David Lammy
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Riot Compensation Bill
David Lammy Excerpts(9 years ago)
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Mr David Lammy (Tottenham) (Lab)
Does the hon. Gentleman accept that the areas that experience riots are often the most deprived in our country? In those communities, increasingly, particularly in London—in the constituency of my hon. Friend the Member for Croydon North (Mr Reed), and certainly in mine—many constituents speak English as a second language. I can think of a constituent who had a heart attack after the riots. Forty-two days is still a very short time after experiencing shock of this kind.
Mike Wood
I recognise the right hon. Gentleman’s point. It is important that alongside any new legislation and regulation we have the co-ordination at a community level to support the people he mentions, who, as he says, are often in our most vulnerable communities.
The basis for switching from old-for-old to new-for-old is one of basic fairness for riot victims. It cannot be fair for them to be expected to engage in extensive negotiations on the book value of a three-year-old dry cleaning machine, as was the case in one claim in 2011, and then to have to search for such a machine at the specified price just at the point when they are trying to rebuild their homes or their businesses. A new-for-old system is already used in most private insurance policies, and it would mean that victims could set about the important business of getting their lives, homes and businesses back on track.
Mr Lammy
I am grateful to the hon. Gentleman for giving way again. His point about new for old is incredibly well made.
There are many small business owners in areas that have experienced riots. I think of my area in particular, which is unfortunately one of the few areas of the country to have experienced two riots in a generation. Those small businesses are under-insured because of the cost of insurance, which is because those areas have had riots. Unless we want such areas to be completely boarded up, like cities in the States such as Detroit, we ought to think carefully about consequential loss. We should not place further insurance burdens on the private sector. After all, the fact that a riot has occurred is not the fault of a business.
Mr David Lammy (Tottenham) (Lab)
I am grateful to have the opportunity to speak in the debate and congratulate the hon. Member for Dudley South (Mike Wood) on bringing the Bill to the House. I have reservations that I want to put before the House, but I agree with the general consensus that the 1886 Act is in serious need of review and change. It is right and appropriate that we have arrived at that point today.
The starting point for any discussion on riots is understanding that the basis of our policing in this country is consent—it is a source of great pride, and countries throughout the world look at policing in this country and try to learn from it. That is the idea that our police do not routinely carry guns and do not police by force. They police alongside the general public, and the general public act as citizens alongside them in the matter of policing. When that consent breaks down in a catastrophic way, we experience riots, which we do from time to time in our communities.
Because we all pay our taxes, and because we supply the uniforms and the badge and contribute to the training of our police officers, we rightly and appropriately say that, when the consent breaks down, people should be compensated for their loss—obviously, in our country, the vast majority of us do not participate in that consent breaking down and would not dream of participating in a riot. The detail of what that compensation should be is described in the 1886 Act.
It was a devastating four days for my constituency. It was a devastating moment. In constituencies such as Tottenham, we do not want another riot in a generation. Fortunately in Britain, we do not have areas that are so crippled by social unrest that the prospect of regeneration and a future looks bleak. Parts of the United States—I think of the city of Detroit—effectively went bankrupt when industry left, people fled, populations fell and buildings lay derelict for year after year. We do not want that in any community in this country, which is why the subject of the debate is so important.
When catastrophic riot occurs to a community, we must do all we can to put that community back together as quickly as possible, so that we do not see business and industry flee such that economic activity can never occur in that community again. I said this at the time of the 2011 riots: the vast majority of my constituents, including the vast majority of young people, were terrified in their homes. They did not participate in the riots. Indeed, because of the nature of the 24-hour media these days, with flames going up and the same scenes being repeated over and over again, it was a red rag to criminals all over London to participate in those riots.
I spent a lot of time with those small business owners on Tottenham High Road. I also spent some time with small business owners in communities such as Croydon. These were the most decent people, people who get up very early in the morning and finish work very late at night and who, frankly, do not rely on the state at all other than when they are ill. They were devastated by what had happened to them in the rioting over those four days.
For the first time, we saw riots in parts of London—Clapham, Ealing, in the constituency of my hon. Friend the Member for Ealing Central and Acton (Dr Huq), and Enfield—in which we might not previously have thought we would see them. Somehow, this was a moment in time when we needed to take stock and to ensure that the arrangements were right not only for those individuals who lost their businesses but for those who lost their homes. I pay tribute to the men and women of my constituency who, the morning after the riots, standing only in their pyjamas, holding their children, had had their homes burnt to the ground. At the time, promises were made. A riot was declared, and it is appropriate that we return to the circumstances in which a riot is declared as that is covered in the Bill. The assumption is that that decision will be made by the police.
