The next item of business is a debate on motion S4M-06455, in the name of Chic Brodie, on behalf of the Public Petitions Committee, on petition PE1441, which relates to flood insurance problems. It might be helpful to members—and Presiding Officers—if at the outset I indicate that we have a lot of time for this debate. If members want to take interventions or expand on any points that they might wish to make, they will find that the Presiding Officers will give them sufficient latitude to do so.
I call Chic Brodie. Mr Brodie, you have 14 minutes.
Thank you, Presiding Officer—and I noted your hesitation before you said “14 minutes”.
I am pleased to open this debate on the motion in my name on behalf of the Public Petitions Committee. I stand in place of our injured convener, David Stewart, who had a particular interest in the subject covered in PE1441.
In this second Public Petitions Committee chamber debate this session, I welcome the opportunity to discuss the issues that have been raised with the committee by Professor David Crichton in PE1441, which refers to the challenges of flooding and the attendant flood insurance problems. Professor Crichton has spent a large number of years in the insurance industry, latterly as a consultant advising insurers across four continents, and is a founder member of every flood liaison and advice group—or FLAG—in Scotland. The groups cover 94 per cent of Scotland’s population.
The petition, which was submitted last August, highlights the importance of the matter in light of the climatic changes that we see and experience every day and seeks primarily to ensure that Scottish interests are represented and considered in discussions between the United Kingdom Department for Environment, Food and Rural Affairs and the UK insurance industry. As matters stand, financial services, including insurance, are reserved to Westminster, whereas flood risk management decisions relating to Scotland are devolved.
The committee is aware that negotiations are taking place between DEFRA and the insurance industry on arrangements to succeed the current insurance agreements as enshrined in a joint agreement known as the statement of principles, which is due to expire in seven weeks’ time at the end of June. We also know that the Scottish Government has been engaged, if indirectly, in those discussions as they affect Scotland. For reasons that I will try to explain, it is important and very urgent that appropriate arrangements are put in place from 1 July onwards.
One-off flooding is one of the greatest natural threats—if not the greatest—that we and the rest of the globe face, and well-documented examples of the damage caused by flooding and its serious long-lasting effects increasingly invade our sitting rooms.
In the United Kingdom in the 1990s, we had two flood events that cost £150 million, yet in the past decade we have had five events costing £3 billion, with 2007 being a particularly disastrous year. Debate on the reasons for that is for another day, although it is safe to say that a committed global approach to addressing climate change becomes more critical as each day passes.
Because of its different landscape and topography, Scotland does not face the same degree of flooding as the rest of the UK. There have been examples of severe flooding in Scotland but not to the same degree as in the rest of the UK. I know that that lies at the heart of the petition and, therefore, at the heart of the motion.
This is not a them-and-us debate. However, there is a manifest anomaly in the background to the motion. There is an unfairness—an inequity—because there is a cross-subsidy that relies on families in Scotland who are insured against high flood risk subsidising, through a higher premium, the higher volume of at-risk properties and the higher risk of flooding down south. Regrettably, 23.1 per cent of English and Welsh households are at risk, whereas only 4.5 per cent of Scots households are at risk.
It might be helpful if I set out some of the background to the petition. In 2008, as I mentioned, an updated joint statement on the provision of flood insurance was agreed with the insurers. According to the Association of British Insurers, the statement was originally drawn up in 2000 and was supposed to be a temporary sticking plaster—a palliative—while the Scottish Government, the UK Government and the ABI worked together to enable flood insurance to continue to be widely available without distorting the market.
The statement identified a number of measures to be taken. The first was to improve the understanding of flood risk from all sources. The second was to work towards putting in place a longer-term strategy—for 25-plus years—to reduce flood risk. That strategy would set out the Government’s objectives and measures backed by local planning and funding arrangements. The third measure was the retention of a national planning policy to ensure that inappropriate development in flood risk areas would be prevented and that any essential new development in medium or high flood risk areas would be flood resistant or at least as resilient as possible. The fourth measure was to raise awareness in areas where flood risks are significant and to encourage actions to mitigate and minimise the risk of flooding, including reinstatement of flood-damaged property in a much more resilient way. The fifth measure was to promote access to insurance for low-income households.
For its part, the insurance industry was committed until the end of June 2013 to continuing to make flood insurance for domestic properties and small businesses available as part of standard policies if the flood risk was not significant—significance is defined as a 1 in 75 annual probability of flooding. It was also committed to continuing to offer flood cover to existing domestic property and small business customers at significant flood risk provided that the relevant local authority had announced plans and notified the ABI of its intention to reduce the risk for those customers to below significant within five years.
The agreement ensured that flood insurance would be available for homes in Scotland that were at risk of flooding. However, it will expire at the start of July and the insurance industry has made it clear that it does not intend to renew it, owing to its belief that that would prevent the development of a free market in flood insurance—a basis that the ABI believes will allow it to establish more accountable and attributable premiums.
We are at a crunch point, with only seven weeks to go before we know whether those in our communities who are at high risk of flooding will be covered by insurance or whether they will continue to be penalised because of the disproportionality between Scotland and the rest of the UK of which I have just spoken.
It might be suggested that because the various measures that have been taken on flood management in Scotland, such as those that are contained in the Flood Risk Management (Scotland) Act 2009, have not been implemented elsewhere, the disproportionality of the subsidy becomes much more profound. Requests to have stricter planning rules to control flood plain development, more spending on structural flood defences and more resilient building regulations, which have largely been complied with in Scotland, Wales and Northern Ireland, have not been complied with to the same extent in England, and that is having an overall impact on the insurance industry’s approach to future agreements.
Notwithstanding that feeling, the Public Petitions Committee was advised that the Scottish Government had commissioned the centre of expertise for waters at the University of Dundee—which, henceforth, I will refer to as CREW—to consider the effect of the changes to the flood insurance market in the face of the joint agreement or statement of principles coming to an end, which we know will happen unless the Department for Environment, Food and Rural Affairs, the ABI and the devolved Administrations reach agreement. I remind Parliament that financial services—in this case, we are talking about insurance—are a reserved matter.
In its research, CREW sought to assess the prices that are currently paid for flood insurance in those areas in Scotland that are potentially vulnerable to flooding; to establish the likely impact of the agreement coming to an end this summer; to identify those communities in Scotland that are most likely to be affected and determine whether particular households would be affected by changes in the availability of insurance and cost; and to undertake a survey to identify trends and hold workshops to explore emerging issues in much more detail.
CREW’s report, “Flood Insurance Provision and Affordability Beyond the Statement of Principles: Implications for Scotland”, was published in July last year. I draw Parliament’s attention to a number of the points that it made. CREW’s research found that the statement of principles confirmed that there was substantial cross-subsidising of insurance in flood risk areas. The insurance body confirmed that the flood risk in England and Wales was significantly greater than the flood risk in Scotland. ABI UK-wide figures indicated that the amount of cross-subsidy from households that are not in the significant risk zone to those that are could be as much as £430 per household.
CREW also found that policyholders do not know how much they are being charged to provide any cross-subsidy, as the information that is held on risk is not publicly available. CREW expected that transparency for the public would improve with the publication of the Scottish Environment Protection Agency’s flood hazard and flood risk maps. That was due to happen during 2013, but it has now slipped to the end of the year. A flood risk management plan is to be available by 2015.
Once again, it will be people on low incomes, the elderly and those in non-homeowner households who are likely to suffer particular potential difficulties in meeting the extra insurance costs that might well be passed on once the existing agreement comes to an end, regardless of what form its successor might take. As someone who lived in the south-east of the UK some 10 years ago, when council tax was subsidised by flood grants to Thames valley councils, I am sure that people there will have little truck with concerns such as those that I have expressed.
The insurance industry might allow homeowners to continue with their existing insurance temporarily after 30 June 2013, but their cover could be qualified in several ways. It appears that one of the problems was that the industry had difficulty accessing information on the Scottish flood defence asset database that it could use for commercial purposes so that it could apply premiums more cogently and more appropriately. That data is relevant and is of importance, and lack of access to it is of concern. Perhaps the minister will be able to allay that concern.
The committee was told that not having access to that data made it more difficult for insurers to compare risk in Scotland with that in England and Wales, where a commercial licence had already been agreed with the Environment Agency that allowed insurers to use data to establish more applicable and fairer premiums. The committee was very disappointed to note that a similar licence had not yet been agreed for Scotland, which meant that insurers could not replicate the fairer and more applicable premium indicator in Scotland.
The committee was advised that SEPA had written to all local authorities seeking permission to share the data that was filed on the database with all stakeholders, including the insurers. When agreed, that data would be released to the insurance industry so that more applicable and fairer premiums could be set. The plan was set for the end of March, but by mid-April—surprise, surprise—there was no agreement to release the data, because three of our local authorities had not responded to SEPA’s request. I assure those councils that when the Public Petitions Committee seeks information and data we do not do it for fun but as part of our duty to petitioners. A bit more courtesy and timeliness in meeting our requests are anticipated henceforth.
The minister has confirmed the further work that the Government has done and is doing through implementation of the Flood Risk Management (Scotland) Act 2009, the Reservoirs (Scotland) Act 2011 and the national flood risk assessment plan regarding large-scale flood protection schemes in communities across Scotland. That is good and welcome, but the committee and I suggest that time is running out. We may be at something of an impasse, but options for the replacement of the statement of principles need urgent consideration; in fact, they need urgent implementation and agreement if flood insurance in the UK—particularly in Scotland—is to be available, affordable and proportionate. I am anxious that we engage with the industry on its proposed flood re scheme—a not-for-profit flood insurance fund that could deliver a real choice for consumers in Scotland.
It is paramount that we deal with the issues of cross-subsidy, accurate assessment of flood risk and availability of data to insurers if we are to reduce the anxieties and the financial burden that hang like a dark cloud over some of our very vulnerable households and communities.
I look forward to hearing the views of my colleagues across the chamber in what should be a constructive and important debate.
That the Parliament notes petition PE1441 in the name of David Crichton on the issue of flood insurance problems; welcomes the petitioner’s efforts to highlight what it considers to be an important matter, and commends the issues raised in the petition to the Scottish Government for further consideration.
The provision and affordability of flood insurance is vitally important to residents and businesses in flood risk areas. Insurance is essential for people to be able to continue to live in their properties and run their businesses effectively; most important, it is essential for their peace of mind. The Scottish statement of principles on the provision of flood insurance expires in July, and there is a great deal of uncertainty about what will follow.
Responsibility for managing flood risk is devolved to Scotland, but Chic Brodie is correct in identifying that responsibility for financial services is a reserved matter. We are therefore reliant on the UK Government reaching an agreement with the Association of British Insurers that will ensure the availability of affordable flood insurance post July. Discussions have been going on between the UK Government and the Association of British Insurers for months. However, the issue is very complex, and although the discussions are closer to consensus, agreement has not yet been reached.
Today, I call on the UK Government to come to a decision quickly, reach a conclusion that is fair to consumers and put an end to this period of uncertainty. I hope that all members in the chamber will echo my call. My officials have been engaged in regular discussions with the other devolved Administrations and DEFRA over the past year to ensure that Scottish interests are covered in the flood insurance negotiations. In addition, I met with the Association of British Insurers in February to raise the concerns of Scottish policyholders. I also recently wrote to the DEFRA Minister for Natural Environment and Fisheries, Richard Benyon MP, to request an update on the negotiations. I am pleased to say that, before coming to the chamber today, I was able to speak with him about the latest position in the negotiations.
I am intrigued that the minister said that he has been able to ensure that Scottish interests are represented. Are there particular Scottish interests that he would define as different from those of people south of the border, or are they parallel interests looked at from a Scottish point of view?
Chic Brodie alluded to that point, which I will come to. There are some clear differences with regard to the risk faced by Scottish householders. The treatment of residential properties is covered by some of the discussions that DEFRA is having. There are also issues about coverage of social enterprises and local businesses and the protection from flooding that they have. Some issues are parallel with those in the rest of the UK, but the main area of difference is the level of risk.
Today’s debate allows us to address what can be done both here and in Whitehall, and I am grateful to the convener of the Public Petitions Committee for raising the issue and to Chic Brodie for bringing the debate to the chamber so that we can air the facts and invite comment from members on the way forward.
I highlight that there are significant differences, as alluded to by Jackson Carlaw, between the level of flood risk in Scotland and that in England, which has a much greater number of properties at risk. According to SEPA’s most recent assessment of flood risk, in Scotland approximately one in 22 properties is at risk, whereas in England the figure is as many as one in six. However, although there are fewer properties at risk in Scotland, in absolute and relative terms the overall impact of flooding on properties is as devastating here as it is elsewhere. Therefore, it is important that any agreement reached with the Association of British Insurers meets the needs of Scottish policyholders.
If Scotland were independent—just to get Jackson Carlaw and Alex Johnstone excited—we would be better placed to negotiate a deal with the ABI that is in Scotland’s best interests. In the meantime, we will have to continue to make representations on the issue to the UK Government in order to achieve the best solution possible for Scotland in the circumstances, recognising that although the ABI regards the Scottish Government as a stakeholder, we do not directly participate in negotiations.
