Levelling-up and Regeneration Bill

Baroness Hayman of Ullock Excerpts

Wednesday 3rd May 2023 Lords Chamber

I turn briefly to Amendment 312K in my name. It has been drafted to ensure that houses built before 2009 are covered by the Flood Re insurance scheme, or the Government must mandate local authorities to stop building in inappropriate places. The fact is that, if a person does not require a mortgage and buys a property without one, they may be unaware that that property is not covered by insurance, if it was built after —sorry; is it before or after?

[Baroness Hayman of Ullock (Lab)]

It is after 2009.

[Baroness McIntosh of Pickering (Con)]

I am very grateful to the noble Baroness. If the house is built after 2009, it will not be covered. I believe this is a gap in the legislation. When we were both in the other place, I visited the noble Baroness’s constituency, which was very heavily flooded in 2009. I was aghast by the number of people who could not even insure their properties for contents if they were tenants, because of the cost of that insurance. So this provision is very important indeed. I hope that my noble friend looks very kindly on Amendment 312K, to which I intend to return at a later stage.

Finally, I lend my very strong support to the other amendments in this group in the name of the noble Baroness, Lady Hayman of Ullock. She has prepared them very well and I think I know where they came from. Many of them are the unfinished business of the Pitt review of 2007 and many reflect the conclusions we reached in not just the reports of the Environment, Food and Rural Affairs Committee of the other place, which I had the honour to chair, but the recent reports of Bricks and Water and Bricks and Water 2, and the recommendations we are going to make in Bricks and Water 3. They are that building regulations can achieve a lot towards greater resilience to future floods in properties, but we need the data that the noble Baroness is asking for in these amendments.

I believe that flood mitigation should reduce insurance premiums, where actions have been taken to make the property more resilient. There is obviously a gap in the data available but, where that data exists, we must urge all organisations to share it. I entirely support the Flood Re scheme and Build Back Better. I would like to end with a tribute to the ABI and all the work that it has done since the Flood Re scheme was introduced. With those words, I beg to move.

[Baroness Hayman of Ullock (Lab)]

My Lords, I thank the noble Baroness, Lady McIntosh of Pickering, for her introduction to this group. As she and other noble Lords are aware, I have a particular interest in flooding issues because where I live, near Cockermouth in Cumbria, we have had some particularly appalling flooding in recent years. The whole issue of flooding and adaptation resilience is becoming more and more important for the Government to consider, as we start to see the impact of climate change on our weather systems. It strikes me that the planning section of the Bill is an opportunity to try to build that kind of resilience and adaptation considerations into legislation.

I will first make some comments on the noble Baroness’s amendment on SUDS. She mentioned that surface water flooding is a relatively new risk, mainly because of the way our planning system works and how we build and what we build. This has now resulted in 3.8 million properties in England at surface water flood risk. That is a huge number. In the Government’s plans to boost the supply of new homes, sustainable drainage systems can play a pivotal role in ensuring that new properties are built in a manner that helps to manage surface water flood risk at the local level. The noble Baroness explained this extremely well in her introduction. We absolutely support her amendment on this.

We also believe that there is an urgent need to implement the Government’s policy on floods under the Flood and Water Management Act 2010, as the noble Baroness mentioned. We need to ensure that we have mandatory installation in all new-build developments. It does not matter what size they are: this has to be part of the development. We welcome the Government’s recent announcement to make sustainable drainage mandatory in new developments, but they need to urgently progress with the necessary implementation phase. As the noble Baroness said, if they can do it in Wales, why can we not just get on with it here? I see the Minister nodding. With her Welsh connection, she knows what Wales can do.

The noble Baroness, Lady McIntosh, reminded us just how important this is and what a difference it could make if we just got on with it. It is frustrating that the Government so often come up with really important suggestions and things that we need to do and then we seem to just sit on those. Perhaps the Minister could explain why this has not been introduced. When will we see progression on it?

I have one last point on this. It is essential that the Environment Agency guidance on surface water flood risk is fully considered as part of the planning process. I will be interested to hear from the Minister whether the Government have plans to include this within the progression.

I turn to my amendments in the group, of which I have a number. Amendment 303 would require the Government to set minimum standards for flood resilience, flood mitigation and flood waste management in all building regulations. Amendment 304 would place a duty on the Government and local authorities to make data about flood prevention and risk available for the purpose of assisting insurers and property owners. Data is absolutely crucial if we are going to get to grips with this issue. People need to understand exactly what is what, whether they are looking for insurance or to purchase a property. Amendment 305 would require the Government to establish a certification scheme for improvements to domestic and commercial properties in England made for flood prevention or mitigation purposes and an accreditation scheme for installers of such improvements.

On that point, one of the very frustrating things after the last floods we had in West Cumbria was that when property owners, particularly in the Cockermouth area, were looking to insurers to replace the damage—whether doors, kitchen equipment, flooring or electricity installations—a certain number of insurers would not look at adaptation and mitigation for the future and would only replace like for like. That is not a sensible way forward. One reason I was keen on this amendment was to ensure that, when a building has flooded and the insurers comes in, the money is spent wisely, to either prevent flooding in the future or to make sure that costs are cheaper. For example, you do not replace a wooden kitchen or floor with the same but look at how you can improve the condition of that building for future risk.

