Flood Insurance

Ian Lavery Excerpts

Tuesday 26th March 2013 Commons Chamber

[Ian Lavery (Wansbeck) (Lab)]

I congratulate the hon. Member for Esher and Walton (Mr Raab) on initiating this timely debate on the Floor of the House. By way of background, I remind Members that on 5 and 6 September 2008 Morpeth—a market town in my constituency—found itself at the centre of the most intensive rainfall in living memory. Some 950 properties in the town, including dozens of businesses, were directly affected. Surrounding villages were hit very hard, too, including Hepscott, which was affected by flash flooding. A number of other properties were badly flooded. The devastation suffered by individuals, families, businesses and the community at large cannot be overstated in any way, shape or form. It was an experience that will haunt their memories for many years.

As we debate the issue today, I am delighted that progress is finally being made in Morpeth. I thank and congratulate Northumberland county council, which has allocated £12 million towards the cost of new flood defences. That money is being delivered with the support and agreement of the three main political parties. It is important to recognise the role that the emergency services have played across the UK, but particularly in Morpeth in my constituency, and the way that they operated to help others during those difficult times. The local community in my constituency, the Morpeth Flood Action Group and many others pulled together, as has happened in the constituencies of many other hon. Members on both sides of the House, in the most difficult of circumstances. It would be remiss of me not to mention the Environment Agency and Ian Hodge, who works at the agency in Newcastle, who has played a huge role in Morpeth.

The problem has been described as immense, but the pooling system—an important component of insurance—will be an integral part of any agreement and, I hope, positive resolution that is reached. The pooling system has been proposed under the “Flood Re” model and the Morpeth model. That system formalises the existing cross-subsidy. It redistributes the risk to keep affordability in place for high-risk properties. It represents the only fair way forward in a changing situation where climate change is giving rise to an increasing number of extreme weather events. The ABI model, the “Flood Re” system and the Morpeth system combine availability with affordability. The “Flood Mu”, or Noah model, does not guarantee that because it does not put a cap on flood premiums.

[Damian Collins (Folkestone and Hythe) (Con)]

Does the hon. Gentleman agree that it is important that the insurance industry take into account investment in new flood defence schemes, including the one that he has talked about and the new sea wall at Dymchurch in my constituency? Often insurers base their quotes on generic information that does not take into account investment in new defences.

[Ian Lavery]

That is a powerful comment, with which I totally agree.

As has been discussed, the ABI has been in discussion with the Government for several months, perhaps years, on the ending of the statement of principles in June 2013. The clock is ticking. The deadline is fast approaching. People want answers. People in Morpeth have been flooded time and again; hon. Members on both sides of the House have described the experiences of people in their constituencies who have suffered greatly time and again. They cannot get affordable insurance. The excesses are higher than what the properties are worth, so it is meaningless.

Time and again, Members on both sides of the House have mentioned the importance of ensuring that we have a statement that will ensure something affordable and accessible is in place when the statement of principles runs out. We have been told time and again that the discussions with the ABI are at a critical point, that the statement is nearly ready and that things are in place. However, The Times this morning said something completely different. It suggested that there are huge difficulties between the ABI and the Government. Perhaps the Minister, for whom I have a lot of time and who has been very helpful, can explain from the Dispatch Box this afternoon where we are with the ABI and what is likely to happen in the next three months. It is absolutely imperative that we get something in place for the people who have been suffering for some time.

I am sure that the Minister will have much more to say, and it is important that we deal with this issue and that measures are put in place. I hope that we will not hear, “We are still in discussions and we cannot really give any more details, because the matter is confidential and that wouldn’t be right.” We want an answer today for everyone who lives in a property on a floodplain. We do not want to hear, “Something will happen.” Give us the answers, so we can tell our constituents what the situation is and they can feel safe.

--- Later in debate ---

[Naomi Long]

rose—

[Ian Lavery]

rose—

[Richard Benyon]

I am really short of time, but I will respond to the point that I believe the hon. Gentleman wants to make. If I have time to give way at the end, I will do so.

As Ministers have repeatedly made clear, the main aim of our work has always been to reach an agreement whereby insurance bills remain affordable, without placing unacceptable and unsustainable costs on wider policyholders. The Government have been doing a lot to support the continued availability of affordable insurance. Reducing flood risk will always be the best and most sustainable solution. Despite difficult times, we are on track to spend more than £2.3 billion to deliver better protection from flooding and coastal erosion to more than 165,000 homes over the four years to 2015. Our new system of partnership funding has brought in an additional £148 million on top of that from external partners. Many hon. Members, including the hon. Member for Wansbeck (Ian Lavery), have benefited from that in their constituencies. I give full praise to him and his constituents for the leadership that they have shown.

The hon. Member for Kingston upon Hull North (Diana Johnson) asked why there was nothing in the Budget, but £120 million of investment was announced in the autumn statement. Many of those schemes are shovel-ready and proceeding, and they are a great comfort to constituents.

Despite last year being the second wettest on record, more than 200,000 homes were protected from flooding because of defences already in place. The Environment Agency’s flood warning service provided additional support; evidence is emerging that many houses avoid flooding because of the better flood warning system. We have estimated that, for every property that suffered flooding last year and in January, more than 25 homes were protected because of flood defences and maintenance work and because of the work of the Environment Agency, local authorities and other front-line responders. More than 200,000 householders are therefore benefiting from the Government’s continued investment in managing flood risk.

Many hon. Members are impatient for information on the Government’s discussions. I am impatient to share the details, but it would be quite wrong to go into too much detail.

I join my hon. Friend the Member for South East Cornwall (Sheryll Murray) in offering commiserations to her constituent and her family for their loss. I entirely agree with her that all available information must be made publicly available, so that we can get to the bottom of what precisely happened.