It is clear at this stage of the negotiations and with the imminent expiry of the statement of principles that it will take time to put in place any proposed solution. Transitional arrangements for Scotland will have to be put in place until such time as any proposed solution can be implemented. That is another reason why I have asked Richard Benyon to make sure that Scotland is kept informed of progress on the negotiations. Unfortunately, although I welcome his recent letter in response to my letter, his response still leaves us in the dark as to what those transitional arrangements might be. However, having discussed the issue today with Mr Benyon, I am at least confident that the issue is being treated as a matter of urgency and that a preferred solution is being developed.
As Chic Brodie said, last year we commissioned a piece of work to assess the potential impact of the expiry of the statement of principles, which was undertaken by the University of Dundee. It identified that the groups that are particularly vulnerable to any increase in the cost of flood insurance are people on low income, the elderly and those in local authority or housing association rented properties. Access to affordable insurance is likely to be even more difficult for those groups now that the UK welfare reform changes are being implemented and people are seeing their income squeezed further.
In the meantime, we will continue to invest in flood risk management in Scotland, in order to reduce the risk of flooding as much as possible, which will make it easier for policyholders to get flood insurance cover. In partnership with SEPA, local authorities and Scottish Water, we are working hard to reduce flood risk in Scotland. SEPA identified 243 potentially vulnerable areas in the national flood risk assessment, which highlighted the communities that are most at risk of flooding.
SEPA is developing new flood risk and flood hazard maps that will be published later this year. The maps will build on the initial flood risk assessment and provide all the bodies involved in flood risk management with better information for decision making. The better the information that we have on flood risk, the easier that it will be for insurance companies to ensure that flood insurance premiums more accurately reflect the actual level of risk.
I assume—I hope that there will be a physical nod in my direction if I am right—that Sarah Boyack is referring to the potentially vulnerable areas and the costs.
Sarah Boyack indicated agreement.
The Flood Risk Management (Scotland) Act 2009 sets out for each potentially vulnerable area an indicative figure of the cost of the schemes. In practice, our experience is that some of the schemes that are being introduced are rapidly increasing in cost, so it is difficult to predict the exact cost of remedying each potentially vulnerable area, including the ultimate capital cost. We are having on-going interaction with particular projects to try to identify what the outturn costs will be.
As Chic Brodie indicated, it is important that insurance companies can access the Scottish flood defence asset database. That will enable them to take account of the reduction in risk that the construction of flood defences affords when they set premiums and the level of insurance excesses that are payable, which can be extremely high in some cases.
Chic Brodie asked for my feedback on that issue, and I am delighted to tell members that SEPA has now received responses from all 32 local authorities, none of which places any significant constraints or restrictions on the use of data from the flood defence asset database by any of the existing member categories, which include members of the Association of British Insurers. That means that the financial benefits to households of lower insurance premiums should be faster in coming forward when investment is made.
The Scottish Government is currently seeking to fund further research on a blueprint for property-level protection provision through local authorities in order to find the best system to enable homeowners, residents and businesses to protect themselves. The fact that individual property owners and occupants are responsible for protecting their own properties is often overlooked. My office in Hawick is currently being fitted with such measures, and I was impressed by Scottish Borders Council’s service.
Earlier this year, I launched, along with SEPA, the first targeted coastal flood warning schemes for the east coast of Scotland. Those will benefit coastal communities from Eyemouth to Arbroath, and the new system will enable people to take action to protect their possessions and properties before flooding occurs and will reduce the damage costs as a result. Additional flood warning schemes are under development: the one for Stonehaven should be operational in autumn this year and the one for the Moray coast in spring 2014. Those additional schemes will take the total number of flood warning schemes in Scotland to 249.
The Scottish Government is continuing to invest in flood protection schemes. As part of that commitment, it looked at the mechanism for funding large-scale flood protection projects, in partnership with the Convention of Scottish Local Authorities, and agreed that, for the current spending review period, the flooding component of the general capital grant should be targeted at major new projects. The distribution of that funding is currently being agreed between COSLA and the Scottish Government. Three schemes were successful in bidding for funding in the first round of applications—Galashiels, Forres and the River Ness—and a second round of applications will be carried out later this year.
As part of the general capital grant, the Scottish Government currently funds local authorities to the tune of £42 million per annum as we attempt to overcome decades of underinvestment. We have raised funding from an average of £5.5 million per annum from 1999 to 2007 to £42 million per annum in 2007-08 onwards, and we have committed to continue that funding until 2015.
In February we published the surface water management guidance, which is an important step towards a collaborative approach to the management of surface water flooding in Scotland. It was developed jointly by the Scottish Government, local authorities, Scottish Water and SEPA through the Scottish advisory and implementation forum for flooding and will help the bodies that are involved in managing surface water to work more effectively together.
The Scottish Government will continue to work in partnership with SEPA, Scottish Water and local authorities to protect more communities from flood risk. The creation of 14 new local plan districts brings together the key players in each area and enables them, in partnership, to take strategic co-ordinated decisions on how best to target their resources in a cohesive way. Those partnerships will develop local plans to tackle flood risk, which will target resources where they will be most effective in reducing that risk.
The Scottish Government will continue to make representations to the Westminster Government to encourage it to reach an agreement that ensures that flood insurance is available and—crucially—affordable in Scotland. In an ideal world, such an agreement should also reflect the lower risk of flooding in Scotland.
That will, in combination with our continuing work to manage flood risk, create a safer, stronger and more secure environment for Scotland’s citizens and businesses now and in the future. I urge Parliament to recognise the efforts that the Scottish Government is making on behalf of Scottish policy holders.
The petition calls on the Scottish Government to ensure that Scotland’s interests are represented in on-going negotiations on home insurance for flooding, but discussion of the petition has raised many other issues. I know that flooding is a matter of concern to the Rural Affairs, Climate Change and Environment Committee, so I hope that today’s debate will contribute to its considerations.
As MSPs, we have seen increasing instances of flooding in our constituencies and regions. I know about the impact that flooding can have on families and communities because my region has been particularly affected in recent times. Last year a home in Dura Den was severely damaged and up to 30 families had to be evacuated from their homes when the River Eden burst its banks. In December, the Eden also burst its banks between Ladybank and Kingskettle, causing severe flooding for some homeowners. Within the region, Perth has been particularly badly hit in recent years, which has caused a great deal of stress to residents. Evidence to the committee highlighted the potential risks to Orkney and Grangemouth, and the potential impact of flooding on the economy and energy supply was also discussed.
The problem of flooding is not reducing in Scotland and we must respond to the challenge as a country, not just as homeowners. The response is complex but, as the Stop Climate Chaos Scotland briefing recognises, solutions can be as much about land management as they are about anything else. Flood prevention and management measures must include more use of land and natural ecosystems to store water or to buffer at-risk areas, instead of just relying on carbon-intensive and costly infrastructure that might not be sufficiently flexible for future needs. We discussed that with the minister when we talked about Scotland’s biodiversity strategy.
Today’s debate is particularly about flood insurance for individual households. The flooding of a home is traumatic and the consequences can be devastating. Insurance is therefore vital so that individuals and businesses can give themselves a level of security. Payments need to be affordable and to accurately reflect the level of risk. If they are not, individuals are at risk of leaving themselves and others vulnerable.
The minister will be well aware of the financial pressure that dealing with flooding is placing on the worst-affected local authorities. Under devolution, Scotland has started to face up to the challenge of increased risk of flooding and has undertaken some good long-term planning. However, when the Scottish Government removed ring-fencing of funds for capital projects, Labour expressed concerns that the burden that was being placed on local authorities would be too high. Communities look to their local authority to deal with such problems, but the costs of preventative and restorative action can be considerable, and the burden falls heaviest on particular authorities. Although the Scottish Government has the Bellwin scheme, the scale of the problem now and in the future is in danger of not being matched by investment.
Information sharing by relevant authorities and planners was discussed at the committee, which talked positively about the role of flood liaison and advice groups, and the opportunity that they provide for formal and informal discussion and information sharing. In response, SEPA has said that it thinks that the local advisory groups will replace many of the functions of FLAGs in the long term, and that it will seek to continue to support FLAGs where they remain in operation. However, there is encouragement of participation in the planning system in the local advisory groups.
The committee also discussed resilient building. We discussed the attraction of requiring insurers to adopt a more resilient reinstatement policy to adapting existing building stock after a flood or a storm claim, at no cost to the taxpayer. However, it seems that that would mean higher premiums for householders, and that a requirement would need to be placed on insurers to ensure a level playing field for all insurers.
Homeowners are seen to be increasingly vulnerable to the effects of flooding, and that is particularly true of low-income households. Since the statement of principles on the provision of flood insurance in 2008, the Scottish Parliament has passed legislation on flood risk management, in 2009. Part of the statement of principles is about providing information about how to obtain flood insurance and promoting access to insurance for low-income households. The petition was prompted by the fact that the agreement is due to end in July 2013, and the ABI has made it clear that it does not intend to renew the agreement because it believes that it prevents the development of a free market in flood insurance.
In a letter to the committee, the Scottish Government said:
“The Scottish Government wants to ensure that any proposed solution is equitable across the UK, and we have made it clear that there are a number of issues around the proposals for an internal industry levy which we believe will require careful consideration in relation to Scotland.”
The minister said that he had a conversation with Richard Benyon this afternoon. Could the minister use his closing speech to say more about whether the discussions are going well? I am a bit concerned about reference to transitional arrangements, because we are only seven weeks away from the period of change, so I would appreciate more detail on that.
On transitional arrangements, any solution that the industry proposes might take some years to have its full impact because of the nature of the model that might be deployed. We therefore have to have transitional arrangements to take account of any event, such as a serious flood incident, and what we would do to recover the costs in those situations. That is not necessarily a negative; there are practical issues involved. We seek to work with the UK Government to develop arrangements in order to ensure that there is a smooth transition to the new scheme, which will perhaps have a longer-term target involving the building up of a fund to protect those who are at highest risk.
I thank the minister for that. I do not know what the intentions of the committee are, but it might be helpful if the minister could respond to the committee in a more formal way about where we expect to be by July.
On the issue of moving away from the statement of principles, it is right to reflect that, whether or not the new development is a positive one and whether or not the statement has delivered for homeowners, it has been claimed that it secured the availability of flood insurance to communities that are at risk of flooding and that it ensured that the Scottish Government invested in flood risk management measures. It is of concern, however, that the evidence from COSLA said anecdotally that
“even for those areas which have adequate flood defence schemes in situ, access to insurance can be an issue in some communities due to the unwillingness of the insurance industry to provide cover.”
The forthcoming change presents challenges for the Scottish Government, which need to be resolved urgently. It is only two months until the statement of principles expires. The report to which Chic Brodie referred, “Flood Insurance Provision and Affordability” from CREW—the centre of expertise for waters—found that
“lower income and non-homeowner groups were also the most likely to have no insurance”.
The report went on to suggest that, after July, insurance rates will move closer to the market rate, which would place a heavier burden on people who live in high-risk areas.
Concerns have been raised about the availability of accurate information on the risks in Scotland. As other members have said, the CREW report highlighted a particular area of concern that had been expressed by the insurance industry: the
“difficulty to date in accessing information on improvements which may substantially reduce the flood risk for individual properties”.
Surely that can be resolved. I welcome the minister’s assurances on that issue this afternoon.
Another concern is about quantifying the risk of surface-water flooding. No map is available for surface-water flood risk. The situation might soon change, with the planned update of SEPA’s indicative river and coastal flood map and the development of local flood risk management plans by 2016. That would still leave an information gap, however, while the system for calculating insurance is set to change.
The CREW report found that, although they are underrepresented in high-risk areas, 41,000 people on very low incomes are identified as being “at risk”. There are further concerns that changes to the insurance market could have an impact on people who are just outside the most income-deprived groups, and the survey that was undertaken suggests that that might be the case.
It is estimated that one in 22 households is at risk, and there is a further risk for people who only require contents insurance: if costs go up more than they are able or willing to pay, they might stop having any insurance. Evidence to the committee from the insurer Adrian Webb highlights the possibility that that could be an issue, as
“The worst cases that insurers see involve people who believe that they will never be flooded but who are suddenly hit by a catastrophic flash flood. Those people are the ones for whom the Government becomes the insurer of last resort.” [Official Report, Public Petitions Committee, 2 October 2012; c 788.]
In those circumstances, it should be asked which Government would be able to provide that level of security for homeowners.
The petition raised the issue of cross-subsidy, and suggested that a separate flood insurance pool would be appropriate for Scotland. That is becoming less of an issue, however, as the insurance providers want to move to a system that recognises higher levels of risk. Once that becomes the practice, the issue of cross-subsidy becomes less noticeable—although the extent of it has been questioned by some commentators.
In addition, future predictions suggest a greater, not smaller, risk for Scotland. Although a changed system might suit some customers—although it is unlikely to lead to a reduction in premiums—it has the potential to impact more heavily on low-income and high-risk households across the UK.
The petition has focused minds on the immediate problem that faces home insurance, as well as highlighting on-going challenges. The Stop Climate Chaos Scotland briefing highlights the fact that
“SEPA have estimated average annual losses of between £720 million to £850 million from flooding of buildings and agricultural land ... Work by the Joseph Rowntree Foundation has shown that coastal communities are on the front line from increased flooding”.
