Cost of flooding is rising

Published on Tuesday, 31 January 2012 14:38
Posted by Scott Buckler

The Commons Public Accounts Committee publishes its 64th Report of Session 2010-12, on the basis of evidence from the Department for Environment, Food and Rural Affairs (DEFRA) and the Rural Payments Agency

The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, today said:

"5 million properties in England - one in six - are currently at risk of flooding. The annual cost of flood damage is at least £1.1 billion and ageing defences and climate change will increase that bill.  So flood protection is a national priority.

Yet it is unclear where the buck stops and who is ultimately responsible for managing the risk of flooding. There is also a great deal of uncertainty about whether there will be enough money to maintain and improve flood protection in the longer term, and who will pay.

The Department tells us that it is not ultimately answerable and shares the responsibility with the Environment Agency and local bodies. But the Department has no way of knowing whether local flood management systems are adequate or when it should step in.

It is not acceptable that local people should be left in doubt about where responsibility and accountability lie.

There is a big mismatch between what the Agency reckons it needs to maintain current levels of flood protection and the budget being made available. The Department sees more funding coming from local sources – including businesses and local authorities. We are sceptical that this will be possible when local authorities and businesses are themselves under financial pressure.

All of this is fuelling uncertainty over the future availability and affordability of insurance cover for buildings in areas at risk of flood. The current agreement between the Government and the insurance industry runs out in 2013. A new agreement is needed urgently."

Margaret Hodge was speaking as the Committee published its 64th Report of this Session which, on the basis of evidence from the Department of Environment, Food and Rural Affairs and the Environment Agency, examined how they manage flood risk in England.

Flood protection is a national priority and features on the National Risk Register of Civil Emergencies. Recently the annual cost of flood damage has been £1.1 billion and is set to rise, and 5.2 million homes are at risk of flooding. In 2010-11 the Department for Environment, Food and Rural Affairs (the Department) spent £664 million on flood and coastal risk management, 95% of which went to the Environment Agency (the Agency).

There have been significant changes in the funding arrangements. In 2009 the Agency projected that its flood risk management budget needed to rise by 9% during the spending review period (2011-12 to 2014-15) to sustain current levels of protection, particularly because risks are growing due to climate change. However during the same period the Agency’s flood risk management budget has been reduced by over 10%.

The Department told us that through efficiency savings and the improved use of resources this budget cut will not reduce capital expenditure on flood defences in this spending review period. However, the Agency had not yet adjusted its long-term investment strategy and could not tell us what the scale of the long-term funding gap would be.

The Department has developed an approach to encourage more funding from local sources including private companies and from local authority levies. The Department told us it wants to increase local contributions from £13 million to a £43 million contribution from such sources, although it had not secured these commitments. Expecting an increase in local authority contributions when their resources are reducing may well be over-optimistic.

We were very concerned that the Department did not accept ultimate responsibility for managing the risk of floods. The Department told us it shared responsibility with the Agency and local bodies. We are concerned that there is no clarity about where the buck stops. It is not acceptable that local people do not know clearly where responsibility for decisions lies and which body is answerable when things go wrong.

The Department relies on inconsistent and unstructured intelligence on local flood risk management performance. Local authorities are producing risk assessments but the Department does not have plans to assess their quality. The Department needs reliable information to inform its decisions on when and where to intervene if local risk management plans are inadequate.

As local communities are being asked to pay more towards flood protection and take on more of the risk, the Agency needs to improve how it involves them in the decision-making process and improve the skills of its staff in this regard. Localism is not just about devolving responsibility to local bodies but also about engaging the community in the decision-making process. At present consultation arrangements on flood defence proposals are not consistent across the country and some people feel the Agency is not listening to their concerns.

The agreement between the Department and the insurance industry that insurance cover will be provided to households at risk of flooding ends in 2013.  In some areas premiums appear to have risen as a result of growing uncertainty over local levels of protection. The Department does not monitor insurance charges but it still needs to come to an early revised agreement with industry in order to reduce uncertainty for affected householders.


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