Draft Grants to the Churches Conservation Trust Order 2022
(2 years, 2 months ago)
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The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Nigel Huddleston)
I beg to move,
That the Committee has considered the draft Grants to the Churches Conservation Trust Order 2022.
It is a pleasure to serve under your chairmanship again, Ms Elliott. The order is required so that the Government may continue to provide funding for the Churches Conservation Trust. The trust takes into its care some of the most impressive examples of our churches that are no longer required for regular worship. All these churches are listed—mostly grade I and grade II* —and some are scheduled ancient monuments.
Historic places of worship are a valuable and vital part of this nation’s heritage. Around 45% of all grade I listed buildings are Church of England churches or cathedrals. They represent some of the finest examples of our historic buildings and heritage, and showcase the most accomplished design and workmanship.
The trust currently cares for over 350 churches in towns, villages and cities across England, ranging from small hidden treasures to grand urban Victorian buildings. The churches the trust has saved are some of the finest examples of architecture and craftsmanship, spanning more than 1,000 years of history, architecture and archaeology. The trust keeps these buildings open to the public and does not charge an entry fee, instead believing that historic churches belong to everyone in the community.
The trust is a charity and was established by ecclesiastical legislation in 1969 as the Redundant Churches Fund, aimed at protecting an essential part of our heritage. It demonstrates a successful partnership between the Church, the Government and communities.
The trust’s strategy for 2019 to 2024 has seen an investment in staff to create the infrastructure to support local communities to use and love their historic church buildings. Those staff provide community support, learning, fundraising, conservation and maintenance expertise, and major project support, as well as funding.
The trust needs our funding, but it has not rested on its laurels and has increasingly made use of its statutory grant to raise new income from other sources, such as donations, legacies and grant-giving foundations. That independent income demonstrates great initiative, with a variety of activities helping to bring the CCT’s buildings back to life at a time of pressure on public funding.
Following the call from the Government to move offices from central London to areas outside the south-east, the trust will be taking the opportunity to highlight an innovative regeneration project in Northampton to create a new national office. The derelict grade II listed Old Black Lion in Northampton will be brought back to life as a pub to support the management and maintenance of St Peter’s church next door, while also becoming home to the CCT’s national team.
This year has seen the successful opening of two new church buildings by the CCT—St Peter’s, Tickencote, and St Nicholas, Gamston. Over £2 million of works have been undertaken to CCT buildings thanks to round 2 of the Heritage Stimulus Fund. This year will also see the vesting by the CCT of St Torney, North Hill, in Cornwall and St Wilfrid in Brougham. In addition, the major projects at St Swithun’s, Worcester, and Holy Trinity, Sunderland, have now completed construction, and these fully repaired and repurposed church buildings will be opening to their local communities shortly.
The trust has done a great job of diversifying its income and finances, and I will speak about just a couple of examples. One of its many initiatives is champing, or church camping, which is a scheme offering overnight stays in historic places of worship. The scheme, which began in 2015, continued to thrive in the 2020 season, as there is now a greater emphasis on UK-based breaks.
Filming has also been an important contributor to diversifying the CCT’s income streams, offering another creative route to supporting and conserving the estate. Over the last few years the organisation has facilitated film and TV productions from the BBC, Sky, HBO and Netflix across its sites. There remains considerable potential to attract more film and TV productions to the CCT estate.
The trust’s staff are award-winning experts in conservation when it comes to regenerating historic churches for new uses. The organisation also has an international reputation for innovation in the field of historic church buildings. In 2015, the CCT won the European Union prize for cultural heritage, the Europa Nostra award, in recognition of its role in promoting the architectural significance of historic places of worship and their essential function as centres of community life.
Consultancy work is also a positive income stream for the trust, working on projects with dioceses, churches and community groups, as well as new maintenance business initiatives. The trust is also participating in the management knowledge transfer partnership, funded by the Department for Business, Energy and Industrial Strategy, with the Saïd Business School at the University of Oxford. Membership of the trust has grown during the pandemic, predominantly through the Thursday lunch time lecture series, which has attracted more than 200,000 viewers to date. It has also created an online community of interest in the work of the CCT.
It was almost a year ago to the day that we sadly lost Peter Ainsworth, who died unexpectedly. Peter was a great chair of the CCT and a committed public servant who supported the charity through the first year of the global pandemic. He is greatly missed. After 15 years with the CCT and nearly five years as chief executive, Peter Aiers is leaving to become the 34th Master of the Charterhouse in London. Peter set up the successful regeneration team in the CCT, which has continued to innovate and deliver such projects as All Souls Bolton, St Mary at Quay, Ipswich, and the Old Black Lion. Peter also invented champing, which I referred to earlier, as a means of raising tourism income for the CCT, which has a worldwide audience now. He also put in place the current CCT strategy, and we thank him for his work and dedication.