The foundation has also highlighted the need for “socially just adaptation” to predicted climate change impacts such as flooding.
Preparation of Scotland for future climate challenges is important. For many households, how they protect themselves will change in a matter of weeks. The Scottish Government has heard the arguments. It now needs to be clear about the consequences and solutions for Scottish households.
Presiding Officer, thank you very much for your generosity. I will see what I can do.
I very much welcome the fact that the Public Petitions Committee has decided to debate the petition on the floor of the Parliament. As has been pointed out, Professor Crichton’s petition is specifically about ensuring that Scottish interests are represented in the negotiations that are taking place with the insurance industry, but on an afternoon such as this—when there seems to be plenty of time available—many of us will want to take the opportunity to talk at some length about the impact of flooding in Scotland, including its impact on the insurance industry and on insurance premiums.
As is pointed out in the briefing paper for today’s debate, and as Chic Brodie pointed out in his opening remarks,
“Scotland does not face the same degree of flooding as the rest of the UK, due principally to differing topography.”
That is very much the case, but Scotland’s differing topography can also cause some of our most severe problems. I want to talk a little about that before I go on to deal with the broader issues.
I am lucky—if that is the right word—to live very close to the area that was affected by flooding in Stonehaven. Stonehaven has been affected by serious flooding on several occasions, but the first time it was badly affected was on the first Sunday in November 2009. As a result of very heavy rain in the Carron catchment area, the burn rose, it closed the gaps under the bridges and the water spilled out into the streets. Stonehaven had experienced floods before, but that was the first in modern times and was certainly the worst in living memory.
The effects of that flood were quite devastating on a significant number of businesses and homes near the foot of the new town, but particularly in the High Street area of the old town. Those who fought their way back from that disaster to reconstruct their homes and re-establish their businesses also experienced a significant effect on their future insurance premiums, which rose because the flooding risk was defined as greater.
That experience was made rather worse on 23 December 2012, when virtually the same kind of flooding happened again. I know that there are some disputes about how the water may have flowed and how it got to where it was, but we can say simply that, as with the incident three years earlier, the water fell out of the sky and it ended up 4 feet deep on the High Street of the old town.
That second incident had the effect of making some properties and businesses uninsurable. Over the past few days, I have taken the opportunity to speak to several individuals who have some experience of the effect of the flood. One lady told me that the excess on her home insurance for flooding purposes increased from £250 prior to the two flooding incidents to £5,000 today. One business in the old town now has insurance cover with an excess of £25,000. Another business—a garage—simply cannot get insurance to cover it against the effects of flooding. Thus, the on-going impact of flooding can cause specific problems in certain areas such as Stonehaven, which serves to inform us about the issue.
In terms of the petition, my assessment is that there is a problem with the use of cross-subsidy, which is when insurance companies choose to charge a slightly higher premium across the board in order to cover for extreme eventualities. That may be a justifiable principle in many cases—after all, that is what insurance is about—but, as the petition points out, because of the difference in risk we in Scotland may be paying slightly over the odds for our insurance.
Sadly, the problems that the petition seeks to deal with do not include those of people who are already in an extremely difficult position in relation to insurance. That is why I welcome the fact that, in their opening remarks, both the mover of the motion and the minister took the opportunity to broaden out the debate to talk about the nature of risk and the requirement to ensure that risk is reduced.
The people who suffered two floods in a three-year period will, of course, take the view that something should have been done, but I welcome the fact that the current minister, Paul Wheelhouse, was quick to visit Stonehaven after the second flood, which was the first for which he had ministerial responsibility. I welcome the fact that he talked to people when they were still under the pressure of having been flooded only a couple of days before, and that he has continued to take a positive interest. There were delay and procrastination in the three years between the incidents, so it is essential that we do not experience those again, which is why I will continue to call on the minister to use the powers that are at his disposal to encourage progress to be made whenever possible.
What about those who suffered as a result of the increased insurance premiums and who will continue to do so? Whatever solution we find for the problems, it is essential that it delivers affordable insurance even for those who know that they are in at-risk areas. The old town of Stonehaven has a lot of older housing that has been effectively redeveloped and modernised. A number of small businesses in the area have become very resilient because they simply have to cope with recurring incidents. However, if we do not find a solution, the alternative could be that those areas of the town will be largely abandoned—the business will move out and the houses will perhaps remain empty. I do not want that to happen.
When I visited the High Street yesterday, it was full of vans belonging to workmen who were in the houses and business properties that are working to return the town to its former glory, to prepare for the tourist season, which we hope will be successful, and to ensure that everybody gets back into their houses at the earliest opportunity.
In spite of the minister’s little poke about our being better off independent, I will forgive him on this occasion because I believe that he is taking the correct approach. If we do the right thing and follow the right course of action, we can find a way to ensure that insurance is affordable across the board for those who require it and, more important, we can find a way to ensure that those who have been hit by flooding, and in some cases hit again, can get affordable insurance and can continue to plough their course against Scotland’s increasingly inclement elements.
Thank you, Presiding Officer. I am grateful for your generosity, and I am sure that my constituents—one of whom is Alex Johnstone—will be, too, because, sadly, they probably know more about the subject of flooding than any other group of constituents in Scotland. We have had plenty of experience. I thank the minister for coming up on what I recall was Christmas eve to see the problems at first hand. That was very much appreciated by all those who were involved.
Alex Johnstone rightly mentioned the flooding of the old town in Stonehaven on 22 and 23 December last year. He did not have time to mention that, only a week before, the north end of the beach had been flooded, but this time by a high tide and a strong easterly wind, which wreaked a great deal of damage and which must have been a dreadful experience for some of the elderly folk who live there in sheltered housing. I suspect that they still have not returned. That was dreadful and came only a week before the events that Alex Johnstone helpfully discussed.
On 21 October last year, further south in my constituency, I was wading through the overflowing South Esk in River Street, Brechin. With a few sandbags, we just about got away with it, but it really was close. Again, the minister has visited the area. There is a prevention scheme there, as the minister will be well aware. The scheme needs a significant amount of money; that is just about ready to go, and I hope that the scheme will be proceeded with very rapidly.
The whole of the Mearns experienced heavy rainfall and there was widespread flooding, especially in Fettercairn, where a flood went straight through a shop and disappeared down an alley. In Marykirk, Auchenblae, St Cyrus and down to Edzell, which is in Angus, there were significant problems that lasted a long time. They are all being addressed—I will come back to that—but we unfortunately have considerable experience of water. However, several things have followed and, inevitably, I suppose, there are some good things.
Local flood action groups have sprung up in most places in order to improve communications and resilience. They have enabled people on the ground to help the officials in the councils who are working on the matter to develop good solutions—we would expect that. They have also worked to improve warning systems for residents and first responders. It is probably fair to say that we are already in a better place should such incidents happen again, but we recognise that they will happen again.
Another lesson that emerged from the floods has perhaps not been entirely learned. Much of what happened in Stonehaven had something, at least, to do with the effect of trees and other flotsam that had just been left lying around, having come along in the floods, which blocked culverts and bridges, causing them to overflow. I am not convinced that everybody has really learned that lesson yet and I am not sure that we are clearing such stuff from valleys as quickly as we should.
I acknowledge the contribution of the police, fire and rescue and ambulance services, local volunteers and many local authority employees. Their actions were exemplary. There were also, of course, the existing flood wardens, who did what they could.
I will mention the Stonehaven flood relief fund, of which Alex Johnstone is well aware. The minister and I—and, I think, Alex Johnstone—were in the town hall on Christmas eve to see the response of the community in trying to ensure that the children of families who had literally just been washed out of their homes would at least enjoy something that Christmas. That was genuinely heartwarming and we should put it on the record.
Part of the response is the Scottish flood forum, through which the indefatigable Paul Hendy has been providing advice and encouragement. I have a report from him, to which I will return later.
I also acknowledge the Bellwin fund, which has been implemented, and the considerable assistance that the Scottish Government has provided to Aberdeenshire Council in its hour of need across several locations.
The petition that is before us today concerns insurance. The officers of Angus Council and Aberdeenshire Council are working hard and applying intelligence, good thought and engineering. There are many opportunities for local authorities in my area—and, I am sure, other areas—to undertake schemes to reduce flood risks. I use the word “reduce” because we all now understand that we will never eliminate such risks; it is only about reduction.
Schemes throughout my constituency will, of course, be prioritised. They should be. It is inevitable that officers and councils will be concerned about the greatest good for the greatest number. That is the normal way of doing things. We will all be concerned about value for money and, inevitably, we are trying to make the best use of scarce resources. That means that some of my constituents—and some constituents of every other member present—will inevitably find themselves at the bottom of the list or, for practical purposes, not on the list because people never work their way up such very long lists.
I acknowledge the point about cross-subsidy that other members have made. However, regardless of cross-subsidy across countries—this is nothing to do with borders—an element of cross-subsidy is absolutely essential in insurance. I want to ensure that we have got that point. Otherwise, we will find houses and possibly businesses that are uninhabitable and unsaleable because they are uninsurable at the market rate.
We have all been out and about and found the remains of a cottage in a valley somewhere that, once upon a time, was an important place to be. We know what derelict buildings look like. In remote areas, that may just be an economic fact about which we can do nothing. However, we cannot afford to have derelict buildings in the middle of Stonehaven or, to be frank, anywhere else in our communities.
If we happen to have a building in the dip in the High Street in the old town of Stonehaven that will be absolutely guaranteed to flood if any extra water gets down there, we must do something as a society and a community to ensure that that property can be insured. That has to be done in a sensible way—people might have to worry about making sure that the electric cables run down the walls rather than up them, as well as doing all sorts of other things that we know about—but we simply cannot afford to have buildings that are unsaleable and uninhabitable in the middle of our communities simply because the market insists on taking its market view. We just have to understand that.
We must ensure reasonable distribution of risk—that is part of insurance—but at the end of the day insurance is about making sure that things that must be covered are covered even if we have to do so collectively. I do not think it matters how we do that. I understand that local councils are in a position to subsidise council tenants to some extent to make sure that they have housing insurance. Clearly that works only for council tenants; one could hardly expect councils to do otherwise. It will have somehow or other to be done at national level or at society level.
I want to pick out one or two more things from the briefing from Paul Hendy. He has compared the Scottish flood forum’s inquiries into Stonehaven’s floods in 2009 and 2012, which Alex Johnstone mentioned. The numbers in 2012 are very much higher than they were in 2009 and I want to point out some significant ones. There have been at least six inquiries this time around from people whose excess on their flood insurance has been above £1,000. Alex Johnstone has already mentioned some figures. The numbers that I have show that there have been three cases in which the excess is above £3,000 and one case in which it is at least £10,000. For a normal home owner, those kinds of numbers would mean that their home contents were uninsurable. If the house actually falls down, they would be covered, but the contents in ground floors would, in effect, be uninsurable. That has a knock-on effect not only for the state of mind of the person who is trying to get back into a property that was flooded three years ago; how on earth can they sell that house to somebody else, whose mortgage provider will ask, “What is the insurance risk?”
I return to the basic point that while we may not mind having derelict properties out and about, we cannot have them in our communities. Stonehaven is the most obvious example, but there will be others. We have to ensure that whatever solution we come up with recognises the need to subsidise people who are in such desperate situations—“desperate” is the word that we should use.
Might I just have another 30 seconds, Presiding Officer?
We talk about once in 75 years, once in 100 years and once in 200 years flood risks. I think that Chic Brodie mentioned once in 75 years flood risks. We will have to carry on using those numbers, but we have to recognise that they are historical numbers and they will, a bit like rateable values, very quickly mean absolutely nothing. Once in 200 years events will materialise considerably more frequently than once in 200 years. It might be sensible if we do something to change our terminology so that people understand what we are talking about. That is not a problem for this afternoon, but it is a problem that we have to address.
I will help to extend the speech a little bit longer.
In Brechin, in which I know the member has an interest, in terms of a once in 200 years flood risk, the solution that would prevent such a flood there might be so unpalatable in terms of the scale of the infrastructure that we would have to put in place that it would be beyond the pale for the public as well.
We have gone from the numbers to the solutions, but I absolutely agree. That comes back to my basic point that we are never going to prevent floods; what we have to do is ameliorate their effects as best we can. Part of that is about saying, “I don’t really want a 10-foot high wall in front of my building, but I might be very happy to live with a five-foot one that I can see over from my drawing room. If that means that the place is going to be flooded once every 100 years, rather than once every 300 years, I will live with the consequences. I may not be around to have to live with them.”
I have probably covered all the issues that I wanted to cover. I am very happy with what the Government has done so far. I very much hope that it will come up with the money that Brechin needs, because we now understand the solution. We need to ensure that there is enough public funding to ensure that people get the insurance that they need and to ensure that schemes that are sensible and cost-effective are implemented across the country, particularly in Angus North and Mearns, as soon as possible.
As a member of the Public Petitions Committee, I welcome this debate on Professor David Crichton’s petition, in which he calls on the Scottish Parliament to urge the Scottish Government to represent Scottish interests in the current discussions between the Department for Environment, Food and Rural Affairs and the United Kingdom insurance industry.
