High Speed Rail (Preparation) Bill
Roger Godsiff Excerpts(10 years, 6 months ago)
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Mrs Ellman
I agree with my hon. Friend’s general point. It is important to assess individual aspects of the project, but we also need to look at the concept and what it is trying to achieve. It is about expanding essential infrastructure in this country. If we do not have vision and if we are not prepared to look ahead at the nation’s needs, we will lack the essential infrastructure needed for economic prosperity. It is essential, too, to look at the detail, which is why we called for a review of the cost-benefit ratio, for a review of the environmental and economic factors and for up-to-date information on the projections of capacity, for freight as well as passengers. The concept must not be lost in the vital necessity to look at the individual components and make an assessment of them.
Mr Roger Godsiff (Birmingham, Hall Green) (Lab)
My hon. Friend is surely aware of the National Audit Office report on this subject, which referred to
“fragile numbers, out-of-date data and assumptions that do not reflect real life.”
What does she say to that?
Mrs Ellman
The strategic review produced this week provides the up-to-date information. When the previous reports, including the NAO report, were produced, that information was not available. It is necessary to examine the new information that has come forward and look at it very carefully indeed—and that is the up-to-date information. As I say, previous reports did not look at it.
Mary Creagh
Again, that is for Sir David Higgins to work out with Ministers, but undoubtedly that could keep costs down and allow further benefits to be realised.
Mr Godsiff
Is there a figure above which the Opposition Front-Bench team would not support this project, if the incompetence to which she refers is played out by the Government? Is there a figure at which the Labour party would pull out?
Mary Creagh
I do not know whether my hon. Friend was here when this was discussed, but we tabled an amendment on Report that was agreed by the Government and which makes it clear that any contingency spend must be reported to the House annually.
We will continue to hold up the weaknesses of the management of HS2 until every one of them has been addressed. We want to see swift progress with the hybrid Bill and we shall scrutinise the latest strategic case, published this week, to satisfy ourselves that it is based on sound assumptions. The Government must drive down those contingency costs and have a clear strategy for doing so. This fiscally disciplined scrutiny is what one would expect from any credible official Opposition seeing a Government desperately mismanaging a project. We will go ahead with the project, but the Government must bring down the costs, and the benefits to the nation must be clear. We say: get a grip on the project, get control of the budget and get it back on track.
The increase in rail usage during our time in government was a record to be proud of, but we now face serious challenges. We understand that current and future capacity constraints on the existing rail network place a brake on regional and city growth. We know that demand for rail travel continues to grow, despite the tough economic times, and our support for a north-south line rests on tackling that capacity problem and supporting 21st century transport infrastructure. This week’s strategic case shows the intense pressure our major mainline stations are under, and not just in the south. In four years, there will be 200 people for every 100 train seats arriving into Birmingham New Street at 5 o’clock. Rail freight is growing at 3% a year, and HS2 would free up space for more freight trains on the east coast, west coast and midland main lines, and take those lorries off our roads.
Mr Godsiff
I spoke and voted against the Bill on Second Reading, and I regret to say that nothing I have heard subsequently has convinced me that I should not vote against it again today. After Second Reading, the argument put forward by the Government began to unravel and people came out stating different positions from those that they had taken before.
First, the Department for Transport upped the figures to £42 billion. Then a previous Chancellor of the Exchequer said that the cost could go to £80 billion and he was withdrawing his support. Then Lord Mandelson said that he attended the Cabinet meeting—presumably the same one as my right hon. Friend the Member for Blackburn (Mr Straw) attended—where the project was dreamed up as a big idea on the back of an envelope without proper analysis or costings. You pays your money and you takes your choice as to what you want to believe, but I do not think that is the way we should undertake such a project.
There are two points that I wish to make. First, the Government say, not unreasonably, that to go ahead with such a big infrastructure project, they need the support of the main Opposition party. That is perfectly reasonable, but I have been there before, as have many Members in the House. I remember when Michael Heseltine was making preparations for the millennium. He went to the Labour party and said, “Look, I can’t build a millennium dome unless you commit yourselves to it.” We committed ourselves to it, and what happened? Well, there was a good party for the great and the good on new year’s eve, then attendances at the dome dwindled, we could not give it away, and eventually we ended up with £600 million of taxpayers’ money being totally wasted because it had to be given away to AEG for nothing. That is what happens when we go in for a vanity project without proper costings.
