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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 780-i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

ENVIRONMENT, FOOD AND RURAL AFFAIRS COMITTEE

 

 

THE ENVIRONMENT AGENCY

 

 

Wednesday 14 December 2005

MR NICK STARLING, MS JANE MILNE and MR DAVID PITT

Evidence heard in Public Questions 1 - 100

 

 

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Oral Evidence

Taken before the Environment, Food and Rural Affairs Committee

on Wednesday 14 December 2005

Members present

Mr Michael Jack, in the Chair

Mr David Drew

James Duddridge

Patrick Hall

Lynne Jones

Sir Peter Soulsby

David Taylor

________________

Memoranda submitted by The Association of British Insurers and Royal & SunAlliance

 

Examination of Witnesses

 

Witnesses: Mr Nick Starling, Director of General Insurance, Ms Jane Milne, Head of Household and Property, Association of British Insurers, and Mr David Pitt, Head of Product, MORE TH>N (the direct operation of Royal & SunAlliance), examined.

Q1 Chairman: Good afternoon, ladies and gentlemen. Can I welcome our two sets of witnesses: from the Association of British Insurers, Mr Nick Starling, the Director of General Insurance, and Jane Milne, Head of Household and Property, and from Royal SunAlliance Mr David Pitt, who is Head of their product MORE TH>N. I promise you, Mr Pitt, I have had to constrain the Committee. They all had these detailed questions about their policies, but I told them this is not the occasion for asking that kind of question! So we will stick to the brief which you have come to talk to us about. Can I thank you very much indeed for the written submission you have made. It was very helpful indeed. On page three of a document from the ABI entitled "Revisiting the Partnership Five Years on from Autumn 2000" you say: "Every year the UK insurance industry pays out between £500 million and £1 billion in weather-related claims." Looking back over the last five years, we have seen an increase in quite severe weather incidents. With that background, can you give us some indication, if you are able to, to ascribe the premium income which goes against the level of pay-outs because what is not clear to us is how you are placed, if you like, in business terms as to whether insuring the types of risk you refer to are in fact making you any money?

Ms Milne: The premiums, of course, cover a whole range of perils which include fire damage and burglaries, etc., as well as the weather perils, but overall household insurers I think made a profit as an industry last year for the first time for some time if you look just in straight underwriting terms and ignore the investment income.

Q2 Chairman: I mentioned the question of timescale and pay-outs. Has that pay-out rate been going up over the last five years?

Ms Milne: We certainly saw an increase over a period. Last year, in fact, turned out to be quite a benign year weather-wise and then we got into this year and in January saw the Carlisle flood. So it is just luck of the draw as to when the events happen often.

Chairman: It would be helpful for us to have perhaps some kind of relationship between pay-outs and time because one of the themes running through your evidence is your observations on the conduct of the Environment Agency in terms of flood protection, and I think you acknowledge there have been some improvements. If that is the case, then one would have expected to see that in some way reflected in the overall global position. So I wonder if you could have a look back at your data to see if you can help us on that, and also in terms of perhaps doing a bit of work on the premium income side, because obviously in setting a premium there must be a weighting effect within that number to ascribe to the types of flood risk. If you could help us, to give us some perspective on that, I think it would be very helpful indeed. I want now to ask James to continue with that questioning.

Q3 James Duddridge: In some of the regions the Agency is developing temporary flood defences and we have seen examples of those on the River Severn in Bewdley. Does the industry have sufficient confidence in their timely deployment of those defences, and specifically to what extent is that reflected in the insurance premium?

Mr Starling: Can I start on that one, if I may? We think that these defences work, they can operate properly, but as with all technology it is how you do it that matters and you have to have a proper plan to do it. You need to know where they should be deployed, and so forth. So there is the issue of the defences themselves, which as far as we can see do operate well, but it is actually putting them into practice.

Ms Milne: There is also a slight difference between the demountable defences which are used in Bewdley, where they are dedicated to that particular site, and the temporary defences which were used in places like Shrewsbury and Ironbridge, where they could be used at a number of different sites. So one of the things insurers need reassurance on is that they will actually be deployed in that location at the moment it is needed. There is a lot of infrastructure in terms of plans and personnel which needs to go around it as well.

Q4 James Duddridge: So presumably at the moment you have not got that assurance and as a result the premiums of some of those houses where the temporary defences could be put in place are actually higher?

Mr Pitt: Can I pick up on that, please? With the demountable defences, I think Nick mentioned the importance of the process in preparing and the early warning signs so that the defences are in place. If I refer back to February 2004, those demountable defences were deployed when the Severn started to rise. As an insurer, we were waiting to see how they worked and as a result we were successful in that particular incident. In our own mapping tool, we actually went back and re-rated round about nine postcode areas in that particular region because of the success of the demountable defences. So we moved the rating from high rating back down to moderate because those defences were deployed, the process worked and because of our confidence in those defences.

Q5 Chairman: Where else could they be deployed? Have you done any analysis on that?

Ms Milne: They work best where you get a lot of warning of flooding, because you need some hours to actually deploy them. They have been used quite widely on the Continent on the very long rivers they have there. In England it is probably only rivers like the Severn, the Trent or the Thames where you could usefully use them.

Q6 Chairman: Let me re-focus your mind on the question I asked. You mentioned you have your own mapping tools, and I think SunAlliance have got theirs. It would not be unreasonable to suggest that you might have compiled a list of places where you thought this kit might have been effective. I am just a bit surprised that you have not.

Mr Pitt: Our own mapping tool is really for our own purposes, to rate the potential of a flooding risk. One of the submissions we actually made was line of sight of potential defences and where defences are going to be built in the future, really to allow us to hone that flooding risk and improve the mapping tool and we believe it is really important for insurers to have that information so that we can assess the risk accurately, rather than insurers deciding where defences should be built.

Q7 Chairman: I appreciate you do not want to decide where they should be, but what I am interested to know is that if the Environment Agency is competing for resources then it has to make a case out. Ms Milne, you identified rivers of a certain characteristic where these particular devices could be successfully deployed. I just wondered if you had looked at the United Kingdom and said, "Well, okay, here is the range of places," and put that to the Environment Agency and said, "What's your roll-out programme? Are you going to do this more, now you have proved it at Bewdley?"

Ms Milne: We certainly have had general conversations with the Environment Agency. We do not second-guess the Government's own system for identifying where they are going to get the maximum benefit, although obviously we do have quite a lot of discussions around places where we are aware there are problems.

Q8 Chairman: But as an industry you are quite happy to have your own mapping tool, as are SunAlliance, so you could argue that is second-guessing the Government?