The Government then said, quite rightly, tough things about those who had rioted and said to the victims, “We will compensate you. We will put you back to where you were.” That was said by the Prime Minister, by the Mayor of London and by other city leaders across the country. Sometimes, when we see a terrible event, usually in a country a long way from here—an earthquake, a tsunami, a flood, a terrible and horrific natural event that disrupts lives and causes damage—we can go to a bank and contribute a little bit of money towards a relief fund. One gets the sense that the whole world combines so that people affected by the event can be brought back to normal. Why, then, did small business owners up and down the country find that three months, four months, six months, a year, two years or three years after the events of 2011 they still had not been compensated? I can think of one business in Tottenham that still has not been compensated.
It was a shocking example of bureaucracy out of control. The performance was patchy across different police forces, and patchy in partnership with the insurance industry. I was very critical of the insurance industry at the time, and the insensitivity of loss adjusters was extraordinary. People were weeping because of the hurdles they were being put through and how they were made to feel as though the rioting was somehow their fault. I must put these comments in the strongest terms because if I had some of those small business owners standing by my side they would expect me to say this. It was not a pretty sight. They said to me time and time again that if their business had been caught up in a tsunami in Thailand, they would have been better treated. They have said to me: “This was no fault of mine. I pay my taxes, I do not rely on the state, but my business is gone, I have had a heart attack. I can’t eat. I keep seeing flashes of the fire. Everything has been destroyed and a year later I have nothing.” Time and time again those were the stories we heard across the country.
Mike Wood
I strongly agree with what the right hon. Gentleman is saying, but does he recognise that the key part of this Bill, putting the riot claims bureau on a statutory footing, will address exactly the kind of issues that he identifies, such as the unnecessary and unacceptable delays in getting the money that is needed to the people who are trying to rebuild their lives and their businesses?
Mr Lammy
The hon. Gentleman is right, of course. The riot claims bureau will be a step forward, but let us be absolutely clear about it. It sounds good, does it not, the riot claims bureau? We get the sense of bureaucrats hard at work somewhere in the Home Office as we speak. No one is staffing the riot claims bureau as a result of the Bill; I suspect it will be brought together rapidly in the event of a riot.
It is important to ensure that the expertise and knowledge are present, that there have been practice exercises and that there is understanding of the sorts of communities that experience such things. There must be a sense that we must put small businesses first on these occasions, because often the big businesses can defend themselves. Members might remember from the riots the atrocious behaviour of the head of JD Sports, who said that it was great that people were breaking down windows to grab trainers because it showed how important his products were. I would suggest that that chief executive can defend himself, but he was in a very different position from those on the high street.
I pay tribute to Sir Bill Castell, chair of the Wellcome Trust and one of the great industrialists of our country. He was chair of the High Street Fund, which did so much to support small businesses across the country. I will never forget Sir Bill ringing me up just a day after the riots, determined to make a difference and to bring big business together to support small business and to bring those funds to individuals. I will also not forget Bill’s consternation that months later funds had not been paid out under the Riot (Damages) Act and that when those funds were paid out, despite the fact that the High Street Fund was a charity relying on contributions from big business, they were discounted against that money. I say to the hon. Member for Dudley South, will we see that happen again?
In these circumstances, when there is philanthropy and charity and when human beings come on side and say that they will support somebody, that should not be discounted against the obligations of the state. We should not be saying that it is for charity to pick up the tab and reduce the burden that we all face as taxpayers when consents break down in this way. I know that Sir Bill felt very strongly about that and I hope that we might get an answer about what will happen in the future in this regard.
I come back to the point about the expertise. Will the bureau have the expertise? How many people will staff it? How will it be brought together? How will it be different from the patchy performance we have seen? For example, I understand that the police in Manchester performed quickly and were able to pay out quickly, although they had a smaller group of businesses involved, whereas the Met were woefully slow in paying out. That led to the then Leader of the Opposition coming to the Dispatch Box during Prime Minister’s questions and asking when businesses would receive their funds. He did that well over a year after the riots—the Met’s performance was that poor. It is important to understand what the bureau will look like and to make sure that it is not just a fancy name, but will work effectively.
