Flood Insurance for Businesses

John McNally Excerpts

Monday 8th February 2016 Commons Chamber

[Craig Whittaker]

I am not sure that that is the sole responsibility of the Government. I think that there needs to be a joint approach between the insurance industry and Government, but, again, I will come on to that during my speech.

Although the ABI said that it would not turn down any small business for flood insurance, I can tell Members that, having spoken to hundreds of businesses in the Calder Valley over the past few weeks, it has become apparent that many small businesses are experiencing difficulties in accessing flood insurance and that this uncertainty, coupled with the crippling costs that now face some businesses as a consequence of the floods, is jeopardising their future. Although I note the Minister’s response that the Government are not aware of any evidence of a systemic problem, I question the basis on which that conclusion has been reached.

Last July, the Department for Environment, Food and Rural Affairs published the report “Affordability and Availability of Flood Insurance: Findings from Research with Businesses”. A cursory look at the report might lead one to conclude that there is not a problem after all. The research found that uptake of insurance across businesses is high. The survey showed that the vast majority of small businesses arrange commercial insurance cover for their premises and that there is no significant difference between small businesses that are located in high flood-risk areas and those that are not.

However, a more detailed consideration of the report, particularly the basis on which the evidence has been collected, provides a different picture. The headline figures from the report come from a secondary source, a small business survey run by the Department for Business, Innovation and Skills. The DEFRA report acknowledges that the BIS survey data contain only small numbers of businesses located in high flood-risk areas. As such, one may legitimately question how valuable such data are when considering the issue of insurance for businesses in high-risk areas. The main focus of the DEFRA report was a series of in-depth interviews with businesses, and it is that component that forms the main evidence base. Only 25 businesses were interviewed, the majority of which were not in high flood-risk areas. The overwhelming majority were very small businesses, employing fewer than 10 people, and only one manufacturing business was included in the sample. My point is that the evidence base of the DEFRA report is not particularly credible and, as a consequence, the report is of limited value. If they are to appreciate the extent of this issue the Government and the Association of British Insurers need to speak to businesses in areas of high risk.

[John Mc Nally (Falkirk) (SNP)]

As the recently appointed chair of the all-party parliamentary group on flood prevention, I can tell the hon. Gentleman that we had discussions with the hon. Member for York Central (Rachael Maskell) on this on, I think, 26 January. It became apparent in the debate, which was interrupted several times so that we could vote in the Chamber, that there was a great divide on whether there was evidence to show that businesses had been affected. Does he agree that the APPG should visit the sites so that we can witness the problem and speak to the businesses that have been affected by flooding?

[Craig Whittaker]

Of course, we would always welcome the APPG in the Calder Valley. In fact, we welcome anyone who would like to come and have a look. Indeed, if it helps us to make progress in this area and others affected by flooding, the whole group is very welcome, and I will help to arrange for businesses to talk to it too.

To appreciate the true extent of the problem, the Government and the ABI need to speak to businesses in areas of high risk, including those located in communities that have experienced a high frequency of flooding in recent times such as the Calder Valley. Calderdale Council says that between 40% and 50% of businesses cannot access flood insurance in five of my six communities, while our local insurance broker in the upper Calder Valley tells me that 20% of his clients cannot access flood insurance—ironically, including himself. True to the spirit of people in the Calder Valley, he has a desk and a mobile phone set up in the middle of all the building works in what was his office, working to ensure that his clients are sorted out. After the floods he, along with other brokers from around the UK in high flood-risk areas, were invited to London to highlight cases to the ABI. The journey turned out to be an absolute farce, as the ABI refused to look at those cases, saying that it was not allowed to do so because of data protection. The ABI says that there is no evidence of businesses not being able to access flood insurance, and cites DEFRA’s own report, which I have highlighted, to say that there is no evidence.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Rory Stewart)]

I pay tribute to my hon. Friend the Member for Calder Valley (Craig Whittaker) for a very quiet but very forensic speech that showed the deep care that he has for his constituency. I saw that directly myself when I walked through many of the businesses that he described. I saw how, in essence, a tidal wave had moved through a furniture factory, wiping out half a million pounds-worth of stock. I saw how a furniture warehouse was ruined and a community centre had been wiped out. I saw, as many hon. Members on both sides of the House have noted, the incredible impact that this has had on a very precious and beautiful area of our country and a historic community, and how intimately the subject of business insurance is connected to the livelihood and the longevity of these communities.