Before I start, I want to wish the convener of the Public Petitions Committee a speedy recovery. I know that he was looking forward to being here today, but unfortunately he is not so good. I hope that he is soon back in the committee.
I want to highlight the growing concerns of many constituents about insurance companies’ hesitancy to provide cover against flood damage to their homes. Thousands of people across Scotland are suffering from decisions by the Association of British Insurers not to renew the statement of principles on flood insurance when the agreement expires in June. As a result of that decision, policy holders in high-risk areas have been left with no assurance that they will be able to secure affordable insurance policies to cover their assets against natural disasters. Failure to reach an agreement will mean that the cost of household insurance for ordinary home owners is likely to rise substantially. That will result in many families being priced out of an insurance policy that would provide protection for the biggest investment in their lives—their home.
This is not an insignificant or isolated issue that affects only a small number of properties that are located around the coast or near large rivers. This is a huge issue for thousands of households throughout Scotland. Four of the five wettest years on record have been since 2000—we have all got the umbrellas and frizzy hair to prove it. The Scottish Environment Protection Agency has recognised that flooding is the greatest natural threat facing the UK and has estimated that approximately 112,000 homes and 14,000 businesses across Scotland are at serious risk of flooding.
One out of every 22 homes and one out of every 14 businesses in Scotland are considered to be at risk from coastal, river or surface flooding. That means that a huge number of homes and businesses throughout the country face dramatic increases in the cost of insurance if a workable solution is not found in the near future, through negotiation between the insurance industry and Government.
I understand that positive steps have been made towards reconciling some of the issues that have been highlighted by the Association of British Insurers and the working procedures of the statutory bodies that are charged with oversight of flooding concerns. Such an agreement has been reached with 29 of the 32 local authorities, meaning that relevant information can be shared through the Scottish flood defence asset database with stakeholders, including insurance bodies, for the task of price setting.
I welcome that development and recognise that much more collaboration is necessary between local authorities, Government and the insurance industry to bring about a resolution that benefits home owners in areas that are most at risk of flooding. I am concerned that the date of extinction of the previous agreement is fast approaching, and I am aware that families and businesses in Scotland would appreciate the certainty that a renewed statement of principles would bring. I urge stakeholders to work together, with urgency, so that we can provide affordable, comprehensive insurance policies for those individuals who are at risk of being unable to afford the most basic cover for their property against the threat of natural disaster.
Thank you, Presiding Officer.
Although I am a substitute member of the Public Petitions Committee, I was not involved in hearing the evidence on the topic. However, I have been substituting in recent weeks, because although David Stewart is incapacitated, so too is my colleague, Adam Ingram. We wish them both a speedy recovery.
I welcome the fact that the petitioner, Professor Crichton, has brought his considerable knowledge on the subject to the committee in highlighting the problems that are faced. I suspect that members do not have to be on the committee to know about the problems, because many people go to MSPs’ surgeries with flood-related problems.
I welcome the Scottish Government’s positive work with DEFRA, the other devolved Administrations and the Association of British Insurers to make flood risk information more widely available, so that those who are at risk can have affordable insurance. Insurance is a necessity, but it is a pain not only to organise insurance but to read the small print and then hope that everything is covered. That is why it is important that agencies such as SEPA work with the insurance industry to make things better for our constituents.
I understand that data sharing has been an issue, and that the ABI does not have access to the Scottish flood defence asset database when setting premiums. That makes it much more difficult for insurers to take into account flood risk when setting premiums for people in Scotland. SEPA has been working with the local authorities. I was pleased to hear the minister say that all 32 local authorities have now responded to the requests.
The Scottish Government has been proactive on the issue of reducing flood risk. “The National Flood Risk Assessment”, which was published in December 2011, provides for the first time a national picture of flood risk across Scotland. That is a major milestone towards Scotland targeting efforts to plan and invest in reducing the impacts in those areas that are most vulnerable to flooding. The sum of £8 million has been invested in developing a state-of-the-art national flood warning dissemination service. In addition, a joint Scottish flood forecasting service between SEPA and the Met Office has been established.
I want to make the case for prevention to be at the top of the agenda. By that, I do not simply mean putting in place flood defence systems; such systems are often extremely expensive and, as Elaine Murray and Stop Climate Chaos Scotland highlighted, their infrastructures are extremely carbon intensive. Other forward planning by councils and SEPA is also needed.
I am pleased, for example, that SEPA has relaxed restrictions on deepening straight watercourses. However, landowners must be encouraged to clear and deepen ditches and burns much more and to allow land to be set aside for upstream flooding. I know from helping a constituent in Portlethen, who has been flooded twice in recent years, how difficult it is to ascertain who the landowner upstream is and to contact them and encourage them to act. I am not sure whether the powers of enforcement exist with local authorities or SEPA to force landowners to act. Furthermore, when a householder is encouraged—as my constituent was—to build their own flood defences around their property, there seems to be a lack of agreement among the agencies about what is required for, or will be acceptable to, insurance companies.
Surely, councils have an obligation not to allow residential or commercial development on flood plains. I for one am not convinced that it is sufficient for the builder to put in earth defences between a development and the watercourse. Such developments simply should not be allowed.
New developments can disturb the water table and normal watercourses. That is a problem for my constituents at Checkbar, and near where I live in Durris a new development has disturbed the watercourse, so that existing properties are more liable to flooding. It is disturbing that no one seems to want to take responsibility for alleviating such problems. I have had to hold meetings to get builders, SEPA and the council round the table and knock heads together to see how problems can be resolved. Meanwhile, people are living with flood risk.
I am not sure that developers and local authorities adequately take account of the disturbance of existing watercourses and the water table when they consider proposed new developments. Does the minister know of anything further that can be done in that regard?
I understand that people in the merchant quarter of Kevin Stewart’s Aberdeen Central constituency have had difficulties with insurers because of constant flooding in the locale. Kevin Stewart told me that many affected businesses have had to wait ages for payouts and face the prospect of not getting insurance at all unless Scottish Water and the council resolve the problem to the satisfaction of insurance companies.
As members said, for many small and medium-sized businesses one flood is a tragedy that might tip them over the edge; more than one flood is often far too much for a business to bear, particularly when insurance companies leave people in the lurch.
Although some householders who experience flooding do not have a good experience with their insurers, some insurers try to help as much as possible. We need consistency across the industry, and we need something in place that can replace the statement of principles.
I hope that the flood risk assessment maps and plans that are produced under the Flood Risk Management (Scotland) Act 2009 will provide information that enables the insurance industry to offer premiums that more accurately reflect the lower risk in Scotland. I hope that the information that is held on databases can be shared with the industry, so that individuals’ premiums more accurately reflect the risk.
You could easily be mistaken for Father Christmas today.
As many members said, two issues are at play. One is Professor Crichton’s direct call, in his petition, which sets out an important case in relation to Scotland’s contribution to the UK-wide flood regime and asks whether the current arrangement should be fundamentally changed. The other is the closely associated question of whether there will be a UK flood regime at all.
News report after news report has signalled that there is all but an impasse between the UK Government and the insurance industry. The longstanding agreement on UK-wide provision expires on 30 June. It is as though a great-grandfather clock were looming over us and ticking, with every swing of the pendulum taking us nearer to the deadline.
Although transitional arrangements are less than ideal, I welcome the minister’s comments in that regard, because a firm deal that sets out matters after 30 June is probably beyond us, given the timescale, and the existence of transitional arrangements will ensure that the wildness of the free market is not set loose on all the households we represent that have issues with flooding.
Let us make no mistake about this: back in March, the AXA UK chief executive Paul Evans warned that unless there was an agreement between the ABI and DEFRA, homes in flood risk areas would become “unsellable”. His views are shared throughout the industry and, worryingly, it all seems to be a bit of a who-will-blink-first negotiation. Before the new year, the media reported that a deal had to be in place by Christmas to ensure that it could come into effect over the summer; however, deadlines keep whooshing by and we are none the wiser.
I want to go back some time to April 2000, when the Water of Leith in my constituency burst its banks in a flood that no one who was there has forgotten. Hundreds of households along the river were affected and, as anyone who has seen the pictures will know, Murrayfield—not just the area, but the stadium itself—was inundated. After a very long battle involving a public inquiry and after the difficulties that arose from the overnight change in the financial climate in 2008-09 and the resulting rethink, my Roseburn and Murrayfield constituents are only slightly more protected than they were 13 years ago. When at a recent community council meeting, the subject of the 2000 floods came up—believe me, it always comes up—a resident who had lived in the area since she was a girl recounted her memories, rattling off dates like a history book right back to the 1960s and demonstrating how the same story had been repeated. Last year, there was a near miss that in other circumstances would have been the next instalment of the recurring cycle of flooding in the area; fortunately, however, and thanks in no small part to Scottish Government-funded works upstream at the Braid burn, the risk has been reduced slightly.
Nevertheless, the Water of Leith is currently projected to flood much more than once every 75 years and as a result my constituents face crippling insurance premiums—and that is before we take into account climate change concerns, which mean that those figures will need to be reviewed. Of course, the flood alert system is valuable and one would rather have it than not, but what a warning to get first thing in the morning: “Your house might be flooded today, so take action!” The people of Murrayfield and Roseburn want to put such traumatic experiences behind them.
Thanks to Scottish Government funding to the council, flood defences have been put in place further downstream at Stockbridge and Warriston but budget overruns mean that, although Roseburn might finally see diggers in the ground next year, they will be working on only a trimmed-down scheme or second-best alternative paid for with leftovers. A solution for Gordon MacDonald’s constituents further along the Water of Leith at Longstone is even further off.
As the minister well knows, I have lobbied the Government quite extensively on this issue; indeed, we met as recently as last Tuesday when I pressed for Edinburgh to have a seat at the table at the next round of national funding. I sense that the Government will be guided by the Convention of Scottish Local Authorities on the crucial eligibility issue. For my constituents, the key issue in being able to protect their homes and indeed insure them against flooding is that eligibility be extended to older flood schemes that, as a result of the changed financial circumstances, require additional support. Obviously, that will result in a more crowded field of applicants but my constituents stand more chance as one group among dozens competing for funds than they do if they are left out of the competition entirely.
The member’s points are very valid. Edinburgh was unlucky in just missing the 80 per cent funding cut-off, which means that the scheme has ended up being funded by the council, and I welcome the member’s lobbying of the minister. However, does the member agree that in the areas that have experienced a disproportionate amount of flooding, the investment has been a huge burden for those taxpayers to bear? Do we need to consider a national approach that is not just about bidding but enables local authorities to have some certainty on this issue?
Either we have a system in which local authorities make individual decisions from their individual pots or we have a nationalised system, which will always have some bidding element. It is not fair to say that local taxpayers have borne the cost of the Water of Leith scheme, because the Scottish Government has made funding available through the general capital grant. Of course, that money has not been ring fenced. The criticism of de-ring fencing flood funding is that a council could take the money and spend it on something else, but it is quite clear to every party to the Water of Leith project that the City of Edinburgh Council has spent the money allocated for flooding on that very issue. Although the sum has been substantial and has delivered a great deal, there have been difficulties with contractors as well as all the other issues that arise with major projects and, as a result, we have been left in a less than ideal situation.
I know that applications in Renfrewshire have been ruled out because of ineligibility on the same basis as the Water of Leith, therefore I urge MSPs throughout the country whose communities may be similarly affected to lobby COSLA along with me to get its seat at the table. My constituents want the protection, and it would be perverse if it were not reflected in their insurance.
I welcome the fact that commercial licences are now likely to happen as a result of the 32 local authorities giving their consent. SEPA’s flood risk map shows Roseburn and Murrayfield in the at-risk zone, but it also shows Stockbridge, just down the Water of Leith, in the same at-risk category even though its defences were virtually in place when the map was completed. There are three very distinct groups that the new insurance regime needs to capture. It needs to ensure that, in Stockbridge, where the defences are in place, the insurance reflects that protection at least somewhat and it needs to ensure that my Roseburn constituents can get insurance at all.
The third and largest group in my constituency—and probably in every other MSP’s constituency—is those who face little or no risk, who deserve Professor Crichton’s core point being taken on board at least somewhat. Given that Scottish planning policies have deliberately and consciously sought to reduce flood risk while, by all accounts, English planning policies appear to have gone in the opposite direction, it seems perverse that Scottish households are now paying, by the ABI’s figures, at least £151 million per annum extra to shore up inappropriate development elsewhere. It is one thing to accept the sharing of risk; it is quite another to create moral hazard whereby planners are rewarded rather than reprimanded for poor decisions.
In the light of that, it is perhaps no wonder that the ABI walked away from the previous deal and that such long and fraught negotiations are going on. We are fast approaching 30 June and for my constituents—whether they are in Stockbridge, Roseburn or anywhere else—a deal is very sorely needed.
I welcome the work that is being undertaken on this important matter across the UK by many people from all walks of life. I especially thank the petitioner, Professor David Crichton, for bringing a petition to the Scottish Parliament on such a critical issue. In Scotland, we are fortunate to have someone who seems—according to his resumé—to have given much of his life to intensive work in this particular sphere of interest. His work seems to be influencing many people across the spectrum of those who are involved in addressing flooding and its impact.
