The House of Commons Environment, Food and Rural Affairs Committee has published the official Government response to the Committee's Third Report of Session 2013-14 - Managing Flood Risk.

In response to the Committee’s call for Defra, together with the Department for Communities and Local Government, to act as an advocate for local communities with HM Treasury to secure additional investment for local flood defences, the Government said that the six year settlement from 2015/16 up to 2020/21 would enable it to make “record levels of investment” in capital improvement projects, with more than £2.3 billion invested in capital alone over a 6 year period.

On the call for Defra to set out detailed evidence to demonstrate to HM Treasury that flood management capital funding must rise year on year by £20 million over the next 25 years to keep pace with increasing flood threat, which must be matched by a better balance between revenue and capital funding, the Government said that “long-term investment planning should not assume that all costs will be met centrally.”

The lengthy response says that Defra will use its capital investment in flood risk management schemes between 2015/16 and 2020/21 to leverage at least 15% contributions from other sources  and that Defra is currently working with the Environment Agency and other Risk Management Authorities “to ensure that the long term investment strategy is updated to reflect the latest scientific evidence of changing risk and optimum investment levels.”

Addressing the Committee’s concerns that only small amounts of private sector funding have been secured to date under the partnership model for allocating flood funding, the Government said that early indications suggested that Defra's Partnership Funding approach would enable up to a quarter (25%) additional schemes to go ahead in the coming years than if project costs were met by central Government alone.

On the need to simplify procedures to speed up delivery of funding to local authorities, the response says that Defra is working with the Environment Agency to ensure that funding is allocated as efficiently as possible whilst ensuring that “solutions are technically robust and value for money.” It points out that Defra has also commissioned an independent evaluation of the partnership funding approach, which is due to report in the autumn.

Addressing the MPs' recommendation that the Government should ensure that “maximum use is made of natural methods to prevent and manage flooding”, the response says it is already Government policy that all options should be assessed when considering alternatives for managing flood risk, including flood management schemes that work with natural processes.

However, the Government has provided a response which is vague to the point of meaninglessness to the Committee’s comment regretting “that the current regulatory framework does not permit innovative investment in natural flood defences by water companies and expect Ofwat's next Price Review to rectify this.”

The Response simply refers to the provisions in the new Water Bill 2013-14 to encourage the use of Sustainable Drainage Systems (SuDS) by clarifying that building and maintenance of SuDS can be a function of sewerage undertakers and the fact that in “some areas water companies are already funding natural flood defence approaches such as blocking peat grips in upland areas to improve water quality and improve infiltration to help reduce flooding.” The Response fails to make any reference at all to the upcoming Price Review.

The Government has strongly rejected the Committee’s comment that “Defra's failure to protect rural areas poses a long term risk to the security of UK food production as a high proportion of the most valuable agricultural land is at risk of flooding. The response states:

“We strongly disagree that Defra is failing to protect rural areas from the risk of flooding….more than 95% of the arable land in England is either outside areas at risk of flooding from rivers or the sea or is in areas benefiting from a greater than 1:75 standard of defence. ……Whilst rural areas can be badly affected by flooding, analysis suggests that the overall exposure of the agricultural sector to flood risk is not disproportionate to other parts of the economy.”

Maintenance of flood defences and watercourses "will continue to be a priority"

In response to the Committee’s coment that it is ”deeply concerned at the decision to reduce funding for maintenance of flood defences and watercourses which could leave communities exposed to the threat of flooding despite having benefited from considerable capital investment in flood defences”, the Government referred to the fact that the overall budget for flood asset management is being reduced in the current Spending Review period (to 2014/15) as part of the wider Government priority to pay down the deficit. The Government said that the Environment Agency will continue to prioritise maintenance of flood defences and watercourses, including dredging, but pointed out that “dredging and maintenance of watercourses is not always the most cost-effective way to manage flood risk, and it is therefore not the right approach to look at this element of the wider asset management budget in isolation.”

On the Committee’s comment that three years after enactment of the Flood and Water Management Act 2010, its provisions Sustainable Drainage Systems (SUDs) sustainable drainage had yet to be implemented and that it was vital that the measures are implemented without further delay, the Government said:

“We appreciate the concern about the delay in implementing Schedule 3 of the Flood and Water Management Act 2010, and we are working hard to do so at the earliest opportunity. Our aim remains to commence Schedule 3 in April 2014.”

Flood insurance - "still a number of aspects to work through"

On the key issue of delays in reaching agreement with the insurance sector on household flood insurance and the need for the Government to conclude negotiations urgently on the details of the measures it proposes, the response says:

“Flood insurance is a complicated issue and it was right that we took the time to formulate our approach. ……There are still a number of aspects of the approach to work through before Flood Re can be implemented and we have been working hard with the insurance industry to resolve these, as well as seeking the necessary Parliamentary approval through the Water Bill. We can assure households at high flood risk that, until Flood Re is in operation, the insurance industry has agreed to abide by their commitments under the 2008 Statement of Principles.”

With regard to the Committee’s questions about how the Flood Re scheme would be accountable to Ministers and Parliament, and how taxpayers' interests will be protected in the event of an extreme flood event requiring funding beyond the capacity of the scheme, the response says the Government  believes it is important that Flood Re is an industry owned and managed entity and should be regulated in the same way as any other reinsurance company. The intention is that Flood Re would be directly accountable to Parliament for its income and expenditure and value for money, while Ministers would remain accountable to Parliament for general policy matters relating to Flood Re and flood insurance.

The Government response has also acknowledged that Flood Re “does not represent value for money of the level normally required of Government policies” but the Government believes that this is the right approach. Although Flood Re's additional costs are expected to outweigh its quantifiable economic benefits, this does not fully reflect the social and economic factors involved in securing access to affordable insurance for thousands of households, and providing the certainty for households at flood risk which the Committee recognises is needed.

Click here to read the Response in full.

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