I will not get into a detailed discussion about the DEFRA survey, although I would point out that it is not quite as bad as it seems on paper. A total of 2,686 businesses were surveyed, but I absolutely agree with my hon. Friend that the 25 on whom an in-depth survey was conducted was not a large enough number to be a decent sample. I strongly encourage the hon. Member for Falkirk (John Mc Nally) and his APPG to get involved in the detailed investigation of what is happening in business insurance in Calder Valley. The hon. Member for Stockton North (Alex Cunningham) raised that issue powerfully.

There are improvements that we can already make without looking at a flood re scheme. First, we need to make information far more accurate so that businesses in a flood-vulnerable zone are not being punished when they are not actually flooded. Secondly, as has been pointed out, we need to make sure that businesses are more resilient. We have access to good public information about that. There is a very good example of a business in Cockermouth that took the right measures and, as a result, was able to come back from the flooding in two days whereas previously it took four months.

In relation to business, the Government have a part to play in investment and infrastructure. We need to guarantee broadband connections; there was a problem in that regard at Tadcaster bridge. Electricity substations and roads must be left open, because that matters not just for communities but for businesses. We need to acknowledge that the insurance industry cannot be the complete answer. As the hon. Member for West Aberdeenshire and Kincardine (Stuart Blair Donaldson) pointed out, it is important that there is an element of grant coming in. We have put a great deal of grant behind businesses—an average of £2,500 per business, but in some cases considerably more—because we acknowledge that the insurance industry does not produce all the answers. There is also the capital expenditure that we need to put into flood schemes in general.

My hon. Friend the Member for Calder Valley focused, as did the hon. Member for York Central (Rachael Maskell), specifically on whether there should be a Flood Re scheme. I am afraid that time will not allow me to answer this question in detail, but I will give some points to consider in looking at business insurance. First, setting up one of these schemes involves a very considerable cost to the dry. At the moment, within a Flood Re scheme, regardless of where someone is located—they could be on the edge of a river and flood every three years—they would be guaranteed that for a £250 premium, or the basic rate of council tax on a £250 excess, they would be insured. This would mean that businesses in dry areas would have to cover the cost of providing insurance in some of the cases that my hon. Friend raised. For example, if a business has indeed, as he said, flooded twice in four years at a cost of £500,000 to its stock each time, it will be difficult to provide insurance without some measure of cross-subsidy for businesses that are not in flood-affected areas.

The second problem is the complexity of flood insurance for businesses. It is much more straightforward for householders, who basically look to insure their buildings and contents. A business, on the other hand, has to look at how much cash it has in the bank, and how much it therefore wants to lower its premiums and self-insure against a higher excess. It has to look at whether it has high fixed structural assets and whether it wants to insure them. An internet company will not want to invest much in insuring the building that it is in, whereas for a farm, a property business or a restaurant, that fixed structural asset is absolutely essential to the continuity of its business.

The difference can be huge when it comes to business interruption insurance. For example, business interruption would be minimal for a company such as cheapflights.com, provided that its service was not located in the area affected. However, if the McVities biscuit factory in Carlisle were wiped out by a flood, the business interruption consequences would be catastrophic. That is why it is much more difficult to model business insurance than household insurance.

There is also, of course, the issue of moral hazard. We do not want to encourage businesses to locate themselves in flood-vulnerable zones if they have a high fixed structural asset cost. We want to keep those communities vibrant and alive, but we also want to do so in a way that makes sense.