I am extremely fortunate to have three CCT churches in my constituency: All Saints’ church in Spetchley, which is a 700-year-old church next to Spetchley Park and gardens; St Michael’s church, Churchill, which is an atmospheric church mainly from the 14th century; and St Lawrence’s church in Evesham, which is a large, imposing church rebuilt on Norman foundations in the 16th century. Those historic buildings remind us of communities of old, and the work of the Churches Conservation Trust means that they will be preserved for generations to come. They anchor us to our history and our communities in a way that we should never take for granted. I hope that the Committee shares my enthusiasm for the important work of the trust, and the key role that it plays in preserving and promoting a vital aspect of our nation’s heritage, and that it will consent to approve the Grants to the Churches Conservation Trust Order 2022, which provides for three years of funding to the trust.
Chris Elmore (Ogmore) (Lab)
It is a pleasure to serve under your chairship, Ms Elliott. I thank the Minister for his introduction to the draft statutory instrument. I am pleased to be able to respond on behalf of the Opposition. This is a broadly non-contentious order, which we do not intend to oppose. The order makes provision for a three-year statutory funding settlement, which will allow the Churches Conservation Trust to continue to care for and maintain its stock of 356 historic church buildings in England—a number that will almost certainly continue to rise. The CCT has indicated that it is pleased with the settlement. It does not amount to a real-terms cut, and it is right that the Government continue to fund its work, which is so important for our heritage.
In turn, through careful management, the trust is able to more than double the statutory funding it receives. That is good news for communities with disused church buildings. Instead of falling into disrepair or ruin, the trust ensures that those buildings, and all the architecture, archaeology and art they house, are kept open and in use by people of all faiths and none. The buildings under the CCT’s care attract almost 2 million visitors a year. They are widely enjoyed as cultural, social, tourism and educational resources, as well as being able to be used for occasional worship. As the Minister mentioned, the CCT even introduced the concept of champing to the world. We are satisfied that the funding laid out in the order will help it to continue all that great work.
I have a couple of questions for the Minister, because there is a broader context to the order, as he mentioned. There is a strong trend in the decline of parish church use in the UK, as across western Europe and America. The pandemic has accelerated the existing trend of declining congregation numbers, already driven by an ageing religious population and an increasingly secular society. There are real financial pressures on churches for their building maintenance. The Church Commissioners’ review paper of the Mission and Pastoral Measure 2011 from last year, which included figures from a diocesan survey, suggested that up to 368 church buildings could be at risk of closure over the next five years. That will undoubtedly affect the number of churches that come under the care of the CCT, a number that, as I mentioned earlier, will continue to rise. What thought has the Minister given to the future needs of the trust, in terms of statutory funding? Will he stand ready to keep the figure under review if its work grows?
The Church Commissioners plan to bring forward a White Paper with proposals for legislative change from their review to the July 2022 session of General Synod. Any changes, if implemented, will have bearings on parish governance, pastoral reforms, financial models and the future of church buildings. What initial thought has the Minister given to how that might affect the CCT’s work? How do the Government plan to engage with the review and the wider debate on the future of parish churches? This is a specific and focused order which we do not oppose, but the wider context raises some important questions and I look forward to hearing from the Minister.
Nigel Huddleston
I thank the hon. Member for Ogmore (Chris Elmore) for his contribution. I know that across the whole House we share a passion for heritage and concern about the future of our churches.
In answer to some of the points the hon. Gentleman raised, we always keep the funding for the Churches Conservation Trust under review. He is right that, unfortunately, as time goes by, more and more churches fall under the CCT remit. In an average year, about 20 churches are moved out of direct Church control, of which only about two or three fall into the CCT arena. Others go into private ownership or are renovated for other purposes, which itself generates income for the Church. The key point about funding is that we have been very impressed by the CCT’s ability to find savings of its own volition. We appreciate the efforts it has made and the pattern we both recognise of identifying additional income streams. We are always happy to engage with the Church and the CCT.
The hon. Gentleman talks about the wider implications of the number of people attending Church of England churches and other institutions. We are in constant dialogue with Churches through a variety of means. The Second Church Estates Commissioner, my hon. Friend the Member for South West Bedfordshire (Andrew Selous) has a role in that respect. We frequently have conversations with him and we are always willing to offer help.
The Government’s funding for the CCT is an effective and successful part of the support we give to our heritage sector. The trust is fully committed to making sure that these remarkable buildings of cultural importance are still in good repair, and are open now and for many generations to come. I extend my grateful thanks to the trustees, the staff of the CCT, and the many volunteers up and down the country who ensure that the churches are open and welcoming.
It is thanks to the important work of the CCT that these historic buildings continue to thrive. Buildings looked after by the CCT across England are enjoyed as cultural, social, tourism and educational resources. They are kept open and in use, and are living once again in the heart of our communities. We thank them for that.
Question put and agreed to.
Draft Flood Reinsurance (Amendment) Regulations 2022
(2 years, 2 months ago)
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The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Rebecca Pow)
I beg to move,
That the Committee has considered the draft Flood Reinsurance (Amendment) Regulations 2022.
It is a pleasure as ever to have you in the Chair, Mr Robertson. This statutory instrument makes important changes to the Flood Re scheme, which is a joint Government and industry initiative, launched in 2016, designed to improve the availability and affordability of UK household flood insurance.