The petition’s focus on insurance is crucial to many of my constituents, for many of whom the looming threat of the end of the present deal is deeply worrying. The two worst areas in the Cowdenbeath constituency are Cowdenbeath itself, where blackspots affect many families, and Rosyth, where numerous families are affected. Insurance is uppermost in people’s minds when flooding takes place. It was hard for families in Cowdenbeath who had been put out of their homes for up to two years while the floods did their worst and ravaged the insides of their homes when, only days later, they had to move back out of their homes—which they had only just moved back into—because flooding had hit a second time. One family had been out of their home for two years and were devastated. The big worry that those families had was whether they would continue to be insured.
When I visited the flood-stricken areas, I had photographs taken of the area. I am shown standing in what seems to be a massive lake in the midst of a housing scheme in Cowdenbeath. The constituents blame Scottish Water, which blames Fife Council, which blames Network Rail. In the meantime, my constituents are distraught. To be flooded is horrendous and to have the fear of having no insurance protection is a nightmare. I have had similar issues to those that Maureen Watt mentioned in helping constituents. There are areas, such as the Raith estate in Cardenden, where private estates are negligent in the maintenance of their land and flooding is created because they have not cleared the old trees and debris that block culverts, as Nigel Don rightly stated. The smooth flow of the rivers is affected severely and the homes nearby are under severe threat and have been flooded.
It is excellent to learn that SEPA has completed a national flood risk assessment that provides a detailed picture of flooding impacts. That assessment identifies that, in Scotland, one in 20 homes and one in 14 businesses are at risk of flooding. SEPA’s work enables all those who are involved to develop a co-ordinated response to tackle flooding more effectively.
With its huge coastline, Fife is among the most vulnerable areas in Scotland. I served as a councillor in Fife for 13 years. In that time, I was roads and transportation spokesperson, a role that included responsibility for matters to do with coastal erosion and flooding. I recall the entire side of a home in West Wemyss being demolished in minutes by the force of the waves. Thankfully, the family survived, but they were traumatised.
Coastal erosion is serious all round Fife. It affects Limekilns, Aberdour, the famous Wemyss caves and St Monans, as well, no doubt, as other areas that I have not mentioned. I live right on the coast and when I look out of my window, I am always worried by the various articles that suggest that the total rise in sea levels off the UK coast may exceed 1m and could reach 2m by 2080, and that the frequency of intense storm events is expected to increase and, along with the rise in sea level, to lead to more coastal flooding. When I look out from my home at the water, I think, “Hmm. We might just get away with it.” My fingers are crossed.
I was pleased by the recommendations that Professor Crichton made as part of his three-point plan, which he described as a cheap, simple, quick and popular three-point plan to limit increases in flood insurance costs in Scotland. He asked the Scottish minister to write an open letter to the Association of British Insurers and the chief executives of each of the major insurance companies to remind them of some of the 42 important ways in which the flood risk in Scotland is lower than it is in England and to ask their underwriters to recognise that the UK is not a homogeneous risk, and that Scotland and Ireland should have their own flood insurance pool, which should be separate from that for England and Wales, and should be exempted from bluelining for any council area that has established or which participates in a flood liaison and advice group with insurance representation.
Professor Crichton also asked the minister to produce proposals to implement current building standards retrospectively in respect of insurance repairs following flood or storm damage. Scotland already has excellent resilient building standards for new build, so it could easily apply current building standards retrospectively to the repairs of any properties that are damaged by floods or storms. The primary legislation is already there. That would enable and require insurers to adopt a resilient reinstatement policy to adapt existing building stock in Scotland for climate change after a flood or storm claim at no cost to the taxpayer. Insurers have told Professor Crichton that they would welcome that if there was a level legislative playing field.
Over time, a more resilient building stock would produce lower flood and storm claims costs, despite climate change. It would also reduce the amount of building material that goes to landfill after a flood or storm and the embedded energy costs of making new building materials, which would reduce emissions and improve Scotland’s adaptation to climate change.
Finally, Professor Crichton asked the minister to ask HM Treasury to seek ways of ensuring that any Government flood levy that is collected in Scotland is spent entirely within Scotland to help low-income families in flood hazard zones, ideally to fund Scottish insurance-with-rent schemes for household contents, especially for social housing.
I wish the minister and everyone who is working on this vital area all the very best, and I hope that my constituents might be able to secure support from some of the funding that might become available in due course.
I am pleased to contribute to the debate, not just as a member of the Public Petitions Committee but as a member with a constituency that includes areas that are at a high risk of flooding. Before I go further, I thank Professor David Crichton for bringing the issue to the committee’s attention.
Given that more than 6,000 low-lying homes around the Firth of Forth are at risk of flooding and perhaps about one third of them are in my constituency, the issue is very real for many of my constituents. Flood maps that were published a couple of years ago showed that Grangemouth and Longannet, on the other side of the Forth, are vulnerable to a flood expected to occur once every 200 years. SEPA puts the average cost of potential damage from that at £230 million a year.
Falkirk Council and SEPA are on the case and take the risks extremely seriously. We also have the Grangemouth regulatory review group, chaired by Professor Russel Griggs, looking at the issue as we speak—in fact, the group will meet next Monday. Actions include looking at flood defence schemes for Grangemouth to protect housing and nationally important industries such as the petrochemical plants, with cost estimates ranging from £40 million a few years ago to about £100 million today.
Without wishing to sound too alarmist, as we all know—except for climate change deniers—the frequency and severity of flooding are expected to increase due to climate change, so that the large floods that used to happen every 100 years will start to appear every 20 years or even every decade. That is a clear danger, and some properties at high risk of flooding could become impossible to insure, particularly if rainfall and storms increase as climate experts say that they will. Average rainfall in east central Scotland, for example, rose by 50 per cent between 1961 and 2004.
There have been situations when residents in my constituency in, for example, Grangemouth’s old town have been refused insurance. However, I am happy to report that, thanks to the helix project and the extension that is under construction of the Forth and Clyde canal out to the River Forth, measures have been taken that will significantly reduce the risk of flooding in the area, as the canal will take any excess water away. I therefore hope that homes that were uninsurable will receive cover once more.
Other examples of good work that is under way in my constituency to reduce flood risk include an exciting new project to recreate a rare and vanishing habitat for wildlife that will also aim to champion sustainable flood management in the Forth. The £150,000 Skinflats tidal exchange project, or STEP Forth, has seen the transformation of agricultural land at RSPB Scotland’s Skinflats reserve through the excavation of pools and creeks and the insertion of a pipe into the sea wall to allow the Forth to flood the site. Over time, the flow of the tidal water will create salt-water pools and salt marsh on the reserve, benefiting many types of birds and other wildlife, such as otters. In addition to dealing with the flood risks, the project will assist biodiversity.
A new flood embankment at the back of the site will contain the water in the reserve and ensure that no other properties or land are affected. Although it is on a small scale, it is hoped that the project will demonstrate the potential of an active flood management programme whereby less sensitive land can be sacrificed during flooding incidents to alleviate pressures on built-up areas. The project ticks many environmental boxes and, if the minister can find time in his busy schedule, I encourage him to visit the project, perhaps during his summer tour.
STEP Forth is the first project of its kind in Scotland and is a model for sustainable flood management. If enough land was managed to allow high tides naturally to flood coastal land, flooding could be alleviated for thousands of people living in my constituency. I thank SEPA, the Forth Valley and Lomond LEADER programme, Falkirk Environment Trust, Avondale Environmental Ltd and Scottish Natural Heritage for the funding that allowed the project to happen. I also thank Falkirk Council for its support for the project. I understand that SEPA is to apply similar techniques and lessons learned in other suitable parts of Scotland.
When such positive action is being taken in Scotland, it makes it all the more galling that an insurance stealth subsidy exists. People in Scotland are paying more in insurance because we are, in effect, subsidising the high risks in England. The cross-subsidy has already been mentioned, but it is worth noting that as many as 22 per cent of homes in England are at risk of flooding, compared with less than 5 per cent in Scotland. Because of pressures on space, more than one in 10 new properties in England are still being built in flood-risk areas—that has not happened in Scotland for years. Estimates suggest that Scottish householders are paying for property development in south-east England by contributing to a £200 million a year stealth subsidy for insuring buildings in areas at high risk of flooding. To keep insurance costs down for thousands of home owners on English flood plains, households in Scotland are being charged higher premiums.
Sadly, there have been precedents in excessive hikes in insurance premiums, and experts suggest that Scots in high-risk areas could expect insurance costs to rise by as much as 70 per cent. That is similar to the price hikes that were imposed on residents of Morpeth in Northumberland after it was flooded in 2008. As well as higher premiums, insurance companies are likely to demand much higher excesses, as Alex Johnstone said when he spoke about Stonehaven. One in five householders surveyed in Morpeth now have excesses of £4,000 or more for flooding. The issue must certainly be addressed when the negotiations continue.
I have a lot of sympathy for the petitioner’s aims, although it is clear that the Scottish Government and SEPA have been proactive on the issue. It is a concern that there are reports of sticking points regarding the renewal of the 2008 statement of principles of flood insurance, which is due at the end of June. I would appreciate it if the minister gave us a further progress report on that, given his reference to uncertainty due to delay at Westminster, and further details on the transitional arrangements, which I think that Claire Baker asked for. Perhaps the minister could update the committee.
I am sure that we all look forward to the sharing of SEPA’s flood risk data and information with the insurance industry through the Scottish flood defence asset base and the proposed use of an internal commercial licence. That will go some way to address the issues raised by the petitioner and provide a lasting solution that ensures affordable insurance for those at flood risk, but it will not place unsustainable costs on wider policy holders and the taxpayer. To ensure that what is wanted happens, it is imperative that industry has access to that information, and in turn the industry must play its part when setting insurance premiums in Scotland.
I thank the petitioner, Professor David Crichton, for highlighting to the Public Petitions Committee and the Parliament the issue of flood insurance. I welcome the debate about that important issue that the committee is holding.
As members will remember, in 2008 the Scottish Government and the Association of British Insurers signed an agreement called the statement of principles on the provision of flood insurance. It outlined that the ABI and the Scottish Government would work together to increase the understanding and awareness of flood risk, develop a strategy to reduce the risk of flooding throughout Scotland, encourage action to minimise the risks and costs of flooding to the Scottish people and provide essential information on how to obtain flood insurance and on access to insurance for low-income households.
Since then, I note that the Government has been engaged in discussions with DEFRA, devolved Administrations and the ABI on how to safeguard the widespread uptake of affordable insurance for all. That action highlights the Scottish Government’s commitment to ensuring access to flood insurance for all in our society who may have experienced the horrendous effects of flooding or are at risk of doing so.
I recall the Scottish Government’s quick action in 2012 alongside key partner agencies and emergency services—as mentioned by the minister, Paul Wheelhouse—to ensure a co-ordinated response to the problems faced by the whole country. I remember the TV coverage of what happened to parts of Stonehaven during the flooding—there were scenes of devastation and loss of possessions such as furniture and cars. For some, the floods took away memories and cherished belongings. I certainly feel for the residents there.
Having stayed for weekends in Stonehaven for several years, I know the area well. The devastation there surely leads to worry, as many families find themselves needing to sort out their water-damaged homes and possessions. It is particularly difficult for people to do that when they are facing the economic downturn and are feeling the squeeze even harder than before.
It is clear that reducing the risk of flooding is a key priority for the Scottish Government. The national flood risk assessment, which was published in December 2011, provided for the first time a national view of flood risk across Scotland. It was a major milestone towards Scotland being able to target efforts to plan and invest in reducing the impact of flooding on the most vulnerable areas. That action and others further highlight the Government’s commitment to protecting and safeguarding the Scottish people.
I am confident that the Scottish Government will continue to deliver on its commitment to the Scottish people to end the examples of disaster that we have witnessed in Stonehaven and throughout the country when floods hit. Members have commented on negative insurance, and we have to help people to insure at a reasonable price.
The floods and their effects show an even greater truth, which is that climate change is a reality. Scotland is leading the way in renewable energy and cutting its carbon emissions, and the Scottish Government’s commitment to additional climate change action further highlights its commitment to ensuring that we can cope with the effects of climate change and create a more environmentally friendly and sustainable Scotland for all.
I note that the Scottish Environment Protection Agency is working hard to ensure that the insurance industry takes flood risk management work into account. The ABI acknowledges that flood risk is higher in England and Wales than in Scotland. When I look at some of the areas that are being built on in England, I wonder why that is being done.
There is cross-subsidy from high-risk to low-risk areas, which means that those in low-risk areas such as Scotland pay higher premiums to subsidise insurance in higher-risk areas such as England and Wales. As has been mentioned, DEFRA estimates that the total cross-subsidy is £150 million across the UK, while Professor Crichton estimates the subsidy at more than £200 million.
Members will note that, although flood management is a devolved responsibility, financial services are not. With the powers of independence, the Scottish Government—and ultimately the people of Scotland—will be better placed to make decisions on flood insurance and many other areas.