I come to the role of loss adjusters. The hon. Gentleman is right that new-for-old compensation will mitigate some of the insensitivity that so many business owners said they experienced as they were quizzed about the age of their products, whether they were sure those products were in the premises, where they were in the building, why they could not get into the building, why their English was not good enough to fill in a form, and so on. I hope new for old will lead to a better system.
In these circumstances there should be a loss of earnings component. If we were able to pay out relatively quickly, the loss of earnings component would be reduced, which was not the case last time round when the process was so poorly handled. Many of us may not be here for the next set of riots in our country. I hope we are not here—I hope it is that far away—but if the claims process goes on for a long time, there is a terrible loss of earnings for small businesses. I can think of a wonderful mechanic’s business that was burned to the ground. It sat next to the iconic Union building in Tottenham that was also burned to the ground. I think of the wonderful Cypriot owner. He came to see me, devastated by the flooding and destruction of his family business. The road was shut off, the building next to it had been burned down and it was months before he could get into his business premises. He had a heart attack. He was laid low at home, panicking about the pressure of finance and money. I will remember that man and his family for the rest of my life. So I believe that loss of earnings should be a component of the compensation. Consequential earnings are also fundamental when the state breaks down in this way.
The cap of £1 million is right and totally understandable. It is important, though, that that cap is sufficiently high to compensate the vast majority of businesses. I think that that probably is the case, but I would like reassurance that it is index-linked and will rise. It is £1 million today, but what will it be in 50 years or 100 years? In areas of the country that are fragile, where there is deprivation or pockets of deprivation, we must not scare big business away because it fears that it would not be adequately compensated in the event of a riot. We must not do what has happened in other parts of the world, particularly the United States. It is important that private insurance is available for larger businesses for which, if they were to suffer a loss, it would be substantially more than £1 million.
It is easy to see how a relatively small business with stock could lose more than £1 million over several months in the circumstances. I am a little bit nervous about what the effect of the cap may be and whether it will harm regeneration and the prospect of those communities moving forward towards prosperity through regeneration. On the whole, people do not tend to riot if they have a job and a mortgage, but in parts of the country that cannot always be guaranteed, so it is important that big business is there, small business is supported, the £1 million cap is not too low, and that we are sure the insurance industry will provide support beyond that £1 million.
We need to be clear that under-insurance is common in the kind of communities that saw rioting in 2011 and communities where riots have historically taken place in this country. Because of the delicate margins with which businesses operate in such communities, there is often under-insurance. It was the people who were under-insured who paid the heaviest price last time round. They were able to claim from the High Street Fund, but that was discounted down the line. They were the ones who found it hardest to get payments under the Riot (Damages) Act in good time.
The 42 days feels like a long period. People know the riot has happened to them. They must know that there is some means of compensation. People say that on the news, but it does not reach them because they are in shock, because everything they own has been burned to the ground, and they have no paperwork, they have no ID, they do not know who they are. This is not just about shops; it is about homes as well. I am worried about the 42-day period. I can think of many constituents who would not meet that.
The Minister for Immigration (James Brokenshire)
It might help the right hon. Gentleman to know that if the Bill were to pass, that would be dealt with in regulations. Our intention is that the 42 days would be a notification period—a time for people to give notice that they were going to make a claim—but there would a further 90-day period to quantify that claim and provide further details. I hope I can offer him some reassurance that we are thinking carefully about lessons from 2011 and about time periods that will allow people to gather paperwork and quantify the amounts that they are claiming for.
Mr Lammy
I am grateful for that indication. My hon. Friend the Member for West Ham (Lyn Brown) on the Opposition Front Bench also has the kind of constituency where I am sure she would recognise that, in our multicultural London, many businesses are run by people who speak English as a second language and who, in times of riots, are a long way from the state. That is because they do not rely on the state very much at all. Even notifying their intention to make a claim is not something that they would understand. Many of my constituents did not understand that they could make a claim. They simply sat with their head in their hands, under-insured and not aware that the state would support them in this way. They got to the understanding that they could make a claim because word about the High Street Fund spread quickly among the businesses alongside theirs. That was how they started to realise that they, too, could make a claim. I am grateful that the Minister has indicated some flexibility on that, but I wanted to stress my concerns that people might be caught out of the system.
I broadly welcome what has been said today, with some reservations about the nature of the bureau and the expertise that it will need, and real concern that we should understand the sort of areas that can experience riots in our country and why it is important that, as a nation, we support those communities.