Secondly, if this is a such a great bargain for the taxpayer and for this country, why is it not being financed by private capital or foreign sovereign wealth funds? The Government are no great lover of public enterprise. Indeed, they are doing their best to pass the very successful franchise on the east coast line back into private ownership. That is their position, fine, but why is private capital not coming into this project? Why are foreign sovereign wealth funds not coming in? The Government are quite happy to have a new generation of nuclear reactors built by a state-owned Chinese company that is answerable to the Chinese politburo, yet this project needs to be paid for with public money. I suspect the reason is quite simple: private capital will not touch it with a bargepole, because those involved know that it cannot be done within the figures that have been talked about. It will go massively over budget and they are not going to pick up the bill.
I asked my hon. Friend the Member for Nottingham South (Lilian Greenwood) whether there was a pull-out figure for this project. She declined to give me a figure, and I understand that, but if there is no figure to all intents and purposes we are signing a blank cheque. If we go along with the Government and costs escalate—she made a very good point about degrees of incompetence—what will the pull-out figure be? What will happen if we get half the line built and all of a sudden the figure shoots up to nearly £100 billion? What will we do then? Just continue?
I have a great deal of time for the Secretary of State and in many ways he is in a hole. As an ex-miner, however, he ought to know perfectly well that when someone is in a hole, they should stop digging. My strong advice to him is that he should stop digging. He does not want to end up with a white elephant.
High Speed Rail (Preparation) Bill
Roger Godsiff Excerpts(10 years, 10 months ago)
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Mr Roger Godsiff (Birmingham, Hall Green) (Lab)
Two acts of monumental folly have been imposed on the railway industry over the past 50 years. The first, back in 1963, was the Beeching report, which led to the butchering of lines linking communities across the UK. Indeed, one consequence of Beeching is highly relevant to today’s debate, because one of the lines he closed was the Great Central line, which ran from London to Sheffield and Manchester. Were it still in operation, I suggest that we would be debating whether to spend money upgrading it, rather than committing £17 billion, rising to £32 billion, on High Speed 2, for which the infrastructure work will not even begin until 2017.
The second act of monumental folly, of course, was the decision in the 1990s to privatise the railways, something that even Mrs Thatcher steered clear of. She had the good sense to realise that it is not possible to privatise a railway system and divorce the operating companies from the infrastructure. As we all know, privatisation has brought no benefit whatsoever for the consumer. The subsidies now paid to train operating companies are double what they were pro rata when British Rail ceased to exist. The Secretary of State was a little reluctant to answer when asked what the subsidy is. Well, I will help him out: £2.6 billion a year is spent subsidising a railway system that is not fit for purpose.
I would have hoped that the Secretary of State and his colleagues would not bring to the Chamber today something that I believe will be yet another act of folly imposed on the railway industry, particularly in view of all the information that has come out over the past two years as the economic case for HS2 has unravelled. Regrettably, that appears not to be the case.
Reference has already been made to the National Audit Office report, but the comments made in it should be repeated again and again, not least the fact that it estimates that there is already a £3.3 billion funding shortfall, a figure that has just been glossed over as far as London is concerned, as my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson) said. Indeed, the Chair of the Public Accounts Committee has said that the Government’s business case is “farcical” and
“clearly not up to scratch”.
Furthermore, she said that some of the Department’s assumptions were “ludicrous”. I am talking about the National Audit Office and the Chair of the Public Accounts Committee, yet we have been told again and again today that the figures do stack up.
Mr Sheerman
Has my hon. Friend looked at the really interesting French research showing the deleterious effects on the provincial cities of France as the French rapid trains were introduced? It drove those cities into penury.
Mr Godsiff
I have. As my hon. Friend said earlier, there is a report that makes just that point—that such projects do not spread wealth, but quite the contrary.
David Mowat
The hon. Gentleman makes the point, as I understand it, that infrastructure spending does not spread wealth out. In that case, would he like to make the north really prosperous by closing the M1 and the M6?
Mr Godsiff
We are where we are. I do not wish to have an argument about whether the building of the M1 and M6 was folly. What is folly is the privatised section of the M6, which is uneconomic and will soon go bust. It was supported by the Conservatives—“Let’s bring private capital into our motorways”. It is part of the motorway that is never used and will soon either go bust or have to come to the Secretary of State and ask for a handout.
