Water Bill

Debate between Diana Johnson and Jonathan Evans

Monday 25th November 2013 Commons Chamber

[Diana Johnson (Kingston upon Hull North) (Lab)]

I want to speak specifically to clause 47, which is 11 lines long and introduces the new flood insurance schemes. This is the first opportunity we have had to discuss them on the Floor of the House. As the Chair of the Environment, Food and Rural Affairs Committee has said, the Flood Re scheme still raises many questions that need to be answered. I also share her concerns about a lot of it being left to secondary legislation.

The Flood Re scheme follows on from the statement of principles, which was first agreed in 2000, was renewed in 2008 and ran until this summer. Flood insurance has been of particular interest to me since the very bad floods in Hull in 2007. Since then, I have questioned and lobbied Ministers and secured Adjournment debates on the issue, because I am concerned about my constituents and want whatever scheme that is put in place to meet their needs.

In 2012, the then Secretary of State told me on the Floor of the House that she was

“proud that we have found a way forward with the insurance industry that, above all, guarantees that universal and affordable insurance remains available to all”.—[Official Report, 25 June 2012; Vol. 547, c. 30.]

She said that that included my constituents, but all we have 18 months on is this very short clause outlining the Flood Re scheme. I want to set out why I am so concerned about this.

Ninety per cent. of my home city of Hull is low-lying—below sea level—and prone to floods from the River Hull and the Humber estuary. In 2007 we had a deluge of surface water. June of that year was the wettest month recorded in Yorkshire since 1882. The rain that came down on that day was a once-in-250-years event. One in five properties in Hull were flooded, including 7,208 residential properties and 1,300 businesses.

Flooding causes misery. Any MP who has constituents who have been flooded or who has been flooded themselves will know that it is a miserable experience. Homes are disrupted for weeks and months and dehumidifiers and dryers are needed. Having had secondary flooding in my home in Hull, I know that it is horrible. We want to do everything we can to protect people so that they do not have to go through that.

Part of the deal under the statement of principles was that if someone who did not have insurance in 2007 got flooded, they would never get insurance. People also had to stick with the provider they had in 2007. I had to stick with Aviva—I could not move anywhere else—and my premiums and excesses went up just like those of my constituents have since 2007.

The Government have promised a new scheme and, as I have said, the former Secretary of State made out that it would be affordable and available to all. I have three problems with what is being proposed, as I understand it, although it has not yet been suggested as part of primary legislation. First, I have a big problem with the 2009 cut-off. Secondly, I have a problem with the fact that small businesses are not included in the Flood Re scheme. My third problem is that reviews will take place every five years and that, as I understand it, the scheme is transitional and is planned to move to a full open market approach by the end of 25 years.

[Jonathan Evans (Cardiff North) (Con)]

On the hon. Lady’s first two points, she might like to know that the all-party group on insurance and financial services made exactly those points to the Government as part of the consultation.

[Diana Johnson]

I am grateful to the hon. Gentleman for that intervention. I think there is widespread concern about those two points in particular.

When I asked the House of Commons Library to give me figures for homes built since 2009, I was told that 444,300 private dwellings had been built between 2009 and 2012, and that 1,850 permanent dwellings had been built in Hull between 2009 and the second quarter of 2013, of which 1,720 were private homes. Therefore, more than 1,700 properties will not be part of the Flood Re scheme, despite the fact that the city is prone to flooding and that, with 90% of it below sea level, people may have real problems.

As I understand it, the Government are telling people who bought their homes after 2009 that their properties should have been properly assessed for flood risk under PPS25—planning policy statement 25—and the national planning policy framework, and that they can therefore get insurance on the open market. However, the National Flood Forum has pointed out that an unknown number of people will be at significant flood risk, but unable to get insurance under Flood Re or on the free market.

I accept that the Government’s approach appears sensible, but they have to acknowledge, first, that lots of properties built since 2009 have flooded in various parts of the country and, secondly, that they have caused other properties to flood, particularly from surface water problems. The extent of the problem is not clear, but many communities will raise that issue with the Minister over the coming months, as will hon. Members in Committee.

At Kingswood in my constituency, houses have been built over many years: it is a major area of house building as part of a development for the city. Outline planning permission was first given in 1994 and was renewed in 2004. Like areas all over the UK that were given planning permission before 2009, some properties built since 2009 will not be covered by the Flood Re scheme. A key issue about phased developments is whether standards from an earlier period are applied to houses built post-2009, and I want the Minister to address what will happen to such properties.

When the statement of principles was first set out, the cut-off date for houses not to be covered—2008—was in the future, but the Bill actually has a retrospective date of 2009. Why do the Government not accept that it would be better to give everyone proper warning and make the cut-off date 2015, for example, so that we all know what will happen?

I have concerns about the surface water maps that are available. I understand that local authorities will publish their maps next week, but insurance companies have their own ones. I also have concerns about the fact that the Environment Agency will not produce its compound risk maps until the end of 2015. That will leave house purchasers, community activists and insurance companies, now and in future, with different sorts of information available to them. How can they make good and sensible choices on that basis?

I am really concerned that when I asked the Secretary of State for Communities and Local Government in the House this afternoon about what discussions he has had with his colleagues in the Department for Environment, Food and Rural Affairs, he did not seem to know that there was a problem. Yet his Department is at the moment promoting the Help to Buy scheme extremely heavily in Kingswood to get people to buy new homes in an area that another Department says will be completely excluded from the Flood Re scheme. There is a mis-selling issue there, with people not being fully aware of what this Government are doing. Will the Minister address that point about whether other Ministers know what this scheme means for their Departments?

Last Wednesday, it was announced that Hull would be the city of culture for 2017, but on Thursday in DEFRA questions the Minister told me that the cut-off date of 2009 stood and would send “a very clear message” against building on areas that were likely to flood. The problem is that 90% of Hull is below sea level, so it is prone to flooding. The Government cannot have it both ways. They must accept that issues in different geographical areas of this country have to be addressed.

I want to make three more points. The first is about the role of the Environment Agency. I understand that of 455,500 applications for planning permission, the Environment Agency has commented on only 6.6%. The vast majority do not require it to comment because they are too small or do not meet the requirements set out in legislation. If we want the Environment Agency to play more of a role, we must make it clear that its advice on where houses are built must be taken. I say to the Minister that it is wholly unfair and arbitrary to choose 2009 as the cut-off date for Flood Re; 2015 would be much better. If he is not willing to go that far, perhaps he should consider mitigation for Hull and similar areas.

My second point is that the Government should look at what is happening to small businesses. The Federation of Small Businesses has said that one in five small firms was affected by flooding last year alone. Small firms will end up paying exorbitantly high costs to be insured against the threat of flooding. I hope that amendments will be tabled on that point.

My final point is about the 25-year transitional element of the Flood Re scheme. Will the Minister set out what the five-year reviews are about, because we need more details? Will he address what will happen to areas such as Hull in the longer term? If the free market is just opened up, we will be left with no insurance companies that want to offer insurance in those areas, because the risks are too high. I hope that he will give us more information about the Flood Re scheme.