There is a potential conflict between the Met declaring a riot and the fact that the budget comes from the declarer. I hope that the Minister will say a little more about the circumstances in which a riot is declared, because in 2011 the situation was so patently clear that it would have been very hard for the Met not to declare a riot, but that is not always the case. I remember just a few hours into the rioting the former Member for Holborn and St Pancras said to me, “Watch and see if it actually declares this to be a riot.” I would therefore like some reassurance about the circumstances in which a riot is declared, because that could be a source of contention.
When the London Assembly looked into the 2011 riots, it came to the view that the police were handling the situation so badly that the money ought to be in the local authority’s pot. There is some merit in that, because local authorities are much closer to local businesses and can liaise very intently with Government. The money is coming from the Treasury anyway—let us be clear about that—but how it works within Government is the big question. I had sympathy with the London Assembly’s view, although I think that it is important that the police understand that consent must not break down and that, if it does, it comes from their budget stream. There is a discussion to be had about that potential conflict. The Bill is settled on the money coming from the police. It is therefore important to understand the moment at which a riot is declared and how that decision is reached.
There was a sense in those early months that the Met was losing money as a consequence of having to give money out—that there was no extra money from the Treasury. We need our most deprived communities to be policed; we do not want all the money available to go to compensation. That is a complexity in the Bill that I think requires further explanation.
Mr Lammy
On the very sensible point that the hon. Gentleman is making, is he worried, as I am, that the Government will recognise that £1 million is inadequate only after another riot? It is very unlikely that the Government would return to the limit between riots, because there would be no reason to do so.
Mr Nuttall
That is my concern. We need an assurance from the Minister that someone will look at the limit every few years because, as the right hon. Gentleman says, there is a danger that the legislation will be dusted down and looked at only after the event, as happened after the 2011 riots, when everybody realises that it is woefully out of date. A proactive approach is therefore needed.
Where I perhaps part company with the right hon. Gentleman is on whether the riot claims bureau should be a permanent body. Was he suggesting it should be?
Mr Nuttall
No, he was not suggesting that. I would not have agreed with that. I do not think we could set up such a body and have it permanently in operation.
Mr Nuttall
That is the point I am making. Thinking back to the Toxteth riots in the early ’80s, they are mercifully infrequent.
In urban areas that are seen as most at risk, it would make sense to have a stand-alone leaflet available that could be distributed in the event of a riot, so that business owners and affected individuals could be given information simply and straightforwardly in the immediate aftermath to put their minds at ease. They would then know what they needed to do and that they needed to do it within 42 days, or whatever the limit was. They would be aware straight away of the need to take action. In this day and age, there could also be a permanent website after the Bill reaches the statute book, as I hope it will, that can be found easily by somebody who does a search on the internet.
Lyn Brown (West Ham) (Lab)
Sorry, Madam Deputy Speaker; I was sat quite comfortably, waiting for the hon. Member for Bury North (Mr Nuttall) to perform his usual tour de force to the Chamber, and thought I had more time.
I congratulate the hon. Member for Dudley South (Mike Wood) on bringing the Bill before the House. I was saddened to hear that his popularity has declined. I hope that it does not spoil his Christmas. I was rather worried to hear the story about the rogue squirrel. As a city girl who has only just started to experience these creatures in her back garden, it has made me a little more wary of coming into contact with them.
The riots that blighted many of our cities and towns in August 2011 were a truly destructive event. More than 5,000 crimes were recorded in just a few days, five people lost their lives and it has been estimated that the material cost of the London riots alone was over half a billion pounds. That material cost has fallen on the public, local businesses, the police and the taxpayer during a period of harsh economic conditions.
As we have heard today, the existing legal framework for compensating the victims of riots has proven to be inadequate. It is therefore right that we consider carefully how the financial burden of any future riot events should be shouldered.
The House has heard that there is an established principle that the police are liable for damage incurred during riots. There is an implied contract between the public and the police: the public will respect the authority of the police and, in return, the police will secure law and order for the public. It has been contended that when riots break out and property is damaged, the police have failed to keep their end of the bargain and are therefore strictly liable for damages incurred.
As we have heard a number of times today, that principle is enforced through the Riot (Damages) Act 1886. It was perhaps inevitable that a 130-year-old piece of legislation did not prove to be up to the task of handling the aftermath of the 2011 riots, which were as widespread and destructive as any we have seen for a generation. The language of the Act, as Members have said, is archaic, defining riots as
“persons riotously and tumultuously assembled together”.
