Riot Compensation Bill

David Morris Excerpts

Friday 4th December 2015 Commons Chamber

[Dr Huq]

I thank the hon. Gentleman for his intervention. I would feel happy if this issue were addressed to some limited extent. One would expect the Association of British Insurers to be on the side of the insurance industry, but it has found this aspect left wanting in this legislation—it could perhaps be explored at future stages.

[David Morris (Morecambe and Lunesdale) (Con)]

I declare an interest as a commercial business owner and property owner. Most insurance companies insure the buildings and the contents separately. That may not be under discussion in this context, but normally claims for buildings damaged through rioting as separate from contents claims.

[Dr Huq]

I am talking about loss of earnings. The store owner, his wife and two kids had to live off their savings for 18 months. It is an extreme case: 18 months is not the norm, and riots are not the norm. We do not usually expect these occurrences. Let us hope they never happen again.

Helen from Bang & Olufsen remarked that the shop front had not been smashed. The video was shared so many times because people were saying that the rioters had been defeated, along the lines of “Hooray: victory against the rioters”. In the end, she faced a bill of £10,000 for the glass splinters. High-end products were involved, as expensive televisions behind the glass were also damaged. Helen’s point was that a cheque had to be written from the firm’s business account, which caused a problem for cash flow afterwards. She said that she had sunk all her savings into the business, which had been open only for six years, and when it started there was a massive recession. The hit to cash flow to pay the glazier was huge. She suggested that a temporary loan would have been helpful in that instance. It was a frightening time for her: she had a little kid and a second one was on the way.

--- Later in debate ---

[David Morris (Morecambe and Lunesdale) (Con)]

It is a great pleasure to follow the hon. Member for Ealing Central and Acton (Dr Huq). A lot of the points she made were very poignant, especially in this debate on how we amend legislation to compensate businesses or individuals, or even where there has been damage to a home, when there has been a riot.

I must make a declaration: I am a commercial property owner. I congratulate my colleague and friend, my hon. Friend the Member for Dudley South (Mike Wood), on bringing this Bill to the House, as it is timely that we look at what we should do now compared with 1886. I should make another declaration: I am the small business ambassador to the Government, and I want to touch on how this change in legislation would help the self-employed.

Let me consider the issue in hand. Currently, if there is a riot, the police must pay. I think that is absolutely bonkers, because we are expecting the police to work harder than ever in this time of austerity when budgets are capped. We must look sensibly at what the police’s role is and what is expected of them, and at the responsibilities of society at large. We ask the police to pay with the budgets they have, but those budgets are correctly defined by the Government and do not cover compensation for individuals’ loss of property, whether that is business or private property.

It is timely that we stop that practice, but I am concerned by the sharp practices of insurance companies and what they might do in respect of insurance for businesses, small businesses and the self-employed. I was once a small businessman. In my experience, most insurance companies have policies that are broken up into various areas. I had to insure the glass of the building, the fabric of the building and loss of earnings, and the fixtures and fittings within the building. When riots occur—thankfully, we do not riot often in this country—there is no one-size-fits-all of damage. The hon. Lady mentioned a shop where there was no shop-front damage, but where inside there was total carnage. That shop was not covered. We should look at those aspects.

If we change the legislation so that insurance companies have to provide policies to business owners or individuals, the loss of earnings, fixtures and fittings, the fabric of the building and glass—the whole premises—should be covered under one clause when damage occurs. That is partly why businesses cannot get compensated quickly enough. The loss adjusters look into things separately and it takes them a long time to come to the right conclusion.

I know a lot of small businesses that utilise reconditioned machinery. It is a problem when an insurance company says, “We don’t do new for old,” and all the rest of it. In that limit of £1 million for the fabric of the building—I think I am correct in saying that—if everything comes under one banner when riot damage occurs and all insurances are grouped together, compensation should go up to a certain percentage of what the machinery would cost new. We could go round and round in circles—I saw it done many times when I was in business when people had robberies and machinery was damaged. They could not get compensated quickly enough through their insurance company.

