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Flood Defence Allocations

Volume 523: debated on Wednesday 9 February 2011

Before I call the hon. Member for Wakefield (Mary Creagh), let me appeal to right hon. and hon. Members who are leaving the Chamber to do so both quickly and quietly so that the question can proceed in a reasonable atmosphere. I ask Members what they would want if they were asking or answering the urgent question.

(Urgent Question): To ask the Secretary of State for Environment, Food and Rural Affairs if she will make a statement on the Government’s flood defence allocations for 2011-12.

The coalition Government are committed to protecting people and property from flooding and coastal erosion where it is sustainable and affordable to do so. Today, the Environment Agency is setting out detailed plans for proposed capital investment projects in the 2011-12 financial year. When completed, these schemes will provide better protection to over 112,000 homes in England. As already announced, a total of £521 million will be allocated by the Department for Environment, Food and Rural Affairs to the Environment Agency next year for flood and coastal erosion risk management in England. That will be roughly half revenue funding and half capital investment. The capital funds will take forward 109 schemes which are already under construction, and in addition to these, a further 39 new flood and coastal defence projects will go ahead. Of these, 21 projects will provide better protection to 13,000 households at risk. The remainder relates to repairs and safety enhancements to existing defences.

The list of new schemes includes a £5.7 million project to protect 182 households in Keswick from flooding of the river Derwent. In total, over the next four years DEFRA intends to spend at least £2.1 billion and increase protection for at least 145,000 homes.

Inevitably, it has been necessary to find savings in all areas of Government expenditure, but we have protected flood and coastal erosion risk management as much as possible. The reduction is 8% compared with the previous four-year period. We have protected front-line services such as forecasting, warnings and incident response, and the maintenance of existing defences.

As I have said previously, no schemes will have been cancelled. All defences already under construction—the 109 projects I have mentioned— will be completed. 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. Funding has always needed to be prioritised. Nevertheless, I understand the concerns of people and hon. Members who are worried that a particular scheme is not on the indicative list for funding. I should stress, however, that this does not amount to the Government cancelling schemes or saying any particular scheme cannot go ahead in the future. The method of Government funding for schemes starting in 2012-13 and beyond is currently under review. That follows recommendations made by Sir Michael Pitt after the widespread flooding of 2007. Transparency and greater local involvement are at the heart of the new proposals.

Whatever the amount of funding available, we cannot expect the national taxpayer to completely fund all the costs of each and every scheme; that has been a long-accepted understanding on both sides of the House. Difficult decisions must be made, and we must ensure that public investment delivers the most in terms of outcomes and benefits per pound spent.

Under the new proposals for funding flood and coastal erosion risk management, local ambitions in terms of protection no longer need be constrained by what national budgets can afford. We want to use every £1 wisely and make sure that as many people as possible have the opportunity of benefiting from new or enhanced flood defences. With the funding allocations announced today, 112,000 properties will benefit from improved protection. Going forward, closer working with local communities and more opportunities for outside contributions will mean that more people will ultimately be protected.

I am grateful to the Minister for that reply, but I am surprised that the Secretary of State, to whom this question was put, did not deem the House worthy of an answer in person from her.

We know that the Environment Agency board met last Thursday to decide this year’s flood defence allocations, and that the press were invited to a briefing today at noon. We heard from journalists that DEFRA would issue a press release today at noon, but without this urgent question—which you kindly granted, Mr Speaker—Members would have read of the total nationwide flood allocations from the media this evening rather than debating them fully in Parliament today. Can the Minister tell the House why a written ministerial statement on the flood allocations was not even laid in the Library or on the Order Paper today?

Following the comprehensive spending review, Parliament has not had any chance to debate the flood budget for 2011-12, yet this is arguably the part of the DEFRA budget which most affects our constituents. The amount was revealed in a written answer on 20 January this year, which said that the capital funding for flood defences to protect our constituents’ homes has fallen from a baseline figure last year of £354 million to £259 million. Will the Minister confirm that this is a 27% cash cut to the budget, and a 32% real-terms cut when inflation is taken into account, and not the bizarre 8% cut that he insists on briefing in the media?

We know from the Environment Agency’s own figures that,

“On average, every pound invested in improved flood protection…reduces the long term cost of flooding and coastal erosion by £8.”

Has the Minister calculated that this £95 million cut to flood defence spending this year will actually cost the nation more than three quarters of a billion pounds—£760 million—in lost future value? We know that certain schemes have been cancelled, because MPs in those areas have been briefed. The Minister mentioned 39 new schemes going forward, but 59 flood defence projects are due to start over the next four years. How many of those will be completed in the next four years, and what steps is he taking to protect areas affected by these reductions in flood defence spending?

