Select Committee on Agriculture Minutes of Evidence

Examination of Witness (Questions 66 - 79)




  66. Minister, you are a recidivist, thank you for coming again.
  (Mr Morley) That is all right. Actually I am a bit worried after seeing someone going out. I do not know what the Committee has been doing to people in here, I am very nervous now.

  67. You will be happy to know that a glass of water brought him round. Colleagues, the Minister has got other engagements to go to so I would ask everybody to be crisp and sharp with the questions and the Minister will no doubt be very precise, as always, in his answers. What is your estimate of the cost of the floods as it stands at the moment, individually and institutionally, governmentally?
  (Mr Morley) In costing terms of the cost to the Agency and the Government expenditure or do you mean the overall cost of damage?

  68. The overall cost of damage, if you have got that.
  (Mr Morley) I have not seen a figure of the overall cost of damage, as yet, primarily because in talks with the Association of British Insurers they were saying that a lot of claims were not actually in, only a very small proportion of claims have so far been submitted. My understanding is that it will be a big cost but probably not quite as big as the hurricane that happened, which is so far, I think, the biggest cost in relation to insurance companies.

  69. There have been over the last months a lot of stories about people being told that they are now uninsurable or their insurance will not be renewed. Are you able to give us a picture as to where we are in that particular debate and how real those fears are?
  (Mr Morley) We are looking for examples of people who are having difficulty in getting insurance after these floods. In our talks with the Association of British Insurers, the Chief Executive made it very clear that her members were not inclined to make hasty decisions about whether or not they would cease insuring certain areas or certain individuals or, indeed, whether they were going to make large increases in premiums. She obviously added the caveat that in the end insurance companies are commercial companies and they make commercial decisions. It is about risk and risk management and risk assessment. What we have said to the ABI is that from the Government point of view we are very willing to work with the ABI in relation to what we are doing to reduce risk. It is worth making the point, Chairman, in relation to these floods, which have been the worst since 1947, something like 8,500 properties were affected in the floods out of a potential number of 1.8 million which could have been affected. Although it is not much consolation to the unfortunate people who suffered floods, as a proportion of risk it is a small proportion and has demonstrated that the investment that has been made on flood defences over the years has generally worked and has actually defended an awful lot of properties. Those are the kinds of calculations that insurance companies will make.

  70. So when we come to prioritising remedial works and further works, are insurance companies having an influence in the sense of they are indicating unless remedial work is taking place—
  (Mr Morley) They have not made that kind of approach towards the Government quite as bluntly as that. They obviously know that there are certain centres of population that were affected by floods in the course of the recent floods that we have had. Some of those areas do have schemes in the offing. Shrewsbury, for example, is one where there is a scheme which is being prepared. Malton is another where there is a scheme being prepared. With the extra resources which were announced by the Deputy Prime Minister, the extra £51 million, that does mean that we can bring forward schemes, introduce new schemes and accelerate other schemes.

  71. A seamless web, that was what the Environment Agency was going to deliver according to its Action Plan. How do you rate its performance?
  (Mr Morley) I think its performance was much improved compared to the Northampton floods, for example, in 1998. As you know, the Northampton floods was a terrible disaster. It was not just Northampton—these were the Easter floods—but Northampton was particularly badly hit with loss of life, of course. The fact is, Chairman, following on from the Bye Report we had the High Level Targets and we had the uprating of the national flood warning system, which has worked generally very well. There are one or two examples where we do need to look at what happened but generally speaking it has worked very well, people got good warnings. The targets in relation to exercises for local authorities and the emergency services, that was put into place. In some cases some local authorities actually held exercises this summer before this autumn's floods and that also meant that it helped in relation to their response. I think the response from all the emergency services and from the Environment Agency has generally been extremely good and I think it is a great tribute to all those concerned in the sense of their professionalism and their dedication, people who worked around the clock in some cases in terms of giving people the services that they needed at that time. As you probably will have heard, Chairman, I have asked the Environment Agency that when things settle down, when they have more time, and I do not expect them to do this at the moment, then we would expect an evaluation of these floods, a look at what worked well, a look at what was successful, a look at what perhaps could have worked better, and to try to learn some lessons and draw some conclusions from that. We are constantly trying to improve the responses and improve the structures we have in place to protect people from floods.