David Mowat
The hon. Gentleman is generous in giving way a third time. I make the point again: the logic of his argument is that the north would be richer if the M1, the M6 and perhaps the existing west coast main line were all closed. That is ridiculous.
Mr Godsiff
I hear what the hon. Gentleman says, but I do not understand the point that he is trying to make.
As I said, we need to look at the economic case. The National Audit Office report and other reports have said that the project is already spiralling out of control. Already, figures that we were told about a year or so ago just do not stack up and people who have a vested interest in pushing the project ahead seem to be plucking figures out of the sky to suit whatever argument they are making. At the end of the day, the British taxpayer will have to pick up the tab if it goes wrong.
At this time of austerity and cutbacks across a range of services, the idea of reducing the time that business men take to travel from Birmingham or Manchester to London by 30 minutes and one hour respectively is absolutely farcical. It seems completely to disregard the fact that business men tend to work on trains nowadays. They use computers and mobile phones. Not one single, solitary business man in Birmingham has said to me, “Unless the project goes ahead and I can travel from Birmingham to London 30 minutes quicker, my business is going to suffer and be in danger.”
Mark Garnier (Wyre Forest) (Con)
I will come straight back to the hon. Gentleman on that point. I have met a lot of business people in Birmingham who are arguing strongly for HS2. A lot of the hon. Gentleman’s constituents are definitely asking for it.
Mr Godsiff
I say again that not one business man has come to me to make the argument.
The project is absolutely desperate. Secretaries of State always like to leave a legacy, and I understand that. However, I believe that High Speed 2 will not be a legacy. It is a vanity project, and if it goes ahead it could turn into a white elephant.
High Speed 2
Roger Godsiff Excerpts(12 years, 6 months ago)
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Mr Roger Godsiff (Birmingham, Hall Green) (Lab)
Many people are using public transport more these days, particularly the railways, despite the extortionate fares that train operating companies extract from customers for the cheap but not very cheerful service they usually get, particularly on commuter lines. I very much welcome the increased use of public transport, because it reduces carbon emissions and is generally better for the environment.
Two acts of monumental folly have affected the railway industry in the past 50 years. The first was the decision in the early 1960s by the Conservative Government of the day to let Dr Beeching butcher Britain’s network of branch lines, which had linked communities across the country. The second was the decision by another Conservative Government to privatise the railways in the early ’90s, a decision that even the arch-privatiser, Mrs Thatcher, had the good sense not to pursue. Of course, this has meant that the taxpayer has been paying vastly more in subsidy to train operating companies and to the network than was ever paid pro rata to British Rail. I hope that the coalition and the Minister will not, over this decision, make it three monumental follies in a row.
The coalition proposes that we spend £32 billion by 2026 on a new rail project from London to Birmingham, which then goes on to Leeds and Manchester by 2032, allegedly saving 30 minutes’ travelling time from Birmingham and 50 minutes from Manchester. The fact that business people invariably travel first class and can use their computers and communications networks while travelling, while others will remain in Birmingham, Leeds and Manchester and hold meetings using video conferencing facilities, is dismissed by the vested interest groups, which see a massive tranche of public money that they would like to access.
At a time when ordinary people are facing massive reductions in their living standards, living under threat of losing their jobs and watching their community services such as libraries, Sure Start centres and centres for elderly people being axed, we are prepared to commit £17 billion, the estimated cost of the line from London to Birmingham, in order to get business people from Birmingham to London 30 minutes sooner—always assuming that there are no high-speed leaves on the line and the high-speed signalling equipment actually works.
Mr Godsiff
Time is limited, so my hon. Friend must forgive me.
No wonder an online survey by the Birmingham Post showed that 75% of respondents were against the project.
What other inflated claims are made for the project? It is said that it will help to diminish regional inequalities and promote growth, but there is no evidence of that. If we look at what has happened in Japan, Spain and France, we find that the high-speed connections there have benefited the hub much more than the outer communities.
What about the effect of the project on towns and cities that High Speed 2 will bypass? The deputy leader of Coventry city council says that the plans for High Speed 2 send a clear message that
“Coventry is not a place to stop.”
Bearing in mind what my hon. Friend the Member for Coventry North West (Mr Robinson) said about Birmingham, I suggest that that might not be a bad idea.
