Flooding: Growth Areas and Insurance (Hansard, 3 February 2005)

§ Baroness Scott of Needham Market
asked Her Majesty's Government:
What is their response to comments by the Association of British Insurers that up to 10,000 of the homes built in south-east England by 2016 would be located in the floodplain and could be uninsurable.

§ The Minister of State, Office of the Deputy Prime Minister (Lord Rooker)
My Lords, the Government welcome the ABI report. The ABI report shows that in the growth areas, as in other parts of the country, effective land planning policies will help to minimise flood risk. Some sections of the press have misinterpreted the report as showing that 10,000 new homes in the growth areas would be at significant risk. That figure comes from the report's baseline scenario, which assumes that the current planning policy guidance note 25, dealing with development and flood risk, is not applied to new developments in the growth areas. That is clearly unrealistic.

§ Baroness Scott of Needham Market
My Lords, does the Minister accept that government pressure on local authorities in the south-east to provide large numbers of new houses will inevitably put pressure on areas that are subject to flood risk? Can he say whether the Government are prepared to invest more in flood defences, or to work with the insurance industry to make sure that low-cost housing in particular is not built on areas that are vulnerable to flooding?

§ Lord Rooker
My Lords, it naturally follows. It would be barmy to go ahead with large numbers of dwellings in areas where the flood risk was great. The risk has to be measured. There is policy guidance. We welcome the report. It is a very useful contribution. Its recommendations, along with those of the Environment Agency, are just the thing, as the Minister said in the press notice issued by the ABI itself. We welcome the report, and we want to work with insurers to minimise the problems. We cannot remove the flood risk, because we are an island nation. We have a very high degree of flood risk. We are working on it, particularly in the gateway, where the risk is very high.

§ Lord Crickhowell
My Lords, can the Minister assure me that when the Environment Agency advises that houses should not be built on the flood-plain, it is the firm policy of the Government that government departments and local authorities should ensure that houses are not built in those places?

§ Lord Rooker
My Lords, it is up to the local planning authority. Of the planning decisions taken in 2003–04, 88 per cent were decided in line with the Environment Agency's flood risk advice. That percentage is higher than that of a couple of years earlier, so greater notice is being taken. I am not saying that decisions are 100 per cent in line. There are always variations, and arguments about risk. But the concept is that policy guidance should be followed. That is what planning policy guidance note 25 is all about. That guidance is currently under review. We have had six months' consultation, and we intend to review and strengthen the guidance later this year.

§ Lord Bridges
My Lords, have the Government studied the American scheme to cover insurance on properties on the Atlantic coast in the case of catastrophic damage? It is commercial insurance, run by a company that normally meets damages out of premium income, but when the damage is very widespread, the federal government will underwrite the losses. A scheme of that kind could be developed in this country, and it may well be necessary on the east coast, where the Government are declining to maintain the existing sea defences. I should declare an interest, as my home is close to the flood plain and is 16 feet above sea level.

§ Lord Rooker
My Lords, the short answer to the noble Lord's initial question is "no". I have no knowledge of that scheme. It may be that Defra is aware of it.
Notwithstanding that, I am told that there are very few properties in this country for which it is not possible to obtain insurance. Work is going on to strengthen flood 362 defences. In the gateway, they are to a very high level. The risk is one in 1,000, which is very high. Work is going on on the 2100 plan, which assesses the situation over the next 100 years and covers the whole of the south-east, including the barrier and the tributaries of the Thames.

§ Lord Campbell-Savours
My Lords, is there any evidence that local authorities are ignoring the guidance?

§ Lord Rooker
My Lords, as I said to my noble friend, 88 per cent of decisions in 2003–04 were decided in line with the Environment Agency guidance. The issue is that the planning application needs to be brought to the attention of the Environment Agency, so it is not 100 per cent coverage. My noble friend asked whether the guidance is being deliberately ignored or flouted. There is a good deal of co-operation between my department, Defra, the local authorities and the Environment Agency to make sure that we get this right and to strengthen the flood resilience processes in our planning policies.

§ Lord Dixon-Smith
My Lords, in his responses, the Minister has indicated that there are various ways of overcoming the dangers of uninsurable property in flood-plains. But the serious question is whether the Government are satisfied that the regulatory processes of development are sufficiently robust to ensure that uninsurable houses are not constructed in flood-plains? Following on from that, there is always a cost implication. Is the Minister satisfied that these restrictions do not endanger the Government's programme for affordable housing?

§ Lord Rooker
My Lords, one cannot yet be certain where the developments will be in many of the growth areas. It is early days in a 20-year programme. In some of the growth areas, particularly in Ashford, which is potentially at risk, there has been a satisfactory outcome between the delivery vehicle led by the local authority, the Environment Agency and the developers, to make sure that the building is not at risk in the areas of greatest risk on the flood plain. The same kind of work is going on in the other growth areas such as Milton Keynes in the south Midlands. The idea is to make sure that we get a solution. We have always to be spending money on flood risk and flood resilience. But we have to measure the risk. It is only since 2001 and the issue of the guidance on development and flood risk that we have had a system for planning which seeks to measure the flood risk in the first place.