Mr Marsden

  72. Thank you for visiting Shrewsbury not once but twice since the floods, the first time with the Prime Minister and the second time just last week, which has been greatly appreciated locally. As you mentioned, we can afford some new flood defences. You mentioned the extra £51 million over four years, which is very welcome, and this is on top of an increase, as I understand, of £34 million over three years announced in the SR 2000.
  (Mr Morley) That is right.

  73. How was the figure of £51 million arrived at? Has it been allocated already to specific projects? You can mention Shrewsbury at this point.
  (Mr Morley) The £51 million is an assessment of what could be spent over the four year period, bearing in mind that because of design, planning permission and engineering you will not get schemes started probably this financial year, you will be looking at the next financial year when most of the money comes on stream. Having said that, there is also money for such things as whole catchment studies. There is £2 million available right now for doing that. That means that we can start to do some work in relation to whole catchment study plans and I think there is a real need for that on a number of major river systems in relation to a number of communities which are sited upon them. Indeed, the River Severn is one of them where there is a number of communities at risk along the River Severn. It was really a professional assessment of what could be spent on top of what we had already allocated in relation to programmes both which we know have been formulated and programmes that can be formulated within that four year period. It can in some cases, Chairman, take four or five years from scratch to get a programme off the ground.

  74. We have heard previously from the Environment Agency that they have said part of the problem is under-funding. Can I draw your attention to the National Appraisal of Assets at Risk from Flooding and coastal Erosion, commissioned by MAFF. It estimated that in June 2000 an additional £100 million a year was needed in capital works and investment, whilst continuing to invest at the current level would result in "increasing annual average damage eventually reaching some £1.8 billion a year". What is your response to that advice, which is clearly calling for a lot more money and saying there is an awful lot of risk in terms of damage?
  (Mr Morley) That is a report which was commissioned by my own Department as part of the commitment to looking at long-term flood defence strategies. It was a report that was designed to evaluate what would be the value of assets protected against the public expenditure in relation to flood and coastal defence. It is a long-term figure, it is a long-term study. It has been presented that we have to accelerate the programme immediately in one year, and I am not even sure if it was talking about £100 million in one year. It is over quite a long timescale. It is certainly true to say, Chairman, that the report did identify a need for increased expenditure on flood and coastal defence. We accept that advice and it is why we are on the rise in relation to our Spending Review, it is why we have the additional £51 million, and we are going to have to use that report to guide future expenditure, there is no two ways about that.

  75. So you would not agree with the suggestion that the UK is running a grave risk through underfunding of flood defence?
  (Mr Morley) If we do not increase expenditure then, yes, that is a risk, but the fact is we are increasing expenditure and we do have to address the serious points that were raised in that report about the need for additional expenditure over time.

  76. Following on from the Committee's report, which criticised the existing funding arrangements for flood and coastal defence and called for a review of the current mechanisms for financing of works, there was a consultation in 1999 which has been followed by a much more wider and deeper review of funding and that is due to be completed by September 2001.
  (Mr Morley) That is correct.

  77. The question is then how is this review being conducted and why has it taken so long?
  (Mr Morley) The reason why it has taken so long is that it is a very thorough review and, of course, it does involve more than one department. It involves DETR, as you will appreciate, because one of the revenue streams is through the Standard Spending Assessment so, therefore, we have to work with DETR. It also involves bodies like the Association of Drainage Authorities. There is a number of organisations involved in the review. It has been interrupted. It has lost a month or so because of the recent autumn floods and a lot of staff who would have been working on the review have been switched to dealing with the flooding issues, as you would appreciate, so it is difficult to accelerate it. I did ask officials, following the statement I gave to the House, whether or not it would be possible to bring forward that review. I think September 2001 is a realistic date, given the fact it is quite a major review.

  78. Is there anything that could be done in the short-term to simplify the funding mechanisms within MAFF's own remit in order to effect a more speedy and more effective use of the funding?
  (Mr Morley) One of the things we thought about was to move to a block grant system for the Environment Agency, whereby we would give the Agency a block grant rather than the Agency bringing forward schemes for us to evaluate technically, environmentally and on cost benefit. That has been held up because of the review of funding sources, because it does make sense that if you are going to look at the way that flooding and coastal defence is funded in this country it would be sensible to wait for that report rather than to make decisions in relation to what has happened.

Mr Jack

  79. Most of the current flooding has been river-based, what is the split in terms of your grants and other expenditure as detailed in your submission, L3 to the Committee, Table 1, between coastal and river flooding?
  (Mr Morley) I do not have those figures to hand, Chairman, but I would be only too pleased to make sure the Committee has the split.

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