David Lammy
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Riot Compensation Bill
David Lammy Excerpts(8 years, 9 months ago)
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Mr David Lammy (Tottenham) (Lab)
I am grateful for the manner in which the hon. Gentleman is putting his points. Central Government or local government will often put up the money to persuade big business to get engaged, because businesses want to see match funding. In those circumstances, I am concerned that that money will then be counted against those who go on to claim compensation.
Mike Wood
The right hon. Gentleman makes an extremely important point, one with which I think we would all agree. That is why, to make sure that in that kind of joint venture we do not preclude local authorities or central Government from contributing to what are essentially private, business-led appeals, I would not expect that kind of fund to be deducted from riot compensation payments. This is not a black and white issue, however, and there are points on the spectrum where that kind of detail is far better dealt with in regulations than in a clause of this kind in the Bill. I therefore cannot support the amendment. It is sensible that payments from public funds should not be provided for the same purpose twice, because we have a duty to limit unnecessary burdens on the taxpayer. The right hon. Gentleman is absolutely right in saying that there are occasions when public funds contribute to private appeals. I hope the regulations drawn up to implement the provisions in the clause will allow for such initiatives.
Anne Marie Morris (Newton Abbot) (Con)
I rise to give my support to amendments 1, 2 and 3 in the name of my hon. Friend the Member for Dudley South (Mike Wood). I congratulate him on his hard work in getting the Bill to this stage. He deserves a great deal of credit.
Amendment 1 seeks to insert substantial time limits in the Bill and introduce a two-tier system for making a claim. That will allow those affected by the riots to register a claim within 42 days of the riots starting and then submit evidence within a further 90 days after that. As my hon. Friend says, that gives those affected 132 days from the start of the riots to make their claim and submit evidence. It is crucial that those affected have adequate time to make their claim, especially considering the likelihood that paperwork and/or laptops will have been destroyed in the riots.
Riots are not only physically destructive but emotionally draining. With that in mind, it is important to consider the priorities of those forced from their homes and stripped of their possessions. The immediate reaction is probably not to call the insurance company but to consider urgently where they and their families are going to sleep that night and to ensure that everyone in the family is safe and well. Time will also be needed to process what has happened. I have no doubt we have all been in a position where something so distressing has happened that we fail to take in all the details straightaway.
The days available to make a claim also give the police force in an area struck by riots the ability not only to get the community back into some sort of order but to get their own house in order. There may well be internal processes to decide the best way to proceed or establish the date the riot started. I am sure that many cities, since the 2011 riots, will have put in place better protocols. We hope they will not have to use them, but every police force would need time to get everything in order before considering compensation claims. It has taken us 130 years to modernise the law on riot damages and compensation. I am happy we are doing it and that it is being considered in a measured way on both sides of the House. I therefore support amendment 1.
Amendment 2 is another very good amendment. I am thankful that my constituency was fortunate enough not to experience the riots that gripped many areas of the country in 2011. Despite threats on social media of rioting in Exeter, Plymouth and Truro, Bristol was the only area in the south-west unfortunate enough to be confronted with violent disorder. During the riots in London, more than 100 people were forced from their homes, driven from their livelihoods and forced to make alternative arrangements while their homes were under repair. While unfamiliar with riots, the west country is sadly very familiar with flooding. Floods in my constituency in 2012 caused damage to more than 180 homes, with many forced to seek alternative arrangements, so I know how important the provision of alternative accommodation is when exceptional circumstances occur.
A person’s home is at the centre of their life. People’s day-to-day lives revolve around it. The home is a place of stability, and when that is taken away, it is the most traumatic experience, particularly given the circumstances of a riot. Many who were caught up in the riots across the country experienced activity totally unknown to them. Vandalism, arson, violence and theft are not day-to-day happenings, so we need to make the healing process as smooth as possible, which includes support with alternative accommodation, should we face a similar situation again.
Without the amendment, victims of riotous offenders would be left to pick up the bill for the alternative accommodation required through no fault of their own. I have no doubt that some people who took out insurance will have been told, after their home was destroyed and deemed uninhabitable, that the insurance would not cover the additional costs incurred while essential repairs were carried out on the home. The British Insurance Brokers Association said in 2011 in an article in the Financial Times that
“some insurance policies will also cover people for alternative accommodation costs if they cannot stay in their home”.
I emphasise the word “some”. It means that some were not covered, and although I am not sure on which side the majority falls, if it affects anyone, it is too many.