Nevertheless, something must be done. The hon. Member for Halifax (Holly Lynch) has emphasised the importance of business insurance for retaining the communities for the sake of their history and the social costs involved. We therefore need to answer some questions. First, how much subsidy—because there will have to be an element of subsidy—do we wish to put into an individual valley? Secondly, as the hon. Member for Strangford (Jim Shannon) has asked, what should the balance be between the Government element of the subsidy and that provided by the insurance industry for businesses in non-flood-affected areas?

Thirdly, should we consider a different insurance model? One possibility—we have not done this in flood insurance before—is to consider the approach taken by travel and medical insurance, which have a fixed indemnity. If the Government are to be involved, it might be reassuring for them to know that a property had a fixed indemnity of £20,000 or £50,000 attached to it, rather than what we have at the moment, which is an unlimited flood insurance liability.

That is why I am delighted to say that tomorrow I will host a round table with BIBA, ABI, the Federation of Small Businesses and a dozen other stakeholders, to talk through the concrete, detailed issues involved in providing serious insurance for businesses.

[John Mc Nally]

I have sent the Minister a letter inviting him to the next meeting of the all-party group on flood prevention, but he has not replied. It would be an opportune time for him to meet us after his other meeting.

[Rory Stewart]

I would be delighted to do that. I have 45 seconds left. I pay tribute to a wonderful speech by my hon. Friend the Member for Calder Valley. It was a serious forensic analysis that tore the DEFRA report to pieces, for which I am grateful and I will follow up on it. I also thank the other Members who have contributed to the debate, and I pay tribute to the extraordinary community in Calder Valley, including the community activists in Hebden Bridge, individual businesses and, indeed, the military on the streets for the work they did. Finally, I give a commitment to my hon. Friend and to the House that we will, through the round table and over the weeks ahead, look in full, relentlessly and vigorously, at the costs, both economic and social, involved in failing to provide adequate business insurance.

Question put and agreed to.

Protection of Ancient Woodland and Trees

John McNally Excerpts

Thursday 10th December 2015 Westminster Hall

[John Mc Nally (Falkirk) (SNP)]

I am delighted to support the hon. Member for Taunton Deane (Rebecca Pow), who secured this debate on the protection of ancient woodlands and trees. We are all impressed with her passion for the countryside and rural and urban nature. She has raised my awareness of the ancient and veteran trees in my area: I had probably ignored it, but there are 65 ancient trees and 44% of my constituents live within 500 metres of ancient woodlands—I was not aware of that until I met the redoubtable Member.

I am fortunate to represent a constituency that has a great variety of accessible woodlands located close to its population centres. I will give a wee bit of background on my area and do as best I can—the hon. Lady is a difficult act to follow. The picturesque Callendar wood in Falkirk is at least 500 years old. The trees, woods and adjacent parkland were once the gardens and grounds of Callendar house, a family home for centuries. The wood probably evolved from a medieval hunting park, although there is also evidence of working forestry and coalmining. It is a complex, cultural woodland that is rich in archaeology and veteran trees. Through protection, it has become an island of archaeological preservation and biodiversity.

Torwood, also in my constituency, was a large forested area in the 12th century that stretched from the River Carron in the west and north towards Stirling and inland towards the Campsie fells. At that time it was traversed by an old Roman road, which I have walked many times with my dad, my brothers and my sisters over many years. In preparation for the battle of Bannockburn it was used as the encampment for the men of James Douglas, one of the leaders of King Robert the Bruce’s army. In the wood stood an oak tree that, allegedly, Bruce and William Wallace met under—they probably had a cup of tea or something similar—and which gave Wallace shelter. In 1680 the wood is said to have been the site of the excommunication of King Charles II by Donald Cargill.

My constituency is also blessed with the natural beauty of the Carron glen, which has a magnificent stretch of woodland with a beautiful, steep-sided gorge that supports a large tract of ancient deciduous woodland. I spent most of my childhood in the glen, swimming in the Red Brae and the Black Lynn, probably climbing over ancient dykes and generally mucking about. It was a natural place where I could go and enjoy myself and it will never be forgotten. To this day it is a site of special scientific interest that should be preserved at all costs. It supports oak, birch, alder, goat willow and ash, as well as a variety of woodland flora. We now have otters frequenting the area. If someone sits there long enough, they will see deer walking past in the same area. It is an absolutely outstanding, peaceful area of tranquillity.

