“Money is no object…”
– David Cameron, 11 February 2014, 10 Downing Street
It’s not often that the government says money is no object, particularly over the last few years of austerity.
But that’s exactly what the Prime Minister said when asked about the floods covering swathes of England.
“Money is no object in this relief effort,” he said. “Whatever money is needed for, it will be spent.”
It’s potentially an expensive promise, though one, those affected by the flooding would say, which is entirely neccessary.
FactCheck has tried to find out what that promise might actually mean.
What are the costs?
So far, we are talking hundreds of millions of pounds, and that’s only the things we know about, and to date.
As well as the cost to thousands of homes damaged by flooding, the weather has battered much of Britain’s infrastructure, and this will all need to be paid for.
The bulk ofthe cost, however, may end up coming from insurers, for homes and businesses. Earlier this week, PwC said the insurance industry would have at least £500m in costs for repairing properties, and covering costs for businesses which have lost out. They also expect that people who are not insured, or elements of damage or loss not insured, will cost £130m.
They warned, however, that the costs may well rise, given further flash flooding is expected.
In terms of the public purse, we can expect the following:
– Asked how much it thought the damage was worth, Network Rail estimated at least £100m. It says that some of the cost will be borne by insurers, but the rest will come from its operating budget – which is funded by the government.
– The Somerset Levels are undergoing the largest water pumping operation they have ever faced. Last week, Owen Paterson, the environment secretary, said that pumping operations on the moors and levels are costing £100,000 a week.
Since then, more pumps have been brought in, including 13 from the Netherlands in the last couple of days, but the Environment Agency (EA) told us that the cost remains about £100,000 a week.
The EA couldn’t say when the pumps started, saying it’s been a phased approach, but the flooding started in late December. At current rates, that would mean that pumping has so far cost about £600,000.
– Local authorities are so far expected to claim about £100m back in costs under a disaster emergency plan, the Bellwin Scheme. This is operated by the Department for Communities and Local Government (DCLG), and offers financial assistance to local authorities in cases of emergencies.
The £100m covers costs such as repairing local roads, accommodating families who have had to leave, sandbags, repairs to public buildings and some flood operations. Cornwall Council has estimated that the cost of repairing its infrastructure alone was about £21.35m at the start of this week, but it may well go up. Surrey Council Council estimated that its roads repair bill could rise above £10m.
On the point of sandbags, we’ve seen rather a lot of them since December, and just out of interest, we wondered how much they are. The Local Government Association, Cabinet Office, the Department for Environment, Food and Rural Affairs (Defra), DCLG and Environment Agency were unable to say how many sandbags have been issued and at what cost, saying the figures were down to individual local authorities.
Hampshire County Council has already delivered 35,000. Sandbags, they added, purchased by the thousand, cost 12p each (and 20p each when bought by the hundreds). Which would make Hampshire’s bill £4,200, if bought at the cheaper price, so far.
– Flood defences: last week, the Communities Secretary Eric Pickles announced that 42 new flood defences were to be built. Towards the end of last year, there were 13 flood defences planned for 2014. The total bill for all 55 is £344m, according to Defra. A further £130m will be spent on repairing and maintaining existing flood defences, it was announced yesterday.
– Grants to affected properties: this afternoon at Prime Ministers’ Questions, Mr Cameron announced a new £5,000 “repair and renew” grant for all affected homeowners and businesses to ensure flood resilience is built into homes and businesses as they are repaired.
The Environment Agency said that until about a week ago, 5,800 properties – homes and businesses – had been flooded, in some capacity. If all of them were to apply for the grant, it would cost £29m. The number of properties is expected to rise, however, with further bad weather on the way.
– Farmers, the Prime Minister said today, will also get £10m in one-off grants to help them restore their land back into production. The fund will be open for applications by the end of February.
– Dredging: we asked Defra whether any dredging had started yet, and how much it cost us. They couldn’t come back with an answer.
– Military assistance: about 2,000 military personnel are available to assist with flood relief operations. Just over 1,400 defence individuals are working at the moment. Nearly 1,000 troops are in the Thames Valley. The Ministry of Defence was unable to tell us how much this costs, at this stage.
So what does all that add up to?
It should be stressed that this is likely to be a very conservative estimate. Mr Cameron has said a number of times that things will need to get worse before they get better, and the weather forecasters agree.
Likewise, it is only the a tally of costs that have been, to some degree, worked out already.
So, in terms of public costs, to repair the railways, pump water from the Levels, the bill DCLG expects from local authorities, flood defences, grants to affected properties and farmers’ grants, we are looking at at least £583.6m.
A bit more than insurers currently expect to pay out, though of course, both figures may well rise in the coming days.
To maintain existing levels of flood protection will cost an extra £10 to £30m, plus inflation, per year, to 2035, according to a House of Commons research paper.
How much has the government offered so far?
As well as the £5,000 grant, the £10m farmers’ assistance, the £344m for the 55 new flood defences and the £130m flood defence maintenance bill, it has said it will offer:
– 100 per cent business rate relief for three months for affected businesses, and a three month business tax payment deferral
– £7m for a flood recovery package
– £31m for 10 rail resilience projects to improve resilience to flooding. On this last one, however, it’s worth noting the following.
After the floods in November and December 2012 that hit south westEngland, Network Rail asked for investment to make their top 10 most susceptible locations more weather and flood resilient.
They produced their plan in early 2013, and asked the Department for Transport (DfT) for funding.
DfT made all the right noises, and Network Rail assumed they were going to get it. They were so confident, they have already spent £5m on two of the ten schemes.
Now, the money announced will enable Network Rail to carry on with the remaining eight.
Where is it coming from?
Number 10 couldn’t give us a definitive source, saying that it came from “various contingency funds”.
Some of it will come from a £60m underspend from the Department for Transport.
Ultimately, however, organisations such as Network Rail, and the Environment Agency, are publicy funded anyway. So the government is going to have to find the money from somewhere.
Mohammad Khan, insurance partner at PwC, said that the bulk of the cost for households would come in repairing buildings, and replacing damaged carpets, floors and electrical supplies.
For businesses, he said, it would also be repairing damage, but also the cost of covering the amount of time a business isn’t running.
So we’re talking about £1bn then?
That’s the lower figure. But the total economic costs of the summer floods in 2007 were about £3.2bn, in 2007 prices.
Those floods were officially a “national disaster”, according to the Environment Agency.
The situation then has one thing in common with now, though, regardless of where costs may end up. In relation to the 2007 floods, the Agency said: “It is recognised that the impacts on the lives and livelihoods of those caught up in the summer 2007 floods cannot be expressed in monetary values alone.
“For many people affected, the floods were a personal tragedy from which full recovery may be very slow or not possible.”