That sounds like a decent football match.
Lyn Brown
No, we are doing quite well.
The 1886 Act pays no consideration to what are now important questions for any legislation dealing with insurance and compensation. For understandable reasons, there is no mention of motor vehicles. There is no consideration of interim compensations for victims while claims are being processed or of the new-for-old replacement of damaged goods, and there are no powers for the police to delegate administering the compensation process to experts in legal claims. As a result, in 2014, three years after the 2011 riots, victims were still waiting for over £40 million of compensation to be paid out. This is an inordinately long wait for compensation. The existing legislation has therefore been shown to be not fit for purpose, and so the hon. Member for Dudley South is doing the House a favour today.
I pay tribute to my hon. Friend the Member for Croydon North (Mr Reed) for his work on this issue. His constituency was hit as hard by the 2011 riots as many others, and he has worked tirelessly highlighting the difficulty that locals have had in receiving the compensation that they should be entitled to. He used the Freedom of Information Act to show that three years after the riots, 133 victims in London had yet to receive a penny in compensation from the police. Just 16% of the requested compensation had been paid out at that point. These victims of rioting must feel badly let down considering that the Prime Minister had promised they would not be left out of pocket. Without his tireless work and that of my right hon. Friend the Member for Tottenham (Mr Lammy), I gently say that I doubt this Bill would have been before the House today.
To be fair to the Government, being even-handed on a Friday, they have recognised the problems that people have had in receiving compensation. They commissioned an independent review of existing legislation chaired by Neil Kinghan. The Kinghan review was published in September 2013, and it made a series of recommendations. It recommended that the principle that the police are strictly liable for damages incurred during riots ought to be maintained; that legislation ought to protect insurers so as not to deter people from taking out insurance policies, or to inflate the cost of insurance; and that payments to insurance firms should be limited to businesses insured with an annual turnover of less than £2 million. It suggested that legislation should allow the police to delegate the administering of claims to a body made up of insurance professionals rather than the police having to take on that complex administrative task themselves. A further important recommendation was that allowance be made for compensating at the cost of replacement goods—old for new—as is the case in most modern insurance practice. The review judged that new legislation replacing the 1886 Act would be necessary.
The Government ran a consultation exercise after the publication of the Kinghan review, and the Bill before us, as we have heard, has the support of the Government and takes up many of the review’s recommendations. This includes a number of provisions that are uncontentious but nevertheless important, such as including cars within the scope of compensation and providing for interim payments. Given the clear need to update the legislation that governs riot compensation, we welcome this Bill and believe that it ought to move forward to Committee, where it can receive further scrutiny.
While we support the principle that the police ought to be strictly liable for damages incurred during the course of a riot, it is important that our police forces are not asked to promise a blank cheque. It is impossible for police forces to plan and budget for the possibility of having to compensate victims of riots without some understanding of the likely costs to be involved. This is particularly true when our police forces are still absorbing the 17,000 police officer cuts from the previous Parliament. It might be Friday but this is not politics-free.
To deal with this problem, the Kinghan review originally proposed that insurers would be able to claim only for businesses with an annual turnover lower than £2 million. The Bill instead places a £1 million cap on the total claim that can be made, and removes any reference to company turnover. The Association of British Insurers estimates that 99% of commercial property claims for material damage from the August 2011 riots would have been fully covered by this new £1 million limit. The Home Office makes similar estimates, and the impact assessment that accompanies the Bill suggests that just 19 of 1,988 impacted businesses would wish to claim over £1 million in the case of large-scale rioting. This appears to be a significant improvement on the turnover-based model suggested by Kinghan. According to the ABI, only 33% of commercial property claims for material damage during the August 2011 riots came from businesses with a turnover of less than £2 million. There were serious fears that the £2 million turnover limit would have therefore created a disincentive for large businesses to set up in areas that they would possibly consider to be susceptible to rioting, and that some businesses would be left unfairly out of pocket. These details need to be looked at very closely as the Bill moves through Committee, particularly as the £1 million limit represents a departure from the recommendations by the Kinghan review and may have an impact on insurance premiums. I want to ensure that the Government are taking seriously the competing interests of the insurance industry, businesses, the police, and the public finances.