The amendment is purely a reflection of the clauses normally included in commercial insurance policies that pay out compensation for financial loss caused by disruption. In the instance we refer to, we are compensating the loss of a home due to disruption. Not having a home can inconvenience essential tasks, such as going to work to continue earning or taking children to school. Although neither the amendment nor the Bill replaces insurance, they do provide a safety net for the unexpected circumstances we are all exposed to at some point in life. In the instance of rioting, it is imperative we legislate to compensate people sufficiently, and that is why the amendment is particularly important.
Amendment 3 gives the Secretary of State the power to make regulations setting out the
“considerations that decision-makers must take into account in deciding the amount of compensation payable”.
It is right that she have the power to take these situations into account when making regulations regarding the amount payable to those who need it after riotous behaviour. The ability to curtail the amount one can claim is welcome. Although we must help those who genuinely need support to get back on their feet, we must not allow the taxpayer to pay for the support longer than is necessary.
The extra cost incurred from having to stay in hotels or other rented accommodation would put pressure on most people, but those who have also lost a business are in even greater need of support and assistance. Business owners are the backbone of the British economy, and it is only right that we support them, after they have contributed to our growing economy, by helping them back on their feet and back into their own homes. Of course, the Secretary of State does not have to use the powers—with any luck, she will not have to—but her having them at her disposal will I hope be a comfort to those affected previously by reassuring them that the House has heard their cries for help and support and is taking them seriously. On that note, I add my support to amendments 1, 2 and 3.
Lyn Brown (West Ham) (Lab)
If it is okay with you, Mr Speaker, I would like to associate myself with your kind and apposite remarks about Harry. My sympathies go to his wife Gill and all those who mourn him. My friends on these Benches are in real shock and great sadness at his passing.
I rise to speak to amendments 1, 2 and 3, which have been tabled by the hon. Member for Dudley South (Mike Wood). I shall also speak to amendment 8, which has been tabled by my excellent right hon. Friend the Member for Tottenham (Mr Lammy).
Amendment 1 would ensure that victims of rioting had at least 42 days in which to make a claim for compensation and then a further 90 days in which to submit the necessary evidence. We support that amendment. The Bill is about supporting riot victims, and in order to do that we need to give them adequate time to complete claims for compensation. Can any of us imagine trying to rapidly process a legal claim when our papers have been destroyed, we have no access to our home or business, and our life has been completely and utterly turned upside down? That is exactly the situation in which many riot victims found themselves in 2011. That situation was made all the more difficult by the fact that so many of the victims were unaware that they were entitled to compensation. They needed the time to get their affairs in order.
In 2011, the Home Office appeared to recognise that a short time limit on claims was unfair, and extended the time limit from 14 to 42 days. Amendment 1 gives us certainty that any future victims will be guaranteed at least 42 days in future. That has to be right. The amendment also provides an additional 90 days for victims to gather the necessary evidence to complete their application for compensation. Three months’ breathing room seems entirely appropriate, given the total upheaval that can be wrought to businesses and individuals by the kind of rioting we saw.
My right hon. Friend—the magnificent Member for Tottenham—spoke movingly in Committee about some of the challenges faced by his constituents in 2011. Many had English as a second language, some had their health devastated by the riots, and all had their daily routines completely shattered. They desperately needed more time to put their lives back together before they could deal with compensation claims. I congratulate him on raising the issue of time limits in Committee. If the House accepts amendment 1 today, he will have played a vital role in ensuring that any future victims of rioting are not left in the lurch, as his constituents and those of my hon. Friend the Member for Croydon North (Mr Reed) were.
Mr Lammy
My hon. Friend will know, perhaps more than anybody else in this House, the juxtaposition between shopping centres such as Westfield, where there is big business, and small businesses, which in a constituency such as hers are often run by people newly arrived in this country, making the very best of their lives. Her experience in this matter needs to be recorded.
Lyn Brown
My right hon. Friend is absolutely right—the businesses that were affected in my constituency were small businesses along the Barking Road in Canning Town and, indeed, some in Green Street. As he rightly says, they are not like the businesses in Westfield that have massive resources behind them to enable them to make the claims, clean up quickly and get on with their economic lives.
Amendments 2 and 3 would ensure that victims were entitled to compensation for costs incurred as a result of having to seek alternative accommodation. We support those amendments too. Families should not be pushed into severe financial difficulty because their homes have been rendered uninhabitable by circumstances way beyond their control. Some families affected by the 2011 riots were not able to live in their homes for months, and some for years afterwards, putting them in severe financial difficulty. That was particularly the case in the private rented sector, but it also applied to some homeowners. We all know how expensive short-term rented accommodation can be, particularly here in London. It is only right, therefore, that that should be accounted for in the compensation awarded. I therefore urge the House to accept amendments 2 and 3.
