My Lords, in moving this amendment, which calls for an annual review of Flood Re to deal with business which I do not believe has been concluded, I need to declare an interest. I have a leasehold interest with my wife, which I have declared on previous occasions on the Bill, in a band G home on the Thames. Although it is built on the flood plain, my flat is not threatened by flooding. It has never been flooded and can never flood because it is on the second floor. Nevertheless, I have to report that the car park area that serves our block of flats was recently subjected to some flooding, and it is with that in mind that I feel I should restrict my comments today and limit again what I have to say.
The problem with this whole debate on Flood Re is that it was never fully considered in the House of Commons. Some of the worst flooding—certainly this century and for a greater part of the previous century—actually took place after consideration in the Commons and during consideration in the Lords. I believe that many Members of Parliament in the other place would have been drawn into the debate as a result of pressure from their constituents in the event that they had experienced what many people experienced in January and February.
Before I make my wider comments, I thank the Minister for generously offering to arrange a meeting through his office, and I thank Mr Leckie, one of his staff, who has been excellent in his dealings with me. I hope at that meeting to have a representative of the ABI; Miss Anne McIntosh, the Member of Parliament for the constituency to which I referred on another occasion; and one of her constituents, whose statements I drew upon in the previous debate.
I have tabled this amendment because for many people in the country these proceedings are the most important part of the Bill, and they are watching what is happening in this debate on the internet. Many thousands of people in the country are following this debate because they feel that they have been excluded from Flood Re. While we all want Flood Re to go through, I believe that it remains unfinished business. I want to refer specifically to a group of properties, which would not include my own, that fall under the lower council tax bands A to D—mine is G, so I would not be affected by my own amendment or by what I am advocating. I choose those council tax bands because they involve, generally speaking, a group of lower income people who can ill afford the arrangements that are being made.
I want to call on some correspondence that I received by e-mail, which a number of Members have received, from a man called Mr Junco Cochrane. He has been expressing concern in desperate e-mails to Members of this place in his best e-mail English. He says:
“I wrote to the ABI Director and have had quite a bullying type of reply. Leaseholders”—
he is one; they are excluded from Flood Re—
“have very little say and are virtually told what to do and how high to pay”.
He then points out the need to,
“prevent discrimination and distress for leaseholders”—
I believe he is speaking for leaseholders all over the country—
“who often are the poorer and older persons at the end of the property market, and with rip-off charges in various areas, often for nothing of any or little value”.
This is how he has phrased his e-mail. He goes on to say:
“Many leaseholders are pensioners and are not comfortably off ones. May I say respectfully, not like you in your fortunate situation”—
he is talking about me and my band G—
“as many of us just have the one small leasehold and struggle to keep that”.
I repeat: this man is excluded from the arrangements that are being made. He goes on to say:
“Many of us are the poorer category of households, old people in retirement flats, sheltered housing and social leaseholders, who are generally older people, of which there are millions in these types of flats”.
He is exaggerating but he obviously believes that there is a great number. He goes on:
“They are not in the ‘three’ conversions such as those referred to by DEFRA”.
We know what the three conversions are: they are where you have three flats in one block and there has been a compromise in Flood Re whereby they are now included. His e-mails to me and to others are desperate. This is the desperate voice of someone who is really upset about the way in which the legislation is being handled.
In response to people like him—and to Beverley Morris, who wrote to me on a previous occasion—the ABI maintains that insurance at reasonable rates will be made available. In a letter which the Minister kindly arranged to be sent to me, Otto Thoresen, the director-general of the ABI, gives assurances to government that it can deliver on reasonably priced insurance. He states:
“While there are a range of customers seeking insurance in the leasehold market, on the whole freeholders of leasehold property are commercial enterprises that buy their buildings insurance in a different way from ordinary homeowners. There is no failure in this market, and we expect affordable cover to remain available for such properties in an open market. For this reason, they do not need to be included in Flood Re … We fully expect the competitive market that currently allows leasehold managers to buy affordable cover to remain in place, and there remains no evidence to suggest it will not. It may be helpful to stress that Flood Re will be available for contents cover bought by individual residents in leasehold properties”—
which is true—
“and that leaseholders who insure their building in their own name will be able to access buildings and contents insurance through Flood Re if needed”.
That statement is simply inaccurate. He must know what the truth is. He must have seen the evidence that we presented on Report, wherein a lady writes to tell us that her insurance is to go five times higher than what it is at the moment. It is to go up from £5,000 to £23,000, yet Mr Thoresen gives those assurances.
That is the case with Mr Cochrane and people all over the country—very often low-income families—who live in properties many of which at the end of the day will not even be insured because people will not be able to find insurance. If a lower-income family living in a block of flats in an affected area finds that they cannot afford the insurance at the higher prices, they will still have to buy it, because those who have taken out a mortgage are under pressure from their mortgage company to insure their flats. Therefore, they are locked into high reinsurance premiums and there is no way out.