Ms Milne: That is being used to make commercial decisions over offering cover though.

Q9 Chairman: So if the cover level has changed then it would not be unreasonable to suppose that by identifying other areas for the use of these moveable defences it could actually be part and parcel of helping people along a bit really?

Ms Milne: We are lobbying in general for improved protection, whether it is through conventional defences or ---

Q10 Chairman: Okay. Can I just ask you, in your evidence you mention the skills base involved in this kind of thing and you comment about engineering staff. In your judgment, does the Environment Agency have sufficient qualified engineers to deal with both the demountable issue as well as the wider flooding issues? What is your assessment of their engineering capability?

Ms Milne: The Environment Agency has told us - and we know it has been in discussion with the Institute of Civil Engineers - that it is concerned about ensuring it has an adequate skills base available currently and for the future.

Q11 Chairman: What do you think that means, "They are concerned about ensuring that they have"? Have they been more explicit and said, "We haven't got enough engineers and we can't pay enough to keep the ones we have got"?

Ms Milne: I think there certainly have been some discussions about whether their reward structure helps them retain staff, yes.

Q12 Chairman: All right. You employ engineers in the insurance industry. What do you think, Mr Pitt? Have they got enough? Are they adequately supplied with these skills? You can be honest with us.

Mr Pitt: To be honest, I cannot comment on that. I can only comment in our own structure of how we went about preparing our own mapping tool, and we did employ our own force of engineers to concentrate on this and have been in development with the tool since 1998. So it has been important for us throughout that genre that we have maintained the consistency and quality of our engineering force.

Q13 Chairman: Do not feel embarrassed if you want to tell us directly, if you think they need more engineers they ought to pay them more money?

Ms Milne: I think if they are to roll out a larger programme in future, which undoubtedly they are going to need to do if they are going to keep pace with climate change and increasing risks and the long backlog of work from under-investment in the past, then they will need more qualified staff to do that.

Q14 Lynne Jones: How satisfied are you with the adequacy of cooperation between the Environment Agency and other agencies which have enforcement powers in this area, such as water companies, particularly in relation to urban areas where you have a greater complexity of the cause of flooding and the involvement of possible overflowing of sewerage, mis-connections of sewerage, and so on?

Ms Milne: I think in the past it has been quite poor and we were very concerned that there were one or two remarks immediately during the autumn 2000 floods about "the wrong sort of water," which we did not feel was an adequate answer. I think it has improved immensely since then. It depends a bit from area to area. There has been some very close work done, for example, between Severn Trent and the Environment Agency in the Birmingham area and I know the Agency is working very closely with United Utilities up in Carlisle now. There is a slight sense that they need to have a crisis before something actually happens, though.

Q15 Lynne Jones: Since you mention Birmingham, I am from Birmingham and I have had recent examples in my constituency of householders mis-connecting sewerage into the normal water drainage. Severn Trent has been aware of this and has not really take timely enforcement action, which has resulted in sewerage getting into the water courses and obviously into people's back gardens and into their houses as well, which would affect yourselves. This has been known since 1996 and yet it is only just now that enforcement action seems to have been taken by Severn Trent. Should the Environment Agency not have been rather more breathing down their necks, for example, they knew about this problem, in terms of ensuring that Severn Trent took more timely action?

Ms Milne: I think there has not been enough done in the past, but in making space for water the Government did set out that they were looking for practical ways of actually making this operate better in the future and they are going to be running some pilots, and we will be extremely interested to see how those proceed because it is an important area.

Q16 Lynne Jones: One of the problems is that your clients and our constituents do not know who is responsible for what. Obviously it is something which has caused you concern, but you feel satisfied that this is being addressed now?

Ms Milne: Yes. We raised it when we initially launched our Statement of Principles back in the autumn of 2002 as an issue which needed addressing and we are pleased to see it is on the agenda now but, like you, we would like to see more action.

Q17 David Taylor: I think later on we are going to be talking about the mapping of flood plains and local planning and things like that, but on the back of what Lynne has just asked about flooding in urban areas, which often does result from things like run-off from roads and built developments, things of that kind, there was significant flooding in my own area about three years ago for the first time in very many decades, but there were several dozen houses which were flooded there, not several hundreds or more, as you might have seen in Carlisle. Do insurance companies get together under the aegis of the ABI to compare notes on the claims they have had on that sort of miniature scale of local problems to see if there is anything they can contribute as observations in terms of planning or in terms of the water companies, or indeed the environment agencies?

Ms Milne: We certainly do on more major incidents where it is probably in the news and public knowledge anyway. It is much more difficult for us to capture information on the more localised incidents, although if it is brought to our attention either by the constituency MP or by local residents then we will follow up on it.

Q18 David Taylor: So at what point does local become significant? We had 50 to 60 houses flooded in the central and urban area. If that had been 5 or 600 the ABI would have been interested in the origins of that and the ways of minimising future claims, would you?

Ms Milne: Potentially, we are interested in everything. The reality is that we have limited resources like everybody else and we can only actually take forward a restricted number of individual cases, but even if it is only a few houses, if it is a persistent problem we will follow it up.

Q19 Chairman: Ms Milne, you said something intriguing. You said, "There's a slight sense they need to have a crisis before something happens." Would you like to expand on what lay behind that interesting comment?

Ms Milne: The particular examples I used all happened once there had been some local flooding and there was a recognition that there was a problem which needed to be handled. I am not aware of similar activities going on in places where there has not yet been a problem but perhaps there might be.

Q20 Chairman: Does that reflect, in your judgment, a lack of foresightedness in the strategic approach of the Environment Agency towards flooding matters?

Ms Milne: I think in the past it has been a question of everybody looking after their own responsibilities and not being as joined up as they should be.

Q21 Chairman: When you say "everybody" I presume you are talking about all the agencies. Do you see any sign that that is going to improve, because you make mention of that in paragraph 13 of your written evidence. You say: "In taking these policies forward there needs to be a clear vision of the respective roles of the Agency and of local authorities in delivering and deploying these risk management measures." Do you think the Environment Agency is not aiding that cohesiveness under the present arrangements, and if so why?

Ms Milne: I think they are making steps in that direction as they pull together their catchment management plans and they are looking at these more intensive local drainage plans, which are being piloted under "Making space for water". I do not think we have quite got there yet. I think they have been thinking about how they might go about it, but they have not quite got there yet.

Q22 Chairman: As the recipient of the bills when things go wrong, do you think you ought to have a seat at the table to help give a perspective from your standpoint in terms of developing future policies?