Another area of concern that we will pursue in Committee is what constitutes a riot and who decides when a riot has taken place. At present, the Bill empowers police and crime commissioners to determine whether there has or has not been a riot, which they must do in accordance with the definition of a riot provided by the Public Order Act 1986. It is the budgets of police and crime commissioners that will ultimately be hurt if they do judge that there has been a riot, so we might, in effect, be allowing the police to mark their own homework. This was raised by Mark Shepherd of the ABI, who has called for
“a more independent determination of when a disturbance is a riot”.
That might be appropriate given the quasi-judicial nature of the decision.
My final area of concern is that the Bill does not cover loss of trade for businesses, loss of rent for landlords, or the cost of alternative accommodation needed in the wake of a riot. These are all instances of what insurers call consequential loss. Many of those most severely impacted by the 2011 riots would therefore not have been be fully compensated through the provisions in this Bill. That is particularly true of businesses with small capital holdings who rely on trade that has been disrupted by rioting. This needs to be carefully looked at during the next stages of the legislative process so that we can provide the most equitable deal possible between the police and the community in the unwelcome event of future riots.
The current arrangements for dealing with compensation after riots is clearly inadequate, and a new framework is required. I look forward to going through the details of the Bill to make sure that we can have a system that commands the support of the public, business, and the police alike. That will mean looking carefully at the caps on compensation, the process of determining when a riot has taken place, and the clauses setting out which losses are, and which are not, eligible for compensation. We must make sure that we try to minimise the numbers of people who fall victims of future riots, as, unfortunately, so many did in 2011.
The Minister for Immigration (James Brokenshire)
I thank hon. Members from both sides of the House for an informative and passionate debate that has reflected the interests of their constituents on the issue of riot compensation. I particularly commend my hon. Friend the Member for Dudley South (Mike Wood) for his hard work, his approach in bringing the Bill before the House, and the way that he has sought to conduct this morning’s debate. He has achieved consensus on the need to move forward and the need for change, and I know how hard that can be. He stated that as a new Member, he has become popular ever since he was successful in the ballot to introduce a private Member’s Bill, but given how he has conducted himself thus far, I suspect that he will remain very popular in future, and I commend him for that.
I have listened to the speeches made during this debate, and there is no doubt that the 2011 riots remain fresh in the minds of many. As my hon. Friend said, it is important that we respond effectively and promptly to those whose lives have been wrecked as a consequence of the riots. I share his hope that this Bill will never be used, but it is right that we prepare for such eventualities and learn the lessons of the past to meet the potential challenges of the future. The Government acknowledge that payment of riot compensation in the aftermath of August 2011 was not as streamlined as it could have been, first because processes had to be put in place at short notice, and secondly because decision makers were required to work with a piece of legislation that is almost 130 years old.
We may not have “riotous” assembly in this House—we certainly do not—but we might have “tumultuous” assembly. The sense that that terminology may remain—and indeed was—relevant when claims were being considered after the August 2011 riots, underlines the need for us to improve and modernise the way that we approach the payment of compensation to individuals and businesses who experience losses or damage to property caused by riots. I therefore commend the hon. Members for Ealing Central and Acton (Dr Huq) and for West Ham (Lyn Brown), the right hon. Member for Tottenham (Mr Lammy), and my hon. Friends the Members for Torbay (Kevin Foster), for Solihull (Julian Knight), and for Bury North (Mr Nuttall), who broadly welcomed the need to move forward on this issue.
James Brokenshire
My hon. Friend rightly makes a point about the need for certainty and clarity, and that is precisely what the Bill provides. Clause 1(6) seeks to achieve that by reference to the 1986 Act, and it is right to provide the sense of certainty outlined by my hon. Friend. The right hon. Member for Tottenham and my hon. Friend the Member for Bury North mentioned the need to inform the public about this issue, and if the Bill is enacted we would produce guidance to inform the public about the process and entitlements in the Bill, and subsequent regulations.
There has been some debate about why the Bill seeks to set the cap at £1 million. Alternative proposals were considered, but I think my hon. Friend the Member for Dudley South has captured well the analysis that informed his thinking, which I know is based on research. Such a cap would have dealt with around 99% of claims made after the 2011 riots. We have also discussed the fact that the Bill does not provide cover for consequential loss. The independent reviewer thoroughly considered that issue when considering recommendations, but believed that that would be a step too far in a Government scheme. We agree with that analysis, particularly given the potential impact on the public purse, which is likely to run to tens of millions of pounds. The Bill is not intended as a catch-all, but it was right to raise the issue of its inter-relationship with insurance. This is intended as a safety net, not as an alternative to insurance provision.
