Riot Compensation Bill

Mike Wood Excerpts

Friday 5th February 2016 Commons Chamber

[Mike Wood (Dudley South) (Con)]

I beg to move amendment 1, page 3, line 16, at end insert—

‘( ) Regulations under subsection (3)(b) or (3)(d) must provide that—

(a) the time period within which a claim may be made ends no earlier than 42 days from the date of the riot;

(b) the time period within which details and evidence must be submitted ends no earlier than 90 days from the date the claimant first made the claim.”

[Mr Speaker]

With this it will be convenient to discuss the following:

Amendment 2, in clause 8, page 5, line 23, at end insert

“, except in the circumstances described in subsection (2A).

‘(2A) Where a claimant’s home is rendered uninhabitable, the amount of compensation may reflect costs that the claimant incurs as a result of needing alternative accommodation.”

Amendment 3, page 5, line 26, at end insert—

‘( ) considerations that decision-makers must take into account in deciding the amount of compensation payable as a result of a claimant needing alternative accommodation (and the regulations may include provision limiting the amount of time for which the costs of alternative accommodation may be claimed),”

Amendment 8, page 5, line 29, at end insert—

‘(3A) Money received by the claimant from emergency or recovery funds, whether funded publicly or privately, in the aftermath of a riot must not be taken into account by the decision maker when deciding the amount of compensation to be paid.

This amendment would ensure that money received by the claimant for the purposes of emergency relief or recovery in the immediate aftermath of a riot is not seen in the same category as compensation under the purposes of this Bill and therefore reduce the amount a claimant might receive.

[Mike Wood]

May I convey my sympathies and add to the tributes that you paid to Harry Harpham, Mr Speaker? I know that the sympathies of all right hon. and hon. Members will be with his family and friends at this difficult time. Even from the short time in which we saw Harry in this House, it is clear what a loss he will be.

Amendment 1 is a consequence of amendments that were tabled by the right hon. Member for Tottenham (Mr Lammy) but not voted on in Committee, and it seeks to clarify and extend the time limit allowed for someone to communicate their intention to make a claim, and the provision of details, evidence and support of such a claim following a riot. Following concerns raised in Committee, the amendment would allow a 42-day period as originally set out in the Bill, but it clarifies that that is from the date of the riot. As Ministers have made clear, that time limit should come with some flexibility, and I hope that in interpreting the date of the riot, authorities will have the good sense to show flexibility in making that date start at the end of the riot where appropriate, rather than necessarily the date on which the damage was suffered.

The main change in amendment 1 relates to the second period: the 90 days from the date the claimant first made the claim. That would mean, potentially, a minimum of 132 days from the date of loss in which we expect businesses or residents to submit details of their claim and to provide the evidence to support it. I hope that that will provide some reassurance to Members who raised concerns in earlier stages.

Amendments 2 and 3 were tabled following comments made on Second Reading and in Committee, and representations made directly to me outside the Chamber, in particular by the right hon. Member for Tottenham and my hon. Friend the Member for Croydon Central (Gavin Barwell). As I made clear on Second Reading, while there are very good reasons for excluding consequential losses from the claims that can be made against the police in the event of a riot, concerns were raised about what would happen if people’s homes were left uninhabitable following a riot. Social tenants would usually be rehoused, and for owner-occupiers with building and contents insurance, the insurance would normally pay for the additional costs of rehousing. However, that would still leave a significant number of people, particularly in the private rented sector, who could find themselves, through absolutely no fault of their own, having to find new housing. They could struggle to find new housing at the same cost as their current mortgage or rent, and that is what amendments 2 and 3 intend to tackle. They seek to cover the costs of alternative accommodation, whether in a bed and breakfast, a hotel or other short-term rent. Amendment 3 clarifies that and allows the regulation that could include in the provision time limits for such additional costs.

During the passage of the Bill, in particular on Second Reading, Members on all sides brought to the attention of the House heart-wrenching stories of hardship as a result of the 2011 riots. Those stories explain the thought process behind amendments 2 and 3. I still do not believe that consequential losses should be covered, but it would not be just if people were made to suffer unnecessarily in their hour of need. I am certainly not prepared to see people effectively rendered homeless while they wait for their homes to be inhabitable once again. I must stress, however, that covering a consequential loss in this way must be the exception, not the rule. It is intended only to assist individuals to recover costs incurred while staying in alternative accommodation following a riot. The details of the provisions will be clarified in regulations.

