Riot (Damages) Act

John Bercow Excerpts

Monday 14th May 2012 Commons Chamber

[Mr David Lammy (Tottenham) (Lab)]

I am very grateful to have the opportunity today to debate this issue, which is very important to my constituents and, I suspect, to many others in London. All of us in this House tonight, and others beyond, have insurance. We value our homes, our possessions and all the things we have worked hard to accumulate, and it is natural that we seek to protect them. Insurance exists to cover unforeseen events. Some events are more unforeseen than others. Although burglaries, house fires and floods are unfortunate in the extreme, they are all possibilities that insurance is intended to cover and they are, to some extent, foreseeable.

Living in a stable democracy such as ours, it is often easy to take the rule of law for granted. Last August, we saw that rule break down, with rioters destroying the homes and businesses of their neighbours, robbing them of not only their property, but their livelihood. In that context, it is the role of the police to maintain order, so it is to the police that we look when that has failed and we have paid the price for failure. Were the police and the state not to foot the bill, the costs would be passed to individuals and traders. That would result in rising premiums and entire communities losing out. It was not the fault of those who saw the riots, so it is right that the state helps to bring them back to a position where they can get on with their lives.

This evening, I wish to discuss four issues, the first of which is the overly bureaucratic and unprofessional manner in which the Riot (Damages) Act 1886 has been administered. The second is the hypocrisy of Ministers, the Mayor of London and even the Prime Minister himself in promising to support Tottenham’s riot damages—

[Mr Speaker]

Order. May I say to the right hon. Gentleman that he should not refer to identified Ministers using the word “hypocrisy”? He is a versatile individual and he has an extensive vocabulary. I am sure that he can find another way to make his point, and I trust that he will now do so.

[Mr Lammy]

I am grateful for that, Mr Speaker. May I therefore refer to the extreme inconsistency between the statements made to this House and the promises made to victims shortly after the riots by those I referred to, and what we actually see taking place?

The third issue I wish to discuss is that, under the coalition that champions the big society, philanthropic donations are now counted against riot compensation claims. Finally, I wish to draw attention to the differential treatment afforded to the Metropolitan police compared with that offered to police authorities in Merseyside, Manchester and Salford.

Although this debate draws on the experiences of riot victims in my constituency, I know for a fact that Members in other riot areas have been affected, and many are in the House as I speak. This is not the first time that compensation for riot victims has been discussed in the Commons. Some nine months ago, the Prime Minister made two promises, neither of which he has honoured. To the victims of the riots he proclaimed,

“we will help you repair the damage, get your businesses back up and running and support your communities.”

In the same debate, the Prime Minister promised that the Government would

“ensure the police have the funds they need to meet the cost of any legitimate claims”.—[Official Report, 11 August 2011; Vol. 531, c. 1053.]

Seven months later, the Leader of the Opposition pressed the Prime Minister, demanding that he provide proper, clear information about the processing of claims. I, for one, have heard nothing about that. The Prime Minister promised to put the process details in the House of Commons Library after that discussion with the Leader of the Opposition. I therefore ask the Minister when the Prime Minister intends to provide the House of Commons Library with that information.

Between 6 and 10 August 2011, more than 5,000 crimes were committed including five fatalities, 1,860 incidents of arson and criminal damage and 1,649 burglaries, 141 incidents of disorder and 366 incidents of violence against the person. In London alone, more than 171 residential and 100 commercial buildings were affected by fire at a cost of millions. The disturbances last August saw thousands of shops damaged and there were more than 3,800 claims under the Riot (Damages) Act in London alone, with liabilities estimated to be between £200 million and £300 million.

Some shop owners had insurance, of course, but others did not. In that regard the Act represents an important means of financial support. Sevill Hassan, who owns a hair salon on Tottenham High road, was away on holiday when the riots broke out in August. She returned to find her shop front damaged and equipment stolen and looted. She was between insurers at the time of the riots and had not yet sent off her cheque to her new insurer. Sevill did manage eventually to secure a £3,000 payment under the Act, but 18 months later she is still struggling to keep her business afloat.

Despite being labelled by many as arcane and out of date, the Riot (Damages) Act can and in many cases has helped victims of riots, particularly individuals and small businesses without a property insurance policy thanks to a clause added to the Act following the Brixton and Toxteth riots of 1981. Indeed, the Act was used as recently as 2001, following the Bradford riots, and so although the original Act might date back to 1886, there is no excuse for the Home Office’s failure to administer it in a clear and efficient way.

