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Let us look at what has been promised
“£2bn will be spent on flood defences over the next four years” George Osborne 20th October 2010
Unfortunately this statement is rather vague and we cannot find any more detail in all the documents we have read as to how this money will be spent or what expenditure it replaces.
The Environment Agency Flood Defence Grant in Aid (FDGiA) for England for this current year (2010/2011) is ÂŁ629m, and had been projected to rise to ÂŁ679m pa for the following four years (as outlined in the Comprehensive Spending Review approved in February 2010). Is the ÂŁ500m pa the new FDGiA? Is it a limit on the total allocation for England and Wales spending, that includes the Local Levy and other sources, on flood and coastal erosion risk management (FCRM) of ÂŁ745m for 2010/2011?
If it is the FDGiA over the next four years then it is a cut of over 25%. It is a 33% cut if it is the FCRM ÂŁ745m.
From the Review Document
The Capital Department Expenditure Limit (DEL) of Defra has been reduced from ÂŁ600m pa in 2010/2011 to ÂŁ400m pa for the next four years. New flood defence schemes come out of this budget. The EA budget for schemes for 2010/2011 was ÂŁ354m and had been expected to increase in future years. The Capital DEL for the whole of Defra has been cut by 33%. Does this mean the ÂŁ354m will also be cut by 33%?
“better protecting 145,000 households by 2014/2015”
This is where numbers and statistics start to get a bit blurred. 145,000 households to be protected is the same number as were targeted to be protected in the four years up to and including the current years budget. 185,000 households will actually have been provided with improved protection over this period, achieved on a £1.31bn budget. In theory, this £1.31bn could take a 21% cut and still achieve the target 145,000 households. In practice, it doesn’t really work like that.
This is worrying as far as Morpeth’s submission is concerned. We are worried that the method used to score proposed schemes could change. Currently Morpeth scores quite high because of a good biodiversity rating, if the Outcome Measure (OM) proportions change to take more account of the number of households protected, to make reaching the 145,000 more attainable, we could be in trouble. The submission for funding of our project goes forward in November, any change in the scoring of OM’s between now and January would be “moving the goalposts”.
(May 2011 update. We now know that our OM score was too low to be included in the reduced number of schemes that were given the go ahead. There is going to be a change in funding arrangements, so yes the goalposts have moved and we are worse off because of it.)
(November 2011 update. Under the new funding arrangements the Morpeth Scheme has been given an indicative budget for 2012/2013. This is mainly thanks to Northumberland County Council committing ÂŁ8m-ÂŁ12m in additional funding. We look forward to final approval by the main board in February 2012 and work starting towards the end of 2012.)
“DEFRA will work with the Environment Agency and the Efficiency and Reform Group to review existing procurement strategies and maximise the money available, with expected efficiency savings of 15 per cent on capital investment by 2014-15”
This statement probably refers to the process of appointing contractors for flood defence construction, although it is not entirely clear. Most of the process has been completed with the Morpeth scheme so there is little or no scope to reduce costs. Any efficiency savings that could come from reviewing the existing procurement strategies will take months, possibly years, to filter through and so cannot be regarded as a quick fix.
All-in-all we cannot yet say how the the spending cuts will affect the future building of flood defences. The Environment Agency is still not sure (and won’t be for a few months yet). The insurance industry has condemned the cuts and sees them as an obstacle to the negotiations of ensuring affordable insurance when the current agreement runs out in 2013.
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