I turn to amendment 4 tabled by the right hon. Member for Tottenham. At every stage of the Bill, he has raised a number of valid concerns. He has been an extremely effective spokesman for his constituents and for businesses in his constituency. Ministers made it clear on Second Reading and in Committee that we would not expect payments made through charitable funds, or other appeals of that kind, to affect the payments made through the compensation scheme. It would certainly not be right for such payments to be deducted from compensation due under the Bill.

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[Mr David Lammy (Tottenham) (Lab)]

I am grateful for the manner in which the hon. Gentleman is putting his points. Central Government or local government will often put up the money to persuade big business to get engaged, because businesses want to see match funding. In those circumstances, I am concerned that that money will then be counted against those who go on to claim compensation.

[Mike Wood]

The right hon. Gentleman makes an extremely important point, one with which I think we would all agree. That is why, to make sure that in that kind of joint venture we do not preclude local authorities or central Government from contributing to what are essentially private, business-led appeals, I would not expect that kind of fund to be deducted from riot compensation payments. This is not a black and white issue, however, and there are points on the spectrum where that kind of detail is far better dealt with in regulations than in a clause of this kind in the Bill. I therefore cannot support the amendment. It is sensible that payments from public funds should not be provided for the same purpose twice, because we have a duty to limit unnecessary burdens on the taxpayer. The right hon. Gentleman is absolutely right in saying that there are occasions when public funds contribute to private appeals. I hope the regulations drawn up to implement the provisions in the clause will allow for such initiatives.

[Mr Lammy]

Having heard what the hon. Member for Dudley South (Mike Wood) has had to say this morning, I am satisfied that regulations are the right place for clarity on double funds. I will not press my amendment.

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[Mr Speaker]

Does the hon. Member for Dudley South (Mike Wood) wish to contribute further?

[Mike Wood]

No, Mr Speaker.

Amendment 1 agreed to.

Clause 8

Amount and payment of compensation

[Mr Lammy]

I beg to move amendment 4, page 5, line 19, leave out from “compensation” to “that”.

This amendment would remove the £1 million compensation cap.

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[Mr Lammy]

There are parts of this country that routinely experience flooding, as I said in Committee, and there is considerable experience in the system in relation to how we deal with those communities and how the insurance industry reacts in those circumstances. Floods happen more frequently in our country than riots, but a similar catastrophe befalls those who find themselves caught up. I hope that the bureau that will be set up as a result of this Bill can draw on the experience in those areas.

I have heard hon. Members in those areas raise concerns about loss adjustors and the manner in which they treat our constituents. In circumstances in which everything has been lost in the flood or burnt to the ground in a fire, the individual concerned is expected to go and find a receipt for a stove or oven that they now have to claim for. How are they going to find that receipt? Where is it? It is a miserable situation, and I am afraid that during the riots we found the performance of loss adjustors very patchy, and some of them behaved quite inappropriately to my constituents.

However, as I have indicated before, we have a situation of insurance, underinsurance and no insurance at all. That is why we have the Riot (Damages) Act 1886 and why we should inquire as to what the appropriate levels of this newly introduced cap should be. For all those reason, this clutch of amendments address that point. As I have indicated, they are largely probing amendments. I look forward to hearing what the hon. Member for Dudley South (Mike Wood) has to say both about regulations and the need for greater clarity. Perhaps this House might have a greater role in determining that figure, scrutinising it and returning to it over time, because I fear that £1 million may well look very different to people in the wider country in 10 or 15 years’ time, long after the Bill has passed through both Houses.

[Mike Wood]

Let me start with amendments 5 and 6, tabled by the right hon. Member for Tottenham (Mr Lammy), which would either remove or raise the compensation cap. Although I fully understand his reasons for asking that the level of the cap be considered, I am unable to support either amendment. As I have stated at earlier stages in the legislative process, we simply cannot continue to have a situation in which the public purse is subject to unlimited liability.

Neil Kinghan’s excellent independent review of the reforms necessary after the 2011 riots set out convincingly and comprehensively the reasons for retaining the principle of strict liability for police forces when the basic contract to uphold law and order, to which the right hon. Gentleman has referred, breaks down, and that police should be liable for the costs of that. However, Neil Kinghan went on to say that it is not reasonable to expect those liabilities to be unlimited. That is why he put forward a number of alternative ways of controlling liabilities—capping them—in order to deliver a fairer deal for police forces and the taxpayer.

The effect of either amendment would be to impose a still higher liability on police forces and therefore on the taxpayer. The right hon. Gentleman asks how the £1 million figure was reached. The Home Office put the figure forward in response to an earlier consultation, and it received widespread support. At present, the cap is generous. It has been set to make sure that it would have protected as many of the claims made in 2011 as reasonably possible.

