Flooding: Insurance

– in the House of Lords at 2:58 pm on 16th October 2007.

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Photo of Lord Greaves Lord Greaves Spokesperson in the Lords, Environment, Food & Rural Affairs, Spokesperson in the Lords, Department for Communities and Local Government 2:58 pm, 16th October 2007

asked Her Majesty's Government:

Whether the levels of spending on flood defences and controls over the next three years are sufficient to provide the insurance industry with the confidence to maintain the necessary provision of insurance cover for homes most at risk of flooding.

Photo of Lord Rooker Lord Rooker Minister of State (Sustainable Food and Farming and Animal Health), Department for Environment, Food and Rural Affairs, Minister of State (Department for Environment, Food and Rural Affairs) (Sustainable Farming, Food and Animal Welfare), Deputy Leader of the House of Lords

My Lords, yes. As part of the recent Comprehensive Spending Review, the Government have announced that funding for flood and coastal defence will rise to £800 million in 2010-11. We will continue to work with the insurance industry and other stakeholders to ensure that the outcomes delivered from this funding are maximised.

Photo of Lord Greaves Lord Greaves Spokesperson in the Lords, Environment, Food & Rural Affairs, Spokesperson in the Lords, Department for Communities and Local Government

My Lords, I thank the Minister for that reply. Is he aware of the alarm caused last week when the Association of British Insurers issued a press statement saying that the amount that the Government were putting into flood defence and prevention was not enough, and that this could result in the future withdrawal of insurance cover? Does he agree that it is crucial that, in areas subject to high flooding risk, insurance cover is maintained? According to the British Insurance Brokers' Association, up to 40 per cent of people in these areas may not have adequate insurance cover for contents. The important thing is to get everybody in those areas insured and to maintain an affordable supply of insurance for them. Does the Minister therefore agree that it is crucial that the Government work closely with the insurance industry to alleviate the alarm and ensure that cover is maintained?

Photo of Lord Rooker Lord Rooker Minister of State (Sustainable Food and Farming and Animal Health), Department for Environment, Food and Rural Affairs, Minister of State (Department for Environment, Food and Rural Affairs) (Sustainable Farming, Food and Animal Welfare), Deputy Leader of the House of Lords

My Lords, the Treasury is actively working with the insurance industry on cover for people who cannot afford insurance. Defra is honouring all the commitments in respect of money given to the Association of British Insurers in the statement of principles. In 2008-09, the amount of spending will be £650 million; in 2009-10 it will be £700 million; and it will reach £800 million by 2010-11. Those figures are more than was originally requested. They are the minimum available, but I am assured that they are the maximum that can be spent at present.

Photo of Lord Forsyth of Drumlean Lord Forsyth of Drumlean Conservative

My Lords, why did the then Chancellor, now the Prime Minister, cut £14 million from the flood defences budget last year? With hindsight, was that not a grave mistake?

Photo of Lord Rooker Lord Rooker Minister of State (Sustainable Food and Farming and Animal Health), Department for Environment, Food and Rural Affairs, Minister of State (Department for Environment, Food and Rural Affairs) (Sustainable Farming, Food and Animal Welfare), Deputy Leader of the House of Lords

My Lords, first, he did not and, secondly, the money was not cut from the flood defence budget. It was done by Defra. The grant to the Environment Agency was reduced by £15 million in 2006-07 from £428 million to £413 million. The reduction applied to non-capital spend only. Funding for the agency's capital flood risk improvement programme was not reduced—as I have repeatedly said in this House. The cuts were in staff costs, operational spend and some maintenance of defences; the flood defence programme was not affected. That money has since been replaced.

Photo of Lord Elton Lord Elton Conservative

My Lords, under what circumstances will the Government permit building on flood plains?

Photo of Lord Rooker Lord Rooker Minister of State (Sustainable Food and Farming and Animal Health), Department for Environment, Food and Rural Affairs, Minister of State (Department for Environment, Food and Rural Affairs) (Sustainable Farming, Food and Animal Welfare), Deputy Leader of the House of Lords

My Lords, essentially where the Environment Agency—which is now a statutory consultee on building in flood plains, which it was not before—assesses that it can be managed properly and can be defended. Of course, this building is on the flood plain.

