01.08.2007

Compensation, not insurance

Eddie Ford comments on the floods: Communists argue that in the event of a disaster or major accident any redress made should be based on a system of need, not individualised insurance schemes. And logically this requires that a universal compensation system be set up

After weeks of the worst flooding for nearly 60 years - under weather conditions which the environment agency (EA) has described as "phenomenal" - thousands are still struggling to return to some vestige of normality. So far, five people have been confirmed dead and many are unable to return to their homes - effectively turned into internal refugees, as whole towns in England and Wales were deluged by the rainwaters. Then, of course, there is the massive cost of repairing and rebuilding the battered infrastructure.

At the beginning of the week, Gordon Brown promised more funds in order to address the situation - which would see the government incrementally raising the flood defence budget by 2011 from the current £600 million a year to £800 million.

Now the insurance claims are pouring in, from over 50,000 householders and businesses. According to the Chartered Institute of Loss Adjusters, the average domestic claim amounts to £30,000, and for businesses it reaches £100,000. Hence, the insurance companies have estimated - no doubt with some trepidation - that flood claims could top £3 billion or more. But, of course, the eventual total may end up several times that. For instance, the National Farmers' Union - that well known philanthropic organisation - said it expected the bill for lost or damaged crops, livestock and milk sales to run "into the billions".

Also eager to defend their own profit margins, the British Hospitality Association has called for a moratorium on local business rates - on the grounds that some hotels, restaurants and tourist attractions might be closed for months while they are being repaired. Bob Cotton, the association's chief executive, said businesses "needed support from the government, the utilities and the banks in order to conserve cash flow and recover" (Financial Times July 27).

Under pressure, chancellor Alistair Darling has magnanimously announced that businesses and people affected by the floods would be given extra time to pay tax and national insurance contributions - and that the interest and surcharges on late payments would be waived. And in the same spirit of selfless generosity, the doubtless delighted residents of Hull - which took a major battering - will receive a massive 25% discount on their council tax bills. It must be nice to know that the government cares.

Unlike most of Europe the UK does not have government-backed schemes to meet the claims of costs resulting from 'acts of god'. Instead, the cost is met by the private insurance companies - who, to put it mildly, are not charities. Indeed, quite naturally, the insurance companies will do what is required to cost their own costs and not pay out whenever possible - which will mean suddenly discovering those obscure sub-clauses and sub-sub-clauses. The upshot of all this legalised chicanery is that large numbers of people, quite outrageously, will not receive any - or pitifully little - payouts, leading to desperate hardship and misery.

Unsurprisingly, some people are accusing the insurance companies of "profiteering" from the floods. And, yes, the companies are warning that premiums are likely to rise - arguing, poor things, that they will have no choice but to impose additional costs in order to offset the statistically aberrational number of claims. For the last 10 years, because of the steadily increasing competition in that sector, the average premium has remained stable at around £150 a year - but no more, it seems. Mortgage slavery is about to become dearer.

Workers are going to be paying, quite literally, for the cost of the floods in another way too - that is, in the form of increased food prices. In the words of NFU vice-president Paul Temple, the effect on flooded farms has been "phenomenal in terms of productivity". Thus in West Midlands alone, the NFU estimates losses will run into tens of millions of pounds. Among the crops worst hit are potatoes, broccoli, cauliflower and peas - so in north-east Herefordshire, one farmer has lost something in the region of £500,000 worth of potatoes. As for Hereford and Worcester, dairy farmers have had to pour away thousands of pounds-worth of milk because the delivery tankers could not reach them through the floodwaters.

Then there is South Yorkshire and East Riding, which has been labelled a "disaster zone". Between 40% and 60% of the region's pea crop - the majority of which goes to making frozen peas - was destroyed, and more than 1,000 acres of potatoes and field vegetables were devastated. The shortages will bite first within weeks because summer crops are not being harvested, and again in the autumn when those that should be planted now are not ready. Doubly disastrously, Christmas dinners this year might have to be served without Brussels sprouts.

And, of course, most crops are not insured. Farmers protect their buildings and machinery, but most accept damage to crops as a 'trade risk' and therefore are not covered for it. Additionally, the vast majority of farmers are on fixed-price contracts - meaning they get the same price whether there is a good harvest or not. Consequently, or at least in the opinion of Temple, "prices will go up as a result" - though he is certainly guilty of hyperbole by going on to claim that "we are coming to the end of a cheap food era".

Here we have the fundamental irrationality of capitalism, where the automatic response to the flooding has been to reduce it down to a matter of private insurance - and desperate supply-and-demand "profiteering" by the insurance companies and big farmers. Or, to put it another way, the ordinary victims of the flood have been left to sink or swim.

So, for communists, what is to be done? Well, we will most definitely not be backing the 'solutions' proffered by the right reverend Graham Dow, the bishop of Carlisle. In the pages of The Sunday Telegraph, Dow suggested that the flooding was a result of "decadent" society's decision to ignore biblical teaching - especially on marriage and homosexuality. Like the lunatic evangelicals who crawled out of the fundamentalist woodwork after Hurricane Katrina, Dow sees the recent natural disaster as a sign that "the sexual orientation regulations" - ie, gay rights laws - are "part of a general scene of permissiveness", which leaves us all "in a situation where we are liable for god's judgement" (July 1).

Nor are the answers to be found, disappointingly enough, in the Socialist Worker. Rather, last week's edition limply points the finger at Brown for making cuts in the department for environment, food and rural affairs (Defra) and the EA - which has "seriously damaged the ability of local agencies and councils to deal with the floods", not to mention the "increasing concern at the continued building of housing on flood plains without proper flood defences". Instead, the editorial goes on to uncritically back a report produced last year by a House of Commons environment select committee, which "warned of the dangers of building on flood plains", urged the government to "give the EA more powers to stop this" - and also "recommended that flood defence funding should increase to £1 billion" (Socialist Worker July 28).

And the latest edition is no better, presenting the issue as purely a trade union one of opposing job cuts. Hence the paper moans about how "cuts have already meant the loss of two thirds of the regional engineers in flood management", and then gives us the near obligatory quote from one of its current pin-up boy wonders, general secretary Mark Serwotka of the Public and Commercial Services Union: "There is a real fear that cuts will hamper the ability of Defra to coordinate future responses to floods and extreme weather conditions. We urge Gordon Brown, as part of the promised review into the flooding crisis, to halt the cuts in Defra and ensure that department has the capacity and resources to respond to future floods" (August 4).

Self-evidently, the Socialist Workers Party's reaction to the floods is totally inadequate. Of course, that is not to say that some of the concerns it raises are not legitimate - far from it. However, the viewpoints articulated above are extraordinary narrow, totally failing to confront the much wider questions raised.

So, for the SWP, it is economistic business as usual - oppose the cuts, demand greater spending on flood defences and flood-proofing, give better insurance hand-outs, etc. All of which merely amounts to giving advice to the government, as opposed to providing answers for society - and humanity - as a whole.

Communists, on the other hand, seek to go beyond the immediate, surface appearance of things and ruthlessly criticise everything that exists. This entails looking at nature and the environment on a global scale, and identifying how capitalism despoils and degrades nature on a daily and catastrophic scale. And in turn, our ultimate goal is to replace capitalist spontaneity - or anarchy - with conscious human intervention and democratic regulation.

From this perspective, the UK floods - like Hurricane Katrina and the Boxing Day tsunami - were not 'freak' events. Yes, to coin an ugly phrase, 'shit happens' - floods and hurricanes will occur even under communism - how could it be otherwise? But the consequences of natural disasters are socially determined by the politico-economic characteristics of the capitalist system.

Clearly, for communists, the insurance industry - no matter how regulated or policed - is not the answer, and can never be. As the recent floods have amply demonstrated, it is essentially parasitical - or at the very least, grossly unfair. Instead, we argue that in the event of a disaster or major accident - whether resulting from a natural or only too human set of circumstances - any redress made should be based on a system of need, not individualised insurance schemes. And logically this requires that a universal compensation system be set up.

After all, in one area, such a system already exists - it is called the national health service. When you break your leg, you do not have to hand over your credit card to the paramedic - or present your insurance documents to the hospital administrators. No, you are simply treated on the basis of need - even if, as is often the case, it is done in a poor, inadequate or inefficient manner.