Examination of Witness (Questions 66 -
TUESDAY 28 NOVEMBER 2000
66. Minister, you are a recidivist, thank you
for coming again.
(Mr Morley) That is all right. Actually I am a bit
worried after seeing someone going out. I do not know what the
Committee has been doing to people in here, I am very nervous
67. You will be happy to know that a glass of
water brought him round. Colleagues, the Minister has got other
engagements to go to so I would ask everybody to be crisp and
sharp with the questions and the Minister will no doubt be very
precise, as always, in his answers. What is your estimate of the
cost of the floods as it stands at the moment, individually and
(Mr Morley) In costing terms of the cost to the Agency
and the Government expenditure or do you mean the overall cost
68. The overall cost of damage, if you have
(Mr Morley) I have not seen a figure of the overall
cost of damage, as yet, primarily because in talks with the Association
of British Insurers they were saying that a lot of claims were
not actually in, only a very small proportion of claims have so
far been submitted. My understanding is that it will be a big
cost but probably not quite as big as the hurricane that happened,
which is so far, I think, the biggest cost in relation to insurance
69. There have been over the last months a lot
of stories about people being told that they are now uninsurable
or their insurance will not be renewed. Are you able to give us
a picture as to where we are in that particular debate and how
real those fears are?
(Mr Morley) We are looking for examples of people
who are having difficulty in getting insurance after these floods.
In our talks with the Association of British Insurers, the Chief
Executive made it very clear that her members were not inclined
to make hasty decisions about whether or not they would cease
insuring certain areas or certain individuals or, indeed, whether
they were going to make large increases in premiums. She obviously
added the caveat that in the end insurance companies are commercial
companies and they make commercial decisions. It is about risk
and risk management and risk assessment. What we have said to
the ABI is that from the Government point of view we are very
willing to work with the ABI in relation to what we are doing
to reduce risk. It is worth making the point, Chairman, in relation
to these floods, which have been the worst since 1947, something
like 8,500 properties were affected in the floods out of a potential
number of 1.8 million which could have been affected. Although
it is not much consolation to the unfortunate people who suffered
floods, as a proportion of risk it is a small proportion and has
demonstrated that the investment that has been made on flood defences
over the years has generally worked and has actually defended
an awful lot of properties. Those are the kinds of calculations
that insurance companies will make.
70. So when we come to prioritising remedial
works and further works, are insurance companies having an influence
in the sense of they are indicating unless remedial work is taking
(Mr Morley) They have not made that kind of approach
towards the Government quite as bluntly as that. They obviously
know that there are certain centres of population that were affected
by floods in the course of the recent floods that we have had.
Some of those areas do have schemes in the offing. Shrewsbury,
for example, is one where there is a scheme which is being prepared.
Malton is another where there is a scheme being prepared. With
the extra resources which were announced by the Deputy Prime Minister,
the extra £51 million, that does mean that we can bring forward
schemes, introduce new schemes and accelerate other schemes.
71. A seamless web, that was what the Environment
Agency was going to deliver according to its Action Plan. How
do you rate its performance?
(Mr Morley) I think its performance was much improved
compared to the Northampton floods, for example, in 1998. As you
know, the Northampton floods was a terrible disaster. It was not
just Northamptonthese were the Easter floodsbut
Northampton was particularly badly hit with loss of life, of course.
The fact is, Chairman, following on from the Bye Report we had
the High Level Targets and we had the uprating of the national
flood warning system, which has worked generally very well. There
are one or two examples where we do need to look at what happened
but generally speaking it has worked very well, people got good
warnings. The targets in relation to exercises for local authorities
and the emergency services, that was put into place. In some cases
some local authorities actually held exercises this summer before
this autumn's floods and that also meant that it helped in relation
to their response. I think the response from all the emergency
services and from the Environment Agency has generally been extremely
good and I think it is a great tribute to all those concerned
in the sense of their professionalism and their dedication, people
who worked around the clock in some cases in terms of giving people
the services that they needed at that time. As you probably will
have heard, Chairman, I have asked the Environment Agency that
when things settle down, when they have more time, and I do not
expect them to do this at the moment, then we would expect an
evaluation of these floods, a look at what worked well, a look
at what was successful, a look at what perhaps could have worked
better, and to try to learn some lessons and draw some conclusions
from that. We are constantly trying to improve the responses and
improve the structures we have in place to protect people from
72. Thank you for visiting Shrewsbury not once
but twice since the floods, the first time with the Prime Minister
and the second time just last week, which has been greatly appreciated
locally. As you mentioned, we can afford some new flood defences.
