Examination of Witnesses (Questions 120-139)
ENVIRONMENT AGENCY
27 JUNE 2007
Q120 Mr Williams: It is a circle.
Might they not have done so, if your predecessor had done a proper
job from the start and said this was your remit, you had to try
to address the priorities across the country and asked what you
needed in order to address priorities? Like any insurance company
one would have thought you would say you needed a risk analysis.
It is not anything terribly revolutionary, is it?
Baroness Young of Old Scone: We
should not underestimate the strong politics which existed around
flood risk management at the time before the money was centralised
nationally.
Q121 Mr Williams: Say that again.
Do you mean internal politics?
Baroness Young of Old Scone: Local
politics.
Q122 Mr Williams: I know how cussed
local politics can be, but that is not the point. I am talking
about you in a leadership role. You were the national body. It
was for you to go out and fight your corner, to do things you
felt necessary, so at least you could turn around and say: "It's
not our fault guv. We told them, but they refused to do it".
Instead of that what you are saying is that you did not even bother
to try to find out.
Baroness Young of Old Scone: Most
of our work over the last few years has been focused very heavily
on improving our knowledge of the assets, getting them registered,
getting their condition assessed and onto the asset system so
we can take a risk-based approach.
Q123 Mr Williams: You have been going
for 11 years. How much money have you spent in 11 years? What
is your annual budget?
Baroness Young of Old Scone: Our
annual budget at the moment is £1 billion, but on flood risk
management it is £500 million and that has been a huge increase.
Q124 Mr Williams: So over 11 years
what would you say is a ballpark figure for what you have spent
in achieving relatively little?
Baroness Young of Old Scone: We
have achieved a huge amount.
Q125 Mr Williams: What have you spent
in achieving it?
Baroness Young of Old Scone: My
maths are not up to that on the hoof, but I would have thought
that we are probably talking about somewhere between £200
million and £300 million for many, many years until it was
increased to £500 million in the last year.
Q126 Mr Williams: You have been there
seven years, so in your spell what has been spent?
Baroness Young of Old Scone: We
have achieved a huge amount. We have protected over 100,000 people;
we have achieved all our targets.
Q127 Mr Williams: I am not asking
what you have achieved. I am asking a simple question: how much
have you spent?
Baroness Young of Old Scone: I
would say about £2.5 billion.
Mr Kersley: On an average of £300,000
a year £2 to £2.5 billion.
Q128 Mr Williams: You have spent
£2.5 billion and you are only just coming around to doing
it according to a sensible priority.
Mr Kersley: May I come in and
clarify a point because I may have led us down a blind alley here
for which I apologise? In terms of capital, which is a significant
element of our investment, at least half over that period, we
have prioritised since we were created in the late 1990s. Therefore
capital investment was always being allocated according to risk
and over that period we have improved progressively, with our
sponsor department, our prioritisation of that. The point I was
making about asset systems is that it allows us for the first
time to have a clean joined-up look at the components in the chain
that provide an overall service to a community and therefore assessments.
Before that we used to use a surrogate for that because we were
unable, for reasons already expressed, to join up the chain and
the past indicators of condition were themselves a surrogate measure
for risk. So we have always undertaken an approach which has been
risk based. We are at a more advanced stage and we shall continue
to progress in that arena.
Q129 Mr Williams: So you spent all
that capital. Give me the figure again. What was the gross figure
on capital? Over £1 billion? You spent over £1 billion
of capital but you spent it still not having any risk information
on which to address your priority for spending that capital.
Mr Kersley: No. I explained that
in the capital environment we have always appraised the system
at risk and we have been able to look at the contribution towards
that system that a single asset makes when we are investigating
whether to replace it or improve and enhance it. Our analysis
and assessment currently is that the return we get from our capital
investment is incredibly strong but we are only able to fund projects
which have a benefit/cost ratio in excess of six and that is a
demonstration of the extent to which we do prioritise our capital.
Q130 Mr Williams: Lower down the
page you complained about the obduracy of the local government
but I look at the final paragraph and it says: "The Agency
has very limited powers to force other bodies to improve the condition
of their assets" that is what you have been saying all along
"but does not necessarily notify the relevant third party
when Agency inspections identify faults"". You go along
and inspect, you find a fault, I assume a fault is something which
needs to be addressed, and you do not even bother to tell the
person responsible that the fault exists. What is the good of
you?
Baroness Young of Old Scone: We
have in the past taken a risk-based approach to that so that if
the fault was one we believed was material to the integrity of
the flood defence system and needed to be addressed, we would.
Q131 Mr Williams: Answer my question.
Why is it not standard? You have identified risk for a couple
of years, you have been working on a system to address risk, but
you still, currently as far as I can gather, inspect third party
defences and you do not even bother to tell people, or do not
necessarily tell them, even when you discover faults. How do you
justify that?
Baroness Young of Old Scone: We
took a risk-based approach to that because in the case of many
of these owners of third party assets it is difficult to establish
who owns them and they are not willing to do very much about it.
The amount of effort and resource we have available—
Q132 Mr Williams: Do you not see
that the fact that they are not willing to do something about
it means there is certainly a liability issue here? If you had
notified them that you had found a fault and if that fault subsequently
led to damage to someone else, someone else could have a case
against the owner, if the owner were aware of it. If you have
not bothered to tell the owner, the case is probably against you
for neglecting your duty.