We have touched on how the Bill would seek to cover motor vehicles—an issue that, as we have heard, could not have been captured by the original 1886 Act. Again, the cover is not intended to replace insurance, and any claims would be checked to ensure that the vehicle was maintained in full compliance with the law. My hon. Friend has struck the right balance in bringing forward those provisions.
The Bill would also make provision for a riot claims bureau. It is not intended for a bureau to be in place for every instance of rioting—for example, it would not be efficient to make such arrangements where a small-scale disturbance occurred that was perhaps confined to one force area. Experience has highlighted the approach that should be taken to allow for a speedier, more efficient and effective response. The Bill provides for that flexibility, as well as allowing for further regulation.
The right hon. Member for Tottenham talked about how the arrangements would differ from those in the past. If the Bill were to proceed, our approach would be to create regulations setting out the detail of the bureau. The Home Office has had discussions with the insurance industry, police and loss adjusters, and I anticipate that there would be a management board made up of relevant experts, overseeing contracted loss adjusters who would have the capability and capacity to respond quickly. Again, that reflects some of the lessons we have learned.
Mr Lammy
I am grateful for that reassurance. The management board sounds very sensible. There has been some suggestion from the Home Office that some of the expertise that existed following the Bradford and Oldham riots in 2001 has been lost. Might there be a mechanism to contact staff with previous experience of riots—or indeed of floods, after which similar issues come up—so that their expertise can be drawn on quickly?
James Brokenshire
The right hon. Gentleman makes an interesting and fair point. Should the Bill proceed, there will be an opportunity to reflect on such experience when we form the regulations that will set out the structure of the bureau. I hope that we will be able to learn the lessons not only from 2011 but from other times when compensation has been paid. The parallel that he draws with a flooding incident is important.
We believe that the structure of primary police liability, albeit that it was set out in 1886, remains valid. When the police fail to prevent the breakdown of law and order in such a way that a riot occurs, we judge that they should provide compensation to those who have suffered financial loss through no fault of their own. I have sympathy with the arguments that have been made about that strict liability approach, but the independent reviewer came to the same conclusion after much consideration and discussion with police and other stakeholders.
The Bill will bring much-needed reform by ensuring that after future riots, there will be modern, transparent and fair arrangements for individuals and businesses that have experienced losses through no fault of their own. Important points have been made today about payment arrangements, including points about charity payments by the hon. Member for Croydon North (Mr Reed) in an intervention and by the right hon. Member for Tottenham and my hon. Friend the Member for Torbay in their speeches. It is our intention that charitable donations should not be deducted from compensation, but that formal aid such as that funded by local government should be. I think that clarity can be provided.
The hon. Member for Ealing Central and Acton talked about the police marking their own homework, and other Members developed that theme. We expect claims, other than those of relatively low value, to be subject to a loss adjustment-type process, as most insurance claims are. I also underline that clause 9 provides for a reviews and appeals mechanism, which gives an important assurance about how claims will be addressed.
My hon. Friend the Member for Morecambe and Lunesdale (David Morris) rightly focused on small business, and he asked whether mobile businesses might be covered. That is an interesting question that may be worthy of further development in Committee. Members also mentioned the compensation cap, and as we have heard, there is provision for it to be extended. Any legislation requires regular Government assessment, and there are processes in place for that, which I hope will allow for reflection on the level of the cap. I am sure that that point, too, will be subject to further examination in Committee.
Several of the proposals in the Bill will make compensation arrangements more generous. The way compensation has been paid in the past has created hardship for some vulnerable people and businesses, and it is right to ensure that those in the greatest need can recover more easily from the impact of riots. We are mindful of our responsibilities to protect public money, and the proposals to limit payments to large businesses and to apply excesses to compensation will help balance out the impact of increased compensation.
Ultimately, however, the purpose of the Bill tabled by my hon. Friend the Member for Dudley South is to protect vulnerable people from hardship. The current provisions may have been suitable to provide for the living standards of Victorian Britain, but they do not reflect the needs of our modern society. That is why I agree with him about the need for change. I commend him again for bringing the Bill before the House. In the light of today’s debate and the clear need for reform, I hope that the House will not just commend him but give his Bill a Second Reading.