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Flood defence projects to receive government funding
Practical Law UK Legal Update 5-590-9847 (Approx. 5 pages)
Flood defence projects to receive government funding
| Law stated as at 03 Dec 2014 • England, Wales |
The government has announced where it will apply the £2.3 billion budget for flood defence spending that was announced in 2013. This may reassure clients who own, or wish to buy, properties in a flood risk area.
Speedread
On 2 December 2014, the government and the Environment Agency indicated how the £2.3 billion budget for flood defence spending would be allocated over the next six years. The underlying detail means that the figures are not quite as encouraging as the government press release would suggest.
Context
On 2 December 2014, the government issued its National Infrastructure Plan 2014 (see HM Treasury: National Infrastructure Plan 2014 (December 2014)). Chapter 9 confirmed their commitment to reducing the risk of flooding and coastal erosion, but did not announce any additional funding.
Alongside the National Infrastructure Plan 2014, the Environment Agency issued:
- A list of the planned flood defence projects (see Environment Agency list of projects) and the government investment to be made in each.
- A new report on Long Term Investment Scenarios (see Environment Agency Long Term Investment Scenarios) for flood and coastal management, indicating its thinking on where the risk lies and the money that needs to be spent.
For more information on the National Infrastructure Plan 2014, see HM Treasury: National Infrastructure Plan 2014 (December 2014) and Legal update, National Infrastructure Plan 2014: property aspects.
Government funding
Government funding for flood defence work was announced in the Spending Round 2013 and accompanying paper "Investing in Britain's future" (paragraphs 8.23-8.27). The long term settlement was £2.3 billion over the period to 2021. For more details on the Spending Round 2013 and Investing in Britain's future see:
Some supplemental funding was announced following the flooding in early 2014.
No new funding has been announced this time. The government has simply referred to the proposed allocation of the funds (by reference to the Environment Agency list of projects). Naturally the government has drawn attention, in its press releases, to the most high profile proposed flood defence projects.
There has been widespread comment throughout 2014 that the government funding allocated to flood defences remains insufficient. There are many reasons for this, including:
- Investment in new flood defences must be matched by continued effective maintenance of existing flood defences, yet the maintenance budget has been cut in real terms.
- Climate science suggests that the risk from flooding is getting worse, so defences need to be improved.
- The effect of inflation means that the government fund is not as generous as they would like to suggest.
The figures are difficult to reconcile, but it would be unwise to think that the full £2.3 billion will be spent before 2021 (the reasons for this are explained in Significance for property lawyers below).
Environment Agency list of projects
The Environment Agency issued its latest programme of flood and coastal defence projects which have been given the necessary consent by the relevant Regional Flood and Coastal Committees. To access the list, see Programme of flood and coastal erosion risk management schemes.
Projects in construction
This description is somewhat misleading because it includes three categories of project, yet those in the last category are not guaranteed to proceed. This part covers projects which are:
- Already in construction.
- Due to start in 2015/6 and are fully funded (either from government money or third party contributions or a mixture).
- Scheduled to start in 2015/6 if more money is found from third party contributions.
Projects the Environment Agency hopes will start in subsequent years
These projects are divided into two categories:
- Those that have full funding packages, but await approval of a full business case.
- Those that have neither full funding packages nor an approved full business case.
Pipeline projects
These are flood defence projects that are likely to qualify for government funding before 2021, so have been given an indicative allocation, but lack the rest of their funding package or a worked up draft business case.
To find a particular project
If a client is interested in knowing whether there are projects proposed which will help to protect their property (or one they are considering acquiring) from flooding in future, they can search the list using the normal search tool in Excel.
The table shows the name and location of the project, the amount of government funding allocated to it (usually referred to as GIA), the relevant year for allocation of funding and the proposed date for construction.
Environment Agency Long Term Investment Scenarios
This report builds on the 2009 Environment Agency report on long term investment strategy for flooding and coastal management. It forecasts both the risk from flooding of many varieties and the benefits of investment in flood defences over the next 50 years. The report broadly accepts that current spending plans for flood defences, based on both public and third party sources, are justified. However, those current spending plans are different from the £2.3 billion which the government refers to in the National Infrastructure Plan 2014. The Environment Agency report makes no comment on the adequacy of that sum.
The report discusses how the forecasted risks would alter if the assumptions on which they are based were to change. The variables which would cause greatest divergence are:
- Failure to control building in flood risk areas, using the planning system.
- Greater inflation (putting up costs of flood defence work).
- Adverse climate change of greater extent.
- Failure of property owners to embrace the concept of Property Level Protection (measures to increase flood resistance or resilience, which owners install themselves). For more information on this, see Legal update, Individual flood protection measures: new EA template report for insurers.
For details of the report, see Flood and coastal risk management: long-term investment scenarios.
Significance for property lawyers
Where a client has a property that is in an area prone to flooding, or is considering purchasing one, the initial flood risk assessment may prove off-putting (either to potential purchasers, their intended mortgagee or to prospective insurers). As a result, they may want a discount on the price or offer insurance only on more expensive terms.
It may be possible to alleviate these concerns by identifying the property as lying within an area that will soon benefit from improved flood defences. The Environment Agency list of projects (part 1) is a useful source of information as to where these projects will be and how soon they will come on stream.
However, the information should be used with caution for the following reasons:
- Many of the listed projects will proceed only if there is additional funding provided by third parties (perhaps the local authority, an internal drainage board or local residents). There are no guarantees that this will materialise.
- The start date for many of the projects to which government funding has been allocated is a long way off. Clients will need to check what the timetable is before they can draw much reassurance.
- None of the money announced by the government for flood and coastal erosion protection will be used to reduce the risk from sewer flooding. This is the responsibility of the water authority. Whether, and when, any work will be done is variable and difficult to establish.
- Fewer of the projects seem to be designed to reduce surface water flooding. The Environment Agency report (see Environment Agency Long Term Investment Scenarios above) and Chapter 9 of the National Infrastructure Plan 2014 indicates that more properties are at risk of surface water than other types of flooding. There is now some information on surface water risk published by the Environment Agency online, but it is not sufficiently accurate. A flood search from a reputable provider is likely to give more accurate information on the surface water flooding risk. For more information on this, see Practice note, Flood Risk Searches.
- It is impossible to marry the amounts shown on the Environment Agency table for government investment with the £2.3 billion budget that has been confirmed. GIA expenditure on projects under construction (Part 1) is well below this figure. So the £2.3 billion must include money allocated to projects in Parts 2 and 3 of the list, which may never proceed for other reasons, or money allocated for expenditure post 2021. Further detailed analysis of these figures is bound to be carried out by other organisations and Practical Law Property will report on their conclusions.
Sources: