The Boss has some tough words for insurers

Two years on from his second dramatic Cabinet resignation, David Blunkett now calls himself, with uncharacteristic self-deprecation, “a lowly backbencher”. But he seems more like the Blunkett of old when he declares he is engaged in a “long-running battle” with the ABI. He deplores its recent threat to hike premiums or withdraw cover in flood-struck areas if the government fails to increase defence spending.

Speaking after an Aon seminar on the Corporate Manslaughter Bill, Blunkett sits ramrod straight as delegates mill around him, his guide dog Sadie lying quietly by his side, his two ever-present bodyguards (they’ll be with him for life) hovering at a discreet distance, and his fingers resting on top of one of the thick piles of meticulously prepared Braille notes for which he was so well known when in power.

Blunkett has always been a man of conviction – too much conviction, some might say – and the floods are a subject close to his heart. When the news first broke he dashed up to his Sheffield constituency to find scenes of devastation, such as Sheffield Wednesday’s famous football ground half full with water.

Four months on, he believes his constituents are still suffering, and warns that the “victims of the flood must not become the victims of a reluctance to invest in these areas”.

Consummate politician

Asked about his discussions with the ABI (there have been letters back and forth), Blunkett launches into the kind of five-minute, rapid fire delivery speech that used to have presenters, such as John Humphrys and Jeremy Paxman, spluttering in frustration, as they tried futilely to get a word in.

This consummate politician acknowledges, though, the efforts of some parts of the industry. “Some have been extraordinarily good,” he concedes, “not only at organising the loss adjusters and their contractors to get the work done, but also in terms of the pay-out for household insurance, which obviously is crucial.

“This is true of businesses as well,” he continues without pause, “where the slower the turnaround, the greater the problems arising out of lack of liquidity and, therefore, the loss of income and of wages for employees.

“However there has been a problem in two fields,” and here he begins to pick up pace, warming to this theme. “First, where there has not been sufficient and urgent action and a failure to understand what impact that has on businesses and on individuals.

“That has been primarily by not following through what loss adjusters have done and taking proper responsibility for progress-chasing and for monitoring.”

His familiar Yorkshire tones are strident now, as he launches into the core of his attack, an ideological point, always his favourite. “Second, and more worrying, has been the attitude that insurance isn’t somehow covering risk, that somehow the government or the local authority or the business should take on that risk in a way they wouldn’t have been expected to do before the floods,” he says.

Water power

“And we’re talking here about areas of the country where, firstly, there haven’t been floods of this nature for something like 140 years and, secondly, where the very location of business next to a river arose from the fact that this provided the water power, the cleaning power and therefore the driving power of the very industry itself.

“Victims of the flood must not become the victims of a reluctance to invest in these areas.

“You can’t expect companies that have been located next to a river for many generations to suddenly move because one major flood has occurred.”

With his obvious concern for his constituency, this “lowly backbencher” may sound like just another local MP, but remember, Blunkett was once one of the most powerful men in the country, and he has not moved that far from the centre of power.

Indeed he is still working with the government – for example on an initiative to bring American-style school buses to the UK – and he remains closely involved with the ID card programme, one of the most controversial policies from his time in government.

But back to the floods. “I have been worried that the industry hasn’t taken a long view and said this is part of what people pay premiums for – they pay to share the risk. And they have taken a pretty big hit themselves. In fact, there has been a danger in my constituency of companies going out of business, or those that are owned by overseas parent companies thinking well, ok, if this is going to happen or insurers are not going to be readily available to insure a risk, then why should we carry on business. That has been a really grave worry.”

And that was the answer to just one question. Yet Blunkett, reviled by liberals and hounded by the press, despite his stridence and what some have called his Northern chippiness, is a kind and humorous man. He is extremely polite, his Special Branch bodyguards, who rather endearingly refer to him as “The Boss”, make a point of saying how pleasant he is to work for.

He has Aon’s delegates rolling in the aisles with anecdotes that poke fun at his own disability, other people’s stupidity and even the topic in hand, the Corporate Manslaughter Act (as Home Secretary, he spent years trying to get it through Parliament, and he now says that like Zsa Zsa Gabor when she married for the ninth time, “I can remember what it is, I can remember how to do it, but I can’t remember how to make it fun”).

Blunkett is unlikely to let a subject about which he is so obviously passionate as the floods, lie. The ABI has tried to tell him there will be a market solution – that if some insurers withdraw cover, others will offer it – but this is not enough for a natural socialist.

He invokes corporate social responsibility, and perhaps betrays his remaining closeness to government with his insistence that the £800m for flood defences pledged in the recent Comprehensive Spending Review, with a promise to consider further investment following Sir Michael Peak’s report into what happened, is “a very fair offer”.

And here he gives a rather ominous warning: “The insurance industry as a whole should also take cognisance of Sir Michael Pitt’s recommendations when they come out before Christmas, and should be prepared to be partners with government and local government in getting this right for the future.”

If not, intervention is on the table. While Blunkett says he is “not looking” for a statutory solution at this time, he adds: “Unless the situation bottoms out, there is an acceptance that, while the government through the Environment Agency should take responsibility for investing over the next few years, insurance companies actually do need to take the long view. Unless they do, there will be pressure by businesses and householders for them to have to offer a certain level of insurance.”

But there is no time to get into details of this intriguingly veiled threat. Blunkett, half “lowly backbencher”, half “The Boss”, has to hurry to the House of Commons to hear Gordon Brown deliver a key statement on terrorism, his old stomping ground.

Who knows where Blunkett will end up next – but one thing is for sure. He won’t go away, and he is a formidable enemy to have.