Riot (Damages) Act

David Lammy Excerpts

Monday 14th May 2012 Commons Chamber

[Mr David Lammy (Tottenham) (Lab)]

I am very grateful to have the opportunity today to debate this issue, which is very important to my constituents and, I suspect, to many others in London. All of us in this House tonight, and others beyond, have insurance. We value our homes, our possessions and all the things we have worked hard to accumulate, and it is natural that we seek to protect them. Insurance exists to cover unforeseen events. Some events are more unforeseen than others. Although burglaries, house fires and floods are unfortunate in the extreme, they are all possibilities that insurance is intended to cover and they are, to some extent, foreseeable.

Living in a stable democracy such as ours, it is often easy to take the rule of law for granted. Last August, we saw that rule break down, with rioters destroying the homes and businesses of their neighbours, robbing them of not only their property, but their livelihood. In that context, it is the role of the police to maintain order, so it is to the police that we look when that has failed and we have paid the price for failure. Were the police and the state not to foot the bill, the costs would be passed to individuals and traders. That would result in rising premiums and entire communities losing out. It was not the fault of those who saw the riots, so it is right that the state helps to bring them back to a position where they can get on with their lives.

This evening, I wish to discuss four issues, the first of which is the overly bureaucratic and unprofessional manner in which the Riot (Damages) Act 1886 has been administered. The second is the hypocrisy of Ministers, the Mayor of London and even the Prime Minister himself in promising to support Tottenham’s riot damages—

[Mr Speaker]

Order. May I say to the right hon. Gentleman that he should not refer to identified Ministers using the word “hypocrisy”? He is a versatile individual and he has an extensive vocabulary. I am sure that he can find another way to make his point, and I trust that he will now do so.

[Mr Lammy]

I am grateful for that, Mr Speaker. May I therefore refer to the extreme inconsistency between the statements made to this House and the promises made to victims shortly after the riots by those I referred to, and what we actually see taking place?

The third issue I wish to discuss is that, under the coalition that champions the big society, philanthropic donations are now counted against riot compensation claims. Finally, I wish to draw attention to the differential treatment afforded to the Metropolitan police compared with that offered to police authorities in Merseyside, Manchester and Salford.

Although this debate draws on the experiences of riot victims in my constituency, I know for a fact that Members in other riot areas have been affected, and many are in the House as I speak. This is not the first time that compensation for riot victims has been discussed in the Commons. Some nine months ago, the Prime Minister made two promises, neither of which he has honoured. To the victims of the riots he proclaimed,

“we will help you repair the damage, get your businesses back up and running and support your communities.”

In the same debate, the Prime Minister promised that the Government would

“ensure the police have the funds they need to meet the cost of any legitimate claims”.—[Official Report, 11 August 2011; Vol. 531, c. 1053.]

Seven months later, the Leader of the Opposition pressed the Prime Minister, demanding that he provide proper, clear information about the processing of claims. I, for one, have heard nothing about that. The Prime Minister promised to put the process details in the House of Commons Library after that discussion with the Leader of the Opposition. I therefore ask the Minister when the Prime Minister intends to provide the House of Commons Library with that information.

Between 6 and 10 August 2011, more than 5,000 crimes were committed including five fatalities, 1,860 incidents of arson and criminal damage and 1,649 burglaries, 141 incidents of disorder and 366 incidents of violence against the person. In London alone, more than 171 residential and 100 commercial buildings were affected by fire at a cost of millions. The disturbances last August saw thousands of shops damaged and there were more than 3,800 claims under the Riot (Damages) Act in London alone, with liabilities estimated to be between £200 million and £300 million.

Some shop owners had insurance, of course, but others did not. In that regard the Act represents an important means of financial support. Sevill Hassan, who owns a hair salon on Tottenham High road, was away on holiday when the riots broke out in August. She returned to find her shop front damaged and equipment stolen and looted. She was between insurers at the time of the riots and had not yet sent off her cheque to her new insurer. Sevill did manage eventually to secure a £3,000 payment under the Act, but 18 months later she is still struggling to keep her business afloat.

Despite being labelled by many as arcane and out of date, the Riot (Damages) Act can and in many cases has helped victims of riots, particularly individuals and small businesses without a property insurance policy thanks to a clause added to the Act following the Brixton and Toxteth riots of 1981. Indeed, the Act was used as recently as 2001, following the Bradford riots, and so although the original Act might date back to 1886, there is no excuse for the Home Office’s failure to administer it in a clear and efficient way.

When one speaks to individuals and businesses who have submitted claims through the Act, its limitations become apparent. A number of the limitations relate to the manner in which it is administered and the majority could have been avoided or minimised had the insurance industry processed its own claims. Why have the Home Office and the Metropolitan police been unable to process their claims as successfully? Perhaps that is why, when representatives of the insurance industry went to the Home Office on 18 August, after the riots, they offered to do the job for the Met. Why was that offer from the Association of British Insurers and the industry rejected out of hand? The industry processes claims every day of the week, but the Department said, “Oh no, we can do it.” Nine months later, that has not happened.

Loss adjusters were appointed by the Home Office to manage claims. On making their claims, a number of individuals were treated insensitively by insurers and loss adjusters, many of whom failed to appreciate the devastating impact of the damage caused during the riots. Victims of the riots tell me that they were asked to provide receipts, and ask how they can do so when their business has burnt to the ground. That was the insensitivity shown to them. I have heard from traders in Tottenham who claim to have been treated like criminals, rather than victims of crime.