I am one of the lucky ones, as I live in an area that is not subject to flooding, but people in other areas of my region are not as lucky. We must help constituents who face problems with possible flooding in whatever way we can. Insurance must be available to everyone who wants it, at a cost that suits people’s needs. Insurance excess payments must be affordable and not excessive, as members have mentioned today.
I welcome this debate on a subject that is important to all. We have to learn how to cope best with insurance, flooding and the situation that faces many of our constituents. We must draw on examples. My mother-in-law was born in Holland, where every area pays a windmill tax so that the water is kept off the land. Holland is a prime example of a country that copes with flooding. I am not saying that it has the answer for everything, but we have to look at other countries in order to see how we can cope.
I welcome today’s debate and I welcome the points that Chic Brodie and other members have made.
I had little knowledge of the petition as I am not a member of the Public Petitions Committee, and I looked into it only recently. I will not go through the details of it, because Chic Brodie and other members have explained them well.
On the issue of cross-subsidy, although it is clear that a lower percentage of properties in Scotland are at risk of flooding, SEPA’s recent letter to the committee said that it does not fully accept the argument that there has been no development on once-in-200-years flood plains in Scotland since 1995. It feels that such a claim cannot be substantiated, so we should not be too complacent about flooding.
As other members have said, SEPA advises that approximately 112,000 residential properties and 14,000 business properties—one in 22 homes and one in 13 businesses—are at risk of flooding. As recent weather events have demonstrated, the problem is worsening every year.
I should perhaps declare an interest, as my constituency office is one of those 14,000 business properties that are at risk of flooding. In fact, it has flooded twice since 2009—that experience is even more common for businesses that are situated by the River Nith on the Whitesands.
We could have a flooding competition. I am sure that Nigel Don agrees that, until it happens, we do not realise how devastating flooding is. It is not like when the bath overflows. When rivers and drains flood, the experience is completely different.
On 19 November 2009, a month’s rainfall was deposited in one day along the River Nith. I get SEPA’s flood warnings, and on that day, they were issued for the Whitesands and the bottom of Friars Vennel, where my office is situated. We took on that constituency office back in 2000 and, at that time, we were told that there had sometimes been flooding in that area. However, until 19 November 2009, the highest that the flood waters had ever reached was on to the steps outside the office. Apart from having to roll up my trousers to wade out of the office on occasion—a spectacle that, I am sure, amused passing constituents—I had never experienced anything worse than that.
We all had a false sense of security. When the flood warning came, we removed furniture from the lowest part of the office, thinking that the water would come in there, and we thought that we were safe. In fact, the flood water came into the office at a height of about 18 inches in the main part of the office, and it caused several thousand pounds of damage.
On that one flooding occasion, the cost of the damage to Dumfries was estimated at £5 million. My office had to be rewired and replastered, and the telephones and electricity were out. All the files in the bottom of filing cabinets were contaminated with water that contained sewage and had to be taken away to be burned, so some of my constituents’ files no longer exist. The office carpet had to be taken up and much of our furniture was soaked in sewage-contaminated water, so it also had to go.
I can advise members that the smell is appalling and that it gets worse over days. It is also extremely cold. Nigel Don mentioned Paul Hendy, who became very familiar with Whitesands, Friars Vennel and, indeed, my office after the flooding, as he came round with various people to stick probes into the walls to see whether they were drying out.
We had to get rid of stationery and stamps that had been stored in the cupboards—that all had to be destroyed. My Westminster colleague had tower computers on the floor; they were all damaged and had to be sent back to Westminster for some boffin to recreate the disks and get the information off them. We had dehumidifiers running—ineffectively—for what seemed like weeks.
However, what struck me was that at least that was only my workplace, and I could turn the key in the door and go to a nice warm home at night. That really brought home to me how devastating flooding in the home must be, because that affects people’s personal belongings. Ours was just a parliamentary office. I do not mean that our job is not important, but it was not a business that we had painstakingly built up over the years as were most of the properties that had been affected by the flooding of the River Nith. Many of those properties were involved in the preparation and retail of food, and we can imagine the damage that flood water does to the equipment for that. People had to buy tens of thousands of pounds-worth of equipment to replace what they had lost.
Our insurance premiums did not go up, but the excess shot up. Indeed, the excess for some of the properties that were worst affected went up by about £5,000, and some cannot get insurance at all now.
Needless to say, almost two years to the day later, we had a similar warning and the flood water came back in again. Between times, Dumfries and Galloway Council had assisted businesses with the purchase of flood gates so, in 2011, we managed to seal all the doors to the office so that the water could not get in. I was quite pleased with what I had done. We had got sandbags that inflated when they came into contact with water and I was sure that we were well sealed. I went down at half past 10 at night and poked my head around the door, and the carpet seemed to be dry, but the next morning, it was absolutely soaked. The water had come right round the back of the property and in through the wall. The measures that I took do not seem to work with old buildings.
Did anybody in Dumfries experience what happened in Stonehaven, where flood barriers were put up to stop the water coming into houses through the doors, and sometimes the windows, but it was forgotten that, once the water got into the drains, it would come up through the toilets?
Something similar happened to one of the properties across the road from us. The water was kept in, and it did not get back out again until the doors were opened. Those are difficult situations.
Over the years, there have been a number of discussions about how we will deal with flooding, and that is a frustration for people—we have talked and talked about what we will do about flooding. Many years ago, somebody came to demonstrate a temporary flood barrier that we could put along the side of the river, but the proposal was never taken up, because there was a dispute about who would be responsible for taking it down, where it would be stored and who would install it. That never happened.
We have also discussed opening up the flood plains further upstream, which would be very much in the spirit of the Flood Risk Management (Scotland) Act 2009, which promoted sustainable solutions. I believe that that has now been discounted as a solution, although I am not quite sure why.
Dumfries and Galloway Council recently organised something called a charrette. I got quite excited when I heard that there was going to be a charrette on the Whitesands—I thought that it might be some sort of French festival, but apparently it was some sort of discussion about possible ideas for tackling the flooding of the River Nith. The problem is that, although ideas are being exchanged, the finance is not there. That will always be the problem. Since then, nothing very much has happened. In the end, it will come down to funding.
I sympathise about some of the problems that the member has described. We discussed the Whitesands issue in committee. Having said what she has said about some of the problems that we experience in Scotland, will she accept that, in 2010, the Dutch Government—which knows a bit about flooding—held up Scotland as an example to the rest of Europe as to how to work on flood management?
I was a member of the Rural Affairs and Environment Committee, which examined the Flood Risk Management (Scotland) Bill and the Reservoirs (Scotland) Bill, and I agree that we have done a lot in Scotland in terms of passing legislation.
The prevention of flooding is better than insurance. It does not even matter whether someone is insured when such destruction gets into their home and causes so much disturbance. Preventing the flood from happening in the first place is the best solution, but that costs an awful lot of money. That is the problem.
As other members have said, as we build more throughout the countryside and as the climate changes, flooding incidents are getting worse. How we identify and fund the required measures is a major problem. Money is not the only problem with the River Nith, although it is a big problem. I do not think that anybody is quite sure what the solution is. We hear many different ideas, but we do not know what the solution is.
I asked a councillor with whom I am very well acquainted what was happening and what the council was doing. He said that he would bring the matter up with the planning, housing and environment services committee at its next meeting to find out what was happening. There is a difficulty in identifying the solutions, which I am sure is also true for Stonehaven and other places.
Thank you, Presiding Officer, for giving me the chance to relate our experiences of flooding, which I hope might be useful to future deliberations.
I, too, am very pleased to speak in this important debate, held at the instigation of the Public Petitions Committee, on flood insurance problems. I, too, pay tribute to the admirable determination of the petitioner, Professor David Crichton, in ensuring that the petition was lodged, and of course now we have the opportunity to debate it.
This is indeed an important debate in light of the very significant impact that flooding has on people’s lives. It has had a very miserable impact across Scotland, as we know—in Cowdenbeath, in Perthshire and in many other parts of Scotland.
There is not just the horror of the water coming in, as happened in Comrie, the village that I am very pleased to call home, on 27 August and again, sadly, on 19 November last year. The problem is not just the damage to precious and, in many cases, irreplaceable possessions. It is not just the smell that is left in the house and the dampness that creeps up the wall—Elaine Murray is nodding, as she will remember exactly what it felt like in her office after the incidents in Dumfries. In the case of the family home in particular, it is not just the need to evacuate, with the endless months of being relocated, packing and unpacking, being inconvenienced and living out of suitcases, which is especially unsettling for families with children.
Another absolutely miserable impact in, I believe, far too many cases is the requirement to have constant arguments with the insurance company—at a time when people may be vulnerable emotionally—when all that people want to do is to secure what they are entitled to under the policy for which, in many cases, they will have already paid handsomely.
A useful study for the ABI might be to look at a double flood event such as happened in Comrie, where two floods occurred within a short space of time, to see how the insurance industry fared in treating its policyholders. Such a case study would provide useful feedback to the ABI and its members and they would be able to see whether they rose to the occasion by treating their policyholders within not just the letter but the spirit of their contractual obligations. As far as I am aware, in far too many cases in Comrie the verdict would be that there was considerable room for improvement.
Of course, the misery that people experience from a flood does not end with the flood event itself, with subsequently signing off the deal that has been reached with the insurance company—which may happen many months after the fact and after much tortuous to-ing and fro-ing—or with getting back into the family home. Many people in Comrie were just about to get back into their home when the second flood hit them. However, the misery is not over then because, when people then try to renew their policy, they are often quoted a vastly increased sum of money for their insurance premium and the entirely unrealistic excesses that we have heard about, which render the cover nugatory. Frankly, an excess of £4,000 is ridiculous. Recently, a policyholder in Comrie contacted me to say that when she tried to renew her policy with the company that she had been with for quite some time, she was quoted an increase in her premium of some 250 per cent.
That brings me to the very crux of this afternoon’s debate, which is about what can be done to ensure that insurance companies base their premiums for policyholders in Scotland on the facts. How do we ensure that premiums are based on a proper risk assessment that takes due account of both the circumstances in Scotland as a whole, in terms of our Government’s policy positioning, and the local circumstances in different parts of Scotland where remedial works have been undertaken?
I very much welcome the strenuous efforts of the Scottish Government to seek to make Scotland’s voice heard in the on-going discussions between the ABI and the UK department DEFRA, with the looming expiry of the statement of principles. However, we must recall that the regulation of the insurance industry is a reserved matter. That is a fundamentally important point because it means that, at the end of the day, there is no way to ensure that any deal done is properly reflective of Scottish interests.
As we have heard, there is a continuing fear that, through increased premiums and excesses, policyholders in Scotland will pay increasing cross-subsidies to deal with the much greater flooding risk south of the border, where, for reasons that are unfathomable, risks are simply being ignored in local planning policy. It is important to recall that, whereas in Scotland one in 22 properties are at risk from flooding, south of the border the equivalent ratio is in the order of one in six. That speaks for itself, and it begs the question: why should policyholders in Cowdenbeath or Comrie pay higher premiums to subsidise policyholders south of the border?
To a certain extent, the ABI briefing questions Professor Crichton’s analysis. The ABI argues that there is more sophistication in the setting of premiums, whether in Scotland or in England, but it highlights the lack of appropriate information as an issue. Will the member perhaps respond to the points that have been made by the insurance sector, which does not agree that there is a significant level of cross-subsidy throughout the UK?
The ABI is a big organisation that can fight its own battles; I am fighting for the interests of individual policyholders who find it difficult to get a fair deal from insurance companies. I am happy to speak up for them. The figures speak for themselves. I understand that, in Comrie, more information has been made available directly to insurance companies, but ridiculously increased premiums are still being quoted. Clearly, something is not working in the ABI if it believes that its figures, rather than Professor Crichton’s, are correct.
I welcome the progress that SEPA has made in finally securing the permission of all 32 local authorities in Scotland to share the data that they provide with the Scottish flood defence and asset database. I hope that the information will feed into serious consideration by the ABI of basing risk assessment in Scotland on the facts.
I will conclude on an issue that I have raised previously in the chamber, so members might know what is coming. I encourage the minister to see what he can do to ensure that all local authorities are more proactive about communicating with the ABI and, importantly, individual insurance companies about what local authorities are doing in their areas, particularly when they have a good story to tell in that local remedial works have been undertaken.
Some local authorities, such as Perth and Kinross Council, helpfully issue a so-called “To whom it may concern” letter that details the works that they have undertaken. However, I urge the minister to see what he can do to ensure the proper dissemination of those important letters. At present, a letter relating to Comrie is languishing on a website somewhere, which is not helpful to the many policyholders who do not have access to computers. It is also not particularly helpful for a local authority to suggest that such a letter could be distributed to each household, but perhaps via the hard-working volunteer leafleters of the local community council.
I speak as a member of the Public Petitions Committee, the role of which has evolved over the years. It is an important committee, as it is regarded as one of the key public access points to the Parliament, as highlighted by this afternoon’s debate. The committee has examined petitions that have brought issues of importance to wider awareness. That is illustrated by the petition from Professor David Crichton, who has highlighted flood insurance problems and, in particular, the problems associated with flood-damaged property. The committee actively considers ways to fully investigate the issues behind petitions, whether that be through a detailed inquiry and report, as in the case of petitions on access to cancer treatment, or a debate such as this one on the problems of flood insurance.
