The Flood Defence Problem
There are some 35,000 km of coastal and flood defence embankments in England and Wales . Nevertheless, the pace of new building means that some areas may not be fully defended before properties are occupied. For example, the 2,500 houses at Sovereign Harbour , Eastbourne. The EA claim that people living in such houses are seriously at risk from a coastal storm, and argued against the development.

Increases in new building in floodplains means that money for flood defences is spread thinner, and this may result in defences being built to a lower standard of service. However, building to less than a 200-year standard of service could be a false economy as the defence is more likely to be damaged, and repair costs could mean that the whole life cost of the defence could be greater. In addition of course, if the standard of service is less than 200 years plus climate change allowance, insurance costs for residents could be higher than normal.

Engineers have tended to be drawn towards structural solutions such as embankments and other "hard" defences and have argued for greater spending on such defences. In Japan , they spend 30 times more than in England as a percentage of GNP. Although they do have a much more severe flood risk, it shows what can be afforded if the country has the will, but it also means covering riverbanks and coastlines in concrete and steel. There is also the issue of whether the general taxpayer should pay for defences, and in 2002, the government seriously considered some sort of "Flood Tax" for those in hazardous areas. (After lobbying by the author and flood victims, the government abandoned its plans in September 2002.) A tax on flood victims would have been grossly unfair: taxing people who have already suffered, usually through no fault of their own. It would seem particularly unfair at a time when property developers are making record profits, especially as much of this profit comes from developing in flood hazard zones.

A research report published by the Department for Environment, Food and Rural Affairs (DEFRA) in July 2001 concluded that:

•  "The capital works and maintenance investment needed to continue to provide and maintain present defence standards is in excess of £0.3 billion/year;

•  "Current standards of defence reduce annual average damages to approximately £0.8 billion/year;

•  "Continuing to invest at present levels of approximately £0.24 billion per year will result in increasing annual average damage possibly at the rate of some £10-15 million per year.

•  "Accommodating climate change is likely to require a further increase in investment of between 10% and 20% over and above that required to meet indicative standards under present day conditions;

•  "Without allowance for accommodating the predicted impacts of climate change within defence provision the economic impacts associated with flooding could increase significantly, with annual average damages increasing in fluvial areas by approximately 50% and in excess of 200% on the coast by the year 2050.

•  "To allow for anticipated climate change over the next 50 years, an overall increase of between 35 and 85% in flood defence spending would be required."

The report offered two alternatives: increase spending by up to 85% now, or concentrate spending on selected areas, in effect abandoning less populated areas to the risk of repeated floods. In such areas, flooding would become inevitable. Such "managed retreat" as it is called in other countries, is euphemistically termed "managed realignment" in Britain, and the government and its agencies have been quietly working on such schemes for some time.

(The most comprehensive list of "managed realignment" sites seems to be the one contained in a detailed study produced in 2001 by the Babtie Group for the Scottish Executive, Scottish Natural Heritage, and other groups in Scotland.)

If the government cannot afford to defend people already living in areas it has designated for managed retreat, should it compensate them? It is interesting to note that the government's recent consultation paper on compulsory purchase in England and Wales has no proposals to introduce compensation for homeowners in such circumstances. (The question of compensation in cases of managed retreat is a complex one. A useful outline of the position in England is contained in a recent report produced by the Royal Institution for Chartered Surveyors.)

Should insurance companies continue to offer flood insurance for these properties, or should the government step in? As mentioned in the introduction, the government has already made its position clear on this point, there will be no government compensation for flood victims.

But the biggest issue remains the continued growth in the number of people living in flood hazard areas and the failure of government to adequately control this, or to make corresponding increases in flood defence spending. Is it right that in a civilised, developed country such as the UK , the government should simply accept that thousands of its citizens will be put at risk of being flooded regularly in the future? Why should the government expect the insurance industry to continue paying out for damage which is increasingly becoming inevitable due to the government's failure to protect its citizens adequately?

Thomas Jefferson, the author of the USA 's Declaration of Independence, said "The care of human life and happiness, and not their destruction, is the first and only legitimate object of good government". Posterity might well judge current government policy in England and Wales to be more concerned about building houses in the South East of England, than in protecting their citizens.

It is true that funding has been made available in England for increased investment in capital works since the autumn 2000 floods. Elliot Morley reported that the annual budget of £150 million of capital works supported by DEFRA grant represents a 25% increase over the £110-120 million average in recent years. This was perhaps a little misleading because it probably includes the "one off" payment from the Deputy Prime Minister of £50 million following the floods in 2000. Mr Morley did not mention that the DEFRA spending in 2002-3 is due to reduce again to £114m, the equivalent of around half the profits made by Barratts the house builders in 2001-2002.