In the past, the Government allocated flood defence money for two or three years, as large construction projects take several years to plan and complete. We have heard from the Minister today about his plans for a flood levy. Again, this is the first time we have debated that on the Floor of the House, but the consultation is on the DEFRA website. Can he reassure the House that any proposals for future flood defence funding are not skewed away from areas of high need and towards areas where people have deeper pockets?

Can the Minister say what conversations he has had with the insurance industry about its consternation at these funding cuts? Labour’s statement of principles guaranteed universal flood insurance coverage for homes in affected areas. It runs out in 2013 and was based on the understanding, following the Pitt review, that Government should have

“above inflation settlements for future spending rounds.”

Is the Minister aware of the comments of Steve Foulsham, technical service manager of the British Insurance Brokers Association, who said in Insurance Professional Magazine in January 2011:

“When the Statement of Principles comes to an end, it will be devastating for consumers”?

Has the Minister had any contact with David Williams, managing director of claims at Axa Commercial Lines, who says,

“Now that spending has been reduced…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”?

What contact has the Minister had with the industry to ensure that homes do not become uninsurable, or insurance premiums simply unaffordable? Does he agree with me that if insurance is too expensive, the Government become the insurer of last resort for those who simply cannot afford it?

Finally, may I ask that the Minister place a copy of his statement in the Library of the House, so that hon. Members in all parts of the House can communicate first with their constituents, and not be trumped once again by the newspapers?

I am grateful for those questions and I am sure I can reassure the hon. Lady on a number of them. First, my right hon. Friend the Secretary of State has just returned from a meeting at Water UK. This is an urgent question, she came to the House a short time ago, and I have been available to prepare for it. Secondly, we have a debate this afternoon in Westminster Hall when we will have the opportunity to discuss these matters in detail, and I look forward to that. Thirdly, on the hon. Lady’s question about a written statement, there is nothing different in this method of announcing funding compared with previous years. Last year, there was no written statement. These are indicative budgets put forward by the Environment Agency. Where Ministers were, rightly, held and continue to be held to account was on the overall budget, which was announced in the autumn. There are plenty of opportunities for the hon. Lady—Opposition day debates and other circumstances —to raise this issue and hold Ministers to account. The Environment Agency is publishing its indicative list of schemes that are due to go ahead in the coming year, and that goes to regional flood defence committees for approval. So we are at that stage of the process, and that is no different from previous years, and no written statement was made last year—I checked before I came to the House.

On capital spending, really, the hon. Lady has got to change her tack, because she is not comparing apples with apples; these are two very different circumstances. Rightly, the former Chancellor in the previous Government announced a 50% cut in capital spending. If the hon. Lady were sitting on the Government side of the House, she might—rightly, as we have—favour flood spending and reduce the amount of saving accordingly, as we have done. But she cannot say that as if the spending last year and this year are the same, because they are not; the economic situations are completely different. She knows that and she really needs to change her tune.

The hon. Lady asked about communities with a high deprivation index, where there is a need to protect people on low incomes. I can assure her that the system will be skewed, as it is and always was, in favour of areas where a large number of people are on low incomes; that will remain through the payment-for-outcomes scheme.

On insurance, we are working closely with the Association of British Insurers. The statement of principles was always going to end in 2013, and it is always going to require important and careful negotiation to ensure that we get a scheme that protects people and their homes and so that they can get insurance. A good working party has come out of a flood summit that we held in September, which was attended by a number of hon. Members. The ABI is optimistic that it can find a scheme that will offer the kind of protection that households will need in the future, and I hope that that will be the case.

Order. There is considerable interest in this subject, but there are two important statements, and other demanding business, to follow. There is pressure on time, so short questions and short answers are essential.

The House will not be taken in by the crocodile tears of the hon. Member for Wakefield (Mary Creagh), whose Government changed the points system in 2005, depriving many towns such as Thirsk of protection from floods. Will the Minister give the House an assurance that any local levy he seeks to raise will not trigger the 2.5% increase that would lead to a local referendum? Will he work with the insurance industry to see whether local resilience measures for houses could be extended to business properties and whether a lower insurance premium could then be attracted?

We very much want to gear things towards a system where the benefits can be understood by people. That is why the payment-for-outcomes scheme offers so much potential; it offers clarity, for the first time, where the current system is opaque. It will allow communities such as my hon. Friend’s to see where they are in the pecking order, why they are constantly overtaken as our understanding of flood risk management gets better and where they are missing out. Thus, when people and businesses are benefiting, they may choose to contribute and get their scheme above the line. This approach offers her and her constituents a great opportunity.