Ms Milne: I think we are very pleased that both Defra and the Environment Agency do involve us in discussions and do treat us as a stakeholder who often speaks on behalf of customers as well as our member companies.

Q23 Chairman: I think I was looking at perhaps a more localised involvement than at a strategic level.

Ms Milne: Yes, we do tend to operate on a more strategic level.

Q24 David Taylor: If I can pick up one point. You quoted that, Chairman, on the point which Ms Milne made about the Agency only acting when there is a crisis, paraphrasing. Is that not a fairly predictable method of prioritising work in an organisation which may be short of resources, that it can fire-fight okay but it has not got adequate knowledge or the people to look ahead much further than the next fire-fighting or flood draining?

Ms Milne: Just to correct the impression, I think that was the situation some years ago and the Agency has been improving on that over time. What we want to see is more actual results on the ground, but I suppose it is inevitable for any organisation that they deal with the immediate more readily.

Q25 Chairman: So it is a question of, has made progress but could do better?

Ms Milne: Yes.

Mr Starling: May I just say, there is another point here. We all know when events happen perspectives change and the Environment Agency is operating in an area where lots of other agencies' interests are operating and quite often a voice which any organisation has expressed before an event suddenly becomes heard with greater clarity after it and people start to re-think. That is often the case with floods and you will find that people have been warning of the risk for some time before, but it takes the event to happen for action to actually take place. That is fairly common in a lot of areas.

Q26 Chairman: In a way that is discounting the old phrase "prevention is better than cure"?

Mr Starling: Indeed, but I am just saying that in practical terms rather than the Environment Agency not doing its job, it is a voice among many which quite often is heard more clearly once the event has happened. That is what happens.

Q27 Chairman: The reason I posed my earlier question was because the industry has a pattern of claims and Mr Pitt observed in the context of the first question that there was a reduction in risk as a result of action taken. You can spot where claims continue to be made, therefore almost by definition that is an area which needs attention, and that is what I wondered whether you were feeding back into the planning process as a way of trying to move the agenda forward from, "Let's wait and see what happens and then do something," to, "Oh, yes, here is a demonstration of un-met need. We can now prioritise and do something." Do you use your information in that way to advise the Environment Agency?

Ms Milne: We do not collect data on an industry-wide basis on exactly where claims fall, companies hold that information themselves.

Q28 Chairman: Why not? You told me earlier on you are a high-level strategic partner. You are giving advice to Government and the Agency and here is something which indicates whether problems are occurring (i.e. the claims records of your members), but you have not got access to it to advise Government about what is happening on the ground.

Ms Milne: We collect overall the totals of claims. If members tell us that they have problems in particular areas, then we would follow up on that.

Q29 Chairman: Do they tell you?

Ms Milne: Yes, but very often you know as well as we do where they are because they are in the news.

Q30 Chairman: I think I am just a little confused there, because you have indicated how you would like to see policy develop and you have at your disposal a hard record of where problems are occurring because people make claims. Therefore, it would seem, Q.E.D., that if you want to help the Environment Agency move forward beyond, "Let's react when it happens," what you have by way of a claims record could be rather important?

Ms Milne: It certainly is good in telling you where there have been floods; it does not predict where there will be floods.

Q31 Chairman: No, but if you take a series of data going back over time - that is why I asked the first question about what has been happening over time - in the spatial sense that information would focus on where the serious problems were and if there were still claims coming in, it is a question of un-met need? Mr Pitt, you are nodding in my direction. I find that comforting! Tell me why you are nodding.

Mr Pitt: From an industry point of view, we comply obviously with the Statement of Principles and within the Statement of Principles there is a period of time for that protection to be afforded to a particular address or area and I think you will see in our submission that we are requesting more awareness of where defences are going to be built in the future and also the timescales against those defences being prepared and built so that we can understand the timescale for properties which are going to be protected and therefore understand that the risk is going to be controlled by a particular defence which is going to be built. We are encouraged by the Environment Agency's interest in our own flood mapping tool and we have taken them through our mapping system. So we are encouraged by the dialogue, but we would like to see more evidence of timescales for defences being built and maintained.

Q32 Patrick Hall: Could I just follow up that point? That is still being reactive rather taking the initiative and the Chairman's point was that you are in a position as an industry to know what has happened in the past and what is happening and therefore to draw conclusions from that to try and proactively influence the Environment Agency and Defra to take action to minimise those areas of claim?

Mr Pitt: As a company we are being proactive by producing our own mapping tool, so we understand risk right down to the individual address level rather than at postcode level. For example, we had numerous examples where other member companies might not be able to provide cover but where because of our mapping tool and greater understanding of the risk of flooding we are able to provide cover.

Q33 Mr Drew: Presumably the very fact that you had to do your maps means that you are dissatisfied with the Environment Agency's initial stab at their maps?

Mr Pitt: I think the Environment Agency map was originally set up for a different purpose and then added flood risk on to it. Certainly from our own evidence, as I say, we have our own in-house engineers and we have taken publicly available information and adding to that as we find out more details - the example of the demountable defences. We have other examples where maybe local authorities have taken action, maybe dredging brooks or whatever to reduce the risk of flood, and what we do with our map is then update our mapping system to the relevant risk that we feel is available and is appropriate for that particular postcode or that particular address.

Q34 Mr Drew: So what legal status have your maps got?

Mr Pitt: Our maps are publicly available information with our intellectual property and also they are reflective of our claims experience built into a mapping tool to understand the potential for flooding risk in the future.

Q35 Mr Drew: So can someone who is not a customer use your maps as a justification for building an extension on their property or seeking to get insurance from another company?

Mr Pitt: Someone who is not a customer of ours, if they phone us for a quotation, our mapping system is used on our front-line systems to assess the risk of flood, but it is not used for the basis you are referring to.

Q36 Mr Drew: So how many people do you turn down for business on the basis of your maps?

Mr Pitt: From our commercial point of view, we want to provide as much flood risk cover as we can and insure as many people as we can. We do not record the many particular inquiries that we do not insure. However, as I referred to earlier, we do comply with the ABI Statement of Principles in continued cover for existing properties.

Q37 Mr Drew: I will ask the ABI about this, but roughly what sort of number, percentage or figures in the round are we talking about of people who subsequent to the maps being available either from the Environment Agency, Norwich Union or Royal SunAlliance are now uninsurable because of the maps putting a blot on their property or on their community?

Ms Milne: I think what we have found is that the availability of better information has allowed insurers to stay on cover in situations where if they had been uncertain of the risk they might have wished to withdraw cover. So under our monitoring under the Statement of Principles to see that members are complying with the terms of that, we have had in the past two years literally 10 or 12 people refused renewal of cover by the entire market over that period.