Yes, a cap is welcome—I agree we should have caps—but if we go down that route, insurance companies should address responsibly the value of buildings. Most of my buildings were insured for up to £2 million. In that case, £1 million would not be adequate as a blanket cap, so there should be scope to allow insurance companies to value buildings and to say that a building must have a higher cap for insurance purposes.

However—I will say it as it is—I do not trust insurance companies. Insurance companies will try their damnedest to get out of paying in certain circumstances. Some insurance companies are more reputable than others. Hon. Members know them and hear of examples of sharp practices through our constituents. We must make it clear that, if there is to be a new law, the insurance companies cannot see it as a milch cow and start increasing the cost of policies. Businesses and the self-employed could be at the mercy of the insurance companies in conducting their livelihoods from thereon in.

The hon. Lady made a very interesting point. In 1886, we did not have cars or mobile businesses. Most self-employed people in this country today are mobile in that they do not operate from premises. Something should be incorporated in the Bill so that the self-employed—white van man, to coin a phrase and a category —are insured adequately. Most mobile businesses—those white or whatever colour vans—carry £50,000 in the back. That must be addressed. It should be pushed through to the insurance companies that, should there be a change in the law, mobile businesses affected by riots should be compensated by the same criteria as businesses with fixed fabric premises.

I do not want to take too much time in summing up. I am absolutely elated that the Bill is before the House again. I once more congratulate my hon. Friend. He has worked very hard on the Bill—he has hardly been out of his office these past few weeks because he has been putting so much work into it—and I commend him wholeheartedly. I hope that, after this grown-up debate, we see a change to our laws that encompasses what we do in our modern society.

--- Later in debate ---

[David Morris]

What struck me when I was self-employed is the fact that rioting, terrorism and even political activity—that could cover what we do in this Chamber—are excluded in certain forms of insurance for commercial properties, especially for the self-employed. Does my hon. Friend agree that that should also be considered?

[Kevin Foster]

My hon. Friend makes a strong point. That partly reflects the change of era. There was terrorism in the 1880s, but its impact was very different from what a Semtex explosion would do today. The nature of terrorism has changed so greatly, as we saw in the recent attacks in Paris, with the use of automatic battlefield weaponry. In 1886, an automatic weapon was a Gatling gun, which needed a crew to operate it. Sadly, today’s automatic weapons can be carried quite easily. It is therefore absolutely right that we update the legislation. We should give the Bill a Second Reading and then in Committee look in detail at how we can make it suitable for the modern era. On political activity, for example, were the recent events at the Cereal Killer Cafe a disturbance or a riot? My hon. Friend sums up the issues perfectly. In Committee we will look in detail at where we should draw the lines, using modern language, not language that was suitable in the late 19th century.

It is also worth dwelling on the fact that the current legislation—it seems laughable to describe something from the 1880s as current—means that there is strict liability on the police. As has been mentioned, the areas that have been affected by rioting tend to be those areas that rely most on their local police force. If the local police force ends up picking up the bill for a very large amount of riot compensation, ultimately that is likely to be paid for either by putting additional taxes on communities that are least likely to be able to afford them, or by cutting police provision, and that would be in an area that had just suffered rioting and might therefore require more police provision. I respect the Government’s intervention after 2011 to prevent that from happening, but that is not guaranteed for the future. That is another reason why it is vital to update the legislation so that it is not just one community taking the risk.

As we heard in an earlier speech, some police forces could be bankrupted by a large-scale riot that affected particular commercial interests in their area. That is just not a sensible position to be in. That could also act as a disincentive to have economic activity in the local area. If we know that for some reason there might be a public order disturbance—even a once-in-100-years scenario —and that a particular economic interest could be damaged or destroyed, we would know that ultimately we might end up copping the whole bill for compensation. A review of that situation is long overdue.

Therefore, I also think that it is right to include the £1 million cap. Statistics from the House of Commons Library suggest that about 99% of claims made in 2011 would be covered under these proposals. To be clear, this will not be denying justice to thousands of interests; it is about having fairness between the large interests that are the most able to protect themselves and the smaller interests that find it the most difficult.