Examination of Witnesses (Questions 960
- 978)
MONDAY 4 FEBRUARY 2008
BARONESS YOUNG
OF OLD
SCONE, MR
PHIL ROTHWELL
AND MR
DAVID ROOKE
Q960 Chairman:
You know because people have to apply what schemes have been applied
for which your current system is going to slice off.
Baroness Young of Old Scone: No,
that is not the way the system is intended to work. In the past,
I think wrongly, there used to be a system whereby everybody drew
up as many bids as they possibly could and they were all loaded
into the system and there was then an almighty collision as bids
waited for money and local communities were given the prospect
that they might get schemes and then there was no money for them.
I hesitate to use the example of Pickering but poor Pickering
has waited for many years with a pretty low-priority score and
they have been really seriously fed up because there have been
schemes worked up and worked down and worked up and worked down
and that is not a good way to engender the confidence of local
people.
Q961 Chairman:
No, but on your own admission, when I pressed you about being
tough on the Government, you indicate that you had fought very
hard for £1 billion a year expenditure. If we just stick
with that one number, by the time we get to 2010-11 we are £200
million short of the number that you have fought for. There must
be a shortage somewhere.
Baroness Young of Old Scone: I
cannot recall what the date was that the Foresight study said
we needed £1 billion a year. Was it 2015? 2015, I think they
said they wanted £1 billion. I personally think that the
next spending review needs to take us up to £1 billion a
year and the spending review after that will probably need to
take this further.
Q962 Chairman:
You said that last time about the current spending review.
Baroness Young of Old Scone: No,
we said that the ultimate target that the Foresight study, which
was the best available information then, laid out was this 2015
£1 billion a year.
Q963 Chairman:
So the best thing you can advertise at this stage is between the
close of the latest CSR, which is 2011, you are going to want
another £200 million to get you to £1 billion by 2015.
That does not exactly sound like rocket-like progress.
Baroness Young of Old Scone: I
am pretty certain that, as we work through our long-term investment
strategy, that will give us better information about what the
size of the hill is that we are trying to climb, as it were, but
it is only when we have that better information that I think we
will be able to bottom out the next Foresight number.
Q964 Chairman:
So when are we going to get this perfection? When is the plan
going to be revealed?
Baroness Young of Old Scone: We
have only just started on it so it will be certainly all of next
year before we are in a position to have worked that through.
Q965 Chairman:
You have only just started on it, and yet we have had a Comprehensive
Spending Review that went on in planning for the last two years.
Baroness Young of Old Scone: We
have, of course, in the Comprehensive Spending Review used all
of the evidence that has come from a variety of sources to indicate
that the direction of travel needed to be up, and considerably
up. The Foresight study said £1 billion a year. There was
an ABI study that came to a conclusion about a funding level which
was approximately similar though based on different criteria,
so not comparable. There was the work we have done on our own
capital programme that showed for every £1 of investment
we are saving £6 worth of cost. We had put all of that evidence
into the debate for the spending review and we got in total, not
solely to us but to others as well, the £200 million. I believe
the next spending review will have to be as robust, if not more
robust and by then we will be in a better position because we
will have done the very detailed work that is needed to look at
what a 20-year investment strategy looks like.
Q966 Mr Drew:
Can I just ask one specific question? In terms of the capital
programme, is this all public money or is there an assumption
that there will be developer contributions, for example, to make
good some of the capital projects that you would like to see occur?
Baroness Young of Old Scone: Increasingly
I think we will see the need for contributions from all sorts
of people. If you look at some of the surface water issues—and
I should just come back—
Q967 Mr Drew:
So this is not public money then?
Baroness Young of Old Scone: This
is all public money.
Q968 Mr Drew:
This is all public money, so we can add to that a private contribution?
Baroness Young of Old Scone: Can
I go back to Michael Jack's point about what the ultimate sum
is? The one thing we need to remember about all these £1
billion a year figures is that they are entirely for coastal and
riverine flooding and do not really take account of some of these
surface water issues, so there is going to have to be a recasting
of the long-term target is to take account of what we have all
learned from the summer.
Mr Drew: That is a huge change in emphasis.
Q969 Chairman:
In other words, are you going to be including any of that or,
bearing in mind where the responsibility lies, have you got to
look to other people to formulate an estimate to deal with the
surface water flooding issues?
Baroness Young of Old Scone: Absolutely.
Q970 Chairman:
So the Government are really on a bit of a false agenda here,
advertising £200 million extra for flooding and none of it
really addresses the question of surface water flooding. Is that
right?
