House of Commons Environment, Food and Rural Affairs Committee Flood Funding Written Evidence Only those submissions, written specifically for the Committee and accepted by the Committee as evidence for the inquiry into flood funding are included. List of written evidence 1 Association of Drainage Authorities p3 2 Council of Mortgage Lenders p13 3 Local Government Association p17; p23 4 Environment Agency p25; p31 5 National Farmers Union p33 6 National Audit Office p36 7 Association of British Insurers p61; p66;p101 8 Aon Benfield p68 9 Country Land and Business Association p71 10 Ewan Larcombe p75 11 CL Beaumont-Rydings p75; p77 12 British Insurance Brokers Association p79; p83 13 Jeff Charlton p90 14 Bill Hollis p92 15 Richfords Fire and Flood p93 16 Marsh Ltd p97 17 Paul Hinton p99 Written evidence submitted by the Association of Drainage Authorities regarding recent decisions about funding for flood defence schemes 1. Executive Summary 1.1 The Association of Drainage Authorities (ADA) is concerned by the reduction in investment in flood risk management for the present Spending Review (SR10) period. ADA considers that investment in maintenance delivered by the Environment Agency on Main River and associated assets has reached unsustainably low levels to an extent that a lack of maintenance has contributed to the flooding that occurred in England during 2012. 1.2 England faces a number of pressures on flood risk management delivery in the future, including: • a growing and aging asset list, • a broadening array of responsible authorities, • climate change, and • the prevailing economic/investment climate, and • increasing public expectations. 1.3 ADA sees an urgent need for increased revenue funding for the Environment Agency in order to significantly increase the Environment Agency’s maintenance operations: on watercourses, for existing assets, and to facilitate the transfer of some watercourses to more local risk management authorities, such as Internal Drainage Boards. 2. Background 2.1 In 2009 the Environment Agency published its long term investment strategy for flood and coastal risk management (FCRM) in England. The report identified that investment in FCRM would need to reach £1,040 million per annum plus inflation by 2035 in order to build and maintain new and existing FCRM assets to deliver the protection levels as they were then. In 2010-11 a total of £570 million was spent on constructing and maintaining FCRM assets, the report recommended an increase in investment of around £20 million plus inflation each and every year. 2.2 However, Government investment in Flood Defence Grant in Aid (FDGiA) has been reduced during the current Spending Review period (See Figure 1). FDGiA is made up of two aspects, capital (primarily for the construction of new assets) and revenue (for staff, offices and for on-going works including maintenance of existing assets). It is the revenue budget that most concerns ADA at present. 3. Revenue Funding Pressure 3.1 The FDGiA Revenue budget is steadily decreasing throughout the current Spending Review period from £275 million in 2010-11 to £226 million in 2014-15 (See Figure 1). The major concern of the Association’s members has for many years been the under investment in the maintenance of England’s watercourses, particularly those designated as Main River. The Environment Agency has been reducing its Main River maintenance for many years but the revenue cuts brought in during the current Spending Review Period have accelerated the process markedly. Maintenance funding for the Environment Agency is predominantly derived from the FDGiA revenue budget, with further contributions from local authorities through local levies and from IDBs via a precept which have either broadly risen with inflation or remained static. 3.2 In 2010/11, the Environment Agency's annual regional revenue maintenance budget was 1 just over £100 million. This was widely considered to be significantly short of the investment required to keep up with even the most essential works to keep our rivers flowing. A decreasing amount of work is being conducted on medium and low priority parts of the network and whilst it is to be expected that these areas would receive less work, if they are never maintained these parts of the system may no longer function as intended. De-silting work on rivers in areas such as the Somerset Levels having all but ceased, the Rivers Tone and Parrett are considered to be between a third and two third of their capacity, exacerbating the extent and duration of the current flooding. The EA's maintenance budget for 2013/14, beginning in April, is just under £70 million and for 2014/15 it is set to be £60.7 million. In short, the Environment Agency's maintenance budget will have nearly halved since the turn of the decade (See Figure 2). Yet this budget will have to stretch ever further with new defences being built under capital investment. 