COMMONS

Strategic flood risk management report published

25 March 2015

There are major risks to the sustainability of current levels of flood protection, which could impact on long-term value for money according to the Public Accounts Committee's report published Wednesday 25 March 2015.

Richard Bacon MP comments

"Some 5 million properties in England – a total of 1 in 6 properties – are at risk of flooding from coastal, river and surface water. In 2013, the risk of flooding from the coast was one of the highest priority risks on the National Risk Register of Civil Emergencies.

The Department for Environment, Food and Rural Affairs and the Environment Agency have done a good job in improving the cost effectiveness of their approach to flood risk management.

However, there are major risks to the sustainability of current levels of flood protection, which could impact on long-term value for money.

For example, the current capital budget for flood risk management has been approved for a 6 year period, but the revenue budget settlement is agreed on an annual basis. This limits the Agency’s ability to take a long term approach to planning and procuring maintenance. The Agency’s new long term investment strategy should be used as a basis to negotiate future settlements.

The Agency has limited resources and must make difficult decisions about what it can and cannot fund, for example about some defences where it will need to reduce or stop maintenance. As of August 2014, around half of all asset systems were on a 'minimum' regime.

Reducing the spend on maintaining some flood defences may be a false economy as additional spending could be needed if those defences then fail earlier than they would otherwise have done.

There is also a lack of transparency around the consequences of allowing some defences to fail, and the Agency should be open with local communities about the consequences of prioritising maintenance, even allowing for the local pressure this may bring.

Central government cannot fund all flood defence schemes, and so in 2011, the Department introduced a new partnership funding model which will have attracted an estimated additional funding of £140 million by the end of March 2015. However, the approach to accessing partnership funding does not yet have the strategic focus needed to match government’s ambitions for it.

The Agency is directly responsible for the maintenance of only 45% of all flood defences. The rest are the responsibility of local authorities, internal drainage boards and private landowners. Local authority flood strategies are crucial to the success of flood risk management; however, by March 2014 only 16% of local authorities had a flood strategy in place.

There is also a lack of public awareness of the realities of flood risk management, such as the responsibilities placed on individual landowners to maintain flood defences. The Agency should ensure that these issues are more clearly understood, particularly by those who have sometimes inadvertently removed flood defences such as earth bunds."

Richard Bacon was speaking as the Committee published its 48th Report of this Session which - on the basis of evidence from Bronwyn Hill, Permanent Secretary, Department for Environment, Food and Rural Affairs, Paul Leinster, Chief Executive, Environment Agency and David Rooke, Executive Director, Environment Agency – examined strategic flood risk management.

Given financial constraints, the Department for Environment, Food and Rural Affairs (the Department) and the Environment Agency (the Agency) have done a good job in improving the cost effectiveness of their approach to flood risk management. They have adopted rational methods to prioritise spending on both new capital flood defences and maintaining existing ones.

However, risks remain to the sustainability of current levels of flood protection. The Agency will need to make difficult decisions about how it prioritises its maintenance budget, including some defences where it will need to reduce or stop maintenance. In these cases, there is a risk that lack of maintenance will mean that capital costs are incurred sooner, when defences require replacement earlier. Since our evidence session, the Agency has published a long term investment strategy, which presents a number of flooding scenarios and outlines how much funding would be needed to protect against these.

The Environment Agency (the Agency) estimates that 1 in 6 homes in England are at risk of flooding from coastal, river and surface water. Climate change means that the weather is becoming more unpredictable, leading to increased risk of severe weather. Effective flood risk management is important so that the country is in the best position to protect against these risks, and to safeguard homes, communities, businesses and infrastructure.

The Department for Environment, Food & Rural Affairs (the Department) has national policy responsibility for flood risk management and the Agency has a strategic overview role and is responsible for the management of flood risk from main rivers and the sea. There are many other bodies with responsibilities for flood risk management, including local authorities. In 2014–15, the Department provided £795 million for flood risk management, which included £180 million of the £270 million additional funding following the winter floods. Excluding this additional money, funding for managing flood risk fell in cash terms from 2010–11 to 2013–14; by 18% for capital spending and 10% for revenue spending.

Conclusions and Recommendations

There are major risks to the sustainability of current levels of flood protection, which could impact on long-term value for money. The current capital budget for flood risk management has been approved for a 6 year period from 2015, which enables the Agency to plan and programme work on a long-term basis and negotiate lower unit costs with contractors. But the revenue budget, which funds the flood defence maintenance programme, is only approved on an annual basis.

Longer term settlements from HM Treasury for the revenue budget would provide more certainty over the availability of funding, allowing the Agency to plan with certainty and secure savings. The Agency has shown its ability to secure these efficiencies, both in capital construction and on maintenance for the Thames Estuary, where the Agency was able to take a longer term approach. The effects of climate change heighten the importance of being able to plan for the longer term effects of flooding.

