Steve Reed
Main Page: Steve Reed (Labour (Co-op) - Streatham and Croydon North)Department Debates - View all Steve Reed's debates with the Home Office
Riot Compensation Bill
Steve Reed Excerpts(8 years, 11 months ago)
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Mike Wood
My hon. Friend is right, and in conversations I have found that a surprising number of right hon. and hon. Members from across the House were similarly unaware that police forces bear those liabilities. We should be under no illusions that most members of the public are much better informed.
Let me return to the principle of switching to a new-for-old system. From the perspective of public finances, much of the additional cost of such a change can be expected to be offset through savings on spending on the loss adjusters needed to calculate second-hand values. It is much simpler and more efficient to assess the cost of a new replacement product, which is why so much of the insurance industry has moved to such a process.
Mr Steve Reed (Croydon North) (Lab)
Was the hon. Gentleman referring to the case in Croydon North of Mr and Mrs Hassan? They had recently bought a dry cleaning business with old dry cleaning machines. It was burned to the ground, but because they were offered only like-for-like funding they could not re-establish their business or get their livelihood going again. They went into serious arrears and were threatened with the loss of their home because they could not pay the mortgage. Surely that is unacceptable and needs to change.
Mike Wood
That is precisely what I have been calling on the ABI and other insurance bodies to do leading up to today’s debate.
I turn to the Bill’s provisions on a riot claims bureau. It sets out that the Secretary of State may assume responsibility for managing riot compensation claims. That is appropriate if rioting spreads across more than one police force area, as it did in 2011. It may also be appropriate at the request of a local policing body, particularly in one of the smaller police force areas, should the volume of compensation claims prove challenging to manage and be beyond its capacity. It is not about taking away local policing bodies’ financial autonomy. It is merely about providing capacity, consistency and additional oversight where necessary.
Mr Steve Reed
I am grateful to the hon. Gentleman for being so generous with his time. He mentions compensation being paid to victims. Is he aware that when local communities came together to raise and distribute funds to support businesses, families and individuals who had been financially affected by the riots, those funds were then deducted from the more official compensation payments? Does he agree that that was completely wrong and went against the intentions of people who generously donated to help their fellow citizens recover from the terrible circumstances in which they found themselves?
Mike Wood
I would certainly hope that money raised to support local communities would be used for that purpose. Of course, we would want to avoid double compensation, with damages being repaid twice so that people were not just put back in an equivalent position to before the riots but received additional payments on top of that. I do not think that that would be appropriate. I do think that after a riot money should be retained more at a community level and invested in rebuilding community cohesion.
The structure of a riot claims bureau would include, in its running and financial decision making, a role for a police and crime commissioner or equivalent, or their designated representative, as well as insurers and loss adjusters. The Bill would allow local policing bodies to place the day-to-day management of claims into the hands of experts in the loss-adjusting profession. That is clearly a better alternative to expecting police forces to retain such responsibility in-house. Companies already have the capacity available to manage major insurance-related incidents, as has been seen in their response to major weather-related events. Moving responsibility for the management of the process to those who understand it best would allow police and crime commissioners to utilise fully industry experts, while retaining full control of the financial decisions for which they are democratically accountable.
The Bill provides, for the first time, cover for some motor vehicles. Understandably, motor insurance and damage to motor vehicles was not considered in the 1886 Act. It is time, nearly 130 years later, to address that. Most insurance companies cover riot damage in comprehensive motor vehicle policies, the type held by the overwhelming majority of the country’s motorists. The Bill would not seek to replace that coverage. The intention is to provide compensation for motorists not covered by comprehensive insurance. Where the vehicle is held in accordance with the law, it would be covered under the Bill: it would cover third-party claims that meet basic minimum legal requirements for insurance, or vehicles that are exempt from requirements for insurance.
Dr Huq
Sorry, I am not into zombie movies. It was Mr Melville’s example. They found cars burning and other such things one does not expect to see in Ealing. Bang & Olufsen closed early, as a precautionary measure, but even so, the glass was shattered and the footage attracted many millions of views on YouTube. Ravi found his store in flames. The London fire brigade was in attendance for 24 hours. It was not just the shop; there were flats above as well.
The Bill attempts to redress some of the imbalances in the current legislation and revamp the compensation provisions, as the hon. Member for Dudley South (Mike Wood) described. The existing legislation is on the aged side, if that is not too much of an understatement. Very few statutes—very few anything—dating from 1886 continue completely unaltered today. It was a time when Queen Victoria was on the throne, and I think both Lord Salisbury and Gladstone had turns at being Prime Minister that year. A house dating from 1886 would at the very least have needed a bit of updating: a lick of paint, central heating and other mod cons. Riots in the UK are, thankfully, relatively rare, but the legal framework needs to be brought into the 21st century, as the hon. Member for Dudley South said.
