Lord Sheikh spoke in the second reading of the Flooding and Water Management Bill. Click here to view his speech.
My Lords, at the outset I declare an interest: I am the chairman of an insurance broking organisation. I welcome this Bill as I recognise that a binding agreement on flood risk management is long overdue. The recent floods in Cumbria caused widespread devastation, surpassed only by the 2007 floods which resulted in 13 deaths and extensive damage to properties at a cost of over £3 billion. The Environment Agency announced that the severe flooding in Cumbria last year was a phenomenon to be expected only once every thousand years. Although the circumstances were unforeseen, they can serve as a catalyst for better flood preparation in the future.
Many homes and businesses have been ruined by the effects of torrential floods; livelihoods have been shattered and in some cases, irreplaceable items have been destroyed. The Association of British Insurers has estimated that payouts resulting from the floods in Cumbria alone will be made in the region of between £50 million to £100 million, and may even surpass that figure. Flood damage has caused considerable losses to the insurance industry, which may result in the charging of higher premiums and application of terms in areas which are prone to floods. One in six homes in the United Kingdom is at risk from flooding. Better flood management and funding is essential to provide those at highest risk with adequate assistance.
In many instances the psychological damage caused by these floods will be difficult to overcome. Affected communities should be given additional emotional support through initiatives such as counselling for those who wish to make use of the service. The Bill provides developers with the responsibility to make sustainable drainage systems available in housing and commercial properties. An effective framework is needed to minimise the economic and social upheaval caused by flooding. Central and local governments must work together to successfully tackle flooding and give leadership to local communities on how best to prepare and equip themselves for floods.
There is growing concern that many individuals are unaware that they live or work in areas that are prone to floods or coastal erosion. A number of people in Cumbria did not arrange insurance cover and, as a result, have suffered financial hardship. What steps will the Government take to raise awareness of possible flooding in high-risk areas so that individuals can seek adequate insurance protection? There are specialist insurance brokers who can provide appropriate cover in areas which are prone to flooding. This legislation must end the confusion over which bodies have responsibility for flood-risk management. Although the Environment Agency should have an overview of all types of flooding, local communities have an important role to play as their knowledge and expertise is crucial to rescue efforts, both during and after flooding.
The Pitt review called for the allocation of clearly defined roles for flood management. It is encouraging to see that this recommendation is a requirement of the Bill. I welcome Clauses 7 and 8 as they make it incumbent on the Environment Agency to devise a strategy for flood and coastal-erosion risk management in both England and Wales. We need, however, to examine details of these clauses at later stages of the Bill. The agency should have the full confidence of both central and local government-related agencies to adequately develop a strategy that is free from political or commercial bias. It is important for the agency to present regular reports to policy-makers that include independent flood-risk assessments which also detail funding requirements and proposals for dealing with imminent floods. The agency should also devise a long-term plan for flood-risk management and must be given responsibility for creating accurate, national flood maps covering all sources of water damage to be made available to the public. There are opportunities for the Environment Agency to consult with tertiary institutions to promote the research and skills required for effective flood and coastal-erosion risk management.
I support Clause 13 as it ensures that local authorities communicate and co-operate with relevant bodies concerning flood and coastal-risk management. Resources such as flood maps are essential to the industry. There is scope for local agencies to collaborate with the Environment Agency in the production of local flood-risk maps. Local authorities have the potential to become the leading agencies in charge of assessing local flood risk in specific areas. Insurers and loss adjusters have a duty to advise local communities susceptible to flooding whether they should build in flood resistance to best prepare their homes for possible floods.
I welcome the provision which grants greater power to local authorities when managing flood risks as they are best placed to deal with the initial effects of flooding due to their knowledge of their areas. The proposal to promote multi-agency co-operation is also encouraging. A lack of broad agency collaboration has been cited as one of the barriers to effective flood management. Local authorities must work in concert with the Environment Agency to enable the development of a national overview of surface-water flood risk.
I agree with Clause 35 which proposes to regulate the provision of infrastructure by a third party for the eventual use by water or sewerage undertakers. I support Clause 36, which amends the Water Industry act 1991 to enable water companies to prevent or restrict the use of water at times when serious shortages occur, or are at risk of occurring. We have had situations in this country when there has been a lack of rain and a shortage of water. The use of water must be controlled under these circumstances. However, we must work out the details, perhaps in the form of issuing a suitable code. I will add that during the last drought, I lived in a house with five acres of grounds and encountered great difficulty in keeping my plants alive because of the hosepipe bans.
Water companies should be free to impose charges for connecting new developments to give access to sewerage and water networks. They also have a duty to ensure that new developments do not increase the risk of future damage. Clause 38 allows the Environment Agency to engage in works that may cause flooding, provided this is in the interests of natural conservation or civic enjoyment. I hope that the conditions of the clause will be examined in more detail in Committee.
