Flood Insurance

Stephen Gilbert Excerpts

Tuesday 26th March 2013 Commons Chamber

[Stephen Gilbert (St Austell and Newquay) (LD)]

I join my hon. Friend the Member for South East Cornwall (Sheryll Murray) in expressing condolences to the family and friends of her constituent, who was so tragically killed. It shows the importance of this debate and the need, as all Members have said, for the Government to get on with the job and provide a solution for what will happen at the end of the statement of principles.

There has been tremendous unanimity across the Chamber. I agreed with every word of what the hon. Member for Oxford West and Abingdon (Nicola Blackwood) said and with most of what the hon. Member for Kingston upon Hull North (Diana Johnson) said, although perhaps not the tone in which she said it. I recognise that the Government have worked hard behind the scenes with the Association of British Insurers to reach a solution, but the clock is ticking.

It gives me no pleasure to be standing in the Chamber talking about flooding again, as I think that this is the fourth or fifth time that I have raised the issue in the House. The key point is the continued availability and affordability of insurance. A second issue, which I shall touch on briefly, is the operation of the Bellwin scheme—that is, shall we say, the insurance policy for local authorities that are hit by the cost of cleaning up floods. Before I do that, I want to join hon. Members from all parties who have paid tribute to the volunteers in their constituencies who are helping to build community resilience. Whether they are in Mevagissey, St Austell, Pentewan or Polmassick—or, perhaps most notably, in St Blazey—I see a huge amount of voluntary work in my constituency, with people coming forward and developing strategies and contingency plans.

As we all know, flooding can be devastating, even when there is no loss of life. It can have a devastating impact on businesses and individuals as possessions and memories are washed away. In the clear-up, people need to know that insurance companies will pay out in a timely way and that they will be able to get insurance again for the future. Sadly, there remains a considerable danger that this simple aspiration for business and home owners will not be guaranteed and that affordable flood insurance will become unavailable in our country.

The scale of the challenge is getting worse, not better: one in every six homes are at risk of flooding; 2.4 million properties are at risk from the sea and rivers; 2.8 million homes are at risk from surface flooding; and 5 million people live or work in flood-risk areas. As my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) said, with the extent and nature of the threat we face changing, surely our response as a society should change, too. We are in an era of climate change and we all face unpredictable flooding risks and the potential for great costs. Therefore, I encourage the Government to recognise that this is not a problem that can be contained to specific areas; it is a national problem that requires a national response.

As my hon. Friend the Member for South East Cornwall made clear, Cornwall has suffered hugely with the costs of repairing flood damage over recent years. The latest estimate I have from Cornwall council is that the cost in November and December for last year’s floods alone is £7.4 million in revenue and capital expenditure. The Government have rightly activated the Bellwin scheme, the insurance policy for local authorities hit by flooding.

[Sheryll Murray]

Does my hon. Friend agree that under the Bellwin scheme’s rules the fact that Cornwall was changed to a unitary authority from six districts and one county council has disadvantaged Cornwall considerably?

--- Later in debate ---

[Stephen Gilbert]

My hon. Friend pre-empts the point I was about to make, and which I have made before. We need to review the Bellwin scheme in order to take account of different types of local authority structure, whether single-tier, such as Cornwall’s unitary council, which I believe gives Cornwall a stronger voice overall, or two-tier, such as Devon, with its district council and county council, which has a lower threshold for activating Government support. In Cornwall’s case, the threshold is £1.4 million of expenditure, which needs to be defrayed before the Bellwin scheme provides any central Government support. If that threshold is not met, the whole bill must be picked up by the local authority. Even if it is met, the local authority will still have to pick up 15% of the additional total.

There are very strange rules relating to different types of expenditure. Although the immediate response to incidents—the £181,000 for the fire and rescue service and the cost of advice to residents and of housing support, for example—might fall within the Bellwin scheme if the threshold is crossed, the repairs to highways and other capital expenditure to put right what the flood damage put wrong are not covered. I say to the Minister that as well as ensuring that flood insurance for homes and businesses remains affordable and available, and recognising that we are all in it together, local authorities need to know that the Government stand behind them, too. With climate change happening, it is clear that flooding will continue, but we must not leave people, businesses and councils hung out to dry when the waters recede.