Not far from that is a tree locally referred to as a Spanish chestnut tree. Its actual species is not known for certain; we are still investigating that. That tree is the symbol of the Denny and Dunipace Heritage Society, of which myself and Charles McAteer—not the Charles mentioned earlier—were founder members. The tree is more than 400 years old and was part of the Herbertshire estate owned by the Forbes family. The castle on the estate was burnt to the ground in 1914—I was not around at that time, before the hon. Member for Taunton Deane says anything. The tree is still standing and is still known locally as the “hanging tree”.

A number of local conservation groups help to protect the ancient trees and woodland in my constituency, such as the Communities Along the Carron Association, which is run by a group of local volunteers who are committed to the regeneration of the River Carron, its communities and its ancient land. It is led by a remarkable woman called Christine Bell. There is also the local Community Green Initiative, which is run by a group of volunteers. One of its aims is to ensure that the woodland areas are kept litter-free and accessible for everyone. That group is extremely active, with all the schools across Falkirk using the local woodlands. This is about looking to the future and the long term.

As a keen cyclist and walker, I have taken full advantage of those natural amenities. I am well aware that woodlands ancient and modern are more than a source of timber, more than a habitat of flora and fauna and more than a pleasant vista. Although they are and should continue to be all those things, they are also a destination for all groups, families and communities to enjoy. The protection of this natural asset is vital. Ancient woodland is our richest habitat for wildlife and is home to more threatened species than any other habitat. It represents the last fragments of the wildwood that once covered all of the UK thousands of years ago.

When I was doing some research this morning, I came across an article by Scottish Natural Heritage on hen harriers, which are a rare bird of prey. There were only 505 pairs left at the time of the last survey, in 2010, and another survey will be done next year. Those birds leave the highlands of Scotland and come down south for the winter. We are still not sure where they go, but if we cut down these trees, they will not go there again; that is a certainty. We need to be mindful of that at all times.

Our ancient woodland has now diminished to a fraction of its former extent. We have lost forever an irreplaceable part of our natural heritage. The nation’s remaining ancient woodlands are increasingly under threat from development. As the hon. Member for Taunton Deane mentioned, the Woodland Trust reports that it has responded to 14 cases of woods under threat in just the last month and is currently dealing with a total of 561 such cases. That is an unacceptable number of threats, and I do not know how the Woodland Trust will cope. There is a genuine increase in threats to ancient woodland, and the UK Government are simply not doing enough about it.

[Scott Mann]

While the national planning policy framework affects England, I understand that Scotland has devolved powers in planning. Will the hon. Gentleman expand a little on how Scotland has dealt with this issue?

[John Mc Nally]

I can give the hon. Gentleman a brief answer, but I am sure my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr) will answer that later. The Scottish Government have developed a policy direction for decisions on woodland removal in Scotland and will apply the policy to decisions within the areas of competence. Unlike England, Scotland has an ancient woodland inventory, to which the hon. Member for Taunton Deane referred. We are making progress. There is a lot more information to read, which I advise hon. Members to do. We can all learn lessons from one another. This is not a political matter; it is about doing the best we can.

Within my constituency, more than 7.5% of the ancient woodland is under threat, while more than 40% of constituents live near woodland. That amounts to only 15.6% of woodland, old and new, which is quite scary. However, the quantity of ancient woodland under threat is not the only issue; the irreplaceable nature of that woodland is the significant point. The hon. Member for Taunton Deane mentioned a Fortingall tree earlier of between 3,000 and 3,500 years old, which I have visited many times. It is believed that Pontius Pilate was born underneath it—never let the facts get in the way of the truth. In Scotland, we define ancient woodland as having existed since around 1750 AD, so what takes minutes to cut down takes centuries to grow. The loss is immeasurable; imagine cutting down the Fortingall tree.