Can the Minister please explain how the cuts that he is being forced to confirm to the House today are consistent with a very clear assurance given by the Prime Minister to this House during Prime Minister’s questions on 17 November? He said that flood defence spending would be “protected” and would be “roughly the same” as under Labour.

I hope that we will be able to prove at the end of this process that the spending is broadly the same: an 8% cut compared with the previous four years, but with 15% efficiency savings that we think we can get out of the Environment Agency and a greater understanding of how we can deliver. The right hon. Gentleman must agree that what really matters is the outcome: households protected from flooding. I am really confident that at the end of this process we will be able to produce outcomes that are no worse than those in the past and perhaps even better.

Will the Environment Agency continue to work with local organisations and local people on small-scale engineering improvements, which have helped to protect for the future areas such as Glendale and the Ingram valley in Northumberland, as well as considering issues such as those relating to Morpeth?

I can guarantee that to my right hon. Friend. I can also tell him that our understanding and the software now available to guide on things such as surface water flooding mean that a small and relatively low-cost building of defences can have an enormous effect in delivering precisely the amount of protection we want. I can assure him that the Environment Agency will continue to work with local people.

In the north-west London basin, 2,000 people have been subjected to repeated flooding in the Mogden catchment area. That was to be addressed through the sustainable urban drainage scheme and the investigations that were going on into that catchment area. Can the Minister assure me that that scheme will go ahead?

I do not want to mislead the House or the hon. Gentleman. If he will meet me, I will be happy to give him exact and firm details about that scheme.

Parts of my constituency were devastated by the floods in 2007. May I thank the Minister, on behalf of the people of Alcester, for allowing the project there to go ahead? May I also, on behalf of the people of Broom, come and see him about an innovative idea that we have had, with the Environment Agency, for mitigating flooding in Broom?

I am all for innovation. The carpet in my office is wearing thin from colleagues on both sides of the House coming to see me, but I will certainly meet my hon. Friend. I am keen to hear about new plans and I am happy to involve the Environment Agency, which perhaps has greater technical understanding than I do.

The Minister mentioned the Pitt review and that the Government have protected incident response. One of the review’s recommendations was to place a statutory duty on fire and rescue authorities. The Government supported that in opposition and the Select Committee on Environment, Food and Rural Affairs supports it now. Can he give us a time scale for the implementation of that statutory duty?

The hon. Gentleman is absolutely right to raise this issue, which is the one area of the Pitt review about which we have qualms. I am happy to discuss it because I know that he has a lot of contact with members of the fire service. I am not sure that placing a statutory duty on fire and rescue services will make any difference to the services I have seen. We are really going to be testing them through Exercise Watermark. Some of them tell me that they would like a duty, but quite a lot tell me that it would not make a blind bit of difference to how they operate and how they integrate with other emergency services. However, I have an open mind and I will listen to him.

I want to take this opportunity to thank the Minister for meeting my constituents and because the schemes for Felixstowe and Thorpeness are on the national list. That has yet to be confirmed by the regional flood and coastal committee, but I am sure that it will do so. Will he tell us a little more about how the funding will help people who help themselves and how it will protect those in vulnerable households and areas?

I have been impressed by innovative schemes in my hon. Friend’s constituency, which we are using as a basis from which to take forward a number of ideas. I can confirm that the central Felixstowe beach management works will proceed under the next year’s budget.

What assessment has the Minister made of the impact that the cuts will have on my constituents in Hull who were badly flooded in 2007 and who still find the insurance market partly closed?

The statement of principles relates only to properties built before 2009, so for a large number of households it already does not apply. That is a major concern. We have debated this issue in the House, and the hon. Lady’s constituents who were flooded in 2007, like mine, have a right to see the road ahead on this issue. Not only are their premiums rising but their excess charges are rising too. Some of my constituents, frankly, have no insurance because they have excess charges of £10,000. She is absolutely right to ask about this issue, which we will take forward in our negotiations with the ABI. The most important thing is that we are talking. There is a lot of agreement and I believe we can find a way forward and find solutions. The insurance industry is in a state of change and we will see more specialist providers coming through this process.

One of the lessons from the flooding in Cornwall before Christmas was that community flood plans and community flood wardens can make a real difference in protecting people and property. Can the Minister assure me that there is money within the settlement to continue the establishment of such groups in vulnerable areas?

