New flood insurance scheme won’t be expanded

Labour MPs have attacked the coalition’s refusal to allow people on low incomes who own expensive “Band H” properties into the long-awaited “Flood Re” scheme, which is designed to ensure households at risk of flooding can still obtain affordable insurance.

The scheme – which will see £10.50 levied on every household bill to subsidise the premiums of those most at risk of flooding – has come under fire over recent weeks after the Government revealed it will not be available to all. Small businesses, properties built after 2009 and homes in the most expensive council tax band will be among the groups excluded.

The Government insists it would be wrong for relatively poor homeowners to subsidise the premiums of people living in mansions, and that it is therefore fair to exclude the most expensive Band H properties.

But speaking in the Commons as the legislation was debated by a Parliamentary Bill committee, Labour shadow environment Minister Tommy Docherty said: “Some lower-income households are in higher council tax bands – is this not a quite crude mechanism?

“We all have constituents who have inherited a property, perhaps following their partner, husband or wife passing away.

“They could be elderly and struggling to cope – but as things stand, the Government do not intend to provide any assistance. That is wrong and should be rectified.”

Andrew Percy, the Conservative MP for Brigg and Goole, admitted he shared Labour’s concerns over the impact on the “small group” of people on low incomes living in expensive properties.

“That will be an issue for some,” he said. “I’d like to hear whether (the Government) is prepared to take the Opposition’s offer to look at whether something can be done for those in financial distress or poverty who happen to live in a big or expensive property.”

But Labour’s proposal to extend the scheme to all low-income households was rejected by the Government, which said council tax banding was a less bureaucratic measure than means-testing.

“An income-based assessment using HMRC records was considered,” said Floods Minister Dan Rogerson. “It would involve checking self-declared income against the data, and it was not deemed suitable.

“We need to ensure the costs of Flood Re remain manageable... We need to consider the administration costs.”

Labour said it was “disappointed” at the decision and will continue to press for the change when the Water Bill returns to the Commons for its final reading early in the new year.

The importance of the issue was brought into sharp context by Mr Percy, who warned that a number of homes in his East Yorkshire constituency flooded in the recent tidal surge had been unable to obtain insurance.

“Sadly, a number of the properties that were flooded were not insured, because the owners were unable to take insurance, or because they felt the insurance offered to them was too expensive.

“As in previous years, perhaps some of the saddest cases have been those of people who thought they were insured but on contacting their insurers found out that they did not have flood cover as part of their policy.”