Baroness Young of Old Scone: Increasingly
and already in two of our river systems we do have powers to be
able to do something about it and we did notify third party owners.
We are now in the process of implementing a new policy which will
ensure that third party owners, where they can be identified,
are notified and that where we believe these are of risk to the
integrity of the system, we can increasingly put pressure on them
to comply. If they do not comply, and we have very few legal ways
of making them comply, we may have to seek additional powers.
Q133 Mr Williams: If you do not notify
them and they do not comply and you are aware of it, are you not
guilty of negligence?
Baroness Young of Old Scone: Not
if we have taken an appropriately based risk assessment which
says that we do not believe that the quality of that asset was
going to be a risk to the integrity of the system as a whole.
Q134 Mr Williams: May I say I find
this astonishing? An organisation set up with your remit, with
a couple of billion pounds and you are only just coming around
to addressing the priorities which should have been addressed
right from the start.
Baroness Young of Old Scone: I
should be very pleased to send you a list of the achievements
over the last seven years that we have made in flood risk management.
We have achieved a huge programme of change and development and
we have delivered an improved standard of flood defence and flood
warning to a large proportion of people in this country. We are
on the move to improving some of the other things which are part
of our programme. We have delivered a very substantial programme.
Q135 Mr Williams: That would be more
impressive, if we did not find in the same paragraph as the original
information that the spending share: "...on high risk systems
varied from 24 % in the North East to 67 % in the Midlands".
To my mind you have failed to address issues you should have addressed
earlier. How do you account for the fact that you can have such
an incredible variation?
Baroness Young of Old Scone: May
I turn you to table 11 again?
Q136 Chairman: You have already given
this answer.
Baroness Young of Old Scone: The
grey band, which is the high risk systems and which looks very
low in the North East, needs to be taken into context with the
navy blue band which is also spend on systems which are for the
most part high priority and therefore, with the exception of one
of our regions, over 74% of our main expenditure is on high priorities.[10]
Q137 Mr Bacon: Could you send us a note?
Looking at your figures for government spending on flood management
over the last ten years, which are on the website, it looks as
though you have spent £2.5 billion just going back to 2002-03
and going back to 1997-98 it looks to me more like £4.2 billion
roughly—I have just totted it up—than £2.5 billion.
Could you send us a note on that and explain how much of it is
flood and how much is coastal erosion? That would be very helpful.[11]
You were founded in 1996, were you?
Dr King: Yes, 1996.
Q138 Mr Bacon: Why do you not send us
that breakdown from your inception?
Baroness Young of Old Scone: Yes.
Q139 Chairman: I was going to ask questions
but time is pushing on so I am going to ask for notes. I want
to know, reference paragraph 3.8 on page 24, why you spent so
much developing plans for new flood defences rather than actually
building them? [12]I
want to know, in relation to figure 17, how many of the projects
which you did not fund are in areas affected by floods at the
moment. [13]I
want to know why such a small proportion of your construction
budget is available for new projects, with reference to figure
15 on page 23. [14]I
want to know why it is that six years after the last NAO Report,
your data systems are still of such poor quality, with reference
to summary paragraph 5, final bullet on page 7. [15]I
have to say, Lady Young, that although you say you need more money,
following this hearing I do not think we are convinced that you
can guarantee to us that you will spend it more effectively than
the extra money you have already received. I say to the Treasury
that when Lady Young says she needs more money, which she doubts
Defra will supply, she says she will come to you. We hope that
you will require from her, if you grant her request, that these
monies are actually wisely spent. I do not think, following the
answers we have heard today, that we can be entirely convinced
of that. I go back to my original question about these plans which
were promised as long ago as 2000 and we are still waiting for
them. Contrary to what Lady Young said in her answer to us, I
would have thought that if these plans had been started earlier
then property could have been saved which has been badly damaged
in these floods. You personally have been in charge of this Agency
now for seven years, which is quite rare in government, you undertook
to improve flood defences. It is my impression that you have not
adequately done it, nor have you warned the National Audit Office
of your shortcomings and you have broken specific commitments
given to this Committee and you have not learned the lessons of
New Orleans, that adequate planning is absolutely essential. The
exchange that you had with Mr Williams, in terms of the shortcoming
of your risk assessments, was devastating. Thank you very much.
10 Note by witness: Figure 11 in the National
Audit Office Report provides the proportion of expenditure on
High, Medium and Low risk systems. However some 27% is shown as
Non Systems specific expenditure, much of which also goes towards
high-risk systems. This increases the levels of expenditure on
high-risk systems substantially in all Regions. Back
11
Note by witness: The Environment Agency came into being
on 1st April 1996. Since this time we have spent in total £3.429
billion on flood risk management. We do not keep separate records
for the amounts spent on inland as opposed to coastal flood risk
management. Our estimate is that over the last 5 years, we have
spent around one third of our capital investment on sea flood
defences. The Environment Agency until very recently had no role
in coastal erosion. Back
12
Ev 25 Back
13
Note by witness: The only unfunded scheme on the list in figure
17 that is in an area affected by the current floods is Ripon.
Ripon has a priority score of 16.35, and was approved in 2005
(£11m total cost). The relatively low score means that it
has yet to receive funding to deliver the scheme. Back
14
Ev 26 Back
15
Ev 26 Back
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