We really value those measures and we are impressed with what has been happening in my hon. Friend’s constituency and elsewhere, so we will certainly encourage that. It is not just us doing that: there is also the work of Mary Dhonau and her organisation. They are trying to provide local flood forums with a toolkit they can pick up not only when a disaster happens, as with my hon. Friend’s constituents, but in areas that we know are at risk of flooding, which can be forewarned and better able to cope with flooding in future.

May I reiterate that Morpeth is in my constituency? I made that point last week, but I think I need to re-emphasise it. Having listened to the Minister’s statement, can he reassure me that the Morpeth flood alleviation scheme, in its entirety, will still take place?

The hon. Gentleman and I met yesterday and I explained to him the complexities of the scheme, which is not going ahead in the current proposals, but will, I am sure, in future. The scheme requires further work and consideration about areas where it can be provided and give better value for money. [Interruption.] Some hon. Members are chuntering, but if we allow a scheme that does not stack up as well as others to go ahead, other hon. Members will quite rightly come to the House and try to hold me to account by asking, “Why isn’t our scheme going ahead?” That has always been the case for Ministers standing here. It is important to understand that we have to give best value for money. The hon. Gentleman’s scheme is good and I hope that it will go ahead in time.

Given the constraints on the public finances, can my hon. Friend confirm that the criteria for judging the schemes before him include not only the risk but the costs of flooding? In Leeds, which is the second-biggest financial centre in the country, those costs would be £500 million. Do the criteria also include the economic benefits of putting in the flood alleviation scheme? In Leeds, the scheme is supported by all the Leeds MPs because it would attract more development to the city.

I am well aware of the concerns of the people of Leeds, which have been well articulated by the Members who represent that city. That scheme is hugely expensive and I do not doubt that it will bring benefits to the city. I am happy to meet Members on both sides of the House to discuss it. We want to work with the local authority and other agencies to find parts of the scheme with which we might proceed sooner than others. It will not go from conception to commissioning in one year because it is such a massive scheme, but we want to bring it forward as quickly as we can. We have to make sure that we have value for taxpayers’ money at the heart of what we are doing so that we can protect as many homes as possible across the country.

I am grateful for those words from the Minister, but is he aware that Leeds city centre came within centimetres of being flooded in 2000, according to Environment Agency information, and that it had numerous near misses in 2004, 2007 and 2008? Will the Minister agree to meet Leeds MPs to discuss this? Leeds is the largest city in the north and we cannot allow it to be knocked out by flooding or to be prioritised below households. It is the major economic centre of west Yorkshire.

I absolutely understand that. The hon. Gentleman can come to meet me if he wishes to hear more details about this. The scheme will cost £250,000 or thereabouts per household it protects. That is an enormous amount of money and I do not deny its importance, particularly to the people of Leeds, but we have to look at it from the perspective of the whole area. If it can unlock regeneration or benefits to that city there might be opportunities under the new payment-for-outcomes scheme.

You know, Mr Speaker, that I headed up flood risk management for the Environment Agency Wales between 2005 and 2010, so I appreciate the relationship between climate change and flood risk, which we have seen in New Orleans. What has happened in Queensland, Australia and in England is not a laughing matter. Will Ministers undertake to visit victims and communities who have been devastated by flooding that could have been avoided had the Minister not cut the revised budget for flood defences, which was made after the 2007 floods, and say sorry to them?

We have visited places that have been flooded since we came into government. The hon. Gentleman must understand that I have waded through houses reeking of sewage and have looked into the eyes of families whose houses have been flooded. He does not have to tell me about the misery that flooding causes those communities—2,500 households in my constituency were flooded in 2007. We understand how important this issue is and he knows that we cannot protect every house. There are 5.2 million houses at risk.

Will the Minister take this opportunity to correct the record and confirm that my right hon. Friend the Member for Leeds Central (Hilary Benn), when he was the Secretary of State for Environment, Food and Rural Affairs, ring-fenced flood defences so that in the last round of cuts there was no cut in the funding? That is why this year’s cut is a 27% cut.

A 50% cut and ring-fenced funding for the future could not have been defended. That is absolutely impossible. I honestly urge the hon. Gentleman to look at the realities of the situation. There is a 50% capital cut. Whichever party had been in government now would have had to take difficult decisions. We have protected the floods budget as best we can, and he should recognise that.

Has the Environment Agency’s flood defence scheme for Water End and Leeman road in York, which defends more than 300 low-income households, been cancelled? It was due to go ahead this year and was funded to go ahead this year. If it has not been cancelled, when will it go ahead?

The scheme has not been cancelled. It has been deferred. There are technical difficulties with it.

We will shortly debate the matter in Westminster Hall, when I will be happy to give the hon. Gentleman more details. I can assure him that the scheme has not been cancelled.