evidence.

Flooding: Insurance

Debate between Lord Campbell-Savours and Lord De Mauley

Wednesday 26th June 2013 Lords Chamber

[Lord De Mauley]

My Lords, my noble friend is unique among your Lordships in that he seems to have both ears to the ground at the same time. As I said, we are at an advanced stage in discussions with the insurance industry about the future of flood insurance. We aim to announce future measures shortly to ensure that households can continue to access affordable flood insurance.

[Lord Campbell-Savours]

My Lords, why should not all policyholders carry the risk? It would mean a very marginal difference in premiums.

[Lord De Mauley]

Yes, my Lords. We are trying to arrange a system where those at the highest risk who have difficulty affording the insurance effectively have a continued cross-subsidy from wider policyholders. It is a very complicated negotiation, as I think that the noble Lord is effectively pointing out, and we have a lot of interests to keep in mind here.

Insurance: Flood Risk Areas

Debate between Lord Campbell-Savours and Lord De Mauley

Wednesday 22nd May 2013 Lords Chamber

[Lord De Mauley]

My Lords, I agree with that. To answer my noble friend’s question and to add to my answer to the noble Lord, Lord Foulkes, I should say that we have regular ministerial meetings with Ministers from the devolved Administrations—in fact, I attended one this week—and this subject regularly comes up.

[Lord Campbell-Savours]

My Lords, has the Minister himself been directly involved in these negotiations? If he has, does he know what the obstacle is? What is the problem? What is holding them up?

[Lord De Mauley]

I have to admit to the noble Lord that this is not in my policy area, so I have not. I attend the regular ministerial meetings so I know a certain amount about what is going on. In negotiations, it is very important that the intricate details are kept confidential, and I hope that the noble Lord will understand that, but, as I say, I am confident that we are working towards a solution.

Flooding: Insurance

Debate between Lord Campbell-Savours and Lord De Mauley

Wednesday 18th July 2012 Lords Chamber

[Lord De Mauley]

Once again, my Lords, yes is the answer to my noble friend.

[Lord Campbell-Savours]

My Lords, it is not just a question of the availability of insurance. Just as important is the question of excess. Will that very important component be on the agenda?

[Lord De Mauley]

My Lords, I have first-hand experience of that very point. I think that in a number of cases, premiums have been held relatively steady but the excesses have been put up. The noble Lord is absolutely right.

Phone Hacking

Debate between Lord Campbell-Savours and Lord De Mauley

Wednesday 13th July 2011 Lords Chamber

[Lord De Mauley]

My Lords, we have 10 more minutes. Can the noble Lords decide which of them is to go first?

[Lord Campbell-Savours]

My Lords, the Prime Minister referred in his Statement to consulting with the Cabinet Secretary on an amendment to the Ministerial Code for the recording of all meetings “regardless of the nature of the meeting”. Does this include formal and informal meetings and official and unofficial meetings, if they exist? How is he describing them?

News Corporation/BSkyB Merger

Debate between Lord Campbell-Savours and Lord De Mauley

Thursday 3rd March 2011 Lords Chamber

[Lord Campbell-Savours]

My Lords, this is an abuse of our procedure. Would the Whips step in to sort it out?

[Lord De Mauley]

My Lords, questions are expected to be brief.