Finally, let me turn to amendment 8, which would ensure that any money claimed in compensation for emergency relief in the immediate aftermath of a riot did not lead to a reduction in the amount of compensation a claimant might receive. It is shameful that this sort of deduction was made in 2011. We support the amendment, because people putting money into charity buckets to help their neighbours through the turmoil of rioting do not expect the compensation due to those victims to be reduced as a result of their kindness. I am not surprised that my hon. Friend the Member for Croydon North reports that his constituents were aghast that their donations led to a reduction in the compensation doled out.
My right hon. Friend the Member for Tottenham also argued in Committee, I thought convincingly, that we do not want to discourage big businesses from helping out small businesses with which they share a high street. Deducting payments as a result of charitable giving would have precisely that unwelcome and rather unpleasant effect. I urge the House to accept amendment 8 so that, in the unwelcome event of future riots, the police and charities can work together to help communities, rather than treating support as a zero-sum game.
I heard what the hon. Member for Dudley South had to say on that matter, but I now look forward to hearing from the Minister on these issues, because I am sure he is going to make us very happy today.
The Minister for Immigration (James Brokenshire)
I, too, want to associate myself with your comments, Mr Speaker, following the sad loss of Harry Harpham. Members throughout the House can all say that Harry was a dedicated public servant. Although we had the privilege of having him in the House only for a short time, he clearly served with distinction in his community, having sat on Sheffield City Council, and he was dedicated to public service. The fact that as recently as 20 January, Harry was here at Prime Minister’s questions standing up for constituents on an issue he believed in, Sheffield Forgemasters, underlines the sort of person he was, the dedication he showed and the fact that he always wanted to stand up for his constituents. The whole House will wish to pass its condolences, thoughts and prayers to his wife, Gill, his children and his whole family, his friends, colleagues and everyone who knew him and who mourns his loss.
I congratulate my hon. Friend the Member for Dudley South (Mike Wood) on the manner in which he has sought to advance the Bill. He has clearly reflected on the helpful debates in Committee, to which the Minister for Policing, Crime and Criminal Justice responded. The Committee worked on themes that were started on Second Reading. I believe that my hon. Friend’s amendments are helpful additions and clarifications to the Bill.
Amendment 1 deals with the time limits, which are set at not less than 42 days and 90 days respectively for lodging claims and producing detailed evidence. That is the right approach to the lodging of an initial claim, and then it is right to allow more time for detailed information to be provided. We support placing those minimum requirements in the Bill.
For clarification and for the further assurance of right hon. and hon. Members, I underline that there might be some exceptional circumstances in which more time is required, perhaps when a claimant falls ill and cannot meet the deadlines, when evidence has been destroyed or cannot be accessed owing to riot damage, or when final cost estimates are contingent on other processes such as planning permission or some other regulatory requirements. We expect the regulations sitting alongside the Bill to provide some flexibility in extenuating circumstances and to allow extensions of time, while recognising the framework and the statutory minimums set out in the Bill.
Amendments 2 and 3 deal with payments for alternative accommodation. They will allow compensation to be paid to uninsured individuals whose home has become uninhabitable as a result of a riot, to cover the cost of alternative accommodation. Amendment 3 makes it clear that regulations may provide for further details of considerations to be taken into account when such claims are made, as well as the length of time for which such costs may be covered.
During the passage of the Bill, Members have highlighted a number of cases in which their constituents had suffered significant hardship following the 2011 riots. We have certainly heard that from the right hon. Member for Tottenham (Mr Lammy) and the hon. Member for Croydon North (Mr Reed).
Mr Lammy
On the issue of constituents who live in private rented accommodation, I recognise that regulations might be the best place to indicate the length of time for which support will be given, but can the Minister provide us with any clarity about whether he considers that to be a matter of weeks or months? People can be living without virtually everything for a considerable length of time after a catastrophe of this sort.
James Brokenshire
At this stage, it is probably best for me to say that we will reflect further before we bring forward the regulations. The right hon. Gentleman has made some important points on behalf of his constituents. I know from our discussions back in 2011 the direct impact of the issues that he rightly took up on behalf of his constituents. Other Members also made direct challenges on behalf of their constituents. We will continue to reflect carefully on the issue as we move towards drawing up the regulations. That is the right approach and provides us with an opportunity to reflect further on the important and powerful points that have been made.