The solution to the issue under discussion is not to be found at local level and is not straightforward. The Scottish Government clearly has a role in developing solutions that are in the Scottish interest, as detailed in the petition, although that role is restricted. As members have said, that is principally because financial services, including insurance, are currently a reserved matter, although the sector is important to Scottish industry.
As many members have said, the Association of British Insurers does not intend to renew the agreement that it made with the Scottish Government in December 2008. The agreement, which is due to lapse in a couple of months’ time, relates to the provision of information about how to access flood insurance and is particularly important for low-income households. Much has been made of access to flood insurance. Alex Johnstone spoke about £5,000 excesses. Such issues hit those on the lowest incomes the hardest, and particularly those who are struggling to get into the housing market. Every mortgage company tells people that they must have property and contents insurance before they get a mortgage. If the cost of insurance policies becomes prohibitive and individuals cannot afford them, how will they get into the housing market?
The insurance policies are excessive and insurers keep on hiking up prices and excesses. It is all very well for an insurer to say to someone that they can sell them a household insurance policy for a £300 premium, but the excess becomes prohibitive and it takes only one flood risk to knock the family right off and, potentially, for them to end up losing their home. That is only one aspect of the costs to such households of the agreement on reinstating flood-damaged property.
Other members have already referred to the fact that the Scottish Government has been engaged in regular dialogue with DEFRA, as the minister outlined in his speech, about how to ensure the uptake of reasonably priced insurance. The issue is reasonably priced insurance.
The UK Government statement of 11 July 2012 on flood insurance has created some substantive issues, as detailed by the petitioner. There are serious issues with the assertion that any renewal of the agreement would somehow hinder the development of a free market in flood insurance. That is assertion over fact. The statement does not detail the problems that are associated with climate change.
The ABI does not recognise that it should have a degree of corporate social responsibility on the matter. The most basic building and contents insurance policy asks at least two questions on flooding when a consumer seeks home insurance. In particular, it asks whether the property to be insured has had a history of flooding over the past 10 years.
In its consideration of the petition, the Public Petitions Committee noted that the Scottish Government had already commissioned the University of Dundee to research matters associated with the petition, especially flood insurance and the impact on those who are more at risk and are attempting to access house insurance.
The petitioner raised another important issue with the committee: the fact that legislation exists that allows insurance companies to recover the costs that are associated with flood damage. The Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 allows insurers to sue a developer for recovery of any flood claim costs. The committee asked the ABI whether insurers companies had raised any cases to recover any flood costs. It responded:
“No, we are not aware of any occasions when the ABI has sued a developer for the recovery of flood claim costs. We do not believe that this is because insurers are unaware of the Law Reform Act 1985. Insurers would need to prove that planning permission was given due to negligence on behalf of some party, maybe the planner or the developer or both, probably based on their assessment of the risk of flooding. This would never be easy.”
We know from the situation south of the border that housing developments are being built on identified flood plains. Scottish householders are being asked to pay the cost of those developments. Does the same legislation exist south of the border to allow the insurance companies to challenge developers and others and recover some of the costs that are associated with flooding in those areas? As other members said, it is clear that developments have taken place south of the border on flood plains and that every person who is looking for household insurance is being asked to pay the price.
Nigel Don and Marco Biagi raised issues with people being able to sell on their homes if they have been affected by flooding. That is an important factor, particularly in historic towns such as Stonehaven. Those are not new estates that have been built in the past 25 or 30 years but historic towns and there are issues for the people who live, and the businesses that operate, in such town centres.
As my colleague Angus MacDonald indicated, someone would need to be a climate change denier not to accept that we are faced with coastal, river and flash floods and the build-up of surface water throughout Scotland. We must tackle those issues. He did not go into quite the detail that he has gone into in the committee on the fears about, and dangers at, Grangemouth, which is a major industrial complex, or the impact on the economy of not only the area but the whole of Scotland if something serious were to happen there.
I put on record my appreciation of all the emergency services that attempt to deal with the effects of flooding when it happens. We should show our appreciation for the organisations that step in to try and alleviate the worst effects of flooding in particular areas.
I welcome the actions by the Scottish Government on this issue to date and look forward to a positive outcome that resolves many of the concerns raised in Professor Crichton’s petition on flood insurance.
I welcome the opportunity to debate the petition, the work of the Public Petitions Committee before Parliament and the opportunity to stress some of the issues surrounding the petition. I look forward to many of the issues being resolved as early as possible and to the satisfaction of the people of Scotland.
Presiding Officer, the generosity of the chair has run out. I am quite glad about that, because having spoken earlier I have probably said a lot of what I was going to say. However, a number of things have come from the debate on which I want to remark—and one or two on which I will perhaps challenge the minister to comment.
The first point has come up a number of times, when we have been talking about the nature of shared risk—namely, the suggestion that south of the border they are more inclined to build on flood plains and that consequently the risk is rather higher. However, to accept that—which I do, by the way—would be to deny that we have a similar and corresponding problem here in Scotland. We have a grand example back in Stonehaven, where I was earlier. It is not that we are building on flood plains, since the flood area has been populated for many hundreds, in some cases perhaps even thousands, of years. The issue in Stonehaven concerns the decisions on planning applications around the town. If we build new roads and new roofs and surface over large areas in the immediate vicinity, that means, of course, that when it rains, the rain runs off a great deal more quickly and the likelihood of flash floods is much higher.
It could be argued that much of the development in the Stonehaven area has already contributed to a higher risk of flood in the bottom of the town, based entirely on the fact that when the rain falls on soft ground, it can take hours or days to reach the bottom of the river, but when rain falls on a hard surface and runs directly into a drain, it can be down there in minutes. That is perhaps one of the causes of our problems and should be taken into account in future.
Is Mr Johnstone implying that the developers are not putting in appropriate drainage and underwater courses to ensure that the water runs off from those hard surfaces?
I know that the application of local building regulations has gone a long way towards dealing with the problem. However, I suspect that the kind of rainfall that we have experienced on one or two occasions in recent years is far in excess of what even those regulations were designed to avoid.
I have a couple of brief points before I come to a close.
I will carry on in the meantime.
One of my concerns relates to the local authority and its responsibility for dealing with the flood problems in Aberdeenshire. Both locally and on occasion in this chamber, SNP members have suggested that Aberdeenshire should pay for flood prevention work, because it has a cash surplus. Surely Aberdeenshire should be treated in the same way as other local authorities, regardless of how prudent it might have been in managing its own finances. I would like the minister’s reassurance that Aberdeenshire will get the same support, when necessary, as any other local authority would.
Surely the minister will have a chance to make his point when he speaks later.
When I spoke earlier, I thought that I was talking about a unique occurrence of a double-flooding event, in which a second flood caught everybody out almost before they had dealt with the first one. However, during the debate, we have heard from Elaine Murray and Annabelle Ewing about similar events. I wonder whether we might be justified in asking the minister to make a desktop case study of double-flooding events to see whether there are any lessons to learn that we have not previously learned. As a result of the evidence that we have heard, it seems that such incidents are much more common than I thought they were a couple of hours ago.
The main issue that I want to deal with is cross-subsidy or shared risk—both terms have been used today. In fact, we heard Angus MacDonald use the term “stealth subsidy” and say that Scottish people were paying insurance to support people south of the border. However, as I said earlier, the nature of insurance is sharing risk. Of course, we could debate endlessly the precise point at which shared risk stops and cross-subsidy starts—the two terms are synonymous.
By defining Scotland as a separate area, we could perhaps gain cheaper insurance against flood risk. However, I wonder how much work has been done to assess whether it would be counterproductive to apply the same mechanism to fire risk or car-crime risk. If we did that, we might find that we would lose as much as we gain.
It is important that we understand the nature of risk. That is where the advice of those who work in the insurance industry is vital. This debate has brought up a subject that is much more complex than the simple issue of flood insurance, but that is what it has, essentially, been about. We know that there are people across Scotland today who might be paying higher premiums in order to support those who might need to be supported through their insurance. However, we also know that there are many people in Scotland who—by virtue of the fact that they have been flooded before—have been identified as a high risk and consequently are not enjoying an opportunity to share the risk with others.
Although I fully support the idea that we need to keep insurance premiums as low as they can be, within reason, and I fully accept that we do not wish insurance premiums to be restrictive, particularly on those who find them difficult to afford, we also need to be sure that we have an insurance industry that can cover its costs, can pay out claims when they are made and understands its responsibilities. That is why I welcome this petition, which has given us the opportunity to point out the many difficulties that we face and the problems that we will have to surmount as we seek to ensure that, ultimately, we can provide affordable insurance for those who live in flood zones.
In the 14 years since the Parliament was established, there have been numerous debates on flooding. We have made a lot of progress over that period with regard to planning policy and investment. In that sense, it is particularly disappointing that we have to have this debate today, but it has been difficult to get a sense of what will happen after 30 June, what the transitional arrangements will be and what the new regime will look like.
Clearly, the insurance industry is attempting to reduce its costs and deal with the fact that there are increasing incidences of flooding. The Stop Climate Chaos briefing quotes Scottish Government figures that suggest that the risk of flooding might double in some areas by the end of the century. That is the context for this debate; the situation is a real challenge.
Members spoke passionately about the problems that their constituents have experienced and how some of them have faced those problems not only once but twice or more. That is a human cost. People feel nervous every time it rains heavily. There is also a huge economic cost because of the damage to industry and the lost opportunity. Nigel Don questioned whether we can allow some areas to be economically unviable. Will some people’s houses or businesses become worthless? What is the social and economic impact of that?
All those points must concentrate our mind on what practical things we can do—and there is a lot that we can do. We must do everything that we can to push the insurance industry to act with corporate social responsibility so that, while those big companies make money from providing us with insurance, they do so with a sense of social justice and solidarity underpinning their business.
I hope that the minister will take up those crucial issues in all his discussions and that they are on the agenda with the UK Government and the industry. The 14 per cent of people who live in high flood risk areas and cannot get insurance need a voice. They need to know what will happen and that there will be something to support them, whether that is the insurance industry or Government stepping in as a last resort.
The most intelligent approach would be for the insurance industry, supported by Government, to ensure that we have a cost-effective insurance industry. As Alex Johnstone said, both the Government and the industry involve an element of cross-subsidy and social protection across the country. Whether the border is that between Scotland and England or England and Wales, or whether it is between people in Glasgow and Renfrewshire or between people in different parts of the Lothians, the problem is growing across the country, so it is an issue that must concern us all.
Some practical things can be done. All councils have now bitten the bullet and said that they are happy for the industry to access the relevant database. If the debate achieves nothing else, it will have at least achieved a timescale for that to happen. I hope that the minister will be tough and push as hard as he can to ensure that the licensing regime comes into place as soon as possible. That is crucial because it will mean that there will be no place for an insurance company to hide or say that it did not know about some information. There are different views among the insurers about how important that will be, but it is important that there should be a proper set of information to allow risk to be judged.
The second issue that I want to comment on is resilient buildings. The Parliament can make building regulations, and it is possible for the minister to require more resilient reinstatement. That makes sense—not only in the long term, but the medium term—for buildings that might potentially be flooded. If flooded again, a more resilient building will cost less for reinstatement the second time, so it also makes sense financially. Perhaps the Scottish Government needs to push on the issue to see whether more resilient reinstatement can be brought about through changes to building standards. Helen Eadie spoke very effectively on that matter.
Other members spoke about the benefit gained by knowing about potential flooding and how it might happen again. We know that flood risk is impossible to eradicate completely. A short-term marginal investment could bring large long-term benefits for householders and businesses. That would be a very practical thing to do.
Members also mentioned the issue of planning. I draw members’ attention to the fact that there is a consultation on Scottish planning policy. A fairly significant part of the document talks about flood risk. Although we all convince ourselves that planning procedures in Scotland now mean that there is no building on flood risk areas, the detail in the planning policy does not quite match that aspiration. There are always planning applications that come in and there may be an argument about it. For example, members have heard evidence that brownfield development makes a huge amount of sense for some parts of Glasgow, but some of those developments will be in flood risk areas. What we need is not no development but intelligent development—knowing all the facts and risks and then building in resilience and mitigation.
Alex Johnstone’s mentioned run-offs. The issue is not just about the building of structures but the management of the land thereafter. For example, people routinely convert their gardens from grass to concrete. That makes a difference, but people do not necessarily have that information. A few members talked about the need to bang heads together, and Maureen Watt talked about her experience in that regard. We have a lot of expertise in Scotland, but not everyone who needs that expertise has automatic access to it. Whether we are talking about planning committees or builders, we need to ensure that everyone knows enough when planning decisions are taken. I hope that members will consider the planning policy document and ensure that the precautionary principle is built into the final version as strongly as possible—the same goes for building standards, too.
The Accounts Commission published a good document recently, which highlighted cost-effective flood management investment. There is an issue to do with sustainable flood management; there is also an issue about the cost of flood management projects. Marco Biagi quite rightly mentioned the Edinburgh scheme, which is expensive. There are issues to do with delay in that regard and there are issues to do with expertise across the country. Flood management works need to be more sustainable, in the context of both the cost and the environment.
