Riot Compensation Bill

Debate between Mike Wood and David Lammy

Friday 5th February 2016 Commons Chamber

[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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[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.

Riot Compensation Bill

Debate between Mike Wood and David Lammy

Wednesday 13th January 2016 Public Bill Committees

[Mike Wood]

I will be brief, Mr Howarth. The main purpose of clause 2 is to clarify the property within the confines of the scheme, primarily extending it to motor vehicles. As has been said, 1886 was the year the first diesel engine was pioneered, so it would be too much to hope that those considering that legislation might have foreseen the extent to which the motor would come to dominate so much of our lives. The clause would explicitly extend the riot damages scheme to include motor vehicles. It also clarifies the position of mobile businesses and the equipment stored within them.

Question put and agreed to.

Clause 2 accordingly ordered to stand part of the Bill.

Clause 3

Regulations about claims procedure

[Mr David Lammy (Tottenham) (Lab)]

I beg to move amendment 5, in clause 3, page 3, line 12, at end insert “, which must be no shorter than 132 calendar days from the day on which the riot ends”.

This amendment would ensure that a person has at least 132 days from the end of the riot to make a claim for compensation.

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[Mr Lammy]

With that statement from the Minister, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn

Clause 3 ordered to stand part of the Bill.

Clause 4

The decision-maker on a claim

Question proposed, That the clause stand part of the Bill.

[Mike Wood]

Neither police and crime commissioners nor local police forces are experts in processing claims, which is why it is important to allow those bodies to delegate the functions, particularly to loss adjusters. Provisions in clause 4(3) allow the Secretary of State to specify the persons to whom those functions may be delegated, which will hopefully achieve the objectives that the right hon. Member for Tottenham was trying to achieve through amendment 3.

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[Mr Lammy]

I am grateful for that undertaking from the Minister. With that, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 ordered to stand part of the Bill.

Clauses 9 and 10 ordered to stand part of the Bill.

Clause 11

Regulations

Question proposed, That the clause stand part of the Bill.

[Mike Wood]

Earlier, I referred to mobile businesses being within the scope of the Bill. To clarify, they are not in the Bill but the intention is to include property contained within mobile businesses in the regulations. I hope that the Minister will take that on board.

Question put and agreed to.

Clause 11 accordingly ordered to stand part of the Bill.

Clause 12 ordered to stand part of the Bill.

Schedule agreed to.

Question proposed, That the Chair do report the Bill to the House.

Riot Compensation Bill

Debate between Mike Wood and David Lammy

Friday 4th December 2015 Commons Chamber

[Mr David Lammy (Tottenham) (Lab)]

Does the hon. Gentleman accept that the areas that experience riots are often the most deprived in our country? In those communities, increasingly, particularly in London—in the constituency of my hon. Friend the Member for Croydon North (Mr Reed), and certainly in mine—many constituents speak English as a second language. I can think of a constituent who had a heart attack after the riots. Forty-two days is still a very short time after experiencing shock of this kind.

[Mike Wood]

I recognise the right hon. Gentleman’s point. It is important that alongside any new legislation and regulation we have the co-ordination at a community level to support the people he mentions, who, as he says, are often in our most vulnerable communities.

The basis for switching from old-for-old to new-for-old is one of basic fairness for riot victims. It cannot be fair for them to be expected to engage in extensive negotiations on the book value of a three-year-old dry cleaning machine, as was the case in one claim in 2011, and then to have to search for such a machine at the specified price just at the point when they are trying to rebuild their homes or their businesses. A new-for-old system is already used in most private insurance policies, and it would mean that victims could set about the important business of getting their lives, homes and businesses back on track.

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[Mike Wood]

The hon. Gentleman puts his constituents’ case far better than I could, and he is absolutely right. New for old makes sense—it will save time and make the process simpler, fairer and less labour-intensive for local police bodies.

[Mr Lammy]

I am grateful to the hon. Gentleman for giving way again. His point about new for old is incredibly well made.

There are many small business owners in areas that have experienced riots. I think of my area in particular, which is unfortunately one of the few areas of the country to have experienced two riots in a generation. Those small businesses are under-insured because of the cost of insurance, which is because those areas have had riots. Unless we want such areas to be completely boarded up, like cities in the States such as Detroit, we ought to think carefully about consequential loss. We should not place further insurance burdens on the private sector. After all, the fact that a riot has occurred is not the fault of a business.

[Mike Wood]

Many insurance policies already have business disruption cover, and focusing on direct losses, with a fair cap of £1 million, will allow businesses or individuals to reclaim quickly the significant sums that they need to get back on track.

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[Mike Wood]

I strongly agree with what the right hon. Gentleman is saying, but does he recognise that the key part of this Bill, putting the riot claims bureau on a statutory footing, will address exactly the kind of issues that he identifies, such as the unnecessary and unacceptable delays in getting the money that is needed to the people who are trying to rebuild their lives and their businesses?

[Mr Lammy]

The hon. Gentleman is right, of course. The riot claims bureau will be a step forward, but let us be absolutely clear about it. It sounds good, does it not, the riot claims bureau? We get the sense of bureaucrats hard at work somewhere in the Home Office as we speak. No one is staffing the riot claims bureau as a result of the Bill; I suspect it will be brought together rapidly in the event of a riot.

