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Flood defence plans could sink economic recovery

Government plans that will force residents and businesses to fund flood defences from April next year risks causing uncertainty that could delay vital regeneration schemes and damage the economy, the property industry today warned.

Responding to a consultation on future funding for flood defences, the British Property Federation also criticised government’s intention to give households greater flood protection than businesses – a move which it argued was not only impractical but could cause the damage from future floods to ripple out into the wider economy and cause damage beyond the immediately flooded area.

At present, central government provides 95% of the cost of protecting society from flood events. The BPF said it broadly supported proposals to increase the amount of investment in flood defences beyond that supplied by the state, but it did not believe sums the government are seeking from private contributions are realistic.

It was sceptical that households and businesses would be able to make up the shortfall caused by government spending cuts, and warned the proposed system would not provide sufficient certainty to property investors – and insurers – that the risk of flooding was being managed.

The cuts are being made despite Defra figures showing that each £1 spent on flood defences generates £8 in savings.

James Anderson, Assistant Director at the British Property Federation said: “It is right that those who benefit from flood defences help to fund them, but we struggle to see how, particularly given the state of the economy, private investment can reach the levels government is expecting.

“Given the emphasis on private contributions it must also be made clear that development cannot deliver innumerable benefits to the local community. The demands of flood protection, when added to other planning obligations, all have an impact on development viability, which local authorities must recognise.    

“Protecting households above businesses is simply illogical – householders are currently better insured against flooding and at lower cost. It also fails to take account of the wider impacts that the flooding of commercial premises cause, which spread into the wider economy and cause damage beyond the immediately flooded area.”

Notes to editors

1. In last year’s comprehensive spending review, Chancellor of the Exchequer George Osborne has earmarked only £500m a year to spend on flood defences from 2011 to 2015. This is a reduction of £216m and substantially less than the Environment Agency’s recommended total of £1bn a year by 2035 to maintain current levels of protection.

2. Insurers have warned that insufficient investment in flood defences could cause them to withdraw insurance from some homes and small businesses. Under the current ‘Statement of Principles on Flood Insurance’ agreement with the government, which expires in 2013, the insurance industry has committed to insure homes and small businesses where the flood risk is no worse than a one-in-75. Higher risk properties are considered if work is being carried out to mitigate risks.

3. For more information or to arrange an interview please contact the British Property Federation: Patrick Clift, Media and Public Affairs Manager, at pclift@bpf.org.uk, or on 07834 439 505; or Paul Sweeney, Media Assistant, at psweeney@bpf.org.uk  – 020 7802 0113 or 07841 732194.

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