Where high-speed trains do work is in countries with large land mass, but in other, smaller countries they take resources from humbler but more needed schemes, such as the upgrading of existing networks, signalling and infrastructure. Unfortunately, however, we all know as politicians that unveiling a new signal box tends to appeal less than inaugurating a futuristic new service. The project’s other exaggerated claims have already been dealt with.
Hugh Bayley
Does my hon. Friend realise that the project is not a zero-sum game? As in any business, if one invests in a new product, one gets new customers and generates economic growth. We need investment in the current network, for sure, but that is no reason not to go ahead with High Speed 2.
Mr Godsiff
I am all in favour of infrastructure investment, but I can think of a whole host of infrastructure investment on which £32 billion could be spent in my constituency, my hon. Friend’s constituency and many other constituencies. This project is not good value for money, and it has not been thought through.
Dr Julian Lewis (New Forest East) (Con)
Surely it is a zero-sum game, as was said earlier, because, at a time when we in constituencies that are not directly affected by this railway project are nevertheless having to fight, for example, to save hospitals from closure due to cuts, it seems sheer madness to look at this level of investment instead of at saving our services.
Mr Godsiff
I am delighted that I gave way to the hon. Gentleman, because I agree.
Putting aside my views on the subject, I shall share with the House the views of a Manchester-based businessman who came to London on Tuesday for a meeting of the Surface Engineering Association, an excellent organisation that looks after the interests of companies operating in that segment of manufacturing industry. I asked him how long it had taken to travel down to London that day, and he said “Two hours, eight minutes.” He asked why I wanted to know and I told him about the upcoming debate on High Speed 2. He responded that getting to London from Manchester 50 minutes quicker did not really bother him because he used train time to work on his computer and to make calls. He ventured the opinion that if the Government had that sort of money to spend, they should do something about the bottlenecks on the M6, as well as improving the transport infrastructure in many of our cities.
Those views are similar to the majority of those expressed to me by business people in my constituency. Not one business person has come to me and said, “Thirty minutes is going to make the difference between my company succeeding or not.” It is a fallacy to believe otherwise. However, over the years, plenty of constituents have come to me and said that there should be better public transport facilities within Birmingham—an underground system such as the one in London, a tram system such as those that operate in European cites, improved bus services, or new or reopened train lines and stations within and around the city. Those are the types of improvements that the people of Birmingham want, not a vastly expensive link between London and Birmingham.
People have expressed a great deal of concern about the damage that this will cause in the Chilterns and Warwickshire. The impression has been given that only people who live there are concerned about those areas. In fact, many people living in Birmingham travel to the countryside, especially elderly people in my constituency who have enjoyed the benefits of the free or concessionary fares introduced by the Labour Government. They enjoy the countryside; they are certainly not part of the “carpet the countryside with concrete” brigade, and neither am I.
We have had many vanity projects in this country that have been a disaster. I hope the Minister will think again about this project, because I believe that if she goes ahead, it will be a disaster.
Car Insurance Premiums
Roger Godsiff Excerpts(12 years, 11 months ago)
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Mr Roger Godsiff (Birmingham, Hall Green) (Lab)
I welcome the opportunity to initiate this short debate under your chairmanship, Mr Weir. The cost of car insurance concerns everybody who owns and drives a car, not least my constituents who live in the B11 and B12 postcodes of Birmingham. I will explain later why I mention those specific postcodes.
I am aware of the detailed report on car insurance produced by the Select Committee on Transport and of the recommendations that it has made to both the Government and the insurance industry. I commend the Committee’s work and welcome its recommendations on personal injury claims and referral fees, uninsured driving, fraud, and the whole question of young drivers, whose driving habits are one of the industry’s biggest justifications for the overall increase in the cost of motor insurance.
The Under-Secretary of State for Transport, the hon. Member for Hemel Hempstead (Mike Penning), made it perfectly clear when giving evidence to the Transport Committee that the responsibility for the level of premiums rests with the market and not the Government. I accept that. However, in some other countries—and not least in one of the Canadian provinces—motor insurance has been socialised or run by a Government agency because the market was unable to handle its responsibility, despite having a captive audience of motorists who were rightly obliged by law to insure their vehicles. I shall not attempt to lead the Minister down that path because I suspect that he would not wish to follow, but I make those points to place them on the record.
