Flood Risk Management

Jamie Reed Excerpts

Wednesday 9th February 2011 Westminster Hall

[Mr Jamie Reed (Copeland) (Lab)]

I thank my hon. Friend the Member for York Central (Hugh Bayley) for securing this debate. He has demonstrated yet again his considerable knowledge of the issues, and I think that Members of all parties are grateful to him for securing this debate so that we can air them. I commend the Environment Agency workers who have been working around the clock, as they always do, in the north-west of England over the past few weeks, where rainfall has been high, heightening flood risks considerably.

Communities at risk of flooding require certainty from Government, and that is what I think has been at the core of everyone’s argument today. As I have said, we seek to work with the Government where we can and when we agree that they are doing the right thing. Issues such as flooding and flood defences should be above the typical, tribal knockabout of this House and of British politics in general, but we will hold the Government to account when we believe that they are not doing the right thing or acting in the public interest, and when we believe that their actions are likely to hurt those most in need.

We are all agreed that flooding is a life-changing issue. It is also a complex one and its policy solutions, or the solutions that we as politicians can provide towards the problem, are not simple. Sadly, flood defence in this country, as well as the Department for Environment, Food and Rural Affairs the bodies that rely upon it, and the people whom those organisations serve, are now beginning to pay the price for what many people and independent commentators believe is the Secretary of State’s fevered desire to be the first Secretary of State in the new Government to give the Chancellor what he wants—big, indiscriminate cuts, with little regard for how they could be accommodated, or for the effect that they will have on the Department’s core areas of work. We cannot escape that fact.

In many ways, the debacle over forestry privatisation has illustrated what we already knew about the Government—they are riven with contradictions and lack a clear focus on issues of real concern to people in too many areas throughout the country. There is no argument about the fact that there will be a 27% cut in flood defence spending this year—it has been confirmed by the Environment Agency. I have the greatest respect for the Minister—we have a good working relationship on the whole—but he has himself confirmed to the Environment, Food and Rural Affairs Committee that cuts are taking place. The Prime Minister, however, is apparently unaware of that, or simply disinterested in the detail of the policies that his Government are prosecuting.

The Prime Minister has told the House that it is “simply not the case” that there will be a reduction in spending on flood defences, and that the comprehensive spending review settlement is “roughly the same” as in previous years but, in fact, it is not. Cutting is not the way to deliver the savings that the country needs; it is, in fact, a false economy. I trust that the Minister will encourage the Prime Minister to correct the record.

As I have said, communities that are at risk of flooding—we are talking about 5.2 million homes, as well as business properties—require certainty from Government, not a changing of the goal posts or an abandonment or reneging on agreements. The communities of York, Thirsk, Morpeth and elsewhere feel that sense of abandonment right now as their flood defence schemes fall by the wayside. It is a fact that the Government have announced a 27% cut in capital investment for flood defence spending for 2011-12, which means that many communities will face genuine uncertainty about their futures as projects are delayed or shelved. The cuts will leave many homes and businesses at a heightened risk of flooding.

The Minister said in the main Chamber today that those are deferrals, not cancellations, but they will feel like cancellations. The statement of principles is likely to expire before any investments are made, so those areas that are today missing out on flood defence investments face the prospect of being thrown at the mercy of a bear market when trying to find future insurance. Will the Minister confirm that he will not allow the insurance premiums or excess payments of anyone in any area to go through the roof as a result of his Government’s cancellations or delays? Does he agree that those areas that had expected investments, and that were told that investments would be forthcoming before the expiry of the statement of principles in 2013 have now been prejudiced? If that is not the case, how is it not the case? How much public money has been spent designing, characterising and consulting upon the schemes that will not now go ahead?

We know that York is the tip of the iceberg, that many more cancellations are in the pipeline, and that the Government’s spending cuts will determine which schemes go ahead and which do not. Today is the day that the Government can finally choose to be honest with those home owners, communities and business owners who live in areas at risk of flooding, and tell all of us which schemes will be cancelled and which will go ahead, and not just for the next financial year—there is no security in that at all. I urge the Minister and all his colleagues in DEFRA not to hide behind the Environment Agency—today’s announcement was by DEFRA, not the Environment Agency.

Even after today’s announcement, there are many unanswered questions, an awful lot of drift and there remains a significant lack of transparency. One of the principal concerns is the expiry of the statement of principles in 2013. The statement is the agreement between Government and the insurance industry that currently underpins household insurance provision. So far, we have heard nothing that will reassure home owners or business property owners that the Government are working in an effective way with the insurance industry to resolve the real threat of some homes and businesses becoming uninsurable and unmortgageable following the expiry of the statement of principles.