Analysis by the Home Office and the Association of British Insurers estimates that, had a £1 million cap been in place in August 2011, 99% of claims paid then would still have been paid in full; that compares with about 33% had we continued with the alternative option of a cap on turnover of business, which Neil Kinghan ended up recommending. The £1 million cap is far more generous to the victims of riots and recognises exactly the points made by the right hon. Member for Tottenham: of course such victims are in no way to blame and could have done nothing to prevent their loss. We want to make sure that they continue to be compensated, within a reasonable limit.

I also take note of the right hon. Gentleman’s point about big businesses and the important role they play in our high streets. However, like most businesses, big or small, they have a responsibility to insure themselves adequately—not only against riots, but against a broad range of risks. The £1 million compensation cap applies directly to riots, as defined in the legislation. We would similarly expect such businesses to insure themselves against fire and looting caused by arsonists and against gangs of people rampaging riotously, although perhaps made up of fewer than 12 people and so falling outside the scope of normal riot legislation.

Damage caused by looters or gangs on the rampage is every bit as serious, but police forces would not have liability unless negligence could be demonstrated. There is a need for adequate levels of insurance and it is not unreasonable for businesses with assets running into millions to take out such insurance. Setting a cap at £10 million would largely benefit insurers far more than big or medium-sized businesses on the high street, as they could subrogate those claims under the Bill and the existing scheme. Furthermore, of course, they tend to provide the insurance for big business.

The most pertinent example from the 2011 riots was the claims, which have not yet been settled, arising from the destruction of the Sony warehouse in Enfield. Those run into tens of millions of pounds. That money would go entirely to insurers if the claims ended up being accepted. From the Home Office research, it seems that increasing the £1 million cap to £10 million would have affected six uninsured businesses in 2011—six businesses among all those affected, at a massive cost to the taxpayer without any real benefit to our communities. That is why the £1 million cap has been widely welcomed by Members as well as by the insurance industry. The Government have published their intentions in response to the consultations following the 2011 riots on reforming the compensation arrangements. The £1 million cap was very widely welcomed in that response by stakeholders who took part in the consultation.

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[Mr Lammy]

I beg to move amendment 10, page 6, line 17, at end insert—

(a) after any riot in relation to which compensation was paid under this Act; and

(b) after each period of five years beginning on the date that section 8 came into force.”

This amendment would require the Government to undertake post-legislative scrutiny.

Amendment 10 is about making and returning to the House with a proper assessment after there has been a riot and after the Bill has taken effect. With all that has been written by Mr Kinghan, all the work that has gone into the production of this Bill—I pay tribute to the hon. Member for Dudley South (Mike Wood) for everything he has done—and all that I, and shadow Ministers, have sought to do through it, we have learned a lot from the 2011 riots. Much of what we have learned finds effect in this Bill.

All riots are different. The hon. Gentleman said earlier that the 2011 riots were a particular case in that they were in London, and that he therefore believes that, in terms of regional impact, the £1 million cap is set about right. He will understand, though, that in the past few years we have seen anarchist groups marching in our country and things sometimes getting out of hand. They have marched in parts of the capital that have very expensive retail areas. We do not know where a riot could take place; they are all a bit different.

Given the impact of those riots and our understanding of them, and in terms of how this Bill works and its effectiveness, the issue of what compensation was paid out is hugely important. That is what amendment 10 speaks to. I sincerely hope that Conservative Members understand that and might be able to indicate that they do see the need for a mechanism, given that we are now updating the legislation. We are putting in place new mechanisms such as the bureau, which has not been discussed this morning but was discussed in Committee and on a previous occasion. It would therefore be very beneficial to provide for some assessment after a riot takes place; we do not know when. I hope that I might get some comfort from the hon. Member for Dudley South or the Minister following my decision to table this amendment.

[Mike Wood]

Although I absolutely agree with the right hon. Member for Tottenham (Mr Lammy) that the effectiveness of legislation needs periodically to be reviewed, I am less convinced of the need to set that out in the Bill. Of course, we all hope and pray that there will be no repeat any time soon of the kinds of riots we witnessed in August 2011, but should such riots occur in future it would be absolutely appropriate to consider how well the legislation is working and whether any changes are required, which is what happened following the 2011 riots.

The amendment proposes that the legislation should be reviewed after any riot, but that means that that provision would be triggered by any relatively small disturbance that leads to a claim being made under the riot compensation scheme. That would be unnecessarily bureaucratic and it is certainly not needed, because, as I have said, there is a Government commitment in place to review all new legislation within three to five years of the date it receives Royal Assent. That timeframe provides an opportunity for post-legislative scrutiny in the early years and consideration of non-legislative processes and support systems. I would like us to go further after that three to five-year period.