After reading the Transport Committee’s admirable report, I was struck by the sheer weight of submissions from insurers, solicitors, claim management firms and their associations—all of whom, purely by chance, are part of the referral system. I got the distinct impression from reading the report that the motor insurance industry was trying to convince the Committee—and, indeed, perhaps itself—that it was not making any money out of the motor insurance business and that it was taking on the onerous burden of insuring motorists only out of some sense of public duty. Indeed, the Committee was told:
“insurers currently spent around £1.20 for every £1 collected in premiums”.
I am sure that the Government would say that those are the economics of the mad house and will lead to bankruptcy. However, the motor insurance industry has apparently kept going purely to help out motorists. The Committee was told:
“the underwriters of motor insurance had been loss-making since 1994”.
I drive to and from my constituency, and I am sure that motorists throughout the whole of the United Kingdom would like to say a heartfelt thank you to the motor insurance industry for being prepared to shoulder such losses for 16 years and for their altruistic attitude towards the whole business.
In case hon. Members think that I am seeking to pillory the insurance industry, I should say that I am not. I recognise that the industry is an important part of the UK’s financial services sector and that, in general terms, it provides competitive and tailored products, such as building, household, personal and holiday insurances. However, all those are optional, whereas motor insurance is, rightly, compulsory.
I pick my words carefully when I say, to put it bluntly, that having read the report, looked into the issue and considered many representations I have had from constituents whose motor insurance premiums had gone through the roof, I think that the motor insurance industry is just milking the motorist. Instead of tailoring insurance premiums to individual driving records and the personal circumstances of the motorist and the vehicle they are using, the industry is taking the cheap and easy option of postcode charging and having box-ticking premiums. It is giving scant regard to an individual’s personal circumstances because it knows that to drive on the highway, someone has to have insurance. Motorists are trapped and the industry can do what it wants.
The motor insurance industry and its lobbyists, some of whom may be here today, are very quick off the mark. My e-mail account was totally inundated and blocked by thousands of representations when those concerned saw that this debate was taking place. I applaud their rapid-response approach to the matter. The Association of British Insurers has said to me:
“the market remains competitive, despite recent rate increases, and some of the best deals may be found by phoning insurance companies or brokers directly rather than by using price comparison websites.”
I will give a couple of examples to show not only that that is incorrect, but that the motor insurance industry uses postcode premiums and gives minimal regard to personal circumstances.
A constituent who lives in Sparkhill, which is in the Springfield ward—one of the wards we gained last week at the local elections from the Liberal Democrats—has been driving since 1987 and has a 10-year no-claims bonus. He has a public service vehicle licence and is a bus driver. His postcode is B11 and he was quoted £1,200 a year for his motor insurance. That is for a PSV holder and bus driver, with 10 years’ no claims. He then used the address of one of his relatives who lives in an adjoining postcode. Apart from that, he supplied exactly the same details. How much was he quoted? Some £276, which is four times less. He is being penalised because he lives in B11. As I said—10 years’ no claims, PSV holder, bus driver. However, he lives in the wrong place and is charged four times as much.
Jim Shannon (Strangford) (DUP)
Further to the hon. Gentleman’s last remarks, in Northern Ireland we are subject to higher prices for insurance than in other parts of the United Kingdom—England, Wales and Scotland. In the whole of Northern Ireland, we pay higher prices than everyone else because of our postcode. Does the hon. Gentleman agree that better competitive prices for insurance should be available across the whole of the United Kingdom and that Northern Ireland should not be excluded?
Mr Godsiff
I entirely agree with the hon. Gentleman. However, motor insurance is not being discriminatory; it milks the motorist wherever they live in the United Kingdom.
Another constituent who lives in Sparkbrook, B12, has had a driving licence for 38 years and no claims for 10 years. His insurance has been between £250 and £300 for fully comprehensive and his best quote is now £600. He then got quotes for exactly the same driving history but with a Solihull and a Warwick and Leamington address, and they were less than £300. So he is being asked to pay double because he lives in the wrong postcode.
Those are just two examples, but I have many others about how my constituents are being penalised. The motor insurance industry takes the cheapest and easiest option of using postcodes, rather than individual circumstances, to set its premiums. It does so at a time when there has already been a 29.9% rise in motor insurance for all motorists, and young men and women have been subject to rises of 46.6% and 58.8% respectively. That is ridiculous.