3.3 An example of the pressure being felt is the maintenance funding settlement for the Environment Agency’s Anglian Central Region for 2013-14. Here the Regional EA bid for a maintenance budget of £6 million but received an offer of only £2 million. The bid was focused almost solely on the most essential high priority areas to be maintained. The shortfall means that even high priority watercourses fall further and further into a state of disrepair thus requiring either: more costly maintenance works, a capital project to rebuild the asset or increased flood risk. The picture is one that typifies the situation nationwide (Appendix 1 provides a summary of other cases of reduced main river maintenance and how it is affecting the functioning of IDBs). 4. Increasing costs 4.1 ADA considers that many of the difficulties in delivering main river maintenance stem in part from the inflexibility of a nationalised structure within the Environment Agency that prevents pragmatic local decision-making and increases costs. 4.2 Procurement is one such area. ADA is concerned that the Environment Agency’s existing, and proposed, procurement frameworks ties the Agency’s operational teams to choosing services only from a nationally approved list of contractors and suppliers. For the delivery of a whole range of operations the Environment Agency’s nationalised procurement approach is proving significantly more costly and is a contributing factor to reducing the Agency’s ability to deliver timely and sufficient Main River maintenance. In some instances this is proving to act as barrier to partnership working with other more local risk management authorities such as Internal Drainage Boards, which in many cases are keen to assist the Agency with maintaining sections of main river which fall within the catchment of their Internal Drainage District. 5. Withdrawal of maintenance and transferring functions 5.1 Owing to the reducing maintenance budget and increasing costs of work the Environment Agency is pursuing a policy of withdrawing from maintenance of lower priority Main River systems under its Asset Maintenance Protocol. It is also seeking to withdraw from its responsibilities of acting as the Internal Drainage Board for 10 Internal Drainage Districts in the South East of England. 5.2 In these circumstances the Environment Agency is either seeking to pass maintenance on to other interested parties, revert to riparian owners/occupiers powers and duties or seek interested parties to form IDBs. On the Solway Plain and in the Lyth Valley in Cumbria and in the Lower Alt and Crossen Catchment in Lancashire new IDBs have been proposed to take over some main river maintenance operations from the Environment Agency. However, to progress such proposals the administrative arrangements for setting up a new IDB will need 2 to be supported by the Environment Agency in the short term before the body can levy its own drainage charges. 5.3 ADA in principle would welcome some main river being transferred to new and existing IDBs, especially where this was previously maintained effectively by an IDB prior to becoming Main River in the mid-2000s. However, it is concerned that unless the Environment Agency and Defra are able to financially support the transition of responsibility the management of many sections of our main river network will become piecemeal and disjointed. 5.4 A number of the lower priority sections being proposed are in lowland rural areas. Flooding of these areas can, as shown in Somerset, be devastating to the communities affected and the other infrastructure that criss-crosses such areas, particularly as once water is on the land it is difficult and costly to move and can leave areas flooded for months at a time. ADA believes that where the Environment Agency seeks to withdraw maintenance in order to realise long term savings, sufficient funding should be provided in the short term to ensure assets and systems are transferred in a good operating condition and that there is sufficient funding to make a structured transition. 5.5 ADA is also aware of sections within the Water Resources Act that enables the Environment Agency to levy drainage charges themselves to support maintenance operations that benefit land drainage and thus reduce fluvial flooding. At present these powers are only used in the Anglian Region which levies a General Drainage Charge across the whole region. ADA considers that the Environment Agency should explore applying more local special drainage charges in areas in order to help fund maintenance operations. 6. Organisational arrangements 6.1 The merger of the Environment Agency Wales, Forestry Commission Wales and Countryside Council for Wales to form a new single environmental body called Natural Resources Wales is of concern to ADA. Much investment and resource is being directed by the Welsh Government and the constituent bodies into forming the new single body and there appears to be a reduced focus on flood risk management within the proposed new body.