Managing Flood Risk

Tony Baldry Excerpts

Monday 3rd March 2014 Commons Chamber

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

I welcome this opportunity to open this estimates day debate on managing flood risk. To put today in context, this is the day of the memorial service in honour of Nelson Mandela; it is a week after the visit by the German Chancellor, Angela Merkel, to address both Houses of Parliament; and it is a day on which the future of Crimea and the rest of Ukraine remains very uncertain. In its own way, though, what we meet to discuss today is equally international and portentous in its nature, as we have seen some of the most damaging storms, most likely emanating, we are told, from the Atlantic on the jet steam and causing immense damage in 2013-14.

I am delighted to welcome the Minister to his place. We were most fortunate to enjoy his company on the Select Committee on Environment, Food and Rural Affairs, and indeed that of the shadow Minister, when we adopted this report in July 2013. How prescient that report appears with hindsight. We have had record rainfall over the past two years, which has led to the most extensive flooding, cost the economy millions of pounds, and caused disruption and distress to householders and communities across the UK.

Additional capital funding for flood defences is welcome, since we are told that every £1 spent on flood defences to protect communities spurs growth and delivers economic benefits worth £8. However, we concluded that spending on flood defences has simply not kept pace with increasing risks from more frequent severe weather. The Chancellor of the Exchequer must ensure that investment increases by some £20 million year on year. We need that money over the next 25 years to protect homes and businesses better. Maintenance of these defences and the effective dredging of watercourses must be a priority.

[Sir Tony Baldry (Banbury) (Con)]

Will my hon. Friend give way?

[Miss McIntosh]

I should like initially to set out our overview before I take interventions.

The Committee welcomes proposals for a new Flood Re insurance scheme, to ensure that everyone is able to get affordable insurance. We are told that the scheme will be funded by a small levy of about £10.50 a year on all household insurance customers. The Committee insisted, during the passage of the Water Bill, that safeguards be introduced to keep the costs down. It would be interesting if the Minister confirmed whether the Prime Minister has asked for the band H and certain other exclusions to be brought into the review of Flood Re, as was reported over the weekend.

The Government is an insurer of last resort. We were told in evidence that, if there were a one-in-250-year event, such as the one that we have just seen, in the first two or three years of Flood Re coming into effect, the Government would take over as insurer of last resort. We were also told that, for the first two or three years of the Flood Re scheme, there simply would not be enough money in the pot to fund such claims against it. The House needs to understand the implications of that eventuality.

Delay by the Government and the insurance industry in agreeing the provision of affordable flood insurance has caused householders unnecessary uncertainty. The opaque cross-subsidy in the current statement of principles must be translated into a more transparent scheme with clear and robust governance arrangements. This debate provides a useful opportunity for the Minister to update the House on progress towards state aid approval in Brussels, because the last we heard was that had not been embarked upon, which seems to be leaving it late in the day. It raises other exclusions in addition to band H, such as why the cut-off year of 2009 was chosen, and why small businesses such as farms remain excluded.

With spending on the maintenance of defences and watercourses apparently at its lowest for many years, short-sighted reductions in revenue funding appear to threaten and undermine the benefits of capital investment in flood defences, but I firmly believe, as the Committee does, that we should not rely completely on Government sources, but should look at partnership approaches such as the Pickering “Slowing the flow” scheme in my constituency as well as measures by insurance companies.

[Sir Tony Baldry]

That is exactly the point that I wanted to make. We cannot necessarily expect the Environment Agency to fund the totality of flood defences. In Banbury, recently completed flood defences cost £17 million: £9 million came from the Environment Agency, but £8 million came from others, including the district council, Network Rail, Thames Water and local landowners. Many people have a role to play in contributing to making sure that flood defences work, not just the Environment Agency.

[Miss McIntosh]

My right hon. Friend makes a powerful point. I do not wish to detain the House too long, but I shall come on to look at that. The Government and the Minister have an opportunity to elaborate on this, but the House must be persuaded of the contribution that private bodies can make. The Select Committee has not been persuaded of that. Personally, I think that there are huge opportunities for water companies, but we need to amend the 2014 pricing review to allow that, so it would be useful to have an update. In addition, I should like to know whether the Minister believes that insurance companies will step up to the plate regarding infrastructure spending.