Existing protection for ancient woodland is insufficient. The UK Government have stated on many occasions their support for and appreciation of the value of ancient woodland and the need to protect it. In Scotland, as I mentioned, we are making significant efforts to change that and address these problems, although we are not without our problems. Unlike many precious habitats, however, ancient woodland is not a statutory designation in law and therefore suffers from a lack of protection.

The Minister responsible for forestry, the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Penrith and The Border (Rory Stewart), for whom I have a lot of time—he is an excellent guy who knows his brief exceedingly well—recently admitted:

“ancient woodland, as a category, is not a protected category”.

That is quite a statement.

Paragraph 118 of the national planning policy framework allows for the destruction or loss of ancient woodland and aged or veteran trees if

“the need for, and benefits of, the development in that location clearly outweigh the loss”.

That is a total contradiction, because we can never get that woodland back. As a result of that loophole, hundreds of ancient woods and trees are lost or threatened in the planning system every year. Since the NPPF was introduced in March 2012, more than 40 ancient woods across the UK have suffered loss or damage from development. Hundreds more ancient woods are at risk within areas of land allocated for development through site allocations as part of local plans. As admitted by the Forestry Minister under the previous Administration, the Government do not collect data relating to the loss of trees and woods, so a complete picture of the scale of losses in any given year is currently impossible—I totally agree with the hon. Member for Taunton Deane on that.

In December last year, the Select Committee on Communities and Local Government called for ancient woodland to be awarded the same level of protection as designated heritage assets—that includes the house owned by the hon. Member for Taunton Deane. The Committee also called for work to be undertaken to increase the number of ancient woods with statutory designations, to further increase protection. However, in response to the Committee’s report, the Government ruled out changing the wording, arguing that

“existing protection for ancient woodland in the Framework is strong and it is very clear that development of these areas should be avoided.”

Again, that seems a wee bit contradictory. I urge the Government to follow the Communities and Local Government Committee’s recommendations.

In addition to the previously mentioned comments, the Forestry Minister went on to say that

“an enormous amount of our ancient woodland is already protected within our national parks and within AONBs. A lot of it is covered by natural sites under European legislation and a lot of it is protected under SSSI legislation.”

In a response to a parliamentary question on 23 November, corrected on 24 November, the Forestry Minister set out how much ancient woodland is in fact located within designated areas:

“Natural England estimates that 15% of ancient woodland is located within national parks and 30% is located within areas of outstanding natural beauty (AONBs). In national parks, 29% of this woodland has site of special scientific interest (SSSI) status; in AONBs, 13% of this woodland has SSSI status.”

Unfortunately, while some ancient woodland is indeed located within a national park or area of outstanding natural beauty, that is simply not good enough protection to ensure ancient woodland is not impacted by or lost to development. I absolutely agree with the hon. Member for Thirsk and Malton (Kevin Hollinrake), who mentioned the issue of fracking in such areas.

The HS2 route, as has been mentioned, is a notable example of woodland located within designated areas being threatened by development. Although I do not know it, the Chilterns is an area of outstanding natural beauty, well known throughout the world. Another example provided by the Woodland Trust is a hydroelectric scheme currently being proposed in north Wales at Fairy Glen near Betws-y-Coed—are there any Welsh Members here?

[Richard Arkless (Dumfries and Galloway) (SNP)]

You got away with it.

[John Mc Nally]

Thanks. No one can contradict me.

The scheme threatens to damage the ancient woodland located in the Snowdonia national park. The Cairngorms national park local development plan expressly backs potential development sites that could cause damage to ancient woodland, including at An Camas Mòr, Carrbridge and Nethy Bridge. Indeed, in 2014 the installation of a micro-hydroelectric turbine in the Cairngorms was approved, which could also damage ancient woodland.