People with insurance were able to claim directly through their insurers, but in a constituency such as mine many people found themselves having to submit through the Act—if they were underinsured, for example. That is why this is so important. The Home Office did well to extend the period in which to make a claim from 30 to 42 days, following lobbying from the ABI. However, it took a long time to update the claim form from the 1800s. Many constituents were unable to understand the archaic language and the requirements, or did not know whether to use the form at all. As of 9 May, the Metropolitan police had received a total of 3,427 claims. Just over a quarter of those claims—912 of them—have been settled to date, and a total of just over £6 million has been paid out to victims. That works out at an average of just £7,000 per claim. There are 707 ongoing claims. I can only assume that the remaining 1,800 claims —52% of claims received—were rejected. I would be interested to know whether the Minister can reconcile the figures and say what has happened to the claims that have not been dealt with.

[Lilian Greenwood (Nottingham South) (Lab)]

My right hon. Friend is making a powerful speech on behalf of his constituents. Does he share my concern that some people, including my constituents Sue Murphy and Peter Turnbull, whose car was smashed up by the group who attacked Nottingham’s Canning Circus police station, are being offered nothing more than warm words by the Government, because vehicles are not covered by the Act? Should the Government not have done more?

[Mr Lammy]

Yes, and my hon. Friend will recall the burned-out cars on Tottenham’s High road. Many of my constituents have raised the same point. That is why we need an updated Act. I hope that the Government will not recoil from having an Act at all, because it is important that in such circumstances, victims are compensated by the state.

My hon. Friend will also recall that on 27 February, Boris Johnson said:

“All uninsured claims submitted under the Riot Damages Act have been processed through a bureau set up by the Home Office.”

He said that Met

“officers have been instructed to treat these applications as a matter of priority and they guarantee that once a completed and documented claim is received, an offer (Discharge Form) will be sent within five working days.”

For more than 707 people in London, that has not happened, so why was that claim made in February? Bad bureaucracy and poor administration is more than inefficiency; it prevents business owners, many of whom have dedicated their working lives to running a business, from picking up the pieces and moving on. For many riot victims—I stress that they are victims, not simply clients—an unprocessed claim form means a loss of income, sleepless nights and the brutal reality of losing a business or shutting up shop.

The Minister knows my constituency well. I have had constituents who have ended up having heart attacks as a result of their business going under with no compensation. That is how serious this is for small businesses, which are finding things hard because of the double-dip recession.

In response to questions on 13 March, the Home Office Minister, Lord Henley, told peers that 90% of businesses and individuals who had insurance had “received full or part” compensation. By the same date, just over half of uninsured victims had received money under the Riot (Damages) Act. Why the discrepancy between those who had insurance and had their claims processed by private insurers on the one hand, and those who were reliant on the state on the other? Their experience was completely different. It is often the most deprived, and those with the most marginal businesses, who are still waiting to receive money. That includes, of course, home owners who are relying on the Act. Given that both insured and uninsured businesses were victims, how does the Home Office justify the discrepancy in their treatment? If private insurers were able to process claims more efficiently, why did the Home Office decline the offer from the ABI?

Does the Prime Minister agree that nearly eight months after the riots, it is unacceptable that only half of the uninsured claims in London have been paid out? Nine months on, there is a significant lack of information in the public domain regarding processing and payment of the claims. Unfortunately, no statistics on claims made in Tottenham have been released. Many aspects of the Act are still shrouded in mystery. There is a significant grey area surrounding the relationship between philanthropic donations and compensation received under the Act. According to the Act, all philanthropic donations should be deducted from the eventual compensation settlement.

I want to pay tribute to the work of people such as Sir Bill Castell and the Prince of Wales, both of whom rang me up within hours of the riots, offering their help. Sir Bill set up a big high street fund, working with big business to help small business, only to find that that money has now been offset against the Riot (Damages) Act. Either we believe in the big society or we do not. What is the answer? What kind of society are we living in, when many victims of the riots who have had barely a few hundred pounds from that grant are still waiting for payment to get their businesses back on track?

People say to me that when we see a tsunami or an earthquake in a developing country, we are able to act and get the funds there. Why is it any different in a major democracy and a major developed country such as ours? It must be totally unacceptable that nine months later people are expected to wait. Of course they are not waiting. They are seeing their businesses destroyed and the high road lose its vibrancy. They are feeling abandoned. I remind the Minister that the cry that we heard after the riots right across the country was, “Where are the police? Where are they?” Now we are hearing a similar cry, and I hope the media will remain true to those people and continue to press their case. They want to know where the state is, or have we rolled the state back so far that for true victims it no longer exists?

Can the Minister assure me that measures will be taken to ensure that individuals and organisations are not put off making philanthropic donations to businesses affected by the riots, given the situation that we are in? Can the Prime Minister assure the House that information on payments made under the Riot (Damages) Act, as he said to the Leader of the Opposition, will be put in the House of Commons Library or, as he said, that he will return to the House to make a statement as swiftly as possible? I want to allow the Minister ample time to come back to me on these points, but I end by reminding her of the case of Niche Mufwankolo, who is the landlord of the Pride of Tottenham pub.

On the night of the riots, Niche fled through an upstairs window, while downstairs rioters smashed windows, looted televisions, broke and stole his sound system and set fire to furniture. He escaped from the roof of his pub at knifepoint, and the Metropolitan Police Authority responded to him by offering just £22,000 of compensation, some £70,000 less than the claim that Niche had submitted. It should be noted that VAT was excluded from claims relating to building damage, loss and damage of contents and loss of stock, just one of the reasons given for Niche’s payout being dramatically less than anticipated. To add insult to injury, the Met lost the original invoices submitted by Niche, preventing him from making further claims.

There is a huge disincentive to appeal against any offer of compensation, as people have been waiting for months to get back on their feet, and small businesses do not have the time to be caught up in such bureaucracy.

Many of us will have had different views about those involved in the riots, but I hope that all of us support the victims. That is why I have brought the debate to the House this evening. I look forward to hearing what the Minister has to say.