When one speaks to individuals and businesses who have submitted claims through the Act, its limitations become apparent. A number of the limitations relate to the manner in which it is administered and the majority could have been avoided or minimised had the insurance industry processed its own claims. Why have the Home Office and the Metropolitan police been unable to process their claims as successfully? Perhaps that is why, when representatives of the insurance industry went to the Home Office on 18 August, after the riots, they offered to do the job for the Met. Why was that offer from the Association of British Insurers and the industry rejected out of hand? The industry processes claims every day of the week, but the Department said, “Oh no, we can do it.” Nine months later, that has not happened.

Loss adjusters were appointed by the Home Office to manage claims. On making their claims, a number of individuals were treated insensitively by insurers and loss adjusters, many of whom failed to appreciate the devastating impact of the damage caused during the riots. Victims of the riots tell me that they were asked to provide receipts, and ask how they can do so when their business has burnt to the ground. That was the insensitivity shown to them. I have heard from traders in Tottenham who claim to have been treated like criminals, rather than victims of crime.

People with insurance were able to claim directly through their insurers, but in a constituency such as mine many people found themselves having to submit through the Act—if they were underinsured, for example. That is why this is so important. The Home Office did well to extend the period in which to make a claim from 30 to 42 days, following lobbying from the ABI. However, it took a long time to update the claim form from the 1800s. Many constituents were unable to understand the archaic language and the requirements, or did not know whether to use the form at all. As of 9 May, the Metropolitan police had received a total of 3,427 claims. Just over a quarter of those claims—912 of them—have been settled to date, and a total of just over £6 million has been paid out to victims. That works out at an average of just £7,000 per claim. There are 707 ongoing claims. I can only assume that the remaining 1,800 claims —52% of claims received—were rejected. I would be interested to know whether the Minister can reconcile the figures and say what has happened to the claims that have not been dealt with.

--- Later in debate ---

[Mr Chuka Umunna (Streatham) (Lab)]

Will the Minister give way?

[Mr Speaker]

Order. I am afraid that we cannot have interventions from the Front Bench in a half-hour Adjournment debate.

[Lynne Featherstone]

There are two types of victim, the uninsured and the insured, although, as I will explain in more detail shortly, some overlap has been created by insurance companies repudiating claims, which can lead to further uninsured claims subsequently being submitted.

For the uninsured cases—those people who never had insurance—most of the claims originally made went to the Home Office bureau, which the Government set up in the wake of the riots in order to facilitate the process for individuals who were struggling to come to terms with the damage caused to their property and loss of possessions. The Home Office bureau received 1,261 cases. As of last week it had 68 cases left—about 5% of the original total. Of those cases, 39 have been classed as inactive. Despite repeated attempts to contact claimants or their representatives, no response has been received for a substantial period. The other 29 cases are largely waiting for documents to be submitted, which the bureau chases up regularly.

The bureau has rejected 837 cases and sent 356 to the police authorities to make decisions on payments. Typically, the reason the claims were rejected is that they were not within the scope of the Act, which covers business interruption losses, personal injury, and vehicle damage, as mentioned by the hon. Member for Nottingham South (Lilian Greenwood). In some cases, the claims were rejected because individuals already had insurance cover.

Given that the number of cases with the bureau is now relatively small, the Policing Minister has agreed that the bureau will shortly cease operations. The small number of remaining cases will be passed to local police authorities, where a more co-ordinated approach will be taken to get them resolved in the local area. The police authorities originally received 480 claims, including the 356 sent to them by the Home Office bureau. I am pleased to announce that only 26 claims are left—that is 26 too many, but nevertheless that is down to 5%. Police authorities have rejected 159 claims and settled 295 cases.

That is not the complete picture of uninsured claims, because a number of cases were subsequently received, predominantly in the Metropolitan Police Service, where insurance companies had repudiated claims or refused to pay out because their assessed value of the claim was below the policy excess; a claim under the Act was then made directly to police authorities. A specific example of that is the case, raised by the Leader for the Opposition at Prime Minister’s questions, in which an uninsured claim was not received in the police authority until December 2011. A further delay then occurred as a result of documents not being sent to the police authority until late March, after which the claim was settled in a matter of days. Unfortunately, that case is not untypical, so the delay is not always on the part of the Home Office, the Home Office bureau or the police authority.

To return to the “new” uninsured claims, I can also report that good progress has been made in resolving those cases. The Metropolitan Police Service received 642 such cases and has 133 left. Around half those cases have been delayed due to documentation that has been requested by police authorities from claimants or their representatives not being submitted. Claims made to other police authorities are negligible. The category in which the greatest amount of payments remains outstanding relates to insurance companies. The Act provides for insurance companies to seek recompense from police authorities for the compensation they pay out to policyholders.