Flood Defences (Exeter)

Gavin Shuker Excerpts

Wednesday 22nd February 2012 Westminster Hall

[Richard Benyon]

The right hon. Gentleman, who was a Minister in DEFRA, will understand that these things are done in spending rounds. Very few flood schemes go from conception to commissioning in one year, which is why we base it over a spending review period. The excellent chairman of the Environment Agency will confirm—our figures have been sent to the Public Accounts Committee—that there is a 6% difference. The last Chancellor in the previous Labour Government, of which the right hon. Gentleman was a member, announced shortly before the general election that there would be 50% capital cuts in budgets. I will be generous to the right hon. Gentleman and say that if his party had won the general election it would not have cut the capital budget by 50%, but it would certainly have cut it. I think that he would have also implemented all the recommendations of the Pitt review into those very damaging floods in 2007, part of which form the basis of the partnership funding system that we have introduced, and part of which resulted in the implementation of local flood risk management through lead local flood authorities. That is very important for communities such as his, and I hope that we can work together constructively in the coming months to achieve a result for those people.

It is the nature of flood and coastal defence investment that there are always more projects than national budgets can afford at any one time—there always have been and, sadly, always will be. Some 5.2 million homes are at risk from flooding and we want to protect as many of them as possible. Funding has always needed to be prioritised, and that would be the case even if capital budgets had not been reduced in the spending review.

As we have heard today, the Environment Agency is developing an option for Exeter that is expected to cost £25 million over its lifetime. Under the new partnership funding system, that might attract approximately £13 million funded by the general taxpayer. That leaves a shortfall of £12 million. Many schemes are funded totally by the taxpayer. What we have now in our partnership funding scheme is a totally transparent system. For years, communities such as the right hon. Gentleman’s wanted schemes like this to go ahead, always believing that total funding by the taxpayer would be available, but always just missing out and never knowing why—now they can see a transparent funding system.

The right hon. Gentleman talked about the “independent” Environment Agency. It is part of DEFRA; it is the Government in terms of spending flood money. The people in the Environment Agency are the experts. They have developed that transparent funding system on the lines of the recommendations of the Pitt review and have come up with the scoring for what can be achieved for his community.

Exeter is an excellent example of why we have had to change the funding approach and introduce the partnership funding scheme. The new approach follows recommendations made by Sir Michael Pitt’s review of the 2007 flooding, in which he said that local communities should be allowed and encouraged to invest in flood risk management measures so that more can be done and more schemes can be introduced. He also said that future investment plans should not simply assume that the cost of flood alleviation is met centrally. Those recommendations were accepted fully by the Government. If we had carried on with the old system, we would be placing an ever-increasing burden on the general taxpayer to meet the long-term costs of flood defence alone. Those costs are expected to rise considerably with our changing climate, as the right hon. Gentleman predicted in his speech.

The old system artificially constrained how much could be done in each town and city because Government funding has always been, and always will be, limited. The old system meant that schemes were either funded in full, or not at all, based on top-down decisions. Many worthwhile schemes, such as in Exeter, were knocked back for funding, in many cases without a realistic prospect of ever going forward. At a cost of £25 million, the Exeter scheme would have been in that category, doomed never to have had a high enough priority for full funding. Transparency and greater local involvement is at the heart of the new partnership funding system. Instead of meeting the full costs of a limited number of schemes, national funds are spread further in order to achieve more overall. Many schemes will continue to be fully funded, where value for taxpayers’ money is sufficiently strong.

In other cases, such as Exeter, national funding is available to part-fund the project. This approach creates space within the system for local and private contributions to help pay for the significant benefits to land, property, infrastructure and other assets realised when defences are built. There are potentially many sources of funding to tap in to, both public and private.

Last year, the community of Morpeth found itself in a similar position to Exeter. The proposed scheme in that area did not meet the old criteria for full funding, so it was deferred, potentially indefinitely. Under the new approach, the Government were able to meet around half of the costs of the scheme. Leadership was shown by Northumberland county council, meaning that the scheme is now fully funded and will proceed in the coming months, with half the money—coincidentally, up to £12 million—met from local sources. This example shows the power of the new system, and there are many others that I would like to point to; this is important in addressing one of the right hon. Gentleman’s points.

In south Derbyshire, Nestlé contributed £1.7 million to a £7 million scheme to protect 1,600 homes and further financial contributions have been made from industry and other means. In other areas, the planning system has been used to unlock schemes, whether through section 106 money or some other form of funding, rather like exception site housing schemes in rural communities. The income from those schemes goes to deal with flood and coastal erosion risk management. In respect of another scheme in York, York city council is finding the money to bring it above the line.

The new system has already helped secure £72 million of external funding for schemes in the next three years—more than 500% higher than during the previous spending period.

[Gavin Shuker (Luton South) (Lab/Co-op)]

Will the hon. Gentleman give way?

[Richard Benyon]

If the hon. Gentleman will let me finish this point.

Early indications suggest up to a third more schemes are likely to proceed than if we had kept up the old all-or-nothing system.

[Gavin Shuker]

I am grateful—

[Mr Joe Benton (in the Chair)]

Order. I am sorry, but under the rules for half-hour debates, an Opposition spokesperson cannot intervene.