Q38 Mr Drew: That is across the whole of the insurance industry?

Ms Milne: Yes, of the existing customers refused renewal.

Mr Starling: We do not have any figures on people being turned down for new cover, new customers, new cover. We have no way of collecting that data. The statement of principle is about continuation of cover.

Q39 Mr Drew: You would not keep a record of that. That is quite interesting. In talking about strategic vision, it would be quite interesting for us to know how many people are not insurable once they have sought your advice initially and then the fact that you have not offered them collectively a policy.

Mr Pitt: I would like to pick up two points there. Firstly, just to re-emphasise, our mapping tool is about understanding to a greater degree the risk, so therefore the principle is about being able to provide cover where potentially other insurers could not provide cover because we have a greater understanding of the risk. The second point is the Statement of Principles applies to existing customers and we will continue to comply with those principles and provide cover. Where the issue arises is with new properties which previously have not been insured. Therefore, within our evidence we were calling for the Environment Agency (and it is backed up by PPS25) to become that statutory consultee so that in new builds we have a real understanding from an insurance point of view of the risk and the fact that the Environment Agency has been informed and is satisfied with the actions being taken.

Q40 Mr Drew: On that issue, do you think that if there is sufficient evidence from the mapping and a local authority agreed to the planning permission - I know we are going to touch on this in planning, but I think it is connected to it - that local authority, at least to some extent, would be liable if that property subsequently flooded?

Mr Pitt: Where we are coming from as an insurer is that with any new build we believe the Environment Agency has a key part to play in understanding the risk of flooding. Presently you can see on the Environment Agency website requests from local planning authorities and you can see where flood risk assessments have been requested by the Environment Agency, but you cannot see where it progresses from there. So as an insurer we want to see the full line of sight of their involvement and also the Environment Agency's assessment of the risk before a property is built.

Mr Starling: Your specific question, I think, is that if the Environment Agency has advised against building but nevertheless the local authority has gone ahead, then you might have a situation where people are then unable to get insurance. I do not know where liability lies, but clearly that is a problem for people who have been unable to get insurance.

Q41 Mr Drew: There must be such people?

Mr Starling: There must be. I do not think we have any data on that.

Ms Milne: No, but we do look at where the Agency is raising objections and if it is a major development or if that planning authority is persistently ignoring the Agency's advice we write and raise an objection in partnership with the council's mortgage lenders advising the planning authority that those properties may be uninsurable.

Chairman: We are going to come on to that.

Q42 Mr Drew: Yes, we are. A final point from me: the whole point of the maps is that they give information to the public and obviously through that to the builders, and so on and so forth, but to what extent do they also give information to you in terms of the premium? You will insure someone, but clearly the risk is considerable if you believe the maps are accurate, so to what extent have we got a premium policy in place now where if someone comes to you they will have to pay an additional premium? It may be sizeable because of the additional risk they face. Perhaps Mr Pitt may want to start with the specific rather than look at the general?

Mr Pitt: Firstly, we do not use the Environment Agency map for underwriting, we use our own map for underwriting. As Jane said earlier, flood is one of the perils we insure so it is part of the premium. So it would be impossible to give you a direct answer to that, to say that it is a certain percentage of the premium, or "This is the increase because of particular flood risk." Also, we work with individual customers to review the risk as well and take particular action, whether that would be agreeing, for example, with a customer in south-east London who has been flooded five times in a row in a basement flat to still continue cover on that property. We have actually agreed to move valuables to shelving to protect the contents and take particular action, but we still continued cover. So it would be probably impossible for me to indicate a figure for the different levels of rating for flood.

Q43 Mr Drew: What about generally? Are we talking about 25 percent, 50 percent, 100 percent premiums which could be whacked on when there is a real flood risk?

Ms Milne: Firstly, just to say that the licensing arrangements by which we get information from the Agency precludes ABI members from using that as an underwriting tool. All it does is ensure that they are taking a consistent approach under the Statement of Principles as to whether cover should be offered.

Q44 Mr Drew: What does that mean? That is a legalistic answer.

Ms Milne: The Statement of Principles sets out the risk levels at which insurers can readily offer cover under the normal competitive market or situations where it becomes more difficult for insurers to do that but they are giving a commitment to stand by their existing customers. That is what we use that particular tool for. ABI, of course, is the trade association and does not get involved at all in pricing issues.

Q45 Mr Drew: No, but you have members who come to you for advice and clearly there is usually someone who will insure but what takes the strain is the premium? That is the way insuring and pooling the risk operates, so I am just getting a feel for it. What is the flood differential? What would someone expect to pay, because I have got people who really do face this difficulty? Most, thankfully, are insured but they come to me when they say, "Our insurance is going to go up by an amount," which is sometimes quite sizeable.

Ms Milne: Obviously each company will take its own view, but to illustrate, an average household premium outside of London will be about £330 a year and an average flood claim will cost between 15 and £30,000. If you take the higher figure, if you have a flood once in 100 years, that alone is worth about £300 a year in the technical premium. So that would double your premium.

Mr Starling: It may not just be a matter of premium, of course. It can be the amount you have to pay yourself towards a claim, which means the premium can be lower and the amount of the claim can be less when it is met.

Mr Drew: Yes, of course.

Chairman: I would like to bring in Mr Hall, if I may.

Q46 Patrick Hall: Mr Pitt, you referred to the statement of principle on flood insurance, that it is about existing customers and not about new build, and therefore those new customers, but it is also not about new customers who would like to buy a house from someone who is an existing customer?

Mr Pitt: Yes.

Q47 Patrick Hall: Jane Milne knows, because I have had very constructive discussions with her and Barbara Young and some other people in the Environment Agency, that I have got an example in my constituency where somebody who is insured and who has never had a flood in twenty years is unable to sell because no prospective purchaser can get cover. So it is not just the new build estates in flood plains that cannot get cover where there is a difficulty, it is also people who want to buy a house in an area which the new mapping system reveals as being at risk. I do not know if there has been an assessment of the potential numbers of people who could be involved in that, because there is always a turnover of people wishing to buy and sell homes. Are you aware of this?

Mr Pitt: I cannot comment on the individual case, obviously, but under the Statement of Principles normally what would happen is that the existing insurer, subject to satisfying themselves of the purchaser's claims experience, would normally continue with cover for that property. So even though the seller is moving on to a different property, whoever purchases that property normally can gain cover from the existing insurer.