We need to examine the provisions of Clause 39, which allows lead authorities or internal drainage boards to carry out works under certain conditions that will or may cause flooding, an increase in the amount of water below the ground, or coastal erosion.
I welcome Clause 42, which introduces a new section into the Water Industry Act 1991 that requires the owners of premises and sewers to connect with the public sewer. This requirement is, first, on the proviso that an adoption agreement exists between the owner of the sewer and the sewerage undertaker; and also that the agreement must include details concerning the standards that the constructed sewer or drain should meet. In most cases, repairs will be carried out in accordance with the same regulations that did not prevent water damage occurring in the first place. I would like to see a provision that will ensure that construction repairs are made in such a way as to prevent future floods from causing the same degree of damage. This would in turn reduce the costs and the level of disruption to local community groups. I recommend that local housing authorities be asked to provide low-cost insurance in high flood risk areas, perhaps on the lines of tenants’ contents insurance with rent schemes. This should gain wide support.
I am concerned at the number of householders and businesses without appropriate insurance who, in the event of flooding, will encounter financial and personal hardships. It is encouraging to witness broad political consensus for the majority of proposals in the Bill. I am confident that it will be adequately strengthened during its passage through your Lordships’ House. We have a duty to ensure that the Bill greatly contributes towards managing the rising threat of water damage, which is critical for the 5 million properties nationwide that are most at risk of flooding.
Lord Sheikh: My Lords, it must be appreciated that not every householder or owner of a business will be insured. The Minister referred to the point made by the ABI. Are we giving any consideration to providing financial help to householders and owners of businesses who are not insured? That result would be long-lasting.
Lord Davies of Oldham: My Lords, the noble Lord is right. Some people will not be insured, despite the extent to which that issue was emphasised after the floods in 2007, when a considerable number of people found themselves in distress because they were uninsured. Of course we will look at the question of support for those in greatest need, but I know that the noble Lord, with his great knowledge of the insurance industry, will appreciate that we look to that industry to be prompt in its response to those whom it can help.
My Lords, I declare an interest. I am the chairman of an insurance broking organisation and I have been a director of the British Insurance Brokers’ Association. I took part in the debate on flooding and I reinforce the points made by my noble friend Lord Taylor. The insurance industry has acted very quickly; indeed, we have settled claims as quickly as we can. Our difficulty sometimes is that a lot of properties are not insured, and this is where there is perhaps difficulty in obtaining reinstatement. Indeed, the experiences of our clients demonstrate that people suffer from a great deal of anguish. Does the Minister agree that there must be better co-ordination between the Environment Agency and local authorities, because one criticism is that there is not a great deal of that? Can he assure us that there will be a timetable for implementing what has been suggested?
My Lords, first, I declare an interest as a former board member and regional chairman of the British Insurance Brokers Association and as the current chairman of an insurance organisation.At the outset, I congratulate my noble friend Lord Rotherwick on securing this debate on issues concerning flooding and on his excellent presentation. As a practising insurance broker and underwriter, I see at first hand the misery caused to many of our policyholders by the awful effects of flooding. Flood damage is not something that can be reinstated quickly, as it takes many months for the drying-out process to be completed. It is important that the Government do everything that they can to prevent flooding in the first instance and to support local authorities and victims when flood defences fail.
It is essential that we respond to the problems of future flooding as we face the threat of increasing urbanisation and climate change, which means that the problems will unfortunately get worse. In my opinion, flooding is one of the biggest risks to the United Kingdom. The human suffering, financial loss and interruption to business are devastating, and it is estimated that last summer’s floods cost the country £5 billion, of which £3 billion was absorbed by the insurance industry.
My understanding of the current situation is that no single body is responsible for surface-water flooding, yet this was one of the main causes of the problem in the summer of 2007. I feel that the Government should appoint one single body with the authority to take responsibility for the risk of flooding and to co-ordinate with various stakeholders to ensure that action is taken to protect existing and future properties in the UK. I believe that the Environment Agency should be that body and that it should be empowered appropriately.
Providing the Environment Agency with the authority to exercise an advisory and regulatory role may prove to be the best way forward. As an adviser, the agency should prepare a national high-level, surface-water flood-risk map that local authorities can use as the basis for their own efforts and more detailed analysis. This should include the impact of underground water infrastructure on surface-water flooding.
Regarding the regulatory role, the Environment Agency should ensure that local authorities complete surface-water management plans and provide public feedback on them, including identifying areas for improvement. It is imperative that developers and housebuilders consult the Environment Agency and the insurance industry before building on flood plains. Where developments proceed in areas of high risk, the minimum standards should include in-design features to provide protection against flooding with a focus on minimising the effects. Applying routine national standards is insufficient in high-risk areas.