Let me give you another example of how the motor insurance industry exploits its monopoly position. I know a person who spends part of his time in the UK, and one or two months abroad every year. He checked recently with his insurance broker to find out whether he could save money by avoiding paying insurance premiums for the months that he was out of the country, and his car was off the road and garaged. He was told by his broker:
“it used to be the case that the Insurance Industry would allow you to not pay premiums for months when your car was garaged and you were abroad but they no longer allow this”.
I contend that that is yet another example of how the motor insurance industry milks motorists, rather than seeking to tailor its policies to their personal circumstances. I am not suggesting for one minute—I would not dream of it—that there is collusion between motor insurance companies, but the fact of the matter is that they openly say that they share information regarding fraud—quite rightly. But it is disingenuous to believe that they do not share information concerning their charging policies and postcode premium policies.
I end by saying this: I do not expect the Minister to bring about a revolution in motor insurance overnight, and I know that he will consider the recommendations of the Select Committee very seriously. However, motorists, like the wider population, are under increasing economic pressure and many people still have to rely on the use of their cars for their daily lives. Furthermore, if young people are priced out of using a car because of the massive cost of insurance, then, I regret to say, there will be an increase in the number of uninsured drivers. That would not be a good thing, and I agree with the Minister about that.
The motor insurance industry has to realise that it is in the privileged position of having a captive audience. Instead of whingeing about not making money out of car insurance—which is not true; everybody knows that it is not true—it should be developing insurance policies that reward careful drivers with a proven record of not claiming, and take into account personal driving history. It should also scrap the unfair and discriminatory policy of penalising everybody in certain postcodes and allow motorists who use their cars only for a certain number of months a year to pay insurance for those months only, instead of being charged for the whole year.
I know that the Minister has listened carefully to what I have said, and I hope that he will depart from his brief and address those two specific points. Those points concern motorists in my constituency, his constituency and throughout the country. I do not see why motorists should be milked by the motor insurance industry.
The Parliamentary Under-Secretary of State for Transport (Norman Baker)
The Minister who normally deals with these matters, the Under-Secretary of State for Transport, my hon. Friend the Member for Hemel Hempstead (Mike Penning), is, unfortunately, elsewhere today, so I am happy to stand in for him. I discussed the matter with him prior to the debate and I will ensure that the comments made by the hon. Member for Birmingham, Hall Green (Mr Godsiff) are passed directly to him, so that he is aware of the specific points that have been raised today. My civil servants will confirm that I am not averse to disappearing off my brief to respond to points in debates. I am happy do so today in response to the points that the hon. Gentleman has made, in so far as I am able to within the responsibilities of the Department for Transport.
First, on the point that the hon. Gentleman made about the nature of the motor insurance industry, motor insurance is sold in a competitive market. There are many players, many different companies, and motorists are able to shop around and find the best deal that suits their needs. How premiums are set is a commercial decision for individual insurers according to the risks that they believe are posed by the drivers concerned, including factors such as experience, age, the type of vehicle and the driver’s record—for example, whether he, or she, has penalty points or disqualifications.
The Department is not aware of any evidence that the market is not working. There are certainly a large number of players who have, in theory at least, an opportunity to carve out a better position in the market by offering different kinds of products to different kinds of drivers. If the hon. Gentleman believes that there is evidence of collusion in the market, then he needs to bring that to the attention of the Competition Commission; it can investigate the market if it believes that there is prima facie evidence that collusion is taking place. I should say that the Department is not aware of any such evidence.
On the issue of postcode charging, the hon. Gentleman gave one or two striking examples involving the B11 postcode. I will ensure that my colleague the Under-Secretary is aware of that issue and that he takes it forward in his discussions with the motor insurance industry.
My experience of this issue relates to the year 2000, when there were problems with flood insurance in my constituency of Lewes in the aftermath of flooding, and with how the insurance industry responded to that challenge. It was certainly the case at the time that, in my constituency, the insurance industry applied a broad-brush approach to insurance premiums, based on postcodes—in that case, the BN7 postcode.
The BN7 postcode encompassed houses that had been flooded and houses, way up a hill, that obviously had not been and would never be flooded, even in the worst possible scenario. The houses up the hill were being invited to pay higher premiums because they were in the same postcode, so I entirely understand the hon. Gentleman’s point.
