Exclusive: Plan to limit flood insurance 'has failed to protect the poorest', says Tim Farron

MP says many constituents can’t afford insurance and must live in damaged homes

Tim Farron, leader of the Liberal Democrats, has claimed that his Cumbrian constituents cannot afford flood insurance (Charlie Forgham-Bailey)

The Liberal Democrat leader, Tim Farron, has claimed that his Cumbrian constituents cannot afford flood insurance even though a deal between the industry and Government was supposed to make cover affordable since 2001.

Mr Farron, who represents Westmorland and Lonsdale, told The Independent that the deal, known as the “statement of principles”, failed to keep cover down to an affordable level. He said premiums were still costing poor people £2,500 a year “at best”.

This meant that many residents could not afford the insurance, so families in parts of Cumbria badly hit by Storm Desmond this month had to remain in their flood-ruined homes. They did not have cover to let them live elsewhere while repair work was undertaken.

The damage to the Cumbrian economy from the latest flood was estimated by PricewaterhouseCoopers at £500m, nearly double that of the deluge that devastated the county in 2009. Mr Farron said: “I come across people in my patch [constituency] every week for whom even in a good week they can just about make ends meet. For them to spend money on contents insurance, they just don’t have the money – they make a budget decision. So they’re not feckless, they are penniless, and now they are destitute.

“If you look down the main road in one of the larger council estates in my constituency, where of course many of the houses have been sold and are now privately let, you see lights on in some houses despite the fact that they’ve been flooded out. You know that they are people who are uninsured and they have got nowhere else to go.”

The statement of principles will be replaced next year by a new scheme, Flood Re. This will be funded by roughly £180m a year to reduce insurance for homes built on floodplains through a £10.50 levy on each household in the country with both buildings and contents insurance.

Mr Farron thinks this will be a better scheme, but is concerned that it will no longer cover commercial property.

The Government recently decided that a separate scheme for small businesses was not necessary as there was plenty of alternative cover dealing with the consequences of flooding readily available. Small businesses have criticised ministers for dropping this plan, colloquially referred to as “Flood Re 2”.

Most flood insurance is based on the assumption that these events will take place only once every 100 years. Mr Farron argued that these models needed to change given the frequency at which storms were appearing.

He said: “What the floods in Cumbria prove is that climate change is a real, visceral thing which destroys lives, and it is something that will have increasing consequences.”