The Prime Minister rightly reassured people experiencing floods that the costs of helping them during the crisis will not be subject to some arbitrary cash limit.The government does not wish to ration sandbags or fail to help rescue people stranded and in distress.
Much of the cost of responding to the floods is already catered for in current budgets. It is a case of switching Environment Agency staff, police, fire and military personnel from other duties to flood work. They will be paid the salaries that have been in budgets for sometime. Of course the government will need to raid the contingency fund or the underspends against the 2013-14 budget to pay for some additional costs. These include the extra sandbags, the purchase or hiring of extra pumps and barriers, the private sector contractors who may be used to assist the emergency services, any extra pay for overtime for public sector employees and the additional expenses some staff will incur as they try to work in difficult conditions away from their normal base.
The question of who pays for the repairs once the waters have subsided is a different one. Most of the damage will be to homes. These are mainly insured by their owners. The government has offered to work alongside the insurance companies to help ensure fair and speedy settlement of claims to get the work done and people back to normal as soon as it is possible to do so. Business premises too will usually be insured.
Businesses and farms will also have suffered loss of income which may well not be an insured risk. The government has made some more money available for farmers immediately, and will doubtless look at what help could be offered to other businesses brought low by the inability to trade for a period. It has asked the banks to be helpful to businesses, and has announced favourable tax payment terms for affected businesses.
The bigger financial question will be which schemes should be brought forward or developed for the future to give more parts of the country more protection against future floods. A fundamental rethink of the Environment Agency’s large £1200 million budget would be a good place to start. There may need to be some additional financial provision from government capital budgets in future years, which can be achieved by altering current priorities. This should be allied to new thinking on either preventing more new building on floodplain or requiring works to handle the additional water that leave the position better, not worse, than before the development.Some of the recent anti flood investments have paid off and have protected homes. We need to find more schemes which can protect those places which have suffered badly this time.