Levying for levees will cause problems

If developers want to build on flood plains, they will have to pay for defences, but will local authorities then never say ‘no’?, asks John Gummer

I have warned before about the government’s attitude towards the risk of flooding, but last week’s rain and snow reminds us of the significant danger to property this presents. We were within a whisker of a major disaster. Another 24 hours and property owners in counties from Yorkshire to the far South West would have been in serious trouble.

The government has, of course, promised that spending on flood defences will rise from pound sterling 144m in 2002 to pound sterling564m in 2005. But the adequacy of this investment has been seriously called into question by expert commentators. The trouble is that we do not have an up-to-date flood survey that estimates the likely demands for prevention work over the coming decade. Governments of all colours have always fought shy of so challenging an estimate. Instead they rely on a range of different surveys, specific reports and local assessments produced at different times and with different parameters.

This means that the extent of the problem is always shrouded and the Treasury decides on the resources without proper external verification. It is the kind of financial nonsense that the same Treasury would condemn in the private sector. It is as if a public company were so concerned about its indebtedness and liabilities that it refused to add them up but reported instead an estimate of what it hoped they would be. Such action would be judged inadmissible – simply because of how it would affect others. So, too, should we condemn successive governments. No wonder the insurance industry has cried stop and set a minimum investment target based on its own figures.

As I reported earlier, the Association of British Insurers agreed to offer insurance only if government spending on sea defences were massively increased and building on floodplains seriously curtailed. The government rushed to meet its minimum requirements but, even so, the figures it touted were based on no new and complete survey, no properly grounded research. The result is insufficient provision and the likelihood of considerable loss for property owners while insurance becomes increasingly expensive and difficult to find.

Shifting the burden

So, mindful of the dangers, government has sought to shift the burden and find ways to generate more funding for defences from the private sector. It wants developers to assume a proportion of the costs of the next investment in coastal and river flood defences. Since it put out a consultation document last February, DEFRA has pushed the view that housebuilders and other developers who build on flood plains should pay a one-off fee which would go towards the construction of coastal and river defences. They have high hopes that this method of taxing could raise some pound sterling20m.

It sounds sensible in theory – anything to make building on flood plains less attractive. But, in practice, the actual implementation and operation of such a tax would do exactly the opposite. The money would have to be routed locally or it could not be said to be for specific protection of the sites being developed.

However, if local authorities were to receive the tax directly, they would almost certainly begin to rely heavily on the money gained from approving schemes on flood plain land. Flooding is already low on the list of planning priorities. In the past year, 288 applications to build on flood plains out of 758 objected to by the Environment Agency were approved. That’s one in three when there was nothing financial in it for the local authority. What if they had the inducement of a nice fat cheque as well?

Impartiality will be lost with cash incentive After all, most of our coastal authorities have been hit by central government cuts in the proportion paid centrally to provide sea defences. Here is a ready way to make up the difference. In inland areas, planning permissions will be a useful way of diverting the Environment Agency’s priorities towards the direction a local authority finds electorally desirable. The fact that it levied a tax to prevent flooding will, all too easily, skew the mechanisms by which the EA decides the order and urgency of its schemes. And what about the duty of the EA to object to damaging schemes in flood plains? How can that be done impartially if there were the prospect of a large contribution to works that it intended to do in any case.

This whole proposition has been ill thought through and presents the developer with a bill without presenting the public with a solution. Effectively, this proposal would be a license for local authorities to permit building on flood-prone land – exactly the opposite of the intention of insurers and government alike.

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