Ms Milne: If it is in an area about to be protected. Unfortunately, this case is not, that is the difficulty.

Q48 Patrick Hall: Could I ask maybe both of you about the Agency's flood map for England and Wales. Clearly, Ms Milne and I have had some discussions about that, but it is clear on the Agency's website that it is there for guidance only. I think there is a sentence in a page on the website, which is actually called a joint Environment Agency and Association of British Insurers Flooding Information Sheet, which states that "Flood probability data is not accurate for individual properties" - that is the Environment Agency's map - "Insurers will need to continue to respond to evidence from policyholders about the risk faced by their property on an individual basis." Could I ask David Pitt why his company went on to produce its own flood map? Was it because it felt that the general nature of the Environment Agency map was not accurate enough and, as I have just read out, it is not intended to be accurate enough for individual properties? Is that why you have invested so much money, presumably, in introducing your own?

Mr Pitt: First of all, the Environment Agency map is to 100 metres square and our map is to 10 metres square. We assess the risk of flood every 10 metres square. So rather than assessing at postcode level, which might include up to maybe 150 properties, we are assessing the risk of flooding at an individual property level, which comes back to the earlier comment that the map is really there for us to understand risk and take on risk which potentially other insurers might not be able to because we have that greater degree of understanding.

Q49 Patrick Hall: It does seem a little confusing for the public to have two sets of maps, and who knows more? If other insurance companies produce their own we will be in a very complicated situation. Does your experience from SunAlliance suggest that perhaps the Environment Agency's map should be remodelled to a smaller focus? Does the ABI have any view on that?

Ms Milne: The Agency originally produced these maps for its strategic planning purposes on deciding where they should put in additional defences, so I think they would maintain that they produced it for an entirely different purpose and we are asking it to do things that it was never designed to do. Obviously, individual insurers then develop their own tools to enable them to make those more fine grained decisions. I guess the Agency would say that is not what they are in business to do.

Q50 Patrick Hall: The Agency is quite clear about the nature of its flood map and ABI has signed up to it on that basis, but one of the issues which emerged in the case I am dealing with and in the investigations which I and others have made in Bedford about this is that it would seem that some of your members, insurance companies, are using the very generalised nature of the Agency's flood map, entering the postcode of an enquirer's property and making a decision to insure or not on that basis. Now, it is not intended to be used like that and yet there are people in the industry who talk about "flood blight" not just in areas of flood plain with potential new build but applying it to areas of existing property, the sorts of people I am talking about who want to buy and sell property and who would not notice there is an issue until they come to want to do that. Is there a case for not just the Environment Agency revisiting this but also for the industry as well being very careful in not mis-using the Environment Agency's map as it is in order to make decisions on the basis of something that the map is absolutely not designed to do?

Ms Milne: I think we have to be careful to differentiate between the different sales channels which are available. Some are more automated than others. For example, if you go to a broker and you live in a higher flood risk area and you ask for a quote, that broker may find that different insurers have got a "Refer to underwriter" flag on them and it is up to the broker then to pursue that enquiry, having a dialogue with the insurer and the customer in order to get the additional information which is needed, and some are better at doing that then others.

Q51 James Duddridge: The Environment Agency mapping system cost about £25 million to set up and £8 million on an ongoing basis. I would like to ask you, David. You have got a map system for this purpose which you believe to be superior. How much did it cost and is the taxpayer getting good value for money out of £25 million, £8 million ongoing, from the Environment Agency in relation to these maps?

Mr Pitt: I do not have the figures to hand in terms of the investment. However, we have an ongoing investment in terms of maintaining the map. We started to develop this in 1998 and put it into production and use in 2002, and even since then we are continually changing it. We have made over 600 amendments since we started to use the map. So it is one of these ongoing investments, but I do not have the figures to say how much it cost us.

Q52 Lynne Jones: Could I ask, without wanting to go into commercially sensitive information, if you could perhaps provide the Committee with a bit more information so that it would be a useful benchmark on what the private sector has done in replicating what the public sector is also doing?

Mr Pitt: I am happy to write to the Chairman and find that information.

Chairman: Thank you very much.

Q53 Lynne Jones: Are there any contradictions between the information which you have compiled and the map being produced by the Environment Agency?

Mr Pitt: There will be differences because our map is looking at more detail. For example, by the nature that we are looking at 10 metres square for flood risk ---

Q54 Lynne Jones: I wondered whether there are any contradictions. I understand the differences, but essentially are they saying the same thing?

Mr Pitt: Broadly speaking, the same results are coming in, but there will potentially be differences in certain areas. If we have more information or we have reflected claims experience with our new mapping tool, after every incident we do check our own mapping tool to make sure it has produced sound results. So, for example, with Carlisle we would take the Carlisle incident and play it back through our own mapping tool to understand how effective the tool had been in looking at the flood risk in that area.

Q55 Chairman: What did it tell you when you played it back?

Mr Pitt: Ultimately, you are always going to have flooding. We did have even areas that we were classifying as moderate or negligible risk which actually flooded. So our mapping tool was showing us the extent of the flood had moved to a certain level where even risks in that area were being affected.

Q56 Lynne Jones: How often do you update your publicly available information, because one of the points you have said is that the Environment Agency should update theirs more regularly? How quickly do you get your information available to the public?

Mr Pitt: We are continuously updating our tool. However, we are relying on information on defences and also the maintenance of defences and if we had more information available, timely information, on those defences we would certainly build that into our mapping tool and also the risk rating of flood in particular at present levels.

Q57 Chairman: You say in paragraph 3.1 of your evidence that you have been calling on Defra and the Agency to provide this better information. What are the excuses they give you as to why they cannot give it to you in a more timely fashion?

Mr Pitt: We have been involved in discussions obviously through the ABI and also we have had meetings where we have taken the Environment Agency through our flood mapping tool and illustrated the necessity that we have timely information. We have not as yet received dates as to when that is going to be available, hence the reason why we draw attention to it in the document.

Q58 Chairman: But to be specific, have they said, "We will look at it and come back to you," or are they committing themselves to, "Yes, we could do better and this is what we are going to do"? Are you getting stonewalled or a positive response?

Mr Pitt: We are getting positive responses. They wish to provide that information, but as yet we have not had timescales to provide that.

Chairman: Okay. Let us move on.

Q59 Sir Peter Soulsby: This is very much on the same theme really. I just want to be sure that I have understood what you are saying to us about the flood mapping. Am I right that you are saying to us that the Environment Agency is duplicating what you are doing much better when they do their flood maps and that that is a waste of money?

