Funding

Question proposed, That the clause stand part of the Bill.

I want to take the opportunity to question the Minister on the discretion written into the Clause. The Minister spoke about some of the money not being raised by the Environment Agency or some not being raised by the local authorities. Subsection (1) says:

“The Environment Agency may make grants in respect of expenditure”.

To whom would the grants be extended and from what budget? Is that part of the funding to which he referred in response to an earlier Amendment? Is the money going to come from that allocated to the Environment Agency? A little more background information would be helpful. Subsection (3) says:

“A grant may be subject to conditions”.

What type of conditions does he imagine would be attached?

I am also interested in the context in which the Clause will operate and the context of the budget. I anticipate something of what the Minister will say—that the grants should come from the main Environment Agency flood risk management budget, which we have debated in Parliament on a number of occasions, for example.

For many years, the Liberal Democrats have called for the funding of that budget to be increased faster—and by hundreds of millions of pounds more, over a period of years, than the Government were prepared to put in. [Interruption.] The Government have indeed increased the budget, but we were asking for it to be increased faster. We had a great deal of support, not least from the insurance industry, in trying to push that forward.

Now that the money has gone, in a sense, and we do not have the flexibility to increase funding in such a way, can the Minister say whether there is a backlog of projects that have been approved by the Environment Agency but that are waiting to be implemented? The rumour is that the backlog is considerable. I would be interested to know whether that is the case and, if so, how long the backlog is. At the current rate of work, how many years will it take to clear that backlog?

It would be nice if we could look forward, perhaps even beyond the next Parliament or so when public finances will be extremely constrained, towards the more long-term future to which the Association of British Insurers and others have asked us to look. Flood risk management spending is going to be substantially increased, not least as an adaptation to the threat of climate change, which will increase the risk of flooding considerably. Climate change will probably increase storm surges in the North sea and the risk of coastal erosion. On current trends, it will certainly increase the level of precipitation, paradoxically—not only snow, but heavy rainfall leading directly to flooding.

I only hope that we do not have an example of flooding later on tonight or over the next day or so, with large amounts of snow melt descending into towns such as Cheltenham, Tewkesbury and elsewhere, providing us with an immediate example of exactly how well our flood risk management is working at the moment. That, however, seems something of a possibility.

The context of the budget and the funding available for flood risk management at the national level is critical to our constituents. Flood defences are expensive operations. The flood defences in Cheltenham cost something like £23 million and were in place just in time to prevent flooding in 2007 being even worse—although they have also needed work since, which has been a further expense. The context is very important, so I shall be grateful for the Minister’s words on the subject.

Let me first respond to the hon. Member for Vale of York and clarify that the funding we are talking about will generally, as now, come from grand in aid, which is provided by DEFRA. One of the good, beneficial aspects of the Clause is the increase in the flexibility about where that grant can go—the idea of local flexibility. IDBs or other partners on the ground could be involved in making good use of that funding. The Secretary of State and I have been trying to develop that theme, to allow such use to happen more often.

The agency can make grants, subject to conditions. In response to the hon. Lady, I should say that those conditions could, for example, include conditions for repayment or interest. There could be others. The grants may go to any third party in connection with spending on flood or coastal erosion risk management. In Wales, the policy is that the powers under the clause will be vested in Welsh Ministers.

I can actually give some assurance about funding in the long term. I hear what the hon. Member for Cheltenham is saying, but I shall repeat until I am blue in the face that the measure of our having an agreement with the ABI and its members is because of their recognition that the Government have made an unprecedented investment. It is never going to be enough, but the Government have made an unprecedented investment in both flood and coastal erosion risk management: more than £2.15 billion over three years, which, if we track back only a few years, dwarfs what was being spent before.

We are currently spending £780 million in the 2010-11 financial year, with £20 million of the original £800 million brought forward into the 2009-10 budgets, to provide early protection for 27,000 homes. The Environment Agency’s funding for flood and coastal erosion risk management in 2010-11 will reach almost £660 million and the ABI is aware of that. I could go on, but let me talk a little about the long term. I will not exhaust your patience, Mr. Martlew, late in the sitting as we are.

The funding that we have announced for 2010-11 is consistent with the recommendations of the Foresight Future Flooding report. Of course, flood risk management is not short-term, as we have acknowledged; it is a long-term business. So we have asked the Environment Agency to develop the long-term investment strategy, looking at flood and coastal erosion risk management over the next 25 years. That should provide some more certainty and clarity about what improvements are required and when they will be made. So our commitment is absolutely clear.

Would the Minister like to share with us the numbers for 2010-11 and 2011-12 as envisaged by his friend, the Chancellor of the exchequer?

As I just said, the amount to be spent in 2010-11 will be almost £660 million. I cannot talk about the following year at this moment, because I do not have the figure for that year available to me and I suspect that we might have to wait and anticipate what my right hon. Friend the Chancellor might say about future spending.

However, our commitment has been made clear in an upward trajectory of spending on flood defence. Our position as a Department is that we need to ensure that that spending is maintained. However, we have made it quite clear that we also need to ensure that contributions from other sources, whether private sources or local contributions, maximise the added value that we can obtain from flood defence and from flood risk management generally.

I am puzzled. The Minister said that the spending trajectory is quite clear, but it seems to have gone from more than £800 million in 2008-09 to  £780 million in 2009-10, then to £660 million for 2010-11—the coming year. He is not even sure about the year after that. That trajectory seems to be downwards. Surely he wants to see that reversed.

I explained to the hon. Gentleman that what we have done is to bring forward some spending from future years, first, to keep people in jobs at this moment and secondly, to bring forward flood defence measures for people to protect them in their homes. I think that that is a very good thing. However, we cannot spend the money twice. On that basis, I have no hesitation in saying, yes, we have actually brought forward spending to protect more homes now. That is a good thing, but unfortunately I cannot magic money out of the air twice.

Those amounts—even the lowest amount—are significantly higher than where we were not only a decade ago, but five years ago. We have made clear the commitments that we have made and that we must maintain. We have also made it clear that there needs to be more investment. I look forward to when the hon. Gentleman puts an exact figure on what he will commit any future Liberal Democrat Government to spend on flood defences, because that would indeed be very helpful.

Question put and agreed to.

Clause 16 accordingly ordered to stand part of the Bill.