It is the Government’s position that consequential losses should not be covered by the Bill, particularly bearing in mind the impact on the public purse. We agree that it would be unfair for legislation intended to help those in the greatest need not to provide support to people who have lost their homes, so we support the proposed exception to the prohibition on compensation for consequential losses to permit individuals to recover the additional costs of alternative accommodation following a riot.
Mr Speaker
With this it will be convenient to discuss the following:
Amendment 6, page 5, line 19, leave out from “maximum” to “per”.
Amendments 6 and 7 together represent an alternative to amendment 4 and to amendment 5. They would make determining the compensation cap subject to parliamentary approval and also provide for its review and revision on the same basis without recourse to further primary legislation.
Amendment 5, page 5, line 19, leave out “1” and insert “10”.
This amendment is an alternative to amendment 4 and would increase the £1 million compensation cap to £10 million.
Amendment 7, page 5, line 20, at end insert—
‘(1A) The compensation cap (the “cap”) under subsection (1) must be determined, and revised every three years, by regulations made by the Secretary of State, with the following elements:
(a) the cap may apply differently, or be set at a different level, in different areas; and
(b) the Secretary of State must publish:
(i) the methodology used; and
(ii) the first draft determination of the cap for public consultation within a month of the day after the day on which this Act is passed.
(1B) The Secretary of State must lay before the House of Commons a draft of the regulations making the final determination or revision in a statutory instrument alongside a statement of whether and how the responses to the public consultation were taken into account.
(1C) A statutory instrument under subsection (1B) must be laid in draft before the House of Commons and may not be made until approved by resolution of that House.
(1D) Notwithstanding section 12, section 8 shall come into force on the day after the day on which this Act is passed for the purposes of subsection (1A).
(1E) Until a determination has been approved by the House of Commons, no cap shall apply.
Amendments 6 and 7 together represent an alternative to amendment 4 and to amendment 5. They would make determining the compensation cap subject to parliamentary approval and also provide for its review and revision on the same basis without recourse to further primary legislation.
Amendment 9, page 6, leave out lines 16 and 17.
This amendment is consequential on amendment 4 and on amendment 7.
Mr Lammy
The amendments address the issue of the £1 million compensation cap. It is important for the House and for individuals beyond it who, unfortunately, may find themselves caught up in a riot that we interrogate how the Government reached that figure. In Committee, I raised the issue of the cost of running a business and the fact that it varies across the country. The price of running a newsagent, off-licence or small gift shop in Yeovil is different from the cost in Northumbria and different again from the cost in Tottenham, yet this £1 million figure exists for all those businesses.
I was grateful that the Minister for Policing, Crime and Criminal Justice, who led for the Government in Committee, wrote to my right hon. Friend the Member for Knowsley (Mr Howarth), who also served on the Committee, in response to some of the points I had made and that he shared that with members of the Committee. The letter stated:
“In finding a solution it was important for the Government to come up with a balanced approach that protected the public purse from unlimited liability whilst also ensuring that significant numbers of businesses would not be inhibited from making claims. A further key issue was to minimise the bureaucracy around the administration process.
A number of respondents to the consultation suggested an alternative, and more simple administrative approach, of a cap on the amount of money…We examined data provided by forces and found that 99% of claims from businesses and insurance companies made after the 2011 riots were under £1m.”
It is important to stress that we do not know when there will be another riot. We hope there will not be one, but we are here this morning because we suspect there will be, given the history of our country and the fact that from time to time these things happen. It is important to emphasise that the fantastic nature of our policing model, with policing by consent and our police not routinely carrying guns, means that the public stand alongside them. When that consent is withdrawn and a riot happens, it is not the fault of the business or the homeowner, who have paid their taxes and expect to be protected. Therefore, setting a £1 million cap is an important moment, particularly given the nature of our economy at the moment and the cost of a property in a city such as London. The average price here is now running at half a million, so the average shop front on a high street in Tottenham is about the same and the £1 million cap is an important figure to understand fully.
Anne Marie Morris
Clearly the right hon. Gentleman makes an important point about ensuring that people are properly compensated, but does his amendment not give him a concern that it would provide people with a disincentive to be responsible and take out insurance? How does he suggest we get a better balance between the obligation of the taxpayer and that of the individual?