Mr Pitt: I think what I would say in response to that is that for our mapping tool to be effective we need to understand where the Environment Agency are going to take action and when action is going to be taken so that we can build it into our mapping tool. Our tool, as I say, is more granular in detail and it has consistently been updated with the claims records, but it is probably only as effective as the information we have to feed into the tool.

Q60 Sir Peter Soulsby: Yes, but if you had the information, the £25 million which they have invested, and perhaps more importantly the continuing investment of £8 million a year by the Environment Agency in updating their mapping tool is surplus to requirements?

Mr Pitt: No, because we are driven by what the Environment Agency do in terms of protection in updating the risk. The Environment Agency's role is to build the defence, maintain the defence and then update their own mapping tool. So it is important for us that we understand when that action is going to be taken and also what level of protection a particular postcode is afforded by a defence.

Q61 Sir Peter Soulsby: My question is, we are told they are spending £8 million a year updating their map. You are telling us that your map is a superior product. It follows from that, surely, that their £8 million a year spent updating their map is a waste of public money?

Mr Pitt: I think what I am telling you is that our map is used for rating purposes. The Environment Agency map is used for public information on the potential risk of flood. Our map is taken into account when we actually build the premium and build the price. What we require is the information to be able to make sure our mapping tool is accurate. So I am not saying that the investment from the Environment Agency is a waste of money or not, and certainly we need information available so that we can make our mapping tool as effective as possible.

Q62 Sir Peter Soulsby: But you could have the information, surely, without them spending that £8 million?

Mr Pitt: But the public require the information as well.

Ms Milne: You rely on the Environment Agency. That is the base on which you build. You basically add further information to that which is provided by the Environment Agency and hopefully they also can take the information you have got and take account of it. We can find out whether they do later.

Q63 James Duddridge: Could I just add a small supplementary? It is difficult because we have got the Environment Agency on one side and you are just representing one company. If this piece of work was contracted out, could the private sector provide it more effectively, as you are doing within your niche?

Mr Pitt: What I would say is that the information we have on our map is public available information. We have just taken the step of using that information and building it into a mapping tool which we believe is effective for our rating purposes.

Q64 Chairman: I think, Mr Pitt, what the Committee is trying to get at is this: are you saying, just for the sake of clarity, that your more detailed analysis, your 10 meter square sits on top of what the Environment Agency does? In other words, you could not have yours without theirs, is that right?

Mr Pitt: That is right.

Q65 Sir Peter Soulsby: I have got that now. Thank you very much indeed. Again, to be sure I have understood what you are saying, you were saying, as I understood it, that people who purchased new homes in areas of flood risk which are built against the Agency's advice or in areas where your more detailed map indicates a significant flood risk are likely to find themselves unable to get insurance? That is a correct understanding?

Mr Starling: They would not be able to buy it in the first place because the mortgage company are likely to ---

Q66 Chairman: You use this term "flood risk". Just give us 30 seconds on what we mean by this term. What is the risk? Is it a one in X number of years event or a probability that in any one 12 month period the property will be flooded? Just help me to understand the risk we are talking about.

Ms Milne: The critical benchmark is a one in 75 year probability or an annual probability of 1.3 percent because that is the level at which it starts to affect an insurance premium to an abnormal degree. It is not an absolute number, but that is the number which insurers arrived at in discussion because we felt that beyond that we would be getting into pricing that customers were quite uncomfortable with.

Q67 David Taylor: At paragraph 30 of the ABI advice you refer to the mapping being at the 0.1 percent level. That is one year in 1,000, is it not?

Ms Milne: That is the extreme outline they have put, yes. They have a number of different gradations on the maps.

Q68 Chairman: You are saying one in 75 years, so that if you put your house down within an area which had that risk your one in 75 could mean flooding in year one and nothing for the next 74, or it could mean that you got it wrong and it sequentially flooded for every year for the first ten years?

Ms Milne: Yes. Although you can ascribe a probability, you do not actually know when the events are going to happen. So you are absolutely right, it could happen on the very last day of those 75 years.

Mr Starling: If you have a flood one day, the probability of it happening the next day is exactly the same, notwithstanding what has happened the day before.

Q69 Patrick Hall: So with the possibility of people finding themselves unable to get insurance on a new property in those circumstances, for that and obviously for other reasons should the Government actually be taking firmer steps to prevent local councils from granting planning permission in areas which are prone to flooding?

Ms Milne: Since you need to get insurance before you can get your mortgage, we hope that no customer is found in a difficult position and that is why we are taking the stance we are, so that they do not take on a property which they then subsequently find to be uninsurable. But yes, the planning authorities should. What is the point of building a house nobody can own?

Q70 Sir Peter Soulsby: So the Government should at the end of the day be making sure that the planning permissions are not given?

Ms Milne: Yes.

Q71 Lynne Jones: Do you think the Government should act to stop planning authorities giving planning permission for developments against the advice of the Environment Agency and that planning authorities should automatically consult the Environment Agency?

Mr Starling: We think the Environment Agency should be a statutory consultee and if the local authority goes against the Environment Agency's advice then there should be powers for the Secretary of State to withdraw applications.

Q72 Chairman: It seems a very obvious policy to take. Why do you think that is not the case, or are you optimistic that that is going to be the case in the very near future?

Ms Milne: As of last week the Office of the Deputy Prime Minister is consulting on just such a proposal.

Q73 Lynne Jones: That could delay it for some time. We could have lots more planning permissions. I was horrified that in 60 percent of potentially affected developments the Environment Agency is not consulted.

Ms Milne: Yes. I think there has been the right policy in place in terms of planning guidance for some years now. Unfortunately, it has not been fully implemented and we are very keen that there are effective measures in place to make sure it is implemented properly.

Q74 Lynne Jones: So you hope the consultation will not take too long?

Ms Milne: Yes.

Mr Starling: The answer may not always be not to build, of course, if you have been to a DAP development, so the raw figures may not necessarily give a full indication, but we do think the whole system needs to be much stronger.

Q75 Lynne Jones: But if the Environment Agency recommends against, then presumably it will take those factors into account and planning permission should not then be granted?

Mr Starling: They should either not be granted or the development should be reconsidered to make them flood-resilient or slightly different so that they can be built, yes.

Q76 Mr Drew: I just wonder how useful you will see home sellers' packs in terms of this area of notice about potential flooding risk. You have been involved in discussions. Is this a step forward or is it irrelevant? Could it be made better?

Ms Milne: We think it is essential that this is one of the factors which is included in the pack because it is a waste of everybody's time and effort if it is an issue which they will be asked about when they seek insurance and could prevent the sale from going through if it has not been properly addressed. So it needs to be flagged up right at the front.