In 2019, Flood Re, the scheme administrator, published its first quinquennial review of the scheme. This is a statutory requirement. Flood Re made a number of recommendations to Government. We have since considered and consulted on proposals, leading to the changes set out in this statutory instrument.
Since its launch, Flood Re has helped to provide cover for flood insurance to over 350,000 households at risk of flooding across the UK. Before Flood Re, only 9% of policy holders with a prior flood claim could get flood insurance quotes from two or more insurers and none could get quotes from five or more insurance companies. Following the scheme’s launch in 2016, availability of flood insurance policies for those with prior flood claims has increased; around 96% of customers can now get five or more quotes, and four out of five householders with a prior flood claim see price reductions of over 50% since the scheme’s launch. Building on this success, the statutory instrument makes technical changes to the scheme to improve its efficiency and effectiveness and changes to drive the uptake of property flood resilience measures, helping the United Kingdom to become more resilient to future flooding and the changing climate. I will set those changes out in turn.
First, there are several technical changes. The statutory instrument designates a revised scheme, as described in the new scheme document dated 19 January 2022. This provides the framework within which the scheme administrator, Flood Re, will administer the scheme. The new scheme document will allow Flood Re to propose a revision to levy 1 every three years instead of every five, and reflects the Government’s assurance process. The levy is the scheme’s primary source of income, raised from UK household insurers based on their market share. The revised levy amount will be subject to parliamentary approval every three years. The change will allow Flood Re to obtain better value for money when purchasing reinsurance and to be more dynamic to the potentially changing risk profile. The statutory instrument amends the figure for the levy from £180 million to £135 million per year for the next three years. That ensures the amount of levy being raised is not higher than it needs to be.
The new scheme document will allow Flood Re to set the liability limit, which sets the maximum amount of claims Flood Re is liable to pay to insurers in any one financial year, every three years instead of every five. This will align it with the levy setting cycle and afford Flood Re greater flexibility to respond to the scheme’s changing income needs and risk profile.
The new scheme document also makes a technical clarification to make it clear that surplus levy 1 funds will be returned to Government when the scheme ends, in line with the agreed position between the Government and Flood Re when the scheme was established.
Recently, we saw the devastation that can be caused by flooding and the impact it can have on the lives of those affected. We are making important changes to help to drive the uptake of property flood resilience. Property flood resilience gives households the tools to manage the impact that flooding has on their property and their lives, enabling them to respond and recover more quickly and reducing the cost of damage and, in turn, the cost of insurance claims. The new scheme document will allow Flood Re to pay claims from insurers ceding to the scheme that include an amount of resilient repair up to a value of £10,000 over and above the cost of like-for-like reinstatement of actual flood damage. That will allow UK householders to build back better after a flood, making their homes more resilient to future flooding. That involves using products such as air brick covers, flood doors, water-resistant kitchens and plasterboard. I have seen lots of things being used, and the people who had them put in are generally pleased that they did so. That is what the new claim will enable. Resilient repair will enable homeowners to get back into their houses more quickly following a flood and reduce the cost of future claims.
The Build Back Better scheme is being introduced on a voluntary basis. Insurance companies who cede to the scheme can choose whether to offer it to their customers. Participating insurers will be able to start offering Build Back Better as soon as the draft regulations come into force. Flood Re will require insurers choosing to participate in the Build Back Better scheme to offer it across all their home insurance offerings, rather than just on insurance policies ceded to Flood Re, to ensure consistency and fairness for all customers. By providing Flood Re with the power to pay claims to fund resilient repair over and above—what has largely been happening at the moment—normal reinstatement, Government and Flood Re aim to drive a cultural shift across the insurance market and positive changes in supply chains, to raise awareness and demand for property flood resilience, and to help capture the evidence on the benefits of property flood resilience to support future changes in the market.
The Government will publish a property flood resilience road map at the end of this year to identify the action that Government and industry need to take to accelerate uptake of property flood resilience measures and to underpin the market successfully. That will ensure that all relevant bodies play their part and that consumers can have assurance about the quality of products and their installation.
Any future regulations proposed to make further changes to the Flood Re scheme would receive parliamentary scrutiny through the affirmative procedure, as required under the Water Act 2014. Flood risk management policy is devolved, but insurance policy, including the operation and application of the Flood Re scheme, is a reserved policy. Any changes to the Flood Re scheme, including those in the draft instrument, take effect across the UK. Government have engaged extensively with the devolved Administrations throughout the development of the changes, and they have given their full support for their implementation.
No impact assessment has been prepared for the draft instrument. That is because it has no significant impact on business, charities or voluntary bodies. Most impacts on business are anticipated to be neutral or positive. There is also no impact on the public sector. On those grounds, I commend the draft regulations to the Committee.
Alex Sobel (Leeds North West) (Lab/Co-op)
It is a pleasure to serve with you in the Chair, Mr Robertson. I thank the Minister for introducing the draft regulations.
In recent years, we have seen a sharp increase in extreme weather events all over the world. In the UK, storms and increased rainfall have destroyed homes and claimed lives. We are now at a point where communities are faced with flooding on a semi-regular basis. For those communities, flooding brings misery and huge inconvenience. It can also be financially devastating, which is why people living in flood-risk areas must have access to good, affordable insurance.