[Mr Lammy]

Does the hon. Gentleman agree that, if there had been an assessment mechanism in the ineffective Riot (Damages) Act 1886, it might have been better legislation in the first place? There might be a riot—we hope not—during the period of three to five years. I understand that he may not accept the amendment as drafted, but surely the Government should be prepared to consider some sort of assessment mechanism after a riot, which, thank God, happens so infrequently in our country. Perhaps that could happen in the other place when the Bill receives further scrutiny.

[Mike Wood]

The right hon. Gentleman makes the point that I was about to move on to. Although the initial three to five-year period provides an important chance to reflect on the early years and to consider whether all the commas are in the right place and all the details are right, it is important that regular reviews take place after that period. I hope the regulations will allow for such reviews. If there is a repeat of anything like what happened in August 2011, it is inconceivable that there would not be a review. That should be a given. Outside of the times of serious riots—which, of course, we hope will last many years or even decades—it is important to have some sort of periodic review, but I do not believe that there is a particular case for this Bill to carry a specific provision for post-legislative scrutiny. As I have said, such a provision could be triggered by a fairly small and limited disturbance, but we must make sure that it does not take another 130 years before we next review whether the legislation is working.

[Lyn Brown]

I completely get where the hon. Member for Dudley South (Mike Wood) is coming from—frankly, if I were the Minister in charge of his Bill, I would encourage him to say exactly what he has just said—but I am worried about where we are going with this. It has taken us 150 years to revisit the issue and there have been a number of disturbances—nay, riots—in this country during that time, and even when there have been really big riots, the system of dealing with victims has been wholly inadequate. I am concerned that we will find ourselves in 150 years’ time—well, we won’t, because we’ll be dead by then—saying, “Oh, yeah, we didn’t have very effective legislation. We had things for those old-fashioned things called cars, but the hover vehicles we’re driving around in now aren’t covered by this Riot Act.”

I say gently to the hon. Gentleman that even minor disturbances can wreck lives. We must make sure that any future Government have not only warm words to say to victims of riots, but effective legislation on the books so that they can help those victims effectively. I gently say to the Minister, who I have got a lot of time for—he has done an excellent job so far this morning—that we need to be more warm in our consideration of this Bill, so that we can ensure that the people who come after us in 150 years do not say the same kinds of things that we have been saying, with a little frustration, over the past few weeks.

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[Mike Wood]

I thank right hon. and hon. Members from all parts of the House who have participated in debates on Second Reading, in Committee and here today. In particular, I thank Ministers and shadow Ministers for their supportive and constructive approach. I thank the right hon. Member for Tottenham (Mr Lammy), who has spoken persuasively and passionately on behalf of his constituents, and my hon. Friend the Member for Croydon Central (Gavin Barwell), who has done a lot of work in support of the Bill but cannot speak in the Chamber today because of his other responsibilities.

On Second Reading, I stressed our responsibility as Members of Parliament to bring forward legislation that protects the most vulnerable from harm. That is why I am proud to promote this Bill, which proposes to help individuals and businesses recover from the devastating impact of widespread public disorder in communities. I spoke on Second Reading about my family connection, growing up as the son of a west midlands police officer during the football riots and other disturbances of the 1980s. I told the story of my father being bitten in the stables, and I said that I thought it was safe for me to do so, because my father rarely watches BBC Parliament. Sadly, he listens to BBC WM, so I was not able to keep that as secret as I had hoped.

Like all right hon. and hon. Members, I hope that the Bill will never be used. However, following Neil Kinghan’s review, it is abundantly clear that we need modern legislation that gives us clear guidelines and provisions in the event of any future riots. After the 2011 riots, many vulnerable communities were left counting the cost. The coalition Government responded by pledging to cover the costs incurred by the police to compensate homeowners and businesses under the measures set out in the Riot (Damages) Act 1886. Then, as today, it was clear that the “current”—130-year-old—legislation is outdated and inadequate in providing compensation in the modern world. The language is archaic, and it is unclear in what circumstances claims can be made. That means that decision making after a riot is difficult and time-consuming. There are too many inconsistencies, and it is not fair to those who need support or to those who pay the bill. That is what we need to change with this Bill.

The aim behind the Bill is to protect communities from the devastating losses to which I have referred. It makes much needed changes to address the concerns that have been raised, while still providing support to households and businesses affected by riots. It proposes to end the unlimited compensation afforded through the 1886 Act, while making sure that victims of riots receive the support that they need. The new compensation cap has been discussed at some length, so I will not add anything further. Suffice it to say that the new provisions will not just save money but improve and modernise the claims process to bring it up to date and make it fit for the 21st century.

