British Property Foundation calls government to task over "flooding fiasco"

The British Property Federation (BPF) has called for the government to take responsibility for avoiding a flooding fiasco for property and business owners in a letter being sent today to Sir Michael Pitt. (attached). chair of the South West Strategic Health Authority,

Writing to Pitt, the chairman of the South West Strategic Health Authority who is conducting an independent review into the summer 2007 floods, the BPF said it backs his interim calls for the government to take a lead in averting future problems.

Ministers are being urged to invest enough in supporting flood defences to avoid a situation where insurance firms withdraw insurance cover from those at risk. Homeowners would face the threat of having their mortgages withdrawn due to insurance being a key condition of the contract.

In a deal between the Association of British Insurers (ABI) and the government insurers have agreed to provide affordable insurance cover for those in high flood risk areas in exchange for ministers providing enough funding for flood defences to reasonably avert the risk of flood.

The ABI has already removed small businesses from the scope of its Statement of Principles.

BPF requests for additional expenditure to be included in last autumn's Comprehensive Spending Review were turned down, with the suggestion that there were already plans to increase it in 2010. However, that increase was planned before the disastrous events of last summer and has not been reviewed as a result.

The BPF believes the government is breaching its promises, following a cut in spending by the Department for Environment, Food and Rural Affairs, in summer 2006.

The letter says: "The potential costs of flooding are likely to increase and a solution must be reached through a combination of engineering and non-engineering methods". The BPF also calls for a strategic long-term approach to investment in flood management, and believes that a risk-based approach to any investment is sensible.

Last year's floods saw over 165,000 insurance claims at an estimated cost of £3bn to the industry, making 2007 the worst year on record for weather-related incidents. A National Audit Office report last summer revealed that around 46% of flood defences were inadequate.

It has been suggested that Pitt's review can only make attainable suggestions, ruling out recommendations for the extra funding sought by insurers and property owners.

Bill Gloyn, chairman of the BPF's insurance committee and chairman of real estate at Aon, said: "The government promised over many years to adequately fund flood defences and has failed to do so. There is clear evidence that they have spent part of the budget for flooding on something else.

"Government has to be realistic over the likely costs which may be incurred as a result of a major flooding incident. If the City of London were to suffer a major flood, we could see the whole of UK economy in crisis. This is not a case of saving money, as the situation will only get worse and cost many times as much."

Liz Peace, chief executive of the BPF, added: "This is not simply a case of throwing more money at flood defences. We need someone to develop a country-wide solution and hold their hands up to say 'in the short term, this is going to cost a lot more than we're investing,'. Ultimately, whatever we spend now in prevention of further problems will cost a lot less than dealing with them after they have occurred."