Mr Lammy
The hon. Lady makes an important point and there is a balance to be struck, but I hope she will understand that it is important to interrogate why we have arrived at the £1 million figure. It is also important that we recognise something about parts of the country that experience these upheavals from time to time. It remains the case in a constituency such as mine, which has had two riots in a generation, that when someone walks down Tottenham High Road they do not see the sort of scene they would see in Detroit, with boarded-up shops, houses in which people do not live and no-go areas—areas that have failed. Fortunately, in these fantastic islands of ours there are no communities that have failed—we do not allow them to fail. We do not want to see that kind of failure. We need to get the balance right between having people, rightly, insuring themselves, and recognising that in the poorest parts of our country people are often under-insured or not insured, so when there is a riot we must still try to put them back into a situation where they can get on with their lives and with their business, and get on with the economy.
The 2011 riots were unusual, in that, surprisingly, there were riots in Clapham Junction and in Ealing. There were riots in parts of the country where one might not have expected riots. However, riots occur most often in the most deprived communities and we do not want the economies of those communities to disappear completely. Insurance premiums can also be so high in communities such as the one I represent, and such as those represented by my hon. Friends the Members for Croydon North (Mr Reed) and for West Ham (Lyn Brown), that they are a disincentive to insuring or they encourage under-insuring in the first place.
Amendment 4 seeks to get further explanation about the £1 million cap. Amendment 5 would take the figure up to £10 million, and it is a probing amendment to understand how the £1 million figure has been reached. Amendment 7 is the most important amendment I have tabled and it asks for greater transparency. I have asked for the methodology being used to be put before this House, for Parliament to be able to understand that methodology every three years or so and for this House to be a bigger determinant in reaching the figure for the compensation level.
Mr Nuttall
I am a bit confused—I am always confused, but I am particularly so this morning—by these amendments. Could the right hon. Gentleman briefly explain which of his three different proposals he would personally like to see enacted? It seems to me that he is proposing no cap, a cap of £10 million and a cap to be decided by a formula that is yet to be determined.
Mr Lammy
Forgive me. The hon. Gentleman was not on the Committee, but if he reads the Hansard report of its proceedings he will see that there was quite a lot of debate about this figure. The Government were unable to give much detail of how they arrived at the figure. The Minister has since written to my right hon. Friend the Member for Knowsley, who chaired the Committee—its members were copied in—and given greater clarity on what the Government were told by the insurance industry and on the amount of figures that came under £1 million. I received that letter after tabling these amendments. However, the amendments are probing, because it would be quite wrong for a Bill of this kind to pass quietly through the House without discussion and scrutiny. I see the hon. Member for Croydon Central (Gavin Barwell) nodding in agreement, because his constituency was caught up in the riots. My amendments have been tabled in that spirit.
The hon. Member for Bury North (Mr Nuttall) is right: there is of course a difference between removing the £1 million cap and raising it to £10 million. I suspect that not all of my amendments will be pressed to a vote. However, I emphasise amendment 7, in particular, because it facilitates scrutiny and the need to return to this figure in future, which must be right. I do not want the House to settle on £1 million and then find in 10 or 15 years that it would leave a lot of people, particularly in London and the south-east, really short if their property were damaged in a riot.
Anne Marie Morris
The right hon. Gentleman talks about the challenge of striking a balance between the Home Office and other potential sources for the unpaid sum, but I do not think he has offered sufficient clarity on the role of insurance. He has talked about the challenge of insurance being extraordinarily expensive. In my constituency we have a similar issue with flooding. Flood Re and the negotiations that the Government have had in that regard have clearly been very helpful. What conversations has he had with the insurance industry, and indeed with the Government, on what can be done to make insurance more affordable?
Mr Lammy
There are parts of this country that routinely experience flooding, as I said in Committee, and there is considerable experience in the system in relation to how we deal with those communities and how the insurance industry reacts in those circumstances. Floods happen more frequently in our country than riots, but a similar catastrophe befalls those who find themselves caught up. I hope that the bureau that will be set up as a result of this Bill can draw on the experience in those areas.
I have heard hon. Members in those areas raise concerns about loss adjustors and the manner in which they treat our constituents. In circumstances in which everything has been lost in the flood or burnt to the ground in a fire, the individual concerned is expected to go and find a receipt for a stove or oven that they now have to claim for. How are they going to find that receipt? Where is it? It is a miserable situation, and I am afraid that during the riots we found the performance of loss adjustors very patchy, and some of them behaved quite inappropriately to my constituents.