The old Act’s short timescales for submitting and evidencing a claim are simply not feasible for many potential claimants. As the House will remember, temporary changes were made to the timescales at the time of the 2011 riots in order to provide a more realistic timeframe. The Bill is intended to put that change into legislation.

The time period set out in the original legislation is clearly not long enough. Many homes and places of business are inaccessible for a considerable period after disturbances of the kind we saw in 2011. Allowing a period of 42 days after a riot to submit a claim and a further 90 days to evidence the claim and provide the details to support it will provide people with a fairer deal at a time when they need the extra breathing space and time to think about and prepare such a claim. As has been said, in many cases they will have to work out whether they ever had a receipt, let alone whether they know where the receipt is after a fire or a riot.

The minimum time allowed is now stated in the Bill. I emphasise that it is the minimum time: it remains entirely within the Government’s competence to decide to have a longer period if and when they think that that would be appropriate. As the Minister said earlier, we must ensure that there is flexibility so that people are not unfairly disadvantaged in extraordinary circumstances —for example, when, whether through illness or for another reason, it is not reasonable for them to submit paperwork within the timeframe set out in the Bill.

The reason for switching away from replacement value—old-for-old, as it were—to new-for-old is one of basic fairness for the victims of riots. It is not reasonable to expect people whose homes or businesses have just been devastated by riots, first, to find out what loss adjusters think is the current value of machinery, equipment or property however many years after their purchase, and then to try to source a replacement product of equal value. On Second Reading, I gave the example of a four-year-old dry cleaning machine. It would be difficult to source it, because such machines do not show up every day on eBay. Switching to new-for-old, as most of the insurance industry has done, is sensible, more efficient and, above all, fairer.

Many Members have welcomed the riot claims bureau, which will have responsibility for managing riot compensation claims. The Bill is intended to ensure that there is greater consistency, particularly, as we saw in the 2011 riots, when riots spill over into more than one police force area. In such a case, it may be appropriate for the Secretary of State to assume such powers to ensure that someone can expect the same kind of service, timescales and treatment wherever they make a claim. Again, that is an issue of basic fairness for people affected by riots. The provision will be used if the rioting breaks out in or spreads across more than one area, and for that matter, if the local police decide that they do not have the capacity or expertise to consider such claims—why should they do so? That will particularly affect smaller police forces.

The Bill will allow local policing bodies and the riot claims bureau to place the day-to-day management of claims in the hands of experts. That is significant because although we expect our police forces to do an extremely important job—they do their job extremely well and we can be proud of the role they play—it is not reasonable to expect them to carry out claims handling or loss adjusting. Allowing police and crime commissioners to utilise people trained to play such a role makes sense and enables commissioners to retain full control over financial decisions.

As I have said, the Bill provides for the first time for motor vehicles covered by third-party insurance. It was pointed out on Second Reading that 1886, the date of the current legislation, was coincidentally the same year that the diesel engine was first demonstrated. Unsurprisingly, therefore, the legislation on which we currently rely was not designed around the world of the motor car. We do not know what the nature of riots will be in the future, but there may be widespread damage to motor vehicles. It does not seem fair, and it would not be equitable, for people’s motor cars—if they do not own their own home, their car is probably the most expensive thing they own—to be outside the scope of a compensation claim if they are not covered by their own insurance.

The purpose of the compensation scheme is not to pick up bottomless bills for criminal activity, but to provide a safety net for those in greatest need, while recognising the police’s responsibility to maintain order. That is why we must absolutely recognise the serious implications for communities recovering from major public disorder. Since the 2011 riots, my right hon. Friends in government have worked tirelessly, first by commissioning the Kinghan review and then by holding the Home Office consultation that followed it.

It would be wrong for millions of pounds of public money to be handed over—in essence, to insurance companies—for people who are in a position to insure themselves. That was the thinking behind the cap, and it is also why I limited the extension for motor vehicles to people who would not be covered by their motor insurance.

The provisions in the Bill provide a balance between the responsibility of the police to maintain order and the Government to protect the vulnerable, and the interests of the taxpayer. It retains the principle that the police are responsible for maintaining order, ensures that local accountability remains in the right place and provides local communities with the mechanisms they need to recover quickly from serious disorder.

We all hope and pray that riots of the kind, and certainly of the scale, that we saw in August 2011 will not happen in the future, but hoping for the best can never be an alternative to preparing for the worst. The Bill is about preparing for the worst. I hope it will proceed through the other place as swiftly as reasonably possible so that we can put in place the system we will need should riots take place. The Bill provides a fair deal for the victims of riots and for those who will have to pick up the bill for serious damage caused by them in our communities. I commend the Bill to the House.