You mentioned the extra £51 million over four years, which
is very welcome, and this is on top of an increase, as I understand,
of £34 million over three years announced in the SR 2000.
(Mr Morley) That is right.
73. How was the figure of £51 million arrived
at? Has it been allocated already to specific projects? You can
mention Shrewsbury at this point.
(Mr Morley) The £51 million is an assessment
of what could be spent over the four year period, bearing in mind
that because of design, planning permission and engineering you
will not get schemes started probably this financial year, you
will be looking at the next financial year when most of the money
comes on stream. Having said that, there is also money for such
things as whole catchment studies. There is £2 million available
right now for doing that. That means that we can start to do some
work in relation to whole catchment study plans and I think there
is a real need for that on a number of major river systems in
relation to a number of communities which are sited upon them.
Indeed, the River Severn is one of them where there is a number
of communities at risk along the River Severn. It was really a
professional assessment of what could be spent on top of what
we had already allocated in relation to programmes both which
we know have been formulated and programmes that can be formulated
within that four year period. It can in some cases, Chairman,
take four or five years from scratch to get a programme off the
74. We have heard previously from the Environment
Agency that they have said part of the problem is under-funding.
Can I draw your attention to the National Appraisal of Assets
at Risk from Flooding and coastal Erosion, commissioned by MAFF.
It estimated that in June 2000 an additional £100 million
a year was needed in capital works and investment, whilst continuing
to invest at the current level would result in "increasing
annual average damage eventually reaching some £1.8 billion
a year". What is your response to that advice, which is clearly
calling for a lot more money and saying there is an awful lot
of risk in terms of damage?
(Mr Morley) That is a report which was commissioned
by my own Department as part of the commitment to looking at long-term
flood defence strategies. It was a report that was designed to
evaluate what would be the value of assets protected against the
public expenditure in relation to flood and coastal defence. It
is a long-term figure, it is a long-term study. It has been presented
that we have to accelerate the programme immediately in one year,
and I am not even sure if it was talking about £100 million
in one year. It is over quite a long timescale. It is certainly
true to say, Chairman, that the report did identify a need for
increased expenditure on flood and coastal defence. We accept
that advice and it is why we are on the rise in relation to our
Spending Review, it is why we have the additional £51 million,
and we are going to have to use that report to guide future expenditure,
there is no two ways about that.
75. So you would not agree with the suggestion
that the UK is running a grave risk through underfunding of flood
(Mr Morley) If we do not increase expenditure then,
yes, that is a risk, but the fact is we are increasing expenditure
and we do have to address the serious points that were raised
in that report about the need for additional expenditure over
76. Following on from the Committee's report,
which criticised the existing funding arrangements for flood and
coastal defence and called for a review of the current mechanisms
for financing of works, there was a consultation in 1999 which
has been followed by a much more wider and deeper review of funding
and that is due to be completed by September 2001.
(Mr Morley) That is correct.
77. The question is then how is this review
being conducted and why has it taken so long?
(Mr Morley) The reason why it has taken so long is
that it is a very thorough review and, of course, it does involve
more than one department. It involves DETR, as you will appreciate,
because one of the revenue streams is through the Standard Spending
Assessment so, therefore, we have to work with DETR. It also involves
bodies like the Association of Drainage Authorities. There is
a number of organisations involved in the review. It has been
interrupted. It has lost a month or so because of the recent autumn
floods and a lot of staff who would have been working on the review
have been switched to dealing with the flooding issues, as you
would appreciate, so it is difficult to accelerate it. I did ask
officials, following the statement I gave to the House, whether
or not it would be possible to bring forward that review. I think
September 2001 is a realistic date, given the fact it is quite
a major review.
78. Is there anything that could be done in
the short-term to simplify the funding mechanisms within MAFF's
own remit in order to effect a more speedy and more effective
use of the funding?
(Mr Morley) One of the things we thought about was
to move to a block grant system for the Environment Agency, whereby
we would give the Agency a block grant rather than the Agency
bringing forward schemes for us to evaluate technically, environmentally
and on cost benefit. That has been held up because of the review
of funding sources, because it does make sense that if you are
going to look at the way that flooding and coastal defence is
funded in this country it would be sensible to wait for that report
rather than to make decisions in relation to what has happened.
79. Most of the current flooding has been river-based,
what is the split in terms of your grants and other expenditure
as detailed in your submission, L3 to the Committee, Table 1,
between coastal and river flooding?
(Mr Morley) I do not have those figures to hand, Chairman,
but I would be only too pleased to make sure the Committee has