Some insurance experts have warned that when the statement of principles comes to an end, it will be devastating for consumers. Others have warned that it will be bad for consumers but a great opportunity for brokers. Does the Minister agree with that? Simon Douglas of the AA’s insurance division told the Secretary of State in a letter:

“Millions of people are at risk of inundation from overflowing rivers, coasts and estuaries during extremes of weather and that risk is increasing all the time. If spending isn’t maintained, it will compromise the statement of principles, which could see many homes become uninsurable.”

David Williams of AXA went even further by saying:

“We are committed to the Statement of Principles, subject to spending. Now that spending has been reduced, you could say all bets are off. The Government is in breach of its side of the bargain, so if insurers wanted to stop providing cover, they would probably be able to. The problem is nobody wants to be the first and end up getting harangued in the press.”

I think that all Members on both sides of the House would agree that the expiration of the statement of principles is a ticking time bomb, not just for individuals, home owners or business people, but for whole communities. It is hugely economically and socially significant.

What assessment have the Government undertaken on the impact of their budget cuts on the universal coverage of insurance provision for homes at risk of flooding? Will the Minister publish that assessment? The ongoing negotiations between the insurance industry and Government are of profound importance, so will he tell us, categorically, whether he is committed to the principle of universal insurance cover? If so, will he be transparent about his negotiations with the insurance industry and publish an update on them in the House of Commons Library? Finally on this issue, does he agree that the expiry of the statement of principles, without any meaningful system to replace it, will be a disaster for consumers, and will he seek a system of universal insurance cover for whatever follows the current one beyond 2013?

There are other critical questions for the Minister to answer. In 2010-11, the previous Labour Government allocated £35 million for Pitt and for adaptation budgets. That was outlined in the CSR for 2007-08 to 2010-11. Recently, the Minister announced that £21 million will be provided in 2011-12 to lead local flood authorities. Will he confirm that that is different money from that announced by the previous Government? Is it new money?

The Minister will be aware that local authorities were awarded £100 million for flood funding in 2010-11 through the Communities and Local Government formula grant. What contact has he had with his counterpart in CLG about the level of funding available to local authorities next year for flooding and related investment? The concern throughout the House is that local authorities have been given new responsibilities but no new money, and that local flood defence schemes in many areas face a double cut.

Local authorities are, of course, key to our national efforts to improve flood resilience. The 2009 DEFRA annual report states:

“Over the next 2 years we aim to offer an improved standard of protection against flooding or coastal erosion risk for 145,000 more homes”.

According to a written answer form the Minister on 27 July 2010, we are actually due to exceed that figure and reach “at least 160,000 households”, which is a glowing endorsement of the investment that we made, and I welcome his recognition of it. The Secretary of State said of the next CSR period:

“We intend that, by March 2015, 145,000 households will be better protected”—[Official Report, 19 November 2010; Vol. 518, c. 57WS.]

Will the Minister therefore confirm that the Government plan to do less over four years than we achieved in just two—yes or no?

The Minister said in today’s announcement that 112,000 homes would be protected. Will he confirm that that 112,000 is part of the 145,000 target previously mentioned? If so, what will become of the schemes for the remaining 33,000? The Minister also mentioned the role of specialist providers in relation to the provision of insurance cover. I think that many would say that that hinted towards an end to universal coverage, but I hope that he will refute that. What does he expect specialist providers to do, and how will they keep their excess and insurance premium costs comparable with today’s rates?

My hon. Friend the Member for Wansbeck (Ian Lavery) talked about the cancellation of the Morpeth scheme, which has been halted because budget cuts have changed the outcome measures via which the EA has to assess projects. Will the Minister admit that that is the reason for the scheme’s delay and give the people of that town the clarity they deserve?

This is an essential point. The Minister talked briefly about value for money. Of course, anyone in his position is tasked with spending public money properly and I support him in doing that, but what is his definition of value for money in relation to public spending to protect homes? Will he acknowledge that there is a real fear that his Department’s budget cuts and his changing definitions of value for money mean that particularly sparsely populated areas at heightened flood risk, such as the one I represent and those that many hon. Members here represent, are on their own and that the Government have abandoned them? Will he give a guarantee that his budgets cuts will not prejudice flood defence schemes in the more rural, disparate towns and villages that are outside the larger urban conurbations? Such a move would be a scandal and I condemn it.

Finally, will the Minister lay a copy of the full Environment Agency funding allocation in the Library, so that hon. Members from all parties can examine the detail and inform their constituents about the current state of affairs? I am proud of my Government’s record in office in relation to flood defence spending: £2.36 billion over the past four years, 160,000 homes protected and the introduction of the Flood and Water Management Act 2010. I am grateful to the hon. Member for York Central for introducing the debate. We need to debate these issues urgently in Government time on the Floor of the House. I hope that the Minister will be able to give us that assurance today.