In that case, the insurance industry has moved on, and one or two companies were able to offer different premiums on a more selective basis, based on their detailed analysis of where was, and was not, flooded. They were able to carve out a market from that, which demonstrated that in that case the industry was working and able to respond, through individual initiative by individual companies, to the circumstances that pertained. I would have thought that there was an opportunity for an insurance company to offer more reasonable premiums in B11 in order to undercut those who apply a crude postcode approach. That is, however, a matter for the industry.
Mr Godsiff
I hear what the Minister says, and I know the logic of what he says. I assure him that my constituents are very price-conscious and, particularly in this day and age, very careful with their money. They have searched every alternative. If they had found an alternative, then believe you me, not only would they have taken out insurance with it, but they would have alerted all their friends to the benefits of going to another company. The alternative is not there, despite what the motor insurance industry likes to make out.
Norman Baker
I hear the hon. Gentleman’s comments. Obviously, he has looked into the matter in his area much more than we will have done at the Department for Transport. All I can do is repeat the comments that I have made. First, if he believes that there is collusion in the industry, he needs to draw that to the attention of the Competition Commission. Secondly, the Under-Secretary, my hon. Friend the Member for Hemel Hempstead—the relevant Minister for this area—will, I am sure, be interested in his comments and look at the issue of postcode charging. We would like to ensure that the motorist gets a fair deal and is not subject to improper procedures. We want, therefore, to ensure that motor insurance costs are kept reasonable, as far as it is possible for us to influence them.
We recognise that the high cost of motor insurance can cause a number of policy problems and we are working with the industry to help address them. People are dependent on their cars to travel to work, leisure facilities and so on, so this is an important issue for a great number of people. My hon. Friend the Under-Secretary is speaking with the insurance industry on a number of issues, particularly tackling uninsured driving, automatic access for insurers to check the driver’s record held by the Driver and Vehicle Licensing Agency, and addressing the problems of high premium costs faced by young drivers, to which the hon. Gentleman referred.
One area of concern for us is that people may be tempted to drive uninsured. The insurance industry estimates that uninsured driving costs each motorist approximately £30 on their premiums each year.
The Government introduced the continuous insurance enforcement scheme to deal with uninsured drivers. A new offence has been introduced of keeping a vehicle without insurance unless it is kept off the road and a statutory off-road notice declaration has been made to the Driver and Vehicle Licensing Agency. The new scheme regularly compares the DVLA vehicles database with the motor insurance database, which holds all motor insurance policies.
From that comparison, we are able to detect a greater number of uninsured vehicles, rather than relying solely on the police spotting uninsured vehicles in use on the road. We anticipate that the scheme could reduce uninsured driving by 15% to 20%, by taking out the softer evaders and leaving the police to target on the road hard-core offenders who continue to drive uninsured. Obviously, getting uninsured drivers off the road would be of benefit not only to road safety generally, but to those who legitimately and properly pay their insurance and who quite rightly feel aggrieved about having to pay extra in their premiums to deal with the uninsured. I think that that agenda is shared throughout the country—except by uninsured drivers. I hope that it is shared, so that we can get some fairness into the premiums.
The scheme is planned to commence in late June. Under it, keepers of vehicles that appear to be uninsured will be sent reminder letters by the Motor Insurers’ Bureau. If keepers take no action, they will receive a fixed penalty notice and a fine of £100, followed by enforcement action which, in extreme circumstances, might be wheel-clamping, impounding of the vehicle and, ultimately, prosecution. The DVLA will be responsible for enforcement action on behalf of the Secretary of State.
We are also concerned that significant rises in the cost of insurance might increase fraud, with some drivers prepared to make false statements about their driving record to obtain cheaper insurance, such as on how many penalty points they have, whether they have been disqualified and so on. The insurance industry estimates that 40,000 claims are declined already each year at the underwriting stage, on the grounds of non-disclosure or misrepresentation, and that 200,000 claims are adjusted.
Others might be tempted to declare younger drivers as named secondary drivers on their parents’ insurance when, in fact, they are the main driver of a vehicle. We are working with the insurance industry with a view to allowing it access to the driver details held by the DVLA. That will to help to tackle fraud and prevent situations in which drivers might give inaccurate information, consequently invalidating their insurance. The timetable for delivery is yet to be finalised with the insurance industry, but we expect a project of such a size to take between 18 and 24 months to complete all stages of the work, from specification and design to development, and through to a fully operational system.