Q77 Mr Drew: Can I be clear, these professionals, not necessarily surveyors, who are going to collect this information together on behalf of the persons who want to sell their property, will they have to come to you, or should they come to you? I am not sure of the process of that.

Ms Milne: The Environment Agency already offer a service to solicitors and conveyancers on this, so they would be able to furnish that information to whoever is putting the pack together and we think others with adequate maps should also be able to provide that information.

Q78 Chairman: Can I just go back for the purposes of clarification. You were talking about your new policy where people were building in flood plains with a high risk of effectively signifying that you would not insure certain properties. When did that policy kick in?

Ms Milne: For some years now we have been signalling to planning authorities - we do not say it will not, because it is not for us as a trade association to dictate whether cover is offered or not, but we say it is extremely unlikely that people will be able to secure cover and we wrote to all directors of planning, for example, three years ago pointing this out.

Q79 Chairman: If that is the case, can you give us some concrete examples, because I notice that on p.7 of your evidence you have produced a table in which you have quantified the number of developments which went ahead contrary to the Environment Agency's advice? For example, I do not know whether your members can help us, but in the latest data at 2003/4 it says that 21 major developments went ahead contrary to Environment Agency advice. I would be interested to know whether of that 21 were any of those subject to your notice saying you were unlikely to give cover and in the event were any such properties declined cover?

Ms Milne: These properties would have gone through before we had the system in place where we could write on a specific development basis as opposed to writing with a general policy, but we could go and look at what has progressed on others and provide information for you if that is helpful.

Q80 Chairman: I think it would be helpful and if it does not put you to too much trouble, just to move a stage further, it would be interesting to know the nature of the risk which was involved because clearly if the Environment Agency has come to a conclusion that something should not happen and that has influenced what your members do, in terms of the work of the Agency being effective that is a demonstration of how they are doing a good job. But to turn it around the other way, if in spite of all this people go ahead and build and develop then it is of equal interest to us to know why advice is not being heeded. So if you could help us on that, I think it would be extremely valuable.

Mr Starling: It may take a little while to research, but we will let you have a note.

Chairman: Okay, fair enough.

Q81 Lynne Jones: In the sellers' information packs you said that the Environment Agency will respond with information, but if their information is not at the individual property level they will not be able to give as much information as perhaps SunAlliance might be able to give. Is there not an argument, therefore, for the Environment Agency being able to access that information to give to householders?

Ms Milne: We are told by the Agency, but you would need to ask them specifically, that with that particular service they do more than just look at the maps as on the website to get that further information.

Q82 Mr Drew: You have already answered one of my questions with regard to how you communicate with people over the issue of flood risk, which is through sellers' packs. What evidence is there out there that the general public is more aware of flood risk and how could you, both through the ABI and also through individual companies, make people more aware of what is a difficult and potentially calamitous set of events in people's lives?

Mr Pitt: From an insurer's point of view, we have flood information available on our website. If anyone comes to us for an insurance policy and they are in a high flood risk area we refer them to specially trained handlers, who would talk them through the risk but also give them advice as to how to protect themselves, if a flood happens how to reduce the risk or reduce the damage and obviously through the Statement of Principles refer them back to their present insurer. Within 2006, and for all our existing customers, we have a plan in place to write to them all who are in the high risk flooding area with advice as to how to protect a property and prepare themselves and have a flood plan to try and reduce the risk of damage if a flood incident occurs.

Ms Milne: Obviously our communications are not on an individual customer basis, but likewise we provide information on our website. We have been working on various pieces of advice on what people can do. We work with the National Flood Forum, which is the group which represents customer interests where people have been flooded and we look for other opportunities to work with other partners, whether it is local authorities or whoever. Unfortunately, though, it does tend to be the people who have either suffered a problem or had a near-miss who are most aware of this and others in similar areas who have been fortunate in not having been flooded are perhaps less aware of the issue.

Mr Starling: There is a number of commercial websites as well which have this sort of information and other location information on them.

Q83 Mr Drew: So what more do you think the Environment Agency, Defra and indeed the Government as a whole should be doing to make people more aware of the flood risk? Is there anything specific that you feel you are not actually communicating or are unable to communicate through to the Government?

Ms Milne: I think it would be interesting to see how local authorities put into place their responsibilities under the Civil Contingencies Act in terms of emergency planning and communicating risks to local communities, because I think it is something which is most effectively done at the local level and very often on a fairly face to face basis. We can only go so far in terms of posting things on websites. If people are not looking for the website in the first place, we still have not managed to get the information to them.

Q84 David Taylor: I referred to local flooding three or four years ago, Chairman, and in the wake of that I think it was the local authority who organised a roadshow which went around together with representatives of one or two insurance companies, the Norwich Union, I think, were there, the representatives of Severn Trent and also companies which provided products and services to protect against flooding. Do you believe that that should be driven by the local authority? The insurance industry was helpful and participated, but is there not more you could do on that face to face basis, to use that phrase you used, to take part in that sort of event in areas which have had recent events of flooding?

Ms Milne: I think different parts of the industry have tried to support flood fairs (as they are called) and other such events. It puts a rather jollier face on it than perhaps is really the case. I think the industry would be keen to help support issues, but yes, it has to be done really at the local level.

Q85 David Taylor: So you are reactive on these things if someone asks your members to participate, but you do not see it as part of your role to take the initiative on this?

Ms Milne: I think the sorts of initiatives which David described in terms of actually having that dialogue with their individual customers is very helpful in that regard, but we do not have the local presence.

Q86 David Taylor: No, at a community level I am talking about. You do not see that as a role, a legitimate expectation of the ABI or its members to be more proactive?

Ms Milne: We certainly will do whatever we can within the media, etc., but we just do not have a local presence to provide that face to face contact.

Q87 Mr Drew: Just really to follow up, can I be clear, if someone actually does everything they possibly can do to make their property secure from flood risk, that really does result in a lower premium? Perhaps Mr Pitt can answer this. Does that actually lead to a lower premium being offered?

Mr Pitt: It is fairly difficult to prevent flooding completely. If I could state an example, we had a customer in Leeds who went to the expense of building a wall around his detached property, a remote property, to try and protect it from flooding. However, the flood water still came through the entrance to his property. We worked with that customer to try and resolve the issue. So the actual building of the defence did not affect his premium, it was more looking at the root cause and working with the customer and the local authority to try and lobby for some action to be taken to, as I think I cited the example before, to dredge the brook to allow the water run-off to take place. So it is very difficult to protect a property and therefore it is very difficult to say yes, a customer would receive a discount in premium. As in the example I referred to when we were talking about the demountable defences, it is more likely we would look at the risk of flooding and re-write that risk of flooding. So therefore we may, with a new customer, provide insurance where we would not have before.