Photo of Lord Rooker Lord Rooker Minister of State (Sustainable Food and Farming and Animal Health), Department for Environment, Food and Rural Affairs, Minister of State (Department for Environment, Food and Rural Affairs) (Sustainable Farming, Food and Animal Welfare), Deputy Leader of the House of Lords

My Lords, there are plans for looking at the future of the Thames barrier. Most, if not all, of the building in the Thames Gateway programme is in normal urban areas. They are all on the flood plain and can be adequately defended. Compared to the situation five years ago, the Environment Agency is now a statutory consultee and is therefore in at the beginning. The water companies and others involved in the massive enterprise of building a new city along the banks of the Thames are fully aware of the situation.

Photo of The Countess of Mar The Countess of Mar Crossbench

My Lords is it possible to persuade the Environment Agency to change some of its policies and allow landowners to drain ditches and clear streams that are overgrown with weeds so that they can carry the excess water that comes with flooding? I declare an interest in that we lost a number of sheep in the recent floods in Worcestershire.

Photo of Lord Rooker Lord Rooker Minister of State (Sustainable Food and Farming and Animal Health), Department for Environment, Food and Rural Affairs, Minister of State (Department for Environment, Food and Rural Affairs) (Sustainable Farming, Food and Animal Welfare), Deputy Leader of the House of Lords

My Lords, an independent review of the lessons to be learnt from the recent flood is going on, chaired by Sir Michael Pitt. Information from the internal drainage boards, landowners and others will be put to that committee. The issue of clearing ditches was raised with me when I was looking at the flood areas during the floods and subsequently. The Environment Agency has a view about biodiversity as well as about flood defences. The faster the ditches are cleared, the higher the rivers will be and the more risk there will be to the towns, so there is a balance to be struck. These issues will be fully dealt with in the independent review of what happened this summer.

Photo of Lord Davies of Coity Lord Davies of Coity Labour

My Lords, the original assessment was around £600 million. It has gone up to £800 million, which is a 30 per cent increase. Is it not a bit much for the insurance industry to threaten not to provide insurance cover for these people?

Photo of Lord Rooker Lord Rooker Minister of State (Sustainable Food and Farming and Animal Health), Department for Environment, Food and Rural Affairs, Minister of State (Department for Environment, Food and Rural Affairs) (Sustainable Farming, Food and Animal Welfare), Deputy Leader of the House of Lords

My Lords, my noble friend is right; there has been a substantial increase in flood defence expenditure. Since 1996-97, some £4.5 billion has been spent across England. That is a substantial increase on what was spent before. Nevertheless, with climate change and other unforeseen circumstances, we need to keep our defences up. There will therefore be more expenditure. I do not think the insurance industry is threatening anyone. We intend to work in partnership with it to see that everybody gets the necessary insurance cover.

Photo of Baroness Byford Baroness Byford Conservative

My Lords, has the money that was due to go to the local authorities following the two dreadful flooding episodes, first in Yorkshire and Lincolnshire and then in Gloucestershire, been allocated to them? Secondly, how many private dwellings that were troubled by flooding had personal coverage for insurance purposes?

Photo of Lord Rooker Lord Rooker Minister of State (Sustainable Food and Farming and Animal Health), Department for Environment, Food and Rural Affairs, Minister of State (Department for Environment, Food and Rural Affairs) (Sustainable Farming, Food and Animal Welfare), Deputy Leader of the House of Lords

My Lords, £57 million was made available during the summer to the regions affected. I am not certain if that includes both the local authority Bellwin money and the money that went to the regional development agencies. Obviously money went to the RDAs, which I know has been taken up by only a few farmers in some of the areas. More work is being done on that to make sure people are aware of it. We expect 100,000 households to benefit from the improved protection.

I cannot give an estimate of those who were not insured. I understand that the number of people without individual dwelling cover was fairly high in parts of south Yorkshire. That is where most of the floods affected dwellings. The flooding in Gloucester and Worcestershire affected land rather than dwellings. Obviously it was serious for the crops. I do not have the exact figure on who was and who was not insured. As I have said, the Treasury is concerned about this and is having discussions with the insurance industry to ensure that people who could not afford insurance are able to get access to it.