Flood-hit UK awaits insurance deal

Owen Paterson, who was touring flood defences in Worcestershire has praised the response of emergency services and the Environment Agency for reacting “heroically” to recent national flooding triggered by the wettest year on record.

He said the Government had already committed to funding schemes protecting about 145,000 homes. The Government was also putting more money into new defences.

“Over the spending review period (to 2015) we had already pledged £2.71bn and on top of that the Chancellor already announced in his Autumn Statement a further £120m to protect a further 60,000 homes,” he said.

Mr Paterson also said partnership schemes had raised another £72m from the private sector.

However, he said there has been no deal done yet with the Association of British Insurers (ABI) over the issue of affordable flood insurance for householders in areas of high risk.

Negotiations have been going on since last year to replace the current agreement, known as the Statement of Principles – which ends in July – but so far the Government and the ABI have been unable to come to terms.

Mr Paterson said his colleague, Oliver Letwin, a Cabinet Office minister, met the director-general of the ABI before Christmas, “and we await them coming back to us with a constructive proposal”.

He added he was “not going to negotiate in public” but said the Government wanted “a system which is better, comprehensive, and which is affordable and does not burden the taxpayer”.

Mr Paterson said making flood insurance affordable was “a huge and complex problem” and he would not set a date for the conclusion of talks.

“We are confident we can reach a resolution,” he said.

He made the comments during a tour of the £4.4m flood defences at Upton-upon-Severn, which has flooded 70 times since 1970.

The defences have worked in recent weeks, keeping back the waters of the Severn, preventing 3,000 residents from becoming all but cut off, and protecting 64 homes and businesses.

Mr Paterson said the defences were a “brilliant” example of how investing in defences could benefit flood-hit communities.

In Upton’s case he said the defences had effectively paid for themselves twice over since opening in July 2012, in the amount of money saved from insurance claims.

Resident Grahame Bunn, who runs Upton’s Anchor pub, said the defences, consisting of a riverside water-tight barrier and a series of gates, had “saved the future of the town”.

ABI spokesman Malcolm Tarling said: “We continue to be in talks with the Government about how we could come up with a solution to see that flood insurance remains affordable and available to people at high risk.”

The £120 million of funding – the first tranche of which will be released in the coming financial year – is split equally, with half going towards major flood defences that protect infrastructure, homes and businesses.

The other £60m is being allocated through a partnership fund which allows businesses, councils and developers to pay towards some of the costs of defences.

About 20 new schemes are already going ahead this year, in locations including Manchester, Louth and Warrington.

Between 7,500 and 8,000 households have been flooded since July across Britain, culminating in the major flooding over Christmas and New Year with villages across Yorkshire and the city of York still badly hit by rising water levels.