Q88 Chairman: Can I ask you just one or two questions about the very interesting statement on page 5 of "Revisiting the partnership". In there you say: "Early estimates suggest that London alone needs 4 - £6 billion over the next 20 years to upgrade its defences, equivalent to around eight years of the entire national budget at current expenditure levels." If you are the Government - and they have listened very hard to what you have said, they do not want people to be without insurance, spreading the load - you might say, "Well, it doesn't really matter. We don't need to spend that money because these good people in the insurance industry will take the risk." Under these circumstances, what do you think the stance of the Environment Agency should be if this particular judgment, which I presume - where did you get this 4 - £6 billion from, let me just ask that?

Ms Milne: This is a number which has been used in general discussions, for example, in evidence to the GLA.

Q89 Chairman: Where did it come from?

Ms Milne: I think it was an initial back-of-the-envelope calculation the Environment Agency did.

Q90 Chairman: So it is an Environment Agency number. We might probe them about how they constructed that number, but if for argument's sake the Government said, "We're not prepared to put that kind of money up front. We'll have a number less than that," what do you think the Environment Agency's attitude should be, to roll over and accept it or resign en masse in protest, or some other strategy?

Ms Milne: I could not possibly suggest what sort of individual measures they might take like resignations, but in terms of do we need to replace London's defences, by the 2030s we will be needing to do things or face a substantially higher risk than we currently face. That is a society-wide decision. It will affect this building, along with many others, and it will affect the whole of the UK's economy given the types of activities which go on within the flood plain in London.

Q91 Chairman: I do not want to put words in your mouth, but I am getting the message that basically at whatever number is the right number, if the Government of the day do not accept the professional advice given to them, your risk profile as an industry changes and the consequences are that premiums in places like London would go up, or some areas might become uninsurable? Would that be a fair scenario?

Ms Milne: Ultimately, yes.

Mr Starling: There would be costs which are not insurable at all. For example, if this building flooded, so would Westminster tube.

Q92 Lynne Jones: That was the ministerial statement and essentially you have reached an agreement, the ABI, with the Government that you will stick to your Statement of Principles so long as the Government maintains its investment at least at its current rate?

Ms Milne: Yes, because that particular decision is a long-term decision. That is not to say that if in five or ten years' time nothing had happened and there was no obvious progress the industry would necessarily take the same view.

Q93 Lynne Jones: So if they did more then you would be able to put your premiums down?

Ms Milne: Ultimately, if we get cumulative improvements in the level of flood risk in the country, then yes, people will see that. But we are looking at two million properties in England and Wales alone.

Q94 Chairman: Can I just ask for some interpretation so that I can understand the messages in table 1 of your "Revisiting the partnership"? You have got a comparison which is headed "Standard of Protection in 2000 versus Standard of Protection in 2005". Could you tell me what the numbers represent in these two columns?

Ms Milne: This was based on information from the Environment Agency. That standard of protection in 200 was the standard which we were advised. It is the annual probability of flooding, so a two percent annual probability is roughly a one in fifty risk of flooding, at the time the autumn 2000 floods occurred and obviously these places were on a list with others which we pressed the Agency to take some action on. The 2005 column is the current standard of protection as advised by the Agency this autumn.

Q95 Chairman: So I am reading from that not much change in some of them?

Ms Milne: Some of them changed dramatically, some of them changed hardly at all.

Q96 Chairman: I think what I am getting at is, were they all of equal priority to be changed because I think it is an indicator of how does the Environment Agency's prioritisation programme work? Is it working adequately or is it working selectively? What does it tell you about the way they decide where the priorities are? Have you formed a view?

Ms Milne: Essentially, they have a point-scoring scheme but a large proportion of that scoring is based on a cost benefit analysis and so long as that comes out sufficiently positive then you have a reasonable prospect of getting a scheme there. It is, of course, essentially also a rationing tool because they cannot do all the places they would like to do and therefore they do the ones where they can get the greatest effect. That is why, for example, for Lewes some areas have received a much increased standard of protection and some, as yet, have had nothing done at all.

Q97 Chairman: I think what I am trying to get from you is, do you think that tools of prioritisation are being well-used by the Environment Agency? You mentioned it was a rationing tool, but are there inconsistencies? In other words, is it universally applied, rationally applied, or is it a question of, "Well, we've got our list," but then it is, "How do we feel?"

Ms Milne: I think it is applied quite rationally and I think it has been an improvement in that it does provide as near as possible a sort of true risk basis.

Q98 Chairman: I think I understand that you think it is a reasonably rational process, so let me just move on to one last point of clarification. On paragraph 38 of your actual evidence you say, "Whilst sewage flooding is primarily a responsibility for sewage undertakers, it is important that the Agency ensures urban drainage plans fully integrate sewer system needs". Would you like to just explain a little more what you meant by that?

Ms Milne: This is one of the areas where we will be taking forward pilots under the "Making space for water" strategy and it picks up precisely on the point Ms Jones raised of the need to actually make sure that all the different sources of flooding are adequately brought together in making the assessment of what needs to be done and one may have a knock-on effect to another.

Q99 Chairman: Is the Agency doing a good job in that respect?

Ms Milne: The Agency over the last couple of years has taken this very much more seriously and the indications are that it is tackling this.

Q100 Chairman: Good. You have given us a lot of very helpful information. Is there anything else which is burning in your mind where you think, "I wish I could have said that, but he's come to an end of the questions"? Is there anything at all you want to put to us by way of a postscript?

Ms Milne: Just one point is that a lot of our conversation this afternoon has been about current flood risk. We should not forget that climate change is likely to result in a considerably worse flood risk and that means that we really cannot afford to take our foot off the gas pedal here, if that is the right analogy to use in this context.

Chairman: That is why I was asking you some of the questions about prioritisation, and indeed performance against known current risks, because the Environment Agency finds itself in between people like you and pressing the Government for resources and if, upon reflection, you think there is anything the Agency should do to upgrade its performance in arguing its case and dealing with the forward agenda then do please let us have any further thoughts. If there are any other issues you wanted to write to the Committee about other than the ones you have kindly committed yourself to, particularly Mr Pitt, for which I am grateful, we will be delighted to hear from you. Thank you very much for giving up your time and coming to answer our questions this afternoon.