I could go on and list more examples of ancient woodlands in designated areas that have been removed or are threatened by development. I think everyone in the room shares the concerns of the hon. Member for Taunton Deane about such matters, and I go along with her too. I am happy to support her as best I possibly can. I had more to say, but I think I have spoken for long enough.

Low Emission Zones

John McNally Excerpts

Wednesday 25th November 2015 Westminster Hall

[John Mc Nally (Falkirk) (SNP)]

I thank the hon. Member for Bath (Ben Howlett) for securing this debate. I declare a family interest: I have a relative who is involved in charging points in Scotland. I want to make that open and plain.

I have been here only since May, but I have been impressed by the knowledge that we gain. I am proud and privileged to be a member of the Environmental Audit Committee. The Minister appeared before us and gave us wonderful information about the Volkswagen scandal. I cannot say that I agree with him, but I was totally impressed by his knowledge of the situation. He was particularly honest, and everybody in the Committee appreciated it.

There is huge cross-party recognition that we need to do something. Some years ago, I visited Bath and Wells and the surrounding district—if I remember correctly, Cheddar gorge is in that area—so I know it is extremely busy. It is a beautiful area that I would go back to if I had time, but I totally get what the hon. Gentleman meant when he described it as a death route. The map that he produced is probably significant to lots of people in the House.

The area that I represent is similar to that of the hon. Member for Strangford (Jim Shannon). I have the benefit of being 10 minutes away from canals, mountains, hills and rivers. We are building fish ladders and hydro pumps, and there is a general trend towards getting people out and about, walking and cycling, which can only be good for public health. One of our biggest employers, Alexander Dennis Ltd, has just signed a £2 billion contract with a firm from China to deliver all-electric buses. Hopefully, we will see them on the streets of London and Bath in the future.

Local authorities in Scotland have issues, too. To go back to what the hon. Member for York Central (Rachael Maskell) said, we have had more than 2,000 deaths from air pollution in Scotland. That is not good enough; it is not acceptable. I wholeheartedly go along with everything that is going forward. We need a local strategy and we need to take local people and communities with us, but we have to be mindful of how it will impact on businesses, town centres and city centres.

A Dundee taxi operator has the UK’s largest electric taxi fleet, with 40 such vehicles. The University of Dundee— I do not know why I am going on about Dundee; I am from Falkirk, so I will probably get a row about that when I get home—has got seven electric vans and is rolling out 12 electric bikes. It aims to reduce its CO₂ emissions by 9 tonnes, which will save £10,000 a year. Those are all good, practical steps towards lowering emissions. I think the whole country should work towards the national strategy. In Scotland, we are working towards it as fast as we can.

[Jim Shannon]

The hon. Gentleman referred to electric cars. Interestingly, during the May election, one of the things that people said on the doorstep—and, indeed, on the day of the election—was that they wanted to commit to driving electric cars. Many people wish to make that move. I certainly see that in my constituency. We have installed our first few electric power points in the town of Newtownards, which is a magnificent step in the right direction, so things are moving forward. Does the hon. Gentleman feel that the time has come for the Government to harness the energy of our constituents who want to see this happen?

[John Mc Nally]

I totally agree that we need to harness that energy. In fact, in an earlier debate today we spoke about the need to store renewable electric energy and to produce it when it is required. I do not yet fully understand the Chancellor’s autumn statement—once I have read into it, I will—but I believe he said that he is going to put more money towards renewable energy. Perhaps the Minister can enlighten me on that point.

People want electric cars. From memory—I have not researched this thoroughly—most people travel less than 30 miles a day in and around their own areas. The majority of people do not travel long distances. Therefore, to go back to the point made by the hon. Member for Strangford, having electric charging points in town centres would be great. When we build infrastructure, new shopping centres, schools or hospitals, we should put electric charging points into the construction plan whenever those things are built; it should be like ensuring disability access. That makes absolute sense to me.

I totally agree with what is going on. I am glad I have come along to represent the Scottish National party, and I am happy to share my knowledge at any time in the future. I thank the hon. Members for Bath and for York Central.