While the increase in 2001-2002 is welcome, it has done little to reassure the insurance industry's concerns over maintenance of defences. The ABI had asked for an increase in investment of £435m by 2005/2006, that is an extra £145m per year on average, but the government is only offering an additional £150m over the next three years, and it is not clear how much of that will be new money. Even then, it will be several years before this increased spending will be reflected in better flood defences.

In July 2002, the government gave details of its spending plans for flood defences as follows:

Table 3

Spending plans for flood defences in England and Wales (£m)

Source: "Renewing the partnership - how the insurance industry will work with others to improve protection against flood" Association of British Insurers, September 2002, London .

Note: Defra announced in March 2003 that the figure for 2003-2004 would be increased from £119m to £136m.

It should be noted that most of the projected increases are to come from local authorities, who may not be prepared to deliver. On 9th Jan uary 2001 , John Grogan MP said in the House of Commons:

"A Leeds city councillor, Liz Nash, who was on the (Yorkshire) flood defence committee until last May, was recently reported in the Yorkshire Evening Post as saying:

"Some local councils want to top skim this money to spend on other priorities. Councils have been strapped for cash for years and the temptation to use this money, which should be passed on for flood prevention, is very great."

Time will tell, but time is running out. Insurance problems may help to mobilise the local community to put pressure on their local authorities to do something to reduce the flood risk. In the short term this may well help to maintain local authority spending on flood defences.

The public and insurers can see what levels of protection exist - or don't exist - for particular postcodes.

This project, the National Flood and Coastal Defence Database (NFCDD), is a requirement under the DEFRA High Level Targets for flood and coastal defence operating authorities.

The system is now utilised within the Agency and from March 2004 was made available to operating authorities. At the time of writing there is as yet no news of it becoming available to the public or insurers, and it is not yet taken into account in the Norwich Union maps. Even if it were, NFCDD only applies to England and Wales , although the Scottish Executive has made a commitment to produce a similar database for Scotland .

It is not just the amount of money allocated for flood management that is a problem. With eight separate Acts of Parliament dealing with flood and coastal defences and 254 separate bodies in addition to local authorities involved in flood defences and planning procedures across England alone, there is a huge bureaucratic burden for the EA, and many decisions are based on local political interests. An ABI official stated recently that "some flood defence bodies date back to medieval times - and it shows."

DEFRA have promised to "streamline administrative arrangements" and this is certainly required. A good start was made on 12th March, 2003 , when the Government's conclusions on the Flood and Coastal Defence Funding Review were announced (see panel).

As the EA point out in a recent report the current process delivers different standards of protection within the same community and in different parts of the country. For example the EA say that 84% of flood defences in the North West of England are "good" or "very good" while only 15% of defences in the North East reached that standard.

The EA have serious concerns about the whole system, and their report states that "over-dependence on economic appraisal leads to a sub-optimal solution, particularly by excluding social matters of high public interest. The pursuit of short-term economic efficiency also prevents consideration of long-term, more sustainable, solutions. This leads to long-term inefficiency in the use of funds from taxpayers and others that, in turn, can create a cycle of reducing standards of protection against a back cloth of increasing flood risk from climate change. This works against the public interest and public expectations."

The reference to "long term more sustainable solutions" is an important one. Many countries, including Japan , are turning to so called "non-structural" solutions to the flooding issue, as an increasing proportion of their spending on flood defence is taken up with maintaining existing structures. In England and Wales , there is also concern about maintenance issues and the increased loading that will be placed on defences due to climate change. In December 2001, DEFRA and the EA funded a nine month project to review the issues, and this was carried out by HR Wallingford in conjunction with Posford Haskoning. The report is closely linked to the IMPACT project which is looking at dam break issues.

One alternative to hard defences such as embankments is a whole range of different types of temporary defences, ranging from sandbags and flood boards, to barriers made from pallets, plastic skirts, or huge pneumatic tubes. These all have a role to play, and can allow additional response flexibility, but from an insurance point of view the question must be whether such defences would actually be deployed in time, and would they be effective?

Some other countries have turned to non structural solutions including measures such as allowing rivers to flood naturally by creating flood storage areas, and wetlands. Many people welcome the "natural look", for rivers and often people are prepared to deliberately live in flood hazard areas and put up with occasional flooding in order to have the amenity which a river offers. There have even been a number of cases where residents have refused flood defences because it would spoil their view of the river, - for example in Bradford upon Avon (which subsequently suffered from serious flooding).

In the upper reaches of the Thames , waterfront property values are on average £48,000 higher than comparable properties elsewhere. This desire for the amenity value of living by a river is quite understandable, so long as such people do not expect to be subsidised by cheap flood insurance rates.

One non structural solution which could be used with great effect in Britain is the insurance price mechanism so that those who chose to live in flood hazard areas pay the true cost of the consequences, rather than be subsidised by the rest of society.

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