In my constituency, that happened on Boxing Day 2015, when the River Wharfe flooded parts of Otley. Since being elected in 2017, I have had to support flooding victims on the difficulties of getting reinsured due to the increased risks. Flood Re has been useful to my constituents, so I am particularly pleased to be responding to the draft legislation. Independent research shows that the availability of insurance for householders at risk of flooding is improving, so I am pleased that Flood Re has been successful in that respect. I am also glad that the scheme is financially secure—it has met its initial liquidity and capital requirements, and has a high solvency ratio.
For those reasons, I agree that reducing the levy on insurance companies from £180 million to £135 million a year makes sense. The figure needs to be kept under review, as climate risk will mean that insurance risk will vary. I will continue to monitor that and hold the Minister to account in future years if more support is needed for flooding victims.
Her Majesty’s Opposition have some questions, which I would be thankful if the Minister will help to address. Flood Re proposes to reimburse insurers up to £10,000 for the Build Back Better scheme in order to reduce the future risk of the property flooding and/or the cost of repair. That will mean that property owners can pay for repair after a flood, which makes the home more resilient to flood damage than before. I was pleased that the Minister mentioned air brick covers and other such innovations in her introduction.
I am very much in favour of the support, but I am concerned that, under the proposals, insurers are not obligated to participate in the Build Back Better scheme. Does the Minister not agree that it should be compulsory for all Flood Re policies to participate in the scheme, when we consider the increased threat of flooding and subsequent need to make buildings more flood resilient? Has she considered making the measure compulsory and, if so, what are the reasons for her rejection of that?
In addition, I will express concerns that I know have been raised in the past, but that I am not convinced have yet been adequately resolved. The existing proposals protect only homeowners. Will the Minister consider widening access to the scheme to protect those in tenanted and rented properties? Renters are likely to be more vulnerable to the financial impact of flooding and yet, under the proposals, they are the least protected. Renters are also less likely to realise the flood risk of their property and many renters are in precarious employment that might be dependent on equipment which could be destroyed in flooding, leaving them without income. Insurance becomes the difference between them working and not.
I have also been in contact with farmers, who are concerned that their homes are not protected under the scheme. Will the Minister clarify the status of farmhouses, which fall into a grey area between residential and business premises?
The scheme is targeted towards households at high risk of flooding across the UK. If recent years and the extreme weather events that have defined them are anything to go by, however, we know that high risk—risk in general—is broadening its scope, and areas previously deemed to be safe now experience flooding events never seen before. Therefore, how is “high risk” defined by the Environment Agency, and how are areas reassessed in a way that keeps up with the impact of extreme weather events? I want to know whether the Minister has had discussions with the Environment Agency about risk. I am interested to hear what assessments were made about the changes that might be needed.
Finally, I draw attention to the fact that more than 5,000 new homes in flood-risk areas of England were granted planning permission last year, despite the Environment Agency advising against such developments. Does the Minister agree that the Environment Agency should be given power to ensure that homes are not built against its advice? In my view, that is a crucial change to avoid unnecessary future flooding and the devastation that comes with it. I hope that the Minister will address my concerns.
I can see the Minister desperately looking for her papers, so I will talk for a few more seconds to give her time.
Alex Sobel
The Minister is doing very well. I am sure she will give a full response to all my queries. People up and down the country, whether homeowners, renters or farmers, are all keen to get clarification on those points. She shares my concerns about the increased number of flooding events and the impact of climate change on our rivers. We need to be constantly mindful of the risks involved in potential flooding events. If she does not need more time, I will conclude.
The Chair
Richard Thomson (Gordon) (SNP)
It is a pleasure to serve under your chairmanship, Mr Robertson.
Sadly, I can speak with some personal experience of how much of a violation it can feel like when people’s properties are flooded. In many ways, it is worse than a burglary: all the stuff is still there, but it is damaged beyond repair. People have the heartache of throwing it out themselves and seeing everything done to their home to improve it damaged beyond recovery.
The often tortuous process that one has to go through when it comes to making insurance claims—getting the works done, reacquiring the goods that are replaceable and trying to forget about what is not replaceable—is as absolutely nothing compared to the agonies people have gone through in years past, when they were unable to get insured because of the risk that the properties were felt to be in. We therefore very much welcomed the flood reinsurance scheme when it was introduced. It has been a vital intervention in the market to ensure that insurers are able to serve the public in the manner that we would all hope they are able to. Also, the operation has successfully managed to increase the uptake of flood protection measures for those covered under its auspices.
Clearly, the draft regulations are designed to improve the efficiency and effectiveness of the existing scheme, and to create greater opportunities to improve quality so that what goes back in structural repairs to properties is better than that which was damaged and required replacing.
We hope and believe that that will be the effect of the measures. On that basis, the regulations enjoy the support of my party. I look forward to hearing the Minister’s answers to the questions posed by the Labour spokesperson, the hon. Member for Leeds North West.
Jesse Norman (Hereford and South Herefordshire) (Con)
I thank my hon. Friend the Minister for her comments, as well as for the work she has done on this legislation and on the related area of the cleanliness of the River Wye, which is itself a function, in part, of flooding and the sweep of phosphates into the river. I thank her and her Department very much for the work that they have done on that.
In relation to flooding, the Minister may recall that in early 2020 there was some serious flooding in Herefordshire that resulted in the sweeping away of an entire causeway, and the undermining of the road down to Fownhope. For various different reasons, no support—or very little support—was forthcoming from central Government for the restitution of the causeway and that road. They did not fall under the Department for Transport funding for local road restoration, and as Herefordshire is a county of 190,000 people—fewer than even small London boroughs—it was entirely struggling to pay for the costs of those roads. Nor were the costs paid for by the Bellwin funding, which extends only to surface impediments and other disturbances to the use of a road, and is quite narrowly interpreted even for that.
May I ask the Minister to take back to her Department the question of whether there is a gap in the legislation and in the provision, and whether counties such as Herefordshire, which are completely dependent on their roads because they are so rural and have very small populations, should be asked to bear the extremely large costs of such floods? Indeed, they may in some sense require reinsurance, because that is a serious concern. Of course, this greatly affects the question of levelling up, with which the Government are widely and properly concerned.
Daniel Kawczynski
I know that the River Severn flows through your constituency, Mr Robertson. I am the chairman of the caucus of 45 Conservative Members of Parliament through whose constituencies the River Severn flows. We represent 12% of the Conservative parliamentary party. Unfortunately, flooding is now an annual disaster for our constituencies. The sheer damage and economic chaos for places such as Shrewsbury following the annual flooding of the River Severn is wholly unsustainable for our communities.
I am extremely grateful to the Minister for taking the time to visit Shrewsbury last year, when she had the opportunity to meet the River Severn Partnership, a consortium of councils that represent communities across the whole of the River Severn, Britain’s longest river. Let us not forget that we are the communities that live by the River Severn. I am particularly pleased that the Minister has spoken about her interaction with devolved Assemblies and, following my discussions with her earlier this week, I am grateful to her for visiting the source of the River Severn and for initiating dialogue with her counterparts at the Welsh Assembly.
Will the Minister give the assurance that she will continue to work with the River Severn Partnership and with me, in my role as chair of the caucus of 45 Conservative Members of Parliament who have the River Severn flowing through their constituencies? I can tell her unequivocally that this is the single biggest detrimental economic barrier to the development of our constituencies.
My hon. Friend is a very effective Minister, if I may say so. I look forward to her ongoing negotiations with the Treasury and other parts of Government, and with the Welsh Government, to ensure that we find a long-term, holistic solution to managing Britain’s longest river.
Rebecca Pow
I thank Members for all their comments on the statutory instrument. Of course, flooding affects so many of us. I come from Somerset, and we have had to deal with very serious flooding over the years, including just before I arrived in Parliament. It has to be said that the Government, with their funding, have really helped us to address that down in Somerset.
I thank the shadow Minister, the hon. Member for Leeds North West, for his support for the SI. I know that he has some knowledge of flooding in his constituency. He raised some very valid questions. He asked whether the scheme should not be made compulsory for all insurers. In the approach that we are taking, we are trying to encourage a cultural shift in the insurance industry. We have done a huge amount of engagement. Insurance companies are very pro what we have brought forward, and many are already taking the scheme on board; they are either getting it in writing or just about to start offering it anyway once the SI goes through.
We are optimistic that the scheme will be very widely picked up, and that it will have a really positive impact on supply chains, awareness and demand. Once one lot of insurance companies start offering it, we anticipate that the majority will take it up. That is why we are confident that introducing it on a voluntary basis is what we need to achieve what we are hoping to achieve, which is basically more people being more sure of their property’s flood resilience and being able to get hold of the right money to build back better—to put their houses back in a better state than they were.
At the moment, as I said, houses are often just reinstated as they were. It is awful to think that one might flood again, but in some areas people have to be mindful of that. Therefore, putting down tiles or waterproof plasterboard—you can get that now, Mr Robertson—rather than carpets might make full sense, but it might cost more; that is why this extra bit of funding will be really helpful. We are fully optimistic that we have the necessary measures in place. I hope that gives the hon. Member some reassurance.
The hon. Member also asked about landlords and tenants. All types of landlord insurance are classified by the insurance industry as commercial business insurance, since such insurance, including for larger leasehold premises, is often bespoke. However, leasehold properties consisting of three or fewer blocks, where the freeholder him or herself lives in the block, are eligible for Flood Re, and tenants and leaseholders are able to obtain contents insurance supported by Flood Re regardless of the size of the block. A number of insurers also offer solutions to those struggling to access flood insurance, including parametric insurance and a scheme that amends a lease for the remaining lifetime of Flood Re to allow the individual leaseholders in a block to insure their individual flats. Quite a lot of thinking has gone into that, and quite a number of tenants and leaseholders are covered.
Following the 2019 flooding, the Government commissioned an independent review of flood insurance in Doncaster, which the hon. Member might remember. Following that report, we are taking forward action, which includes repeating some research into the availability and affordability of flood insurance, because there was a small group of people, which included some tenants, that still fell out of getting cover. Work is continuing on that.