I noticed that Amendment 312K, from the noble Baroness, Lady McIntosh of Pickering, is quite similar to some of our amendments. We strongly support what she is saying here.

I want to cover the reasoning behind my amendments. The main thing is that we believe we need much more robust planning policy around development in flood risk areas, and we need to increase our resilience to climate-related flood risk. The measures in the Bill to put greater emphasis on environmental outcomes in the planning process, and recognition of the need to protect areas at high flood risk, are very welcome, but we believe that adapting to climate change and managing flood risk is a challenge for the whole of our society.

--- Later in debate ---

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, Amendment 291, in the name of my noble friend Lady McIntosh of Pickering, seeks to require the Secretary of State to bring into force Schedule 3 to the Flood and Water Management Act 2010 before the end of 31 December 2023.

I understand the intention behind this amendment. However, in January, the review for implementation of Schedule 3 to the Flood and Water Management Act 2010 was published and recommended making sustainable drainage systems mandatory for new developments in England. The Government are now looking at how best to implement Schedule 3, which we aim to do in the course of 2024. An ambitious timeline has been set, which considers parliamentary processes, to deliver this as quickly as we can. It is essential that we allow time to engage with stakeholders to help shape the details of the implementation. A public consultation will then take place on mandatory standards, statutory instruments and impact assessments before new statutory requirements are brought in.

It is clear that bringing in a standardised approach to SUDS is needed to increase their uptake and maximise the benefits they bring. We also need to set technical statutory standards for what an acceptable SUDS is in different circumstances. We need to establish SUDS-approving bodies in unitary or county councils, and provide guidance, as well as legal criteria and processes for fees, appeals and enforcement. I have some information on the Welsh introduction of SUDS—obviously, my favourite subject. Wales has recently completed its post- review implementation and has identified a number of issues that have not worked as well as had been hoped. In England, we are analysing these results, and are able to take these findings into consideration, such as ensuring the best way to fund the maintenance of SUDS.

I hope I have provided adequate reassurance that action is being taken to bring into force Schedule 3 to the Flood and Water Management Act 2010, and therefore the Government are unable to support this amendment at this stage.

The noble Baroness, Lady Hayman of Ullock, tabled six amendments, and I shall take each in turn. Amendment 303 would impose a new duty on the DLUHC Secretary of State to make new building regulations within six months of the day the Act is passed for property flood resilience, flood mitigation and waste management in connection with flooding. Statutory guidance to the building regulations in Approved Document C already promotes the use of flood-resilient and -resistant construction in flood-prone areas. While the building regulations set requirements for the drainage systems of individuals, the main sewerage system is governed by the sewerage undertaker for the area; for example, Thames Water.

The sewerage undertaker, as the statutory consultee, and local planning authority have ultimate responsibility for ensuring that drainage systems for new developments are built to a standard that minimises flooding. These duties sit outside the building regulation system. I thank the noble Baroness for suggesting these amendments and I hope that I have reassured the Committee to some extent that the Government already have well-established means of managing flood risk in the building regulations and associated guidance. Also, new developments are not approved where there is an unacceptable flood risk. The local planning authorities and relevant statutory consultees, including the Environment Agency, are the right bodies to oversee the maintenance of existing flood mitigation measures. For these reasons, the Government do not believe that introducing new requirements in the building regulations is necessary. As I have said, statutory guidance to the building regulations in Approved Document C: Site Preparation and Resistance to Contaminants and Moisture already promotes the use of flood resilient and resistant construction in flood-prone areas.

Amendment 310 would place a duty on the Government and local authorities to make data about flood prevention and risk available for assisting insurers and property owners. The Government agree that communities should have access to the information they need to manage and prepare for their level of flood risk. For example, the Environment Agency publishes flood risk data and maps for England. Lead local flood authorities are required to have a strategy for managing local flood risks in their areas. This must include an assessment of local flood risk. This information is publicly available; therefore, we do not feel that creating new legislative duties on government and local authorities to publish data is necessary. We hope that this explanation will provide enough reassurance to allow the noble Baroness not to move this amendment.

Amendment 305 would require the Government to establish a certification scheme for improvements to domestic and commercial properties in England made for flood prevention or mitigation purposes and an accreditation scheme for installers of such improvements. There are a range of enablers, including improving standards and skills, that need to work effectively to support the property flood resilience market. These will help ensure that the foundations are in place to support communities to be better prepared through the effective use of property flood resilience. We need to work together to overcome these challenges, with all sectors and industries playing their part.

