Riot Compensation Bill — House of Commons, 2016-02-05
Topic: Law and Crime
Michael Jon Wood (Conservative, Centre-right): Let me start with amendments 5 and 6, tabled by the right hon. Member for Tottenham (Mr Lammy), which would either remove or raise the compensation cap. Although I fully understand his reasons for asking that the level of the cap be considered, I am unable to support either amendment. As I have stated at earlier stages in the legislative process, we simply cannot continue to have a situation in which the public purse is subject to unlimited liability. Neil Kinghan’s excellent independent review of the reforms necessary after the 2011 riots set out convincingly and comprehensively the reasons for retaining the principle of strict liability for police forces when the basic contract to uphold law and order, to which the right hon. Gentleman has referred, breaks down, and that police should be liable for the costs of that. However, Neil Kinghan went on to say that it is not reasonable to expect those liabilities to be unlimited. That is why he put forward a number of alternative ways of controlling liabilities—capping them—in order to deliver a fairer deal for police forces and the taxpayer The effect of either amendment would be to impose a still higher liability on police forces and therefore on the taxpayer. The right hon. Gentleman asks how the £1 million figure was reached. The Home Office put the figure forward in response to an earlier consultation, and it received widespread support. At present, the cap is generous. It has been set to make sure that it would have protected as many of the claims made in 2011 as reasonably possible Analysis by the Home Office and the Association of British Insurers estimates that, had a £1 million cap been in place in August 2011, 99% of claims paid then would still have been paid in full; that compares with about 33% had we continued with the alternative option of a cap on turnover of business, which Neil Kinghan ended up recommending. The £1 million cap is far more generous to the victims of riots and recognises exactly the points made by the right hon. Member for Tottenham: of course such victims are in no way to blame and could have done nothing to prevent their loss. We want to make sure that they continue to be compensated, within a reasonable limit I also take note of the right hon. Gentleman’s point about big businesses and the important role they play in our high streets. However, like most businesses, big or small, they have a responsibility to insure themselves adequately—not only against riots, but against a broad range of risks. The £1 million compensation cap applies directly to riots, as defined in the legislation. We would similarly expect such businesses to insure themselves against fire and looting caused by arsonists and against gangs of people rampaging riotously, although perhaps made up of fewer than 12 people and so falling outside the scope of normal riot legislation Damage caused by looters or gangs on the rampage is every bit as serious, but police forces would not have liability unless negligence could be demonstrated. There is a need for adequate levels of insurance and it is not unreasonable for businesses with assets running into millions to take out such insurance. Setting a cap at £10 million would largely benefit insurers far more than big or medium-sized businesses on the high street, as they could subrogate those claims under the Bill and the existing scheme. Furthermore, of course, they tend to provide the insurance for big business The most pertinent example from the 2011 riots was the claims, which have not yet been settled, arising from the destruction of the Sony warehouse in Enfield. Those run into tens of millions of pounds. That money would go entirely to insurers if the claims ended up being accepted. From the Home Office research, it seems that increasing the £1 million cap to £10 million would have affected six uninsured businesses in 2011—six businesses among all those affected, at a massive cost to the taxpayer without any real benefit to our communities. That is why the £1 million cap has been widely welcomed by Members as well as by the insurance industry. The Government have published their intentions in response to the consultations following the 2011 riots on reforming the compensation arrangements. The £1 million cap was very widely welcomed in that response by stakeholders who took part in the consultation.