We have also been working with the insurance industry to set up a new flood insurance directory, to which customers can be signposted by insurers and brokers when they themselves cannot offer flood cover. The directory, which has recently been launched, aims to reduce the number of policies sold with flood exclusions and drive uptake of suitable flood cover. The directory can be found on the British Insurance Brokers’ Association website. I hope that gives some reassurance.
The hon. Member mentioned farming and farmers. What happens to farmers when their land gets flooded has been raised with me many times. Farmers have to work with temporary flooding in many areas—that probably applies to your area around Tewkesbury, Mr Robertson—but there are issues when the water stays longer on the land. A lot of new schemes, particularly the environmental land management scheme, give particular mention to working with farmers to take water in flood-risk areas. It is a changing landscape for farmers, but we are very aware of that particular issue, especially as we are going to get more extreme weather events. Whatever we do about climate change—and we have to do everything we can to tackle it—we still have to adapt, and many of our policies are working towards that.
I thank all hon. Members for their comments. I thank the Scottish shadow Minister, the hon. Member for Gordon, for welcoming the policies. We were very pleased to work with the devolveds on this, because there was all-round support.
My right hon. Friend the Member for Hereford and South Herefordshire is a great advocate for the River Wye. As he knows, I made a visit to look at what is going on there. We are doing so much work now to tackle the issue of pollution in his area, but, as he says, there have also been flooding issues. I will write to him on his point about the road, as it comes under the remit of the Department for Transport and is linked to its road investment strategy.
It is important to address how we tackle the flooding of wider infrastructure. We are at pains to work even more closely on flooding with all other Departments. When we allocate our flood funding money—it is a huge budget worth £5.2 billion of investment—we can get an awful lot of wider spin-offs if we work with other Departments. There are benefits if we tackle the issue effectively. There are huge benefits for the economy from sorting out the flood risk for businesses.
Jesse Norman
I perfectly understand that the Minister will write to me, including in relation to DFT, and I am of course happy with that. This bears on DEFRA because there is a hole in the Bellwin approach that has the effect of not providing funding to address the catastrophic destruction of roads, and that cannot be remedied by small authorities that simply do not have the funds to address such large-scale devastation. That is the problem. I would be grateful if the Minister could look at that in her response.
Rebecca Pow
The Bellwin scheme comes under the Department for Levelling Up, Housing and Communities. Although I am the floods Minister, there is only one significant fund that comes under DEFRA, and that is for farmland. That is why we have to work with other Departments. The Bellwin fund is very much for local authorities to cover the urgent and drastic clean-up required after a flood. I will write to my right hon. Friend on the issue of flooding on the roads, but I take his point.
I thank my hon. Friend the Member for Shrewsbury and Atcham, who talks to me regularly and is a massive advocate for his constituency. I am sorry that it has had flooding recently. He knows that there are schemes under way, and we are going to have a meeting about some additional ones. I welcome his work chairing the partnership of 45 MPs who represent constituencies up and down our enormous and important River Severn. He will know that we have recently given funding to do some much wider, innovative and creative thinking about how to tackle flooding right up and down the whole catchment. Some pilots have already started. A lot of that involves nature-based solutions, as well as hard flood defences and so on. It also involves speaking with our devolved colleagues in Wales. I am really working hard on that, because the river does of course have two sides—in England and in Wales.
Daniel Kawczynski
My hon. Friend is doing a very good job. I am grateful to her for visiting Shropshire and the River Severn. Bearing in mind that we are seeing an increased frequency in flooding and the devastation it is causing to our communities, does she agree that £5.3 billion of extra funding for DEFRA is not sufficient and that we need to lobby the Treasury for even more money for flood defences?
Rebecca Pow
I would say that my hon. Friend is being a bit cheeky, actually. It is £5.2 billion—an extraordinary amount of investment in flood defences and coastal erosion, covering up to 2,000 defences, and an awful lot of other schemes and projects. It is not the only money, either. That is why I say it is so important to work with other Departments to attract levelling-up funds and so on.
I will give an example. I recently launched flood defences in Hull; £42 million was spent on eight different schemes along the Humber estuary. Because that has made people feel more secure and businesses now know they are not at risk of flooding, they are flooding into Hull and setting up. One of the big manufacturers of safety equipment that businesses use, including covid safety equipment, moved there. It was encouraged to go because it knew that it could now get insurance and that it would be safe. There are so many things in addition to that money, but we have to make sure that it is well spent. Of course, the money has to come from somewhere, and the Government have to be very mindful of how we spend our funds.
I hope that I have covered all the questions. This SI will improve the efficiency and effectiveness of the Flood Re scheme and help to build a nation more resilient to future flooding, which is what we need, and that is better able to cope with the changing climate. Once again, I thank everyone for their contributions, and I thank you, Mr Robertson.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Flood Reinsurance (Amendment) Regulations 2022.
Draft Combined Authorities (Borrowing) Regulations 2022
(2 years, 2 months ago)
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The Minister for Housing (Stuart Andrew)
I beg to move,
That the Committee has considered the draft Combined Authorities (Borrowing) Regulations 2022.
It is a pleasure to serve under your chairmanship, Mr Pritchard.