A lot of people called the riots of four years ago the social media, high-tech riots. Some commentators even likened them to the contemporaneous Arab spring, which I think is going a bit far—the riots in Tunisia and those countries had a different cause. To pursue the parallel, if we were updating an 1886 house in line with what the legislation needs, we would need several coats of paint, not just a lick of paint, and total rewiring and heating, with a new boiler and radiators. The cumulative effect is that it becomes too much of a job to stick with the existing structure, so we do need new legislation. It makes perfect sense, and I congratulate the hon. Gentleman on bringing the Bill to the House today, because we need to bring that Victorian legislation kicking and screaming into the present day.
Ealing council’s riot scrutiny panel report from 2012 stated that over 1,000 999 calls were made on 8 August 2011, many of which went unanswered. The report states that there was damage to 100 shops and businesses and that “one supermarket burnt down”—Ealing Green Local, which I referred to. It took 18 months to reopen. It now has half its original footprint and has been rebranded as a SPAR. When the riots happened, I was cowering indoors watching Twitter, but I remember going the next day and seeing an Edwardian turret from the roof structure of that building being lifted away by crane. It was quite surreal.
Ravi outlined what happened in the aftermath and told me what he would like to see in future riot compensation legislation. He said that the insurers had paid out, but that the process was painfully slow. He reckoned that his claim was accelerated somewhat because he knew someone on the inside. That should not be so: we should be a nation above corruption in those things. He pointed out—the hon. Member for Bury North (Mr Nuttall) also made this point—that consequential loss should be covered as well. Ravi said that, at present, compensation covers only fixtures and fittings, whereas he would like loss of earnings to be included.
Ravi’s other point was that the role of the council was relatively limited. Ealing’s report said:
“Feedback on the Council was very positive—the payment of £1,200 was delivered promptly, and the named officer had been in frequent contact with advice and support.”
That is what the council said.
Mr Steve Reed
If Ealing is the queen of the suburbs, Croydon is surely the king. There was another role for councils, in the receipt of riot recovery funds. Croydon council—run by the Conservatives at the time—received more than £20 million from the Greater London Authority, spent half of it in an area that was not affected by the riots and left the rest in a bank until the GLA tried to claim it back. Does my hon. Friend agree that there should be a bigger role for communities and victims in overseeing how such funding is spent, so that the worst affected areas can recover faster?
Dr Huq
My hon. Friend makes an excellent point. He anticipates what I was going to say about the Ealing example, but he is correct that these decisions should be taken at a local level.
Ravi said that the council was very good initially, but that
“after 18 months their door was closed.”
He also praised police actions after the event, but recognised that their role too was limited. His was a flat with a shop beneath, and both were subject to an arson attack, as in probably the most extreme case, which was in my hon. Friend’s constituency—or was it in Croydon Central?—with the famous picture of the girl jumping out of the burning building.
Dr Huq
I am talking about loss of earnings. The store owner, his wife and two kids had to live off their savings for 18 months. It is an extreme case: 18 months is not the norm, and riots are not the norm. We do not usually expect these occurrences. Let us hope they never happen again.
Helen from Bang & Olufsen remarked that the shop front had not been smashed. The video was shared so many times because people were saying that the rioters had been defeated, along the lines of “Hooray: victory against the rioters”. In the end, she faced a bill of £10,000 for the glass splinters. High-end products were involved, as expensive televisions behind the glass were also damaged. Helen’s point was that a cheque had to be written from the firm’s business account, which caused a problem for cash flow afterwards. She said that she had sunk all her savings into the business, which had been open only for six years, and when it started there was a massive recession. The hit to cash flow to pay the glazier was huge. She suggested that a temporary loan would have been helpful in that instance. It was a frightening time for her: she had a little kid and a second one was on the way.
Mr Steve Reed
It was not just Reeves Corner that was affected. Nine businesses and 40 flats were destroyed in London road, west Croydon. Some of the businesses had to continue to pay mortgages or rents on properties that had been destroyed, which is enough to put businesses or individuals who are not wealthy in severe financial difficulty. Does my hon. Friend agree that riot compensation should apply to those who have suffered serious losses of that kind?
Dr Huq
That is an excellent point. There were the headline cases that got all the attention and went viral, but I believe that the proprietors of many small Asian shops in the London road have been waiting a long time to be compensated. I am not sure whether they have received any compensation yet. We may focus on the headline cases, but these are all tragic stories.