Recommendation: The Department should work with HM Treasury on lengthening the budget settlements for revenue funding, so that the Agency and others can plan for the longer term. The Agency’s new long term investment strategy should be used as a basis to negotiate future settlements.

Reducing the spend on maintaining some flood defences may be a false economy, as additional spending could be needed if those defences then fail earlier than they would otherwise have done. The Agency has a rational approach to prioritise where it spends its money on maintenance. It has introduced an annual exercise to identify the maintenance needed for flood defences in each area, and it prioritises maintenance work based on a calculation of economic benefit relative to cost.

Some defences will have their maintenance needs met in full and others, where the benefit is less, will have 'minimal' maintenance. In some cases, the Agency will decide not to maintain defences at all. However, reducing the maintenance on flood defences in order to save revenue funding may mean that capital work is required sooner than originally anticipated, as defences deteriorate faster where maintenance is reduced.

Recommendation: The Agency should review what impact its decisions on reducing or stopping maintenance will have on longer term value for money.

There is a lack of transparency around the consequences of allowing some defences to fail. The Agency has to make difficult decisions about where to fund in full, in part or stop maintaining flood defences. In 10 areas it has handed over maintenance responsibility for defences to local communities. In some cases the Agency has not been as clear as it could be with communities on the reasons behind changes to maintenance regimes and what the implications are for those living locally. Communities will also need to understand the likely effect, should, in future, the Agency deem a flood defence to be uneconomic, or de-prioritise it for maintenance.

Recommendation: The Agency should be open and transparent with local communities and communicate clearly to them the consequences of the difficult decisions it has to make around prioritising maintenance, even allowing for the local pressure this may bring.

The approach to accessing partnership funding does not yet have the strategic focus needed to match government’s ambitions for it. Central government cannot fund all flood defence schemes. By the end of March 2015, the Department’s partnership funding programme–designed to increase investment for capital flood defence projects from outside of central government—was expected to have attracted an estimated additional funding of £140 million since 2011. This funding has allowed more projects to be delivered and several to go ahead which would not have otherwise, such as the Morpeth Flood Alleviation Scheme.

However, the Department did not set a target for how much funding it would achieve at the outset of the programme, and lacks data on the potential funding levels against which to judge whether the £140 million figure is good or bad, high or low. From 2015, as a condition of its funding, HM Treasury has set the Department a target that a minimum of 15% of all funding comes from partnership funding sources, which will be a significant step up.

Recommendation: The Department and the Agency should implement a clear strategy for accessing partnership funding, which should include understanding what best practice looks like, so the lessons from successful schemes can be applied elsewhere.

The Agency could do more to share flood modelling information so there is a consistent view at a local level of flood risk. In 2009, the Agency set up the Flood Forecasting Centre as a joint collaboration with the Met Office. Data from the Centre allows the Agency to provide effective early warnings and advance support to local bodies and communities. We recognise that the Agency has improved its flood modelling and continues to work to improve both the data and the way it is presented. However, information from other partners, such as the insurance industry and local authorities, could be used to provide better local data, which could be shared more widely with all interested parties.

Recommendation: The Agency should work with partners to build on the sophistication of flood modelling data, so stakeholders can have a shared view of flood risk, both nationally and locally.

Local authority flood strategies are crucial to the success of flood risk management, but a very significant number are incomplete. The Flood and Water Management Act of 2010 put more responsibilities on local authorities to address flood risk in their areas. As part of this strategy, lead local authorities were supposed to produce a strategy, outlining how flood risk will be managed in their areas. However, by March 2014 only 16% of local authorities had a flood strategy in place. The Department has no powers to mandate that these strategies are produced by a particular time.

The Minister of State, in conjunction with the Local Government Association, wrote in July 2014 to all local authorities outlining that he would like to see progress by the end of 2014. The lack of local strategies creates a risk that planning decisions will not be informed by the local flood strategy and therefore may run counter to effective flood risk management.

Recommendation: The Department should use all opportunities available–including working with the Department for Communities and Local Government–to ensure a complete set of plans is in place at local authority level as soon as possible.

There is a lack of public awareness of the realities of flood risk management. The Flood and Water Management Act also placed responsibilities on local landowners and third parties to maintain flood defences. However, what constitutes a flood defence may not be obvious to the landowner; for example, a boundary wall in a garden. Its removal may affect not only the property in question but others around it during times of flooding. Because of this, the Agency is working on a pilot scheme in the Midlands to help landowners understand what their responsibilities are in relation to the flood defences that are on their property or land.

Recommendation: The Agency should consider how to improve the understanding of third parties who have responsibilities for flood defences. It should be more explicit about the realities of flooding and the impact of the choices that are made in removing flood defences.

Further information

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