The draft regulations, which were laid before the House on 31 January, will implement a commitment made by the then Chancellor of the Exchequer, the right hon. Philip Hammond, back in 2016 to extend the borrowing powers of mayoral combined authorities that have agreed debt caps with Her Majesty’s Treasury. That is reflected in the devolution deals agreed with the Government for North of Tyne, South Yorkshire and West Yorkshire. The extension is another important step towards empowering mayoral combined authorities to invest in the right infrastructure while giving local leaders the tools needed to stimulate local economic growth, increase productivity and seize the levelling-up opportunities available to their areas.
In the levelling-up White Paper, we set out plans to transform the fortunes of places across the UK by spreading growth and prosperity in areas that feel Westminster has forgotten about them. The paper set out a series of long-term missions to put us on a trajectory towards that goal, including one to give every part of England a devolution deal by 2030. Proper devolution is a central part of our levelling-up agenda. We want to give areas the powers that they need, along with a simplified long-term funding settlement. We are committed not only to extending devolution, but to deepening it.
The draft regulations will live up to that ambition, deepening devolution in North of Tyne, South Yorkshire and West Yorkshire in line with commitments that we have already given, by providing new and deeper powers to local leaders so that they can act more flexibly and innovatively to respond to local need, and be held to account by local citizens. Put simply, the new powers will allow those three combined authorities to borrow not only for their transport functions, but for any of the other functions conferred on them as a result of their bespoke devolution deals. Those areas will be able to make the most of new opportunities by borrowing for their investment programmes, delivering improved public services and greater prosperity for their areas.
At the moment, the primary legislation in place allows combined authorities only to borrow for transport or where the Mayor is also the police and crime commissioner. The primary legislation also provides that the Secretary of State may, by regulations, confer the ability to borrow for additional functions. The draft regulations provide specifically that the three named combined authorities may borrow for all their functions. Each of the three mayoral combined authorities, and each of their constituent authorities—15 in total—has given consent to the regulations.
If Parliament approves the draft regulations and they are made, the North of Tyne, South Yorkshire and West Yorkshire Mayoral Combined Authorities will be able to borrow for all their functions. Through regulations made four years ago, that is already the case for the six other mayoral combined authorities. It is also the position for the generality of local authorities, which are empowered to borrow for all their functions.
In the same way as a local authority, combined authorities are subject to the requirements for borrowing provided under the Local Government Act 2003. The prudential borrowing regime requires that an authority can borrow lawfully only if it can demonstrate that servicing and repayments of debt are affordable. As such, that gives the necessary assurance that the proposed borrowing powers will be used appropriately. In the case of combined authorities, that ability to borrow is also subject to a debt cap agreed with the Treasury. Each agreed cap specifies the cumulative ceiling for the mayoral combined authority’s debt for 2021-22. The caps for future years are currently being agreed with all nine mayoral combined authorities.
The draft regulations will fulfil our existing promise to deepen the devolution deals of those three combined authorities and to extend their borrowing powers to bring them in line with the other six mayoral combined authorities. With that extension, they will be able to borrow to make the investments in infrastructure that are essential to an area’s growth. We believe firmly that that will also lay the groundwork for further levelling up in those areas. I commend the regulations to the Committee.
Mike Amesbury (Weaver Vale) (Lab)
It is always a pleasure to serve under your chairmanship, Mr Pritchard.
I thank the Minister for his thorough and detailed explanation of this draft statutory instrument. I am sure that hon. Members in Committee will be pleased to know that we will not oppose it. It is something that each combined authority has been calling for; I spoke with Mayor Tracy Brabin, for example, and her office has been calling for it for some considerable time. As the Minister outlined correctly, the commitment was made some time ago by a former Chancellor. The flexibility to regenerate and invest in a broader range of opportunities—whether housing, transport or other infrastructure that we would all like to see developed in our communities—is most welcome.
I spoke briefly to the Minister earlier, before the Committee sat, and told him that I would ask a couple of questions. I do not expect an immediate answer; a reply in writing would be satisfactory and helpful. Clearly, some local authorities have made investments that they thought were sound, but turned out to be risky. Surrey County Council, for example, made a number of investments in shopping centres right across the country, but they resulted in a £50 million bill, or deficit, for its locality. It is not the only local authority to have done that, up and down the country.
How will the Department, working with combined authorities, ensure that the check and balance is there as devolution expands rapidly—I hope—right across England? Is there the scrutiny to ensure that the taxpayer gets maximum bang for their buck, so to speak, and the assurance that strong checks and balances are in place and investments are sound? As I say, I do not expect an immediate answer, but I would like some correspondence from the Minister and his Department.
Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)
It is a pleasure to speak under your chairmanship, Mr Pritchard. I was not expecting to speak in this debate—it is the first time that I have spoken in a Delegated Legislation Committee in my time in the House—but the shadow spokesman, the hon. Member for Weaver Vale, made a very valid point about what checks and balances are in place for public bodies that are borrowing, or in effect going into debt, to invest.