In February 2020, a code of practice on property flood resilience delivery was published by the Construction Industry Research and Information Association, with support from the Defra industry round table. It complements British standards on flood resilient construction and retrofit and resistance products. The property flood resilience round table is actively considering how best we can embed the code of practice. The Government have supported training in collaboration with the Chartered Institution of Water and Environmental Management. Alongside this, the Government have also committed to set policy direction for property flood resilience measures that support consumer and industry confidence and therefore take-up. I hope that this explanation will provide some comfort, and enough to allow the noble Baroness not to move this amendment.

Amendment 306 would require the Financial Conduct Authority to make rules requiring insurance companies to take into account flood prevention or mitigation improvements that are either certified or planning permission requirements in setting insurance premiums. The Government’s long-term policy statement committed the Government to ensuring that all homes currently at high risk of flooding are better protected or better prepared. Property flood resilience—PFR—is a nascent market. There are a number of barriers that need to be overcome in order to increase the uptake of PFR, including giving customers confidence in the products and their installation.

There is currently no mechanism to capture data about PFR installed. A process needs to be developed to identify and verify households with PFR. The Government have committed to set policy direction for property flood resilience measures that supports consumer and industry confidence, and therefore take-up. We are working closely with Flood Re, the PFR round table and the insurance industry to determine how best we can achieve this. Again, I hope I have been able to provide some reassurance such that the noble Baroness, Lady Hayman, will not move this amendment.

Amendment 307 would require the Financial Conduct Authority to make rules requiring insurance companies to participate in the currently voluntary Build Back Better scheme launched by Flood Re in April 2022. Build Back Better has been introduced on a voluntary basis. Insurance companies that cede to the Flood Re scheme can choose whether to offer BBB to their customers. At this early stage, we want insurers to adopt BBB and to embed it in their processes. Providing Flood Re with the power to pay claims funding resilient repair over and above normal reinstatement, as the noble Baroness, Lady Hayman, mentioned, will help to drive a cultural shift across the insurance market, driving positive changes in the supply chains and raising awareness of and demand for PFR, helping the market to grow and develop.

Customers of a significant number of insurers, including two-thirds of the household insurance market, are already able to benefit from Build Back Better, and government has encouraged other household insurers to participate in the scheme. In April last year, the Government made legislative changes to the Flood Re scheme to drive the uptake of PFR. Flood Re can now pay claims from insurers ceding to the scheme, which includes an amount of resilient repair, up to a value of £10,000, over and above the cost of like-for-like reinstatement after actual flood damage. While this has been introduced on a voluntary basis, Flood Re requires insurers choosing to participate in Build Back Better to offer it across their home insurance offerings, rather than just on insurance policies ceded to Flood Re.

As I said, property flood resilience is a nascent market, but we want to encourage innovation and learning by doing, and the Government will continue to consider the impact and effectiveness of the current approach. However, Build Back Better is in its early days and has not yet been fully embedded or tested, as a result of relatively benign weather recently. I therefore ask the noble Baroness not to press this new clause.

Amendment 308, also tabled by the noble Baroness, Lady Hayman of Ullock, would require the Government to extend the Flood Re scheme to premises built since 2009 that have property flood resilience measures that meet minimum standards, and buildings insurance for small and medium-sized enterprise premises. Expanding the scope of Flood Re to cover properties built after 2009 would be inconsistent with planning policy. Inappropriate development in flood plains should be avoided. Where necessary, it should be built resiliently so that households can access insurance.

Changes to planning policy in 2006 set out that inappropriate development in flood plains should be avoided. Where development is necessary in a flood risk area, it should be made safe for its lifetime, without increasing flood risk elsewhere, and it should be appropriately flood resilient. There is currently no mechanism to capture data about property flood resilience installed, but we recognise that a process needs to be developed to identify and verify households with property flood resilience.

[Baroness Hayman of Ullock (Lab)]

I apologise, but that is not good enough. I know people living in properties built after 2009 who are completely stuck and cannot get insurance. The Minister talked about the need to come back to planning legislation, but surely this is the place to do it: we are talking about planning legislation, and this is the big opportunity to do something.

Some of these properties have been impacted by developments built in the field next to them, with the water then pushed across. When they were built, they maybe were not considered a flood risk, but unfortunately they now suffer flooding. The current set-up simply does not cover all the properties that it needs to. I urge the Minister to go back to her department and push these points.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I understand the noble Baroness’s concerns, and I will take that back to my colleagues in the department.

Flood Re was designed to provide available and affordable insurance for households. It does not cover businesses. Business insurance operates differently from household insurance: it is often bespoke, based on the individual nature of the business. Flood Re is funded via a levy on UK household insurers. Expanding its scope to cover businesses would create a new levy on businesses and could result in businesses across the country—and, indirectly, customers—subsidising profit-making organisations in locations at flood risk. Often, businesses placed near rivers or the coast benefit from their position.

There is no evidence of a systematic problem for businesses at high flood risk accessing insurance, but I appreciate that this is an issue for some. Businesses in high flood risk areas can shop around for the best insurance quote and can use alternative brokers. A number of innovative products are offered to businesses by the industry, including insurers that offer increased flood excess with reduced premiums, and parametric insurance, which allows property owners to set the level of premiums in line with an agreed level of risk.