Flood Risk and Insurance (Hansard, 23 October 2002)

§ The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty)
My Lords, following much discussion with government, the insurance industry recently announced that for high risk properties where defences are in place or planned by 2007 up to a minimum standard of one flood in 75 years, it would maintain current flood insurance for domestic policies and that, were those properties to be sold, it would continue cover, provided other information about the new owners, especially their previous claims record, is satisfactory.

§ Lord Renton of Mount Harry
My Lords, I thank the noble Lord for that Answer. I have the press release put out by the Association of British Insurers. I point out to the Minister the key words in the press release—which he did not mention—which concern the ABI's new Statement of Principles: It will ensure that there is a competitive market for insurance based on the actual risks of flooding". In my part of Sussex, Lewes—I do not have to declare an interest as my property was not flooded—because of the amount of money that it is intended to spend on flood prevention, the risk of flooding will diminish to one in 75 years or one in 100 years, and household insurance will be available. But in neighbouring Uckfield—a mere seven miles away—the amount of money that it is intended to spend on flood prevention at the moment is much less, despite the flooding of two years ago and, in consequence, the risk of flooding will be one in 30 years—that is, a three per cent risk every year—and on that basis household insurance will not be available. Without household insurance no one can sell their properties as new purchasers cannot obtain mortgages without household insurance. Does the Minister consider that that is unjustifiably unfair?

§ Lord Whitty
My Lords, I am aware of the particular problems of Lewes and Uckfield. I believe that the noble Lord is aware that the Environment Agency has recently submitted a strategy dealing with the whole Ouse basin. My interpretation of the ABI position is 1324 that those premises which have a better risk than the once in 75 years flooding incidence will continue to be insured in the normal way. Properties with a worse risk factor would be judged on a one-by-one basis. It is not that insurance would not be available, but, clearly, it would be more expensive and there would be a premium attached to it. Therefore, there would be some disadvantage for those who are more vulnerable to floods. However, that is the nature of insurance. Neither the insurance industry nor the Government can devise a system where there is no risk. If there is a risk, the insurance industry must judge what premium it charges for that risk.

§ Baroness Knight of Collingtree
My Lords, is the Minister aware that in some areas such as Northamptonshire the Government have not provided proper flood defences? In those circumstances will the Government not take on some responsibility as regards the poor people whose properties are flooded because of the lack of defences?

§ Lord Whitty
My Lords, the Government have a major responsibility in relation to flood defences and dealing with floods. It is not, however, the Government's job to be the insurer of last resort in those or any other circumstances. In the recent spending review the Government committed to flood defences the sum of money which the ABI, on behalf of the insurers, indicated was the amount that was needed for them to be able to make the kind of statement to which I referred which covers the vast majority of properties in the flood plain.

§ Lord Glentoran
My Lords, is the Minister aware that the Environment Agency's maps could be misleading? The maps detailing areas at risk from flooding rely only on topographical data. Because they take no account of precedent and the way in which flood plains work, they have included many houses which are now on the at-risk list that have not been flooded for hundreds of years.

§ Lord Whitty
My Lords, the maps are misleading only if they are taken to mean something that they were not intended to mean. As the noble Lord says, they take account of topography and, to a limited extent, flow, but not flood defences or history. The Environment Agency is working on establishing more detailed maps but that will take some time to complete. The number of properties which are vulnerable, and on which the insurers are basing their calculations, include some which have not been flooded—and are unlikely to be flooded—for a number of years. The figures are a little flexible. Nevertheless, they give an indication of the totality of an area where flooding might be a problem.

§ Lord Greaves
My Lords, the Minister has brought good news in relation to the availability of insurance for properties in areas at high risk of flooding. Can he tell us what proportion of the approximately 2 million 1325 properties in this country which are thought to be at risk of flooding will still not be able to get insurance either as regards existing occupiers or new occupiers?

§ Lord Whitty
My Lords, as I indicated earlier, it is not necessarily a question of not being able to get insurance but it would not be on the same basis on which the ABI is effectively making a commitment. About 180,000 premises of the 1.8 to 2 million to which the noble Lord referred seem to fall in a worse category that that of one flood every 75 years.

§ Lord Selsdon
My Lords, can the Minister tell us whether he regards flooding as an act of God or an act of man?

§ Lord Whitty
My Lords, that is probably a question for the Bishops' Bench rather than the Government.

§ The Lord Bishop of Portsmouth
My Lords, it is a question for the Minister—he is god, not me!

§ Lord Whitty
My Lords, what is the responsibility of man is the responsibility of the Government in this regard. We have signalled our responsibility by providing in the previous spending review that very significant additional resource for capital development on flood defences.

§ Lord Renton of Mount Harry
My Lords, does the Minister accept that the present system for deciding on flood control measures is archaic? There are too many people involved: the Countryside Agency, the Environment Agency, district councils, county councils, DEFRA and local flood committees. Can the system be simplified as soon as possible so that decisions—they must be the right decisions—can be arrived at much more quickly?

§ Lord Whitty
My Lords, there is an issue in relation to the structure of responsibility for flooding. The Environment Agency effectively takes on the strategic role, but a number of different bodies are involved. As the noble Lord will be aware, there is a review of the institutional and funding side of flood defences. We have had the response to the consultation exercise, which we are now assessing. We will be able to give further details on any changes in that regard within a few months. We are aware that there is a problem.
On a question relating to an area that was previously the responsibility of the Ministry of Agriculture, it would probably be remiss of me to sit down without mentioning to the House that today is the 80th birthday of the noble Baroness, Lady Trumpington.

Noble Lords
Hear, hear!

§ Baroness Trumpington
My Lords, it is very nice to be remembered for floods!

§ Lord Campbell of Alloway
My Lords, are the Government considering any process that seeks to inhibit the granting of planning applications on flood plains and areas liable to flooding?

§ Lord Whitty
My Lords, planning authorities are well aware of the problem in relation to new 1326 developments. There have undoubtedly been some perverse planning decisions in the past. The Government and my colleagues in the Office of the Deputy Prime Minister have made sure that planning authorities take that issue seriously.