Thousands left vulnerable as flood funding shortfall has knock-on effect on flood insurance scheme
The government claims it’s sending a lifeline to those at risk from flooding with greater spending and an insurance scheme. But a new report suggests that a failure to increase spending has left 250,000 homes at risk – with no allowance in the insurance scheme to cover them. So what’s going wrong with the government’s flood planning?
Flooding is one of the biggest natural threats in the UK, and it’s set to become even more of a problem in the future. Climate change is predicted to raise the risk of flooding through heavier rainfall and sea level rise, while the ongoing development of floodplains means that when it does flood there’s more to lose.
The government claims it’s spending more than ever on defending the UK from floods. But in a policy note out today government advisor the Committee on Climate Change (CCC) says that’s misleading. In fact, spending will be lower this year than it has been over the previous four years.
What’s more, a new insurance scheme designed to spread the cost of flood risk also looks set to fall short. The scheme assumes there will be no future increase in the number of at-risk homes – because flood defences will be so effective.
But given the fact that long-term spending makes no provision for increased flooding, this is something of a circular argument. Arguably, neither scheme will protect those who will become vulnerable in the future.
Spending gap
The CCC has analysed publicly-available data to test the government’s spending claims. It says funds available for flood defences are only higher now if you rely on expected external contributions and spending on flood defences by local authorities.
This is problematic, the CCC says, because the money given to authorities isn’t ringfenced, meaning they can spend it on other things. The figure also fails to take account of inflation, so the sum will fall in real terms over the years.
Taken together, this makes government spending on flood defences lower than it has been in the previous four years. This means flood spending is well below the amount needed to tackle the increase in flooding the government expects under climate change. Daniel Johns, the CCC’s head of adaptation, tells Carbon Brief:
“The government’s current investment plan is flat in real terms from 2015 to 2021, whereas the Environment Agency says a £20 million year on year increase is needed.”
The EA estimates £20 million will be needed a year just to keep the number of at-risk homes steady. Actually reducing the number of vulnerable properties will cost £50 million a year.
The CCC says:
“Even with the rise in external contributions and assuming inflation can be countered by efficiencies, spending plans for this period are set to be more than half a billion pounds below the amount EA estimated they need to avoid risk increasing in the long-term.”
It calculates spending between 2011 and 2015 is £380 million behind even the EA’s least expensive scenario. which would result in around 250,000 more households becoming exposed to a significant risk of flooding by 2035.
The CCC also warns that development on the UK floodplain is continuing despite the known risks. It found in 2012 that England’s floodplain has seen more property development than other areas over the past 10 years – and one in five of those properties is at risk of flooding.
We got in touch with the Environment Agency for its response to the CCC’s report, and a spokesperson told us:
“The Environment Agency is planning for climate change, with investment in flood forecasting technology and building climate change predictions in to the design of flood defence schemes to make sure that they are fit for the future.”
Insurance assumption
There is another branch to the government’s flood policy. It is planning an affordable flood insurance scheme for the the most vulnerable houses. The scheme is called Flood Re, and it’s designed to help insurers spread the worst flood risks, and better cope with flooding.
But critics say that the scheme has some important design flaws which could jeopardise the future affordability and availability of insurance. Swenja Surminski, a senior research fellow at the LSE’s Grantham Research Institute and its Centre for Climate Change Economics and Policy, has previously told Carbon Brief:
“Our concern is that Flood Re – the way it’s structured and described by government – is disconnected to efforts to getting England more resilient to rising risk levels as the climate changes and population and development levels increase. The first proposals for the scheme didn’t even consider climate change.”
When the Grantham team raised this with Defra, the department reassessed the scheme, Surmanski says. Its response was to argue it did not need to plan for increasing risk of flooding.
Why? The government argues the Environment Agency’s flood investment programme will ensure the country is protected from increased flooding.
But of course, this argument falls down if it ignores the shortfall in spending, which is well below the investment the EA says is needed. Johns says the government’s impact assessment for the insurance scheme (box 2, p.13) assumes current investment plans are sufficient to counter the rising risk, despite evidence to the contrary.
Shaky foundations
At present, the government’s plans to defend the UK from floods are based on somewhat shaky foundations. The flood insurance plan will only work if the Environment Agency is able to adequately protect the UK from floods. Yet according to the EA, this is impossible unless flood spending increases significantly.
Ironically, the more the government spends on flood defences, the more it would save in the long term, avoiding huge bills each time areas suffer floods, the CCC says. However, just spending money won’t solve the problem. The committee says it’s important to start doing things differently, finding better ways to avoid flooding rather than just building houses and trying to protect them from the inevitable.
But at present, spending has flatlined and floodplain building continues apace. The CCC estimates 250,000 houses will fall foul of the flood spending gap, but that number could increase.