It is important to ensure that the expertise and knowledge are present, that there have been practice exercises and that there is understanding of the sorts of communities that experience such things. There must be a sense that we must put small businesses first on these occasions, because often the big businesses can defend themselves. Members might remember from the riots the atrocious behaviour of the head of JD Sports, who said that it was great that people were breaking down windows to grab trainers because it showed how important his products were. I would suggest that that chief executive can defend himself, but he was in a very different position from those on the high street.

I pay tribute to Sir Bill Castell, chair of the Wellcome Trust and one of the great industrialists of our country. He was chair of the High Street Fund, which did so much to support small businesses across the country. I will never forget Sir Bill ringing me up just a day after the riots, determined to make a difference and to bring big business together to support small business and to bring those funds to individuals. I will also not forget Bill’s consternation that months later funds had not been paid out under the Riot (Damages) Act and that when those funds were paid out, despite the fact that the High Street Fund was a charity relying on contributions from big business, they were discounted against that money. I say to the hon. Member for Dudley South, will we see that happen again?

In these circumstances, when there is philanthropy and charity and when human beings come on side and say that they will support somebody, that should not be discounted against the obligations of the state. We should not be saying that it is for charity to pick up the tab and reduce the burden that we all face as taxpayers when consents break down in this way. I know that Sir Bill felt very strongly about that and I hope that we might get an answer about what will happen in the future in this regard.

I come back to the point about the expertise. Will the bureau have the expertise? How many people will staff it? How will it be brought together? How will it be different from the patchy performance we have seen? For example, I understand that the police in Manchester performed quickly and were able to pay out quickly, although they had a smaller group of businesses involved, whereas the Met were woefully slow in paying out. That led to the then Leader of the Opposition coming to the Dispatch Box during Prime Minister’s questions and asking when businesses would receive their funds. He did that well over a year after the riots—the Met’s performance was that poor. It is important to understand what the bureau will look like and to make sure that it is not just a fancy name, but will work effectively.

I come to the role of loss adjusters. The hon. Gentleman is right that new-for-old compensation will mitigate some of the insensitivity that so many business owners said they experienced as they were quizzed about the age of their products, whether they were sure those products were in the premises, where they were in the building, why they could not get into the building, why their English was not good enough to fill in a form, and so on. I hope new for old will lead to a better system.

In these circumstances there should be a loss of earnings component. If we were able to pay out relatively quickly, the loss of earnings component would be reduced, which was not the case last time round when the process was so poorly handled. Many of us may not be here for the next set of riots in our country. I hope we are not here—I hope it is that far away—but if the claims process goes on for a long time, there is a terrible loss of earnings for small businesses. I can think of a wonderful mechanic’s business that was burned to the ground. It sat next to the iconic Union building in Tottenham that was also burned to the ground. I think of the wonderful Cypriot owner. He came to see me, devastated by the flooding and destruction of his family business. The road was shut off, the building next to it had been burned down and it was months before he could get into his business premises. He had a heart attack. He was laid low at home, panicking about the pressure of finance and money. I will remember that man and his family for the rest of my life. So I believe that loss of earnings should be a component of the compensation. Consequential earnings are also fundamental when the state breaks down in this way.

The cap of £1 million is right and totally understandable. It is important, though, that that cap is sufficiently high to compensate the vast majority of businesses. I think that that probably is the case, but I would like reassurance that it is index-linked and will rise. It is £1 million today, but what will it be in 50 years or 100 years? In areas of the country that are fragile, where there is deprivation or pockets of deprivation, we must not scare big business away because it fears that it would not be adequately compensated in the event of a riot. We must not do what has happened in other parts of the world, particularly the United States. It is important that private insurance is available for larger businesses for which, if they were to suffer a loss, it would be substantially more than £1 million.

It is easy to see how a relatively small business with stock could lose more than £1 million over several months in the circumstances. I am a little bit nervous about what the effect of the cap may be and whether it will harm regeneration and the prospect of those communities moving forward towards prosperity through regeneration. On the whole, people do not tend to riot if they have a job and a mortgage, but in parts of the country that cannot always be guaranteed, so it is important that big business is there, small business is supported, the £1 million cap is not too low, and that we are sure the insurance industry will provide support beyond that £1 million.

We need to be clear that under-insurance is common in the kind of communities that saw rioting in 2011 and communities where riots have historically taken place in this country. Because of the delicate margins with which businesses operate in such communities, there is often under-insurance. It was the people who were under-insured who paid the heaviest price last time round. They were able to claim from the High Street Fund, but that was discounted down the line. They were the ones who found it hardest to get payments under the Riot (Damages) Act in good time.

The 42 days feels like a long period. People know the riot has happened to them. They must know that there is some means of compensation. People say that on the news, but it does not reach them because they are in shock, because everything they own has been burned to the ground, and they have no paperwork, they have no ID, they do not know who they are. This is not just about shops; it is about homes as well. I am worried about the 42-day period. I can think of many constituents who would not meet that.