So, why am I writing about flooding?
I’m writing about flooding because it highlights how the government makes decisions based on the political expediency of the day, rather than on an assessment of real quantifiable benefits for all.
There are many thousands of houses that have been built on flood plains – some recently and some before the land was even recognised as a flood plain. With the advent of more extreme weather, these properties are even more likely to be flooded.
Not only is this a disaster for the occupant; it’s pretty bad for the insurance industry too. With any claim comes a higher premium, or in the worst cases, a refusal to give any form of buildings and contents insurance. A property that cannot be insured is pretty much worthless, so a solution needed to be found.
The government of the day negotiated with the insurers to secure an agreement where a property’s insurance cover would not be withdrawn. Occupier costs might go up, but crucially, they could still get cover. However, this agreement comes to an end soon and the current government has been working on a long-term solution to ensure that cover is available for most properties.
That solution is Flood Re; a reinsurance scheme that will ensure homeowners (within a certain criteria) can get flood cover at affordable rates. All homeowners will be paying a levy on their insurance bills of about £10.50, and this levy will be charged to everyone, paid through the insurance premium. So, a scheme to deal with an environmental issue, funded through a charge on everyone’s bills.
Compare that to the recent furore over ‘Green Levies’ on our energy bills. At the Autumn Statement, the Chancellor announced changes to the Energy Company Obligation (ECO) scheme that will cut funding to thousands of homes, many in fuel poverty. The funding was there to make permanent changes to those homes by reducing energy usage and bills. What we have is the sacrifice of those lifetime savings to secure a politically expedient, one-off, £50 cut in energy bills.
The new insurance proposal suggests a scheme that adds costs to all households but will benefit only a small number year on year, for a problem all experts are saying will only get worse. I would expect as a minimum that those homeowners have to flood-proof their house, to mitigate the ongoing costs for the rest of us.
Let's be clear – the government has cut an 'invest to save' scheme in ECO but approved a 'bail out' (pun intended), which exposes us all to ever-increasing insurance premiums.
ECO and Flood Re are two sides of the same coin. The UK government is likely to be having these difficult conversations with the electorate more frequently unless they, and others around the world, get their act together and start reducing energy demand and carbon emissions rapidly. How about starting with the building stock?
John Sinfield is managing director at Knauf Insulation.