This has been a timely debate. It has been interesting and helpful to hear members’ views on flood insurance. I thank members for their many insightful contributions; I will pick up on issues that members raised before I make some closing remarks.
Interesting points have been made. Maureen Watt said that new developments can disturb the water table. The issue should be dealt with as part of the planning process, but I will ask my officials to consider whether there is more that we could do to ensure that it is considered at an earlier stage.
Elaine Murray talked about property-level flood protection. The issues in that regard are well known, which is why the Scottish Government will fund further research on property-level protection with a view to ascertaining the best system for individual householders. A one-size-fits-all approach does not work. Flood guards are no good if the water comes up through the floor—I think that it was Alex Johnstone who talked about water coming up through the sewers. As I said, my Hawick office is in a flood area, so I myself have taken property-level prevention measures.
Chic Brodie suggested that the new SEPA flood risk maps have been delayed. The maps were always planned for the end of 2013. I confirm that they are on schedule; we anticipate that they will be ready by the end of this year.
Sarah Boyack talked about the need to quantify the cost of flood protection. I partly addressed the issue in my opening speech. The new flood risk management plans, which will be provided by the end of 2015, and the local flood risk management plans will provide indicative costs of the flood risk management measures that are in the plans, as well as prioritising those measures.
Of course, the 2009 act helps Government and COSLA to judge which applications from local authorities represent the most strategic investments, which need to be prioritised at national level. I reassure Alex Johnstone that Aberdeenshire Council will be treated like any other council when it makes an application, regardless of its capital or current reserves.
John Wilson and other members made important points about insurance for low-income households. The Scottish Government encourages people who rent in the public housing sector to take up insurance-with-rent schemes, where such schemes are available. I recognise that that is not always possible.
I turn to some of the more substantial points that have been raised. A number of members mentioned the flood re scheme, which is the front runner among the options that might be available to the UK Government and ABI. I know that the UK Government wants a scheme that involves some form of pooling. It is possible that legislation will be required if there is agreement on such a scheme across the industry and Government. That would cause the delay that I mentioned in the context of the need for transitional arrangements to cover the gap. I am reasonably optimistic that a solution will come and, having spoken to the UK minister today, I am reassured that the Government is working hard to find a solution.
A number of members raised the subsidy issue. It is worth pointing out that, although an individual household in a high-risk area might be subsidised to the tune of £450, the subsidy across all policyholders is in the relatively modest region of £6 or thereabouts per premium. However, although it does not place a huge burden on individual policyholders, it would be desirable to avoid it if at all possible. Under the flood re scheme, that informal arrangement would essentially be formalised.
Members have highlighted a number of local flooding situations. I reassure the chamber that I will take on board examples of double flooding as in Stonehaven and Comrie, and I will ask my officials to look at those incidents and assess the scale of the impact of double flooding. In response to Annabelle Ewing, I will certainly speak to the ABI about her reasonable suggestion of looking at Comrie as a case study, as it would certainly inform our thinking. On Sarah Boyack’s point about a licensing scheme, we certainly want such a scheme to come forward as soon as possible.
With regard to the points raised by Professor Crichton himself, I am happy to write to the ABI to emphasise the lower flood risk in Scotland and see whether that will have an impact. As for building standards, I note that they already require mitigation for new build but I acknowledge that the main issue is the older buildings that are flooding and what happens thereafter. We feel that the insurance industry is probably best placed to assess individual properties and determine the measures that are required. Introduction of such a requirement in building standards legislation would add a significant burden and it should be relatively simple for the insurance industry to require appropriate resilience work to be carried out as the condition of a claims settlement. Nevertheless, we will continue to look at the issue.
With regard to members’ questions about the Scottish Government’s discussions with the ABI, I point out that we have had positive discussions with Aidan Kerr and have asked the organisation to look at the extent to which individual property-level prevention schemes might be taken into account in setting premiums and ensuring successes. As with neighbourhood watch schemes and, say, the installation of a burglar alarm on a property, such prevention schemes should be taken into account in reducing individuals’ premiums and as a means of encouraging people to take further action. We must also acknowledge the industry-wide problem of some insurance companies cherry picking premiums and deliberately leaving out those at higher risk of flooding, and I hope that any solution will eliminate such a risk.
As I am aware that time is passing, I will move to my closing remarks. The range of this afternoon’s debate has shown the consensus in the chamber for flood insurance to be both available and affordable to those at risk of flooding. The devastating impacts of flooding are bad enough where people have insurance—I have seen that devastation for myself in places such as Stonehaven—but the prospect of families and businesses suffering from flooding and having no insurance cover to help repair and replace their property is appalling.
I am sure that, as the constituency member for Stonehaven, Nigel Don will know that according to the Scottish flood forum’s assessment one in 10 people affected by that flood were not covered by insurance. Since becoming a minister, I have met many people who have endured the recent storms and flooding, and I have seen at first hand the damage and distress that the floods have caused. I have seen communities such as Stonehaven at their best despite nature doing its worst.
In the aftermath of the recent flood in Stonehaven, the Scottish flood forum has, as I have pointed out, advised that 10 per cent of those affected did not have flood cover and that many of those with flood insurance face excesses of between £2,000 and £10,000. In fact, from what Alex Johnstone has said, it sounds as though those excesses might be even higher.
Despite the current public spending constraints, it is clear from the many flooding incidents in 2012 that a long-term programme of work is needed to address flood risk, particularly when the potential impact of climate change is taken into account. We should make no mistake: as members have pointed out, we have a minimum of three or four decades of change in our weather and climate to come.
I assure the chamber that the Scottish Government will continue to work in partnership with SEPA, Scottish Water and local authorities on measures to reduce the risk of flooding from all sources, and I should take a moment to acknowledge the work that SEPA, local authorities and Scottish Water have already done in helping to reduce flood risk in communities across Scotland. Their continued commitment to protecting communities wherever possible is essential and their work makes a real difference.
The Scottish Government has taken a number of steps towards achieving our goal. For example, the Flood Risk Management (Scotland) Act 2009 streamlined the decision-making process for new flood prevention schemes by removing the necessity for central Government approval where there is local consensus. The act also places new duties on all responsible authorities to co-operate and act to reduce overall flood risk. In addition to the flood risk assessment that has already been published, the act requires SEPA to produce new flood risk and hazard maps by the end of 2013—I made that very point to Chic Brodie—and the first national flood risk management plan by the end of 2015.
The flood risk management plan that is under development will set out the national strategy for managing flood risk and the measures to be undertaken. The research that we commissioned in 2012, which I mentioned earlier, made it clear that it is important that the people and businesses in flood risk areas of Scotland—particularly the most vulnerable groups—have access to affordable flood insurance while flood protection measures are being identified and developed.
The brief for this speech is that I must be consensual and non-partisan, which is of course what I do.
I will outline how the debate came about. When it was first discussed in the Public Petitions Committee that we should bring the petition to the chamber for debate for three hours, Adam Ingram gave me something of a sideways glance and raised his eyebrows. David Stewart was, however, emphatic that there would be an overwhelming demand among members to participate. He then promptly put his leg in plaster and ensured that he would not be here to participate himself.
In so doing, David Stewart has missed a debate with what must be a record number of record-length speeches from members. There have been almost House-of-Commons-style opportunities for members to speak and develop their arguments, and I congratulate all the members who have done so. The longer length of speeches has allowed real issues to be explored and teased out in a way that we sometimes do not see. At one point, when Nigel Don and Elaine Murray explained that their political offices had been washed away by floods, as a Conservative I began to wonder whether there is, after all, an upside to the whole issue. However, when I heard that those were parliamentary offices and taxpayers’ money was at stake, that thought was immediately quashed.
When a debate on the same subject was held just a few weeks ago in the House of Commons, the minister Richard Benyon, who has been referred to several times, summed it all up by saying that most members’ contributions can be assessed as this:
“We want a decision and an announcement soon, because our constituents are worried.”—[Official Report, House of Commons, 26 March 2013; Vol 560, c 1545.]
We should not lose sight of the point of the petition. In 54 days’ time, the statement of principles expires. In the event that we do not have an alternative arrangement in place, there will be a free market arrangement in place for the insurance of homes across the whole United Kingdom. That will have dramatic consequences for some people, who will find that their homes are virtually uninsurable. When we bear in mind the fact that, for most home owners, a primary condition of their mortgage is that they have insurance in place for their property, that is an issue not just for people who will need to find new insurance but for home owners who will find that they are in breach of their existing mortgage covenant. Therefore, the issue is of enormous significance.
As has been said, some 23 per cent of properties in England but only 4.5 per cent of properties in Scotland are at risk. It is also important to remember that the petitioner was not seeking a renewal of the current statement of principles, which is a separate agreement with each of the Governments of England, Northern Ireland, Wales and Scotland. He recognised that that might not be in the best interests.
The point that the petitioner was making is that the statement of principles—which was underpinned by a demand in 2002 that the Governments have stricter planning, that more money be spent on structural flood defences and that more resilient building regulations be adopted—has largely been implemented in Northern Ireland, Wales and Scotland but not in England and that, therefore, people in Scotland are to some extent subsidising insurance costs in the rest of the United Kingdom.
This chamber wants the Scottish Government to represent the argument with the Westminster Government. When Paul Wheelhouse said that Scottish interests are being represented, I tried to tease out what exactly those interests are. We want to encourage him to have a dispensation reflected in whatever emerges for Scottish home owners, given that the situation now is not as critical as it is elsewhere in the United Kingdom. I will return to that point.
As Anne McTaggart said, four of the five wettest years on record have occurred since 2000. We have heard about the consequences of that in Stonehaven from Alex Johnstone and Nigel Don, in Cowdenbeath from Helen Eadie, and in Edinburgh from Marco Biagi. Nigel Don went beyond the other speakers in almost qualifying to be a member of the United States Senate with a filibuster special in the time that he was allowed. I should not overlook Elaine Murray, either, who spoke about the River Nith. As I think that Nigel Don said, we do not necessarily want such flooding situations to be examples that we can point to of communities rising to the occasion, but what happened in December in Stonehaven was certainly one such example.
Maureen Watt made an important point about new development, the addition that it makes to the water table and the displacement that it causes, which is sometimes overlooked. We should recognise that, regardless of the arguments that we might have from time to time about climate change—I see that the Greens have now arrived; they normally detain us with their views on these matters but they did not feel it necessary to be with us while we were talking about flooding and climate change—one of the realities that we face as a result of climate change is flooding. Therefore, we must consider how much money we are investing in flood defences.
Flood management investment was an issue that Sarah Boyack mentioned. As Owen Paterson said in evidence to a House of Commons committee, effective flood defence work also brings back into use land that was otherwise not suitable for development, which can have a profound effect on economic regeneration in the area concerned.
Am I going to be able to keep this going?
Sarah Boyack rose—
I thank the member very much for taking an intervention.
I want to ask him specifically about the resilience of buildings, which the petition raised. The minister commented that he thought that it might be onerous for the insurance industry to have to reinstate properties to a higher level so that they are flood resistant or resilient. Does the committee have a view on that? Would it like to explore the matter further?
It is not an issue that we went into in any great depth, but I think that we accept that it is an important one and that all the aspects of the original statement of principles must be progressed if we are to have a sensible solution.
When earlier I referred to the situation, I said “now” because, although at the moment the situation is better in Scotland than it is elsewhere in the UK, we cannot know what will happen in the future. Maureen Watt, Helen Eadie and others touched on the fact that much of our infrastructure is an old infrastructure that was built to deal with the consequences of a different climate and that it is under enormous pressure. That means that, when there is flooding, we find that tributaries are becoming blocked, which is putting additional pressure on the system. We need to be mindful of such issues.
I think that the minister missed out an extremely important consideration—he did not deal with Anne McTaggart’s frizzy hair issue, which she raised as a key development that relates to flooding. I waited for the minister to give her the reassurance that she sought; it is clear that she was looking for a ministerial intervention and a Government policy to address her concern, but none was forthcoming.
What is important is that the Scottish Government recognises that it has a part to play in putting pressure on the UK Government to arrive at an agreement with the insurance industry. The UK Government is right to ensure that we arrive at the right solution. I think that the flood re scheme that has been mentioned would lead to the formalisation of a premium that would give an additional level of security, but we cannot allow the UK Government or the Scottish Government to be left with a commitment to write an open-ended cheque to bail out the insurance industry.
The insurance industry is obviously holding out for what it sees as the best deal for it, but the deal that is reached must be the best deal for home owners and taxpayers, as well as for addressing the risks that are associated with flood management. It is important that we arrive at a solution that is the right solution in all respects. [Interruption.]
You could have gone on admonishing them for a bit longer, Presiding Officer—that would have been most welcome.
One of the things that I think every member will have experience of constituents complaining about, and which seems ridiculous in this day and age, is that, when it rains, many people find that they have raw sewage arriving in their gardens and homes because the infrastructure that we have is not capable of dealing with it. Whatever we invest in the future of energy supplies in relation to the development of the climate, we should remember that the flooding consequence are ones that we have to deal with today and that they are of primary concern to many of our constituents.