However, as I have indicated before, we have a situation of insurance, underinsurance and no insurance at all. That is why we have the Riot (Damages) Act 1886 and why we should inquire as to what the appropriate levels of this newly introduced cap should be. For all those reason, this clutch of amendments address that point. As I have indicated, they are largely probing amendments. I look forward to hearing what the hon. Member for Dudley South (Mike Wood) has to say both about regulations and the need for greater clarity. Perhaps this House might have a greater role in determining that figure, scrutinising it and returning to it over time, because I fear that £1 million may well look very different to people in the wider country in 10 or 15 years’ time, long after the Bill has passed through both Houses.
Mike Wood
Let me start with amendments 5 and 6, tabled by the right hon. Member for Tottenham (Mr Lammy), which would either remove or raise the compensation cap. Although I fully understand his reasons for asking that the level of the cap be considered, I am unable to support either amendment. As I have stated at earlier stages in the legislative process, we simply cannot continue to have a situation in which the public purse is subject to unlimited liability.
Neil Kinghan’s excellent independent review of the reforms necessary after the 2011 riots set out convincingly and comprehensively the reasons for retaining the principle of strict liability for police forces when the basic contract to uphold law and order, to which the right hon. Gentleman has referred, breaks down, and that police should be liable for the costs of that. However, Neil Kinghan went on to say that it is not reasonable to expect those liabilities to be unlimited. That is why he put forward a number of alternative ways of controlling liabilities—capping them—in order to deliver a fairer deal for police forces and the taxpayer.
The effect of either amendment would be to impose a still higher liability on police forces and therefore on the taxpayer. The right hon. Gentleman asks how the £1 million figure was reached. The Home Office put the figure forward in response to an earlier consultation, and it received widespread support. At present, the cap is generous. It has been set to make sure that it would have protected as many of the claims made in 2011 as reasonably possible.
Analysis by the Home Office and the Association of British Insurers estimates that, had a £1 million cap been in place in August 2011, 99% of claims paid then would still have been paid in full; that compares with about 33% had we continued with the alternative option of a cap on turnover of business, which Neil Kinghan ended up recommending. The £1 million cap is far more generous to the victims of riots and recognises exactly the points made by the right hon. Member for Tottenham: of course such victims are in no way to blame and could have done nothing to prevent their loss. We want to make sure that they continue to be compensated, within a reasonable limit.
I also take note of the right hon. Gentleman’s point about big businesses and the important role they play in our high streets. However, like most businesses, big or small, they have a responsibility to insure themselves adequately—not only against riots, but against a broad range of risks. The £1 million compensation cap applies directly to riots, as defined in the legislation. We would similarly expect such businesses to insure themselves against fire and looting caused by arsonists and against gangs of people rampaging riotously, although perhaps made up of fewer than 12 people and so falling outside the scope of normal riot legislation.
Damage caused by looters or gangs on the rampage is every bit as serious, but police forces would not have liability unless negligence could be demonstrated. There is a need for adequate levels of insurance and it is not unreasonable for businesses with assets running into millions to take out such insurance. Setting a cap at £10 million would largely benefit insurers far more than big or medium-sized businesses on the high street, as they could subrogate those claims under the Bill and the existing scheme. Furthermore, of course, they tend to provide the insurance for big business.
The most pertinent example from the 2011 riots was the claims, which have not yet been settled, arising from the destruction of the Sony warehouse in Enfield. Those run into tens of millions of pounds. That money would go entirely to insurers if the claims ended up being accepted. From the Home Office research, it seems that increasing the £1 million cap to £10 million would have affected six uninsured businesses in 2011—six businesses among all those affected, at a massive cost to the taxpayer without any real benefit to our communities. That is why the £1 million cap has been widely welcomed by Members as well as by the insurance industry. The Government have published their intentions in response to the consultations following the 2011 riots on reforming the compensation arrangements. The £1 million cap was very widely welcomed in that response by stakeholders who took part in the consultation.
James Brokenshire
A £1 million cap strikes the appropriate balance between protecting the public purse and helping those who need it most. Increasing it to £10 million would increase police and public purse liability tenfold, which is neither necessary nor appropriate. If the cap were raised to £10 million, the most likely beneficiaries would be insurance companies seeking to reclaim the costs of any very large claim from the relevant police and crime commissioner. I do not think that that was the intent behind the right hon. Gentleman’s approach in his amendment, but I respect the manner in which he has sought to draw the House’s attention to how we have reached this point and why we judge that £1 million is the appropriate level.
