The Association of British Insurers is up in arms at the Government’s decision to increase investment in flood defences to only GBP800m a year by 2010.
Before the devastating summer floods, the industry was pushing the Government to invest GBP2.25bn in flood defences over the next three years and has since been calling for this rise to be brought forward.
But Chancellor Darling, in his pre-Budget review and comprehensive spending review statements, said that GBP650m would be spent on flood defences in 2008/09 rising to GBP700m in 2009/10 and GBP800m in 2010/11, totalling only GBP2.15bn.
As a result, the ABI is planning a review of the industry’s statement of principles which ensures that people in high-risk areas can qualify for insurance if the Government maintains the nation’s flood defences, suggesting the agreement is hanging by tenterhooks.
ABI director general Stephen Haddrill says: “The insurance industry is helping tens of thousands of people affected by flooding this summer but the Government has now failed to play its part. Millions of homeowners and businesses around the country have been let down by the Government’s failure to commit sufficient money to new and improved flood defences.
“Government spending for the next three years is less than we were asking for, even before the floods. It does not begin to address the major issues, including drainage, which were highlighted this summer. The Government will have to increase spending substantially.”
But Prime Minister Gordon Brown says the Government is doing everything it can to improve flood defences and he hopes insurers “will not take the step to deny people insurance”.