I understand that Mr Ian Fletcher of the British Property Federation, while expressing his concerns about the comments of people such as Mr Thoresen on Flood Re in general, told the Daily Telegraph—and this is his explanation as to why the insurance companies have taken the position that they have:
“We think the problem stems from the fact that insurers’ systems can’t cope with leasehold as a residential form of ownership. They are viewed as commercial properties from insurers’ viewpoints”.
Well, the fact is that they are not necessarily commercial properties. Anyhow, surely they could have changed their systems when they were devising Flood Re somehow to incorporate such people, particularly those in lower-income groups, who are going to find themselves in a pretty difficult position. That matter must inevitably become the subject of Flood Re at some stage in the future.
I move on to another group of people who feel very aggrieved. I have a note, which has just come down the line to me, from Lynne Jones, the chair of the Keswick Flood Action Group. She is speaking on another group who are excluded and who should be of equal concern to us. She states:
“I am … Chair of Keswick Flood Action Group”—
Keswick Flood Action Group is an action group in my former constituency of Workington in Cumbria—
“I am frequently asked about how to get insurance and within my duties as Chair I would also like to point out some local issues with Flood Re working against others in my community”.
She then goes on to comment on the issue of rented property and how that is affected:
“To not give guarantees to rented properties would affect some of the least well off in our town. Most of these are not covered by the Statement of Principles. Landlords’ insurance is currently commercial. The interesting issue will be whether the introduction of Flood Re will affect this market. One of the things I have been arguing for is that it should be mandatory for landlords to hold insurance and that this should cover flooding. That would be a significant improvement on the current situation. Housing associations tend to build on cheap land—flood plains. Thus here as, I suspect, in towns and cities throughout the UK, there are quite a few local occupancy and housing association homes in flood risk areas. But these are typically covered by commercial insurance”—
all excluded.
“Houses are expensive here and many locals can’t buy homes so they can ill afford high premiums—or no flood cover. Tenants will be covered by Flood Re for contents insurance, but my real concern is landlords not taking out insurance at all”.
That is because they are not included. We are not talking about vast commercial landlords, but the chap who buys the house next door or someone who buys something in the town which they may rent out.
“In addition we have a significant amount of housing stock taken over to self-catering. This is a good point and needs thinking about. What proportion of that is covered by residential insurance rather than commercial? How much is currently covered by the Statement of Principles? How much of this would be at significant flood risk? Keswick relies on tourism and the surrounding area relies upon Keswick for the wealth visitors (national and international) bring. Are these also to be denied the chance of flood insurance?
I hope that you will take this information on board when you look at the future of flood insurance”.
Again, that is a group of people concerned about the absence of Flood Re cover.
6.15 pm
Finally, I want to draw on another piece of correspondence that has come from a man called Mr Donington-Smith, whom I know well—he is a member of a working party that I have been chairing on the arrangements for flooding in west Cumberland from Thirlmere. He lives on a road going down to Keswick called Penrith Road. He has written to comment on the classification of areas by the Environment Agency of the risk of flooding, which clearly affects property insurance. In other words, the EA draws up the maps and the insurance companies take them into account when they set their premiums. Of course, that must influence Flood Re. He writes:
“The classification of areas at risk seems highly illogical and is having an adverse effect on our ability to get flood risk cover for our holiday cottage”—
I have nearly finished. I must tell the House that I have spoken for 13 minutes and I know that I should limit my comments to 15 minutes. He also writes:
“This is the first year that the offer of cover has been withdrawn. We are still getting cover for our home, which is just a bit further down the road.
You just need to look at Townsfield to see how illogical the map is. It is marked as being at low risk (it should be at no risk whatsoever). Lydia’s Cottages is next to Townsfield and the cottages have never been flooded from the river since 1906 and heaven knows what happened before then. They were built in the 1850s. Our cottage is about 14ft above normal river level. The old washhouses at the back flooded in 2005 and 2009, but they are on much lower ground”.
I know that that might seem very small and trivial, but the fact is that that is what is going to happen out there. Thousands of people will find that they cannot get cover or that their cover will cost too much. All that I am bringing to the House today is the testimony of people who can see what will happen and are asking Parliament to be fully alerted, particularly as the Commons was unable to consider these matters.
Mr Donington-Smith explains where his cottage is. He writes:
“From my discussion with an insurance broker the insurance industry chooses to disregard the circumstances of individual properties and instead it makes its decisions based on specified areas. Local knowledge would appear to count for nothing. Information from the EA (including its flood risk maps, however inaccurate) are a major factor in their decision making, which is why accuracy is so important. Without this, whole areas are at risk of suffering needlessly from insurance blight with all of the associated problems.
It is not unreasonable to expect that, if nothing changes, we will also eventually suffer problems with our home at Greta Cottage”.
All I am saying is that we stand on the eve of a huge problem. A lot of people who cannot afford insurance are going to be covered by it because they are excluded. When the Minister has this meeting, the ABI chappie will be there and I hope that Beverley Morris will be there to put the case for what I believe are thousands of people. We will then be able to observe what happens. I do not know at what stage this can all be reviewed but it has to be reviewed because a lot of people are going to suffer. I believe that it is the duty of Parliament to put in place legislation which makes sure that people who can ill afford it do not suffer. I beg to move.