The right hon. Gentleman has proposed, as an alternative, that there should be regulations following a public consultation, with reviews taking place every three years. As I said, we believe that there is a compelling reason for having a cap in place. There are benefits that attach to having certainty on the level of the cap, with it being clearly defined, rather than perhaps having further uncertainty in the future as to what it might be. Leaving it to be set by regulations after a public consultation would serve only to remove certainty and increase bureaucratic burdens. A public consultation would achieve very little, given that 99% of claimants would have been paid in full from August 2011.
Mr Lammy
As this Bill and its consequences are a matter of public record, will the Minister undertake to write to hon. Members who have one of the six businesses beyond the Sony claim in their constituencies? I would certainly like to know whether there were any businesses in Tottenham that experienced a claim of more than £1 million, and the nature of those businesses. That would be helpful for the record as we move forward.
James Brokenshire
I do not know whether I am able to give the right hon. Gentleman the assurance he seeks, on the basis of legal constraints or data protection issues, but I note his point. I will reflect on it, and if there is anything more that I may be able to add, then I will obviously be happy to write to him. However, I draw the House’s attention to the fact that this might not be quite as straightforward as he suggests and there may be inhibitions that would prevent that sort of broader disclosure.
The Bill already provides for the power to amend the compensation cap through regulation should it be necessary to adjust it to reflect inflation. It would be a relatively simple task to examine cost of living and property price changes in the period since the cap was last set and apply any change to its level before making compensation payments.
In Committee and again today, the right hon. Gentleman raised the issue of regional variations that might affect the cap. The £1 million cap was determined using claims information from the London riots in 2011. One could say, therefore, that the analysis was conducted on claims from one of the most destructive riots in a generation in one of the most costly regions in which to live. It was a very serious example and the right benchmark. On that basis, the cap would not only adequately cover Londoners in the event of a future riot, but more than adequately cover those in other regions. That is the approach we have taken. I reiterate that according to our analysis and that of the Association of British Insurers, had the £1 million cap been in place for the August 2011 riots, then 99% of claims would still have been paid in full.
I hope that in the light of those comments the right hon. Gentleman will be minded to withdraw his amendment.
Mr Lammy
As I indicated, these are probing amendments. The whole House has heard what the Minister and the hon. Member for Dudley South (Mike Wood) said, and I understand that the Bill will now go to the other place and receive further scrutiny. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendments made: 2, page 5, line 23, at end insert
“, except in the circumstances described in subsection (2A).
‘(2A) Where a claimant’s home is rendered uninhabitable, the amount of compensation may reflect costs that the claimant incurs as a result of needing alternative accommodation.”
Amendment 3, page 5, line 26, at end insert—
‘( ) considerations that decision-makers must take into account in deciding the amount of compensation payable as a result of a claimant needing alternative accommodation (and the regulations may include provision limiting the amount of time for which the costs of alternative accommodation may be claimed),”—(Mike Wood.)
Mr Lammy
I beg to move amendment 10, page 6, line 17, at end insert—
(a) after any riot in relation to which compensation was paid under this Act; and
(b) after each period of five years beginning on the date that section 8 came into force.”
This amendment would require the Government to undertake post-legislative scrutiny.
Amendment 10 is about making and returning to the House with a proper assessment after there has been a riot and after the Bill has taken effect. With all that has been written by Mr Kinghan, all the work that has gone into the production of this Bill—I pay tribute to the hon. Member for Dudley South (Mike Wood) for everything he has done—and all that I, and shadow Ministers, have sought to do through it, we have learned a lot from the 2011 riots. Much of what we have learned finds effect in this Bill.
All riots are different. The hon. Gentleman said earlier that the 2011 riots were a particular case in that they were in London, and that he therefore believes that, in terms of regional impact, the £1 million cap is set about right. He will understand, though, that in the past few years we have seen anarchist groups marching in our country and things sometimes getting out of hand. They have marched in parts of the capital that have very expensive retail areas. We do not know where a riot could take place; they are all a bit different.
Given the impact of those riots and our understanding of them, and in terms of how this Bill works and its effectiveness, the issue of what compensation was paid out is hugely important. That is what amendment 10 speaks to. I sincerely hope that Conservative Members understand that and might be able to indicate that they do see the need for a mechanism, given that we are now updating the legislation. We are putting in place new mechanisms such as the bureau, which has not been discussed this morning but was discussed in Committee and on a previous occasion. It would therefore be very beneficial to provide for some assessment after a riot takes place; we do not know when. I hope that I might get some comfort from the hon. Member for Dudley South or the Minister following my decision to table this amendment.