On planning, the Department for Communities and Local Government’s planning guidance PPS 25 is most welcome. I congratulate Sir Michael Pitt on his excellent interim report, Learning Lessons from the 2007 Floods, and I urge the Government to agree to 72 interim conclusions, many of which can be achieved at little or no cost. I also ask for information about flooding to be made available to members of the public on a wide scale and for the information to include details of flood defences. By doing that, we will provide the opportunity for members of the pubic to be assisted in making informed decisions about flood-prevention measures for their properties, and people will get more involved in the national discussions about flood management. I am, however, pleased that an automated flood-warning system is available free of charge.
In regard to construction, it is very disappointing that, against the advice of the Environment Agency, last year planning permission was granted for 13 major developments in areas of high flooding risk. I should make the point that in order for the insurance industry to continue to cover flood-prone properties, along with buildings in high-risk areas, it is important that the Government act now to provide adequate and continuing funding for flood defences and flood-risk schemes. Without adequate flood protection, the insurance industry will struggle to continue to offer competitive insurance for all. I therefore ask the Minister to inform your Lordships’ House of proposals for the current and future funding of flood defences.
Finally, I take this opportunity to acknowledge the lengths that the insurance industry has gone to in dealing with the large-scale floods of 2007 and the excellent efforts that it has made to get people back into their homes as quickly as possible.
Lord Sheikh asked Her Majesty’s Government:
- What are the main features of the announced flood defence spending increase, including the full profile and timetable involved; and whether this announcement will form part of the Comprehensive Spending Review. [HL4752]
The Minister of State, Department for Environment, Food and Rural Affairs (Lord Rooker): No final decisions have been taken on the allocation of the £200 million increased spending in 2010-11. Following the Comprehensive Spending Review settlement, expected by the autumn, and a subsequent departmental allocations exercise, a separate prioritisation process will determine funding for individual flood risk management projects.
Lord Sheikh asked Her Majesty’s Government:
- Whether they have assessed the role which the insurance industry is playing in dealing with recent flood damage and, in particular, (a) its share of the financial burden, and (b) its assistance to policy holders and local authorities during the crisis. [HL4753]
Lord Davies of Oldham: Government Ministers met with representatives from the Association of British Insurers (ABI) on 10 July as part of discussions on the insurance industry’s role in the response to recent flood damage. The ABI expects that insurance claims arising from this summer’s flood events across the UK will reach £1.5 billion.
According to the ABI, 99 per cent of households and businesses have now been visited by loss adjusters. The insurance industry has assured the Government that its priority is to ensure that those who cannot remain in their homes have appropriate temporary accommodation and that as many businesses as possible are able to continue activities during this recovery period. Insurers are also making provision for early payments to help to deal with immediate hardship.
Lord Sheikh asked Her Majesty’s Government:
- What efficiency savings are generated each year within the Environment Agency’s flood management programme; whether these are sufficient to cover inflationary pressures so that spending in real terms is maintained; and how these inflationary pressures will be accommodated in the forthcoming Comprehensive Spending Review. [HL3533]
The Minister of State, Department for Environment, Food and Rural Affairs (Lord Rooker): The Environment Agency (EA) currently delivers £15 million of savings each year against an overall budget of approximately £450 million for flood risk management. This equates to just over 3 per cent and these efficiencies cover only part of the inflationary burden that is currently running at between 4 per cent and 5 per cent. To date, it has been possible to reprioritise activities to allow key outputs to be maintained in keeping with the 2004 spending review target.
Lord Sheikh asked Her Majesty’s Government:
- How much was spent on flood management and defence in 1997 and 2006; and how much capital was invested in preventive measures in those years.
The Minister of State, Department for Environment, Food and Rural Affairs (Lord Rooker): My Lords, in 1996-97, total government spend on flood management in England was £307 million. Last year it was £590 million. The capital sums for the two years were approximately £127 million and £273 million respectively. All these figures include coast protection projects, which often provide significant flood-risk benefits.
Lord Sheikh: My Lords, I am grateful to the Minister for that response. Does he agree that spending on flood defences needs to rise from the current level of £590 million to £750 million a year by 2011, which is an increase of around 10 per cent each year, so that people and businesses can continue to feel secure in the knowledge that the Government have a long-term, planned and sustainable approach to the reduction of flood risk?
Lord Rooker: My Lords, I agree with the noble Lord’s general point but I cannot agree with the figure. We are spending more than ever before and some £4 billion has been spent across England in the past 10 years. The later years of which he speaks will be subject to the Comprehensive Spending Review that will be conducted later this year.