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Speech by Huw Irranca-Davies MP at the ABI Floods Bill Event – 28 April 2009

Thanks to Stephen and Anne for their comments. I look forward to your helpful amendments on the Bill. I also welcome the research published today.

The insurance industry is more than just a business. It’s more than just a collection of broker offices or call centres, more than just a cover note or policy schedule. The insurance industry provides a vital service that enables individuals, businesses - indeed whole communities - to protect themselves financially, plan for the future, and prepare for the worst case scenario.

As we are all too well aware the worst can and does happen; as we saw in St Ives over the weekend, and my thoughts go out to the families of those who have died; as it did for those families and businesses in the 55,000 properties that flooded in 2007. In this context insurance offers something more: the means to protect your home, your family even your whole way of life.

The fact that we live in one of the few countries in the world where you can insure your property against flooding is down to the efforts of both the UK Government and insurers through their Association. Working together we have provided the means for businesses and communities to protect their homes and possessions. It is vital that through our relationship this protection continues, especially in light of our changing climate.

Since the summer of 2007 we have been working hard to manage and reduce the risks of flooding. Seventy-two flood defences have been completed in England and Wales, protecting around 44,000 homes. We have also increased investment: more than £2 billion will be spent in England over 3 years on flood and coastal risk management, over £1 billion on new and improved defences. Of course we can always do more, but the situation has improved.

We asked the operating authorities to use this money to protect an additional 145,000 homes over the period. I can announce today that operating authorities are expecting to exceed this target by 10%, based on a central estimate, and deliver better protection to a further 15,000 homes by the end of March 2011. We deserve to recognise this.

We supported all of the recommendations in Sir Michael Pitt’s valuable final report, - and it is rare that Government welcomes all of the recommendations in an independent report - and outlined how we planned to meet them in our formal response. This included allocating an additional £8.5 million to the Environment Agency to support them in their key role: the overall strategic responsibility for flood and coastal erosion risk management. Importantly, this means they will give risks from surface water equal prominence to risks from rivers and the sea.

Working with the Met Office the Agency has recently launched the Flood Forecasting Centre, backed by a further £5m from Defra. This brings together under one roof, the best possible intelligence and expertise to monitor and predict flood and extreme rainfall events. The alerts the Centre will provide will allow a faster and more targeted response from the emergency services, and better protection for people and property.

Last week, just four months since our response to Sir Michael’s report, we took our latest and perhaps most significant step towards providing improved security and protection for the public. The Draft Flood and Water Management Bill.

It proposes a twenty-first century response to the ever-present threat of flooding. For the first time all sources of flooding will be managed, with clear accountability. The draft Bill includes a huge range of measures to reduce the likelihood and impact of flooding, including the introduction of sustainable drainage systems, changes to the way land is managed, and powers for local authorities to manage local flood risks more effectively.

The role of local authorities is particularly significant. In line with Sir Michael Pitt’s recommendations, the draft Bill proposes to enable them to take the lead on local flood risk, and sets out what their duties would be. Working with the Environment Agency, water and sewerage companies and highway authorities, they will lead on surface water management – county authorities in two-tier areas. Co-operation and the sharing of information between partners will be key, and there will be a duty for all relevant authorities to comply.

I recognise that these proposals place a weight of expectation on local authorities, but we will provide all the support we can. We will continue to provide the structure, the tools, and make funding available for the work. For example last month we published draft guidance to help them manage surface water risks, which is currently being tested in six different areas across the country.

Financial support to authorities is crucial and all new costs and burdens will be covered. We announced in December that the highest priority authorities will receive a total of £15m over the next two years so they can get started. Six authorities are already sharing £300,000, and more will follow in due course.

We’ve set an ambitious task, and I am encouraged that people are keen to get cracking. The fact is that much good work and progress can be made on the ground without new legislation, and authorities cannot afford to wait, given the next major flood could strike at any time. We have set out where accountabilities will lie, and will provide the extra £15m to catalyse action. But all authorities already have funding within formula grant to make things happen straight away if they decide it is a priority.

It is a draft Bill, because we genuinely want to know what people think and to get it right. And this includes how future funding might work.

We are due to publish a Long Term Investment Strategy which will set out the needs and benefits of investment over the next 25 years given what we expect to happen to our climate. It will be no surprise if future investment levels will need to rise – that is what the Foresight report said in 2004.

The question is who should pay for it? Sir Michael Pitt concluded that the investment strategy should not assume all future costs will be met centrally, and that local areas should be encouraged to invest in their own protection. Everyone recognises the substantial local and regional economic and social benefits that community defences can bring, and we mustn’t allow future protection to be constrained by the amount that central government can invest.

So how much should Government invest, alongside other needs like schools and hospitals? How can communities be encouraged to come together and have a bigger say in their own future? And is it right that some communities get defences for free whilst protection in other areas can’t be afforded? I would like to return to these questions when the investment strategy is published.

If there’s one over-riding message in Sir Michael’s report and in the draft Bill, it’s that everyone needs to take more responsibility and work together to manage the increasing risks we face. The insurance industry is a key partner in this, and there is much you can do to communicate the risks, and encourage people and businesses to take appropriate steps to mitigate them themselves.

There may be a role for insurers in the future to help improve reservoir safety, for example, and the Bill consultation asks for thoughts on this. More immediately, people need to be given a clear incentive by insurers to fit flood protection measures where it would be cost effective to do so. For our part we have announced a £5 million grant scheme. Insurers should also work towards making resilient repair the norm in areas frequently flooded.

We are living in uncertain times. But there are things we can all do - insurers, central and local government, individuals and communities - to better protect ourselves against flood risk and prepare ourselves for the future. We all want to safeguard our homes, businesses and families, and avoid becoming its future victims. We all need to take responsibility in achieving this, and I feel confident that by working together we can directly tackle the risks we face. It’s a big ask for all of us, but is necessary for our long term future.

Page published: 1 May 2009

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Speech by Huw Irranca-Davies MP at the ABI Floods Bill Event – 28 April 2009