The most recent example of that going very badly wrong was Croydon Council, with its borrowing to invest in the Westgate shopping centre. I believe that the council had, in effect, to declare itself bankrupt and insolvent because of that error. I will be grateful for clarification of what monitoring and checks are being put in place by the Government to ensure that local authorities are monitored properly in their use of the money that they are borrowing.
I have a second question and point of clarification. In such situations, under the 2003 Act referred to in the draft regulations some local authorities have set up companies or other arm’s length organisations to manage the money that they borrow. Auditing transparency is much more challenging in such circumstances. I would be grateful to understand how the Government intend to ensure proper transparency of accounts, as that lack of transparency led to the problems in Croydon. Will the Minister outline the answers to my questions in written correspondence, if he is unable to do so today?
Mr Richard Bacon (South Norfolk) (Con)
It is a great pleasure to serve under your chairmanship, Mr Pritchard.
Like my hon. Friend the Member for Central Suffolk and North Ipswich, who is my parliamentary neighbour, I was struck by the comments of the shadow Minister, the hon. Member for Weaver Vale. It is now 50 years since Tony Crosland, a Labour Environment Secretary—as it was in those days, but the position covered local government—used the famous words, “the party is over” in relation to local government borrowing.
The regulations provide for an extension of borrowing powers by local government. As has been said, a variety of councils from across the country undertook investments that they thought were sound. In my constituency, a neighbouring council bought a golf club, which it was pleased by and thought was excellent; I was told that it was going to produce a 7.5% return. I may have commented in the local media at the time that councils owning golf clubs was not necessarily what council tax payers expected. I do not think that anybody assumed that a Government of the future would at some point make the playing of golf a criminal act, but that is of course exactly what happened.
Colleagues’ question about what kind of scrutiny is in place is a first order question, and I hope that the Minister will take it to heart and undertake to write to Committee members with more detail than we have heard today about the scrutiny measures that will be in place.
Section 1 of the Localism Act 2011 is entitled,
“Local authority’s general power of competence”,
and subsection (1) states:
“A local authority has power to do anything that individuals generally may do.”
Section 1 (4) reads:
“Where subsection (1) confers power on the authority to do something, it confers power (subject to sections 2 to 4) to do it in any way whatever, including…power to do it anywhere in the United Kingdom or elsewhere…power to do it for a commercial purpose or otherwise for a charge, or without charge, and…power to do it for, or otherwise than for, the benefit of the authority, its area or persons resident or present in its area.”
There are therefore already very wide powers.
I was particularly interested that the Minister said that the extra powers will apply not only to the existing combined authority, but to the bespoke deals available locally. Will he confirm or refute—now or later in writing—whether the regulations go beyond the bespoke powers of the combined authority and extend to the broad powers in section 1 of the Localism Act 2011 to which I referred? Although we all want, at least on paper and in theory, for local government to be accountable to local citizens, we have seen this process go wrong repeatedly in the past, and the framework—the failure regime—that the Government put in place when the extra powers become law will be very important.
Stuart Andrew
I thank members of the Committee for their contributions. They are right to raise those questions. We have seen examples where things have gone terribly wrong and, of course, it is people’s money that is put at risk. Hon. Members have asked me specific questions. With respect, I will write to them with more detail and will now outline how the prudential borrowing process works.
Combined authorities are subject to the regime provided for in the 2003 Act, just as local authorities are. The underlying principle of the regime is that authorities can raise finance for capital expenditure when they can afford to service the debt without Government support. The key feature of prudential borrowing is that authorities are under a broad duty to determine and keep under review the amount that they can afford to borrow.
Regulations further specify that authorities must have regard to the practical rules for deciding whether borrowing is affordable, as laid down by the “Prudential Code for Capital Finance in Local Authorities” issued by the Chartered Institute of Public Finance and Accountancy. Each authority sets its own prudential limit in accordance with the rules, subject to the scrutiny of external auditors. Authorities are required to balance their revenue budgets and not finance long-term revenue expenditure by borrowing. The Government are aware that some local authorities have taken excessive risk with taxpayers’ funds by investing primarily for profit, and pursuing novel and risky investments.
On 28 July 2021, the Government published the policy paper “Local authority capital finance framework: planned improvements”, which set out our plans to strengthen the capital system to prevent excessive risk.
Grahame Morris (Easington) (Lab)
I am listening carefully to the Minister’s explanation and his answers to various Members. I appreciate that the regulations are limited in scope to areas in England that have an elected Mayor, but will he elucidate in relation to investments? The hon. Member for South Norfolk mentioned a golf course, but in my experience most local authorities have been selling off assets. When I was a member of the local authority, we had a huge caravan park, which we were compelled to sell off. I am aware that Mayor Ben Houchen bought an airport that is losing considerable sums of money. The Minister is saying that it is down to the elected Mayor and the combined authority to determine what is prudential and what is in the public interest, so would the measures cover such cases?
Stuart Andrew
I will speak to the Under-Secretary of State for Levelling Up, Housing and Communities, my hon. Friend the Member for Harborough (Neil O’Brien) —the Minister responsible for this area—to highlight the point made by the hon. Member for Easington. My understanding is that such matters are subject to external auditors, but I will happily give him a more detailed answer in writing.
Question put and agreed to.