Baroness Young of Old Scone: I
think it would have been rash to have put money into the Pitt-type
arrangements issues until some preliminary work has been done
to work out what the art of the possible is on things like mapping
and warning, who needs to do what and how it is best funded, because
I do not believe that all the surface water issues should be funded
by grants and aid direct from government to tax payers. We have
to get local government and groups of local authorities working
together to look at those issues and to lever money from a range
of sources, as we did in Carlisle, where the water company paid
some, we paid some, the highways agency paid some, the local authority
paid some, businesses themselves paid some. Lots of people contributed,
and that is going to have to be the name of the game, otherwise
the bill for the taxpayer will go up exponentially.
Q971 Chairman:
You say the bill for the taxpayer, but the taxpayer is also the
person who funds local authorities, the water companies. The taxpayer,
one way or another, is the same payer. It just may be a different
heading on the bill but they still have to pay if they want to
be protected.
Baroness Young of Old Scone: Which
will raise some other issues, and that is the balance that Sir
Michael Pitt pointed out between personal responsibility and authority
responsibility. Should we—I think we should—be encouraging
individuals to take more responsibility for flood resilience and
flood-proofing of individual properties? We need the insurance
companies and the ABI to help incentivise that. I still do not
know what a five-lever mortise lock is but I tick the box every
year—
Q972 Chairman:
Do not tell your insurance company that because you might have
ticked the box and you are protected.
Baroness Young of Old Scone: I
tick the box every year and I get a smaller excess as a result
of having a range of security products.
Q973 Chairman:
You are on the record now! The ABI will be crawling over your
policy now.
Baroness Young of Old Scone: I
have every confidence that when my locksmith tells me I have five-lever
security locks I do have five-lever security locks. We do need
the way in which insurance products are constructed to incentivise
people to make more flood-resilient and more flood-proof individual
properties. You can reduce the average damage on a property from
£26,000, which it is at the moment per flooded property,
to less than £10,000 with the right sorts of resilience measures.
Q974 David Taylor:
You referred, Baroness Young, to avoiding the need for exponential
growth on behalf of government, to use your phrase, but if the
£800 million a year that is in our table here by 2010-11
is to grow, and you seem relaxed about it, only by 2015 to £1
billion, that is only cumulative growth of about 5% a year, is
it not? That is hardly exponential growth. It is relatively unambitious
in every sense, is it not?
Baroness Young of Old Scone: I
would hope that the next spending review would add funds on top
of that and that we will also find through our—
Q975 David Taylor:
On top of the £1 billion?
Baroness Young of Old Scone: On
top of the £800 million.
Q976 David Taylor:
Yes, I have said that. If that £800 million grows over a
further four-year period by 2015 to £1 billion, it will give
growth of about 5% a year. That is all. That is not exponential
growth, is it?
Baroness Young of Old Scone: We
would hope first, that the next period will only be three years.
Q977 David Taylor:
You referred to 2015, which is four years beyond the end—
Baroness Young of Old Scone: That
is the target that the Foresight study placed. We think that £1
billion needs to come sooner and we think that pretty soon, both
in terms of the costings that Sir Michael Pitt will be doing on
the surface water issues and the work we will be doing on our
long-term investment strategies, we will have a much clearer view
about what the sums that are needed are, and that that will inform
the next spending review to the point where the £1 billion
that has been the kind of accepted wisdom to date may no longer
be the accepted wisdom within the next year or 18 months as that
further work is done.
Q978 David Taylor:
Five per cent is hardly RPI and the actual cost of some of the
capital works that are envisaged might be going up at a greater
rate than RPI anyway because of all sorts of factors. So it is
a relatively unambitious programme that the Government is spelling
out, is it not?
Baroness Young of Old Scone: We
do need to offset the inflation against our efficiency programme,
because every year we find ways of becoming more effective and
more efficient in the way we deliver these programmes.
Chairman: You are going to have to motor
very hard. There are lots of other things we would have loved
to ask you but time is against us. The Committee will be writing
to you about the technical feasibility of providing people with
some degree of warning for surface water flooding. We will be
interested in your observations about who will be responsible
for maintaining and funding sustainable urban drainage schemes,
of which we have heard quite a lot, and we will be writing to
you about some aspects of the Water Framework Directive and current
flooding issues. Can we, as always, thank you for your patience
and forbearance with our questions, for your original written
submission and for the considerable help that you have given to
the Committee in making this inquiry. We have effectively one
more evidence session on Wednesday afternoon, which will include
Ministers and then we will retreat to consider and report. Thank
you for your contribution to our inquiries.
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