Mike Wood
Although I absolutely agree with the right hon. Member for Tottenham (Mr Lammy) that the effectiveness of legislation needs periodically to be reviewed, I am less convinced of the need to set that out in the Bill. Of course, we all hope and pray that there will be no repeat any time soon of the kinds of riots we witnessed in August 2011, but should such riots occur in future it would be absolutely appropriate to consider how well the legislation is working and whether any changes are required, which is what happened following the 2011 riots.
The amendment proposes that the legislation should be reviewed after any riot, but that means that that provision would be triggered by any relatively small disturbance that leads to a claim being made under the riot compensation scheme. That would be unnecessarily bureaucratic and it is certainly not needed, because, as I have said, there is a Government commitment in place to review all new legislation within three to five years of the date it receives Royal Assent. That timeframe provides an opportunity for post-legislative scrutiny in the early years and consideration of non-legislative processes and support systems. I would like us to go further after that three to five-year period.
Mr Lammy
Does the hon. Gentleman agree that, if there had been an assessment mechanism in the ineffective Riot (Damages) Act 1886, it might have been better legislation in the first place? There might be a riot—we hope not—during the period of three to five years. I understand that he may not accept the amendment as drafted, but surely the Government should be prepared to consider some sort of assessment mechanism after a riot, which, thank God, happens so infrequently in our country. Perhaps that could happen in the other place when the Bill receives further scrutiny.
Mike Wood
The right hon. Gentleman makes the point that I was about to move on to. Although the initial three to five-year period provides an important chance to reflect on the early years and to consider whether all the commas are in the right place and all the details are right, it is important that regular reviews take place after that period. I hope the regulations will allow for such reviews. If there is a repeat of anything like what happened in August 2011, it is inconceivable that there would not be a review. That should be a given. Outside of the times of serious riots—which, of course, we hope will last many years or even decades—it is important to have some sort of periodic review, but I do not believe that there is a particular case for this Bill to carry a specific provision for post-legislative scrutiny. As I have said, such a provision could be triggered by a fairly small and limited disturbance, but we must make sure that it does not take another 130 years before we next review whether the legislation is working.
James Brokenshire
The hon. Lady makes a fair point. I am sure that anyone who has been caught up in a riot, and who has suffered loss or damage as a consequence, feels that hugely keenly. We are talking not just about the immediacy of the situation and the fear that it creates, but about what that means in restoring a life, putting property back into place and dealing with adverse effects on a business. That has been at the heart of our debates on the Bill, and that is why I welcome and strongly endorse the approach of my hon. Friend the Member for Dudley South in bringing forward the Bill and seeking to address the problem.
There are a couple of points that I would make. First, the Bill has been drafted in a manner that allows greater latitude than the Victorian legislation. I return to the point about not requiring primary legislation. Dealing with things in secondary legislation gives greater latitude and flexibility to make changes to the regulatory framework more swiftly. That reflects the fact that other items may need to be covered, or the cap may no longer be appropriate. The Bill provides a real benefit in offering that level of flexibility.
Secondly, the hon. Lady made a point about individual occurrences and events, and she pointed to some serious incidents that might have made a review appropriate. The latitude provided by the Bill lends itself well to that, because it will not be necessary completely to recast primary legislation. Some riotous disturbances may not lead to a significant number of claims, so it might not be appropriate to trigger a formal procedure such as that proposed in the amendment. The student riots in 2010, for example, involved significant policing challenges but attracted fewer than five compensation claims. We have the ability to carry out such a review, but we do not need anything with quite such a rigid structure. I suggest to the House that the Bill gives the Government the flexibility and the latitude that they need. In that context, I hope that the right hon. Member for Tottenham will be minded to withdraw his amendment.
Mr Lammy
The shadow Minister, my hon. Friend the Member for West Ham (Lyn Brown), has expressed my views strongly from the Dispatch Box, and I hope that the matter will receive greater scrutiny in another place. Self-evidently, issues arise in the peculiar event of riots, and the Government ought to think seriously about producing some sort of impact assessment, which need not be onerous. I undertake to write to colleagues in the other place to ensure that that receives further examination.
As I have listened, not to myself but to my hon. Friend, I have been convinced of my own argument. Nevertheless, I will not press the amendment to a Division. This is an important Bill, and it must find its way to the other place. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Third Reading