Audit Commission

The overall package of government assistance for this summer's severe flooding was generous but inconsistent, a report published today by the Audit Commission has found. The heavy rainfall in June and July caused flooding in many parts of the country, killing 14 people and devastating thousands of homes, roads, schools and hospitals.

In its study, Staying Afloat – Financing Emergencies, the Commission assesses the impact on the finances of 18 of the worst affected local authorities and examines who ultimately will pick up the bill, which is expected to be a quarter of a billion pounds. It found that, while the government was quick to make additional resources available, on the whole, the assistance given was poorly targeted and unlikely to provide good value for taxpayers' money.

A number of councils have been left much worse off than others as some will have to pay 3 per cent of the costs while others will have to find 73 per cent (1). This is caused by variations in the level of their insurance cover and inconsistencies in central government support. Three different government departments were involved in the allocation of four different sources of money.

Steve Bundred, Chief Executive of the Audit Commission said:
'This is a tale of two floods. There are some local authorities which, although badly hit by the flooding, will bounce back quickly. Others will be dealing with the effects of the flooding for some time to come. Nationally, catastrophes such as terrorist incidents, foot and mouth, or freak weather are all possibilities, but precisely where or when they will hit is impossible to forecast. If every local authority insured for every eventuality, the cost to taxpayers would be unsustainable. Our report clearly shows that the current government scheme to provide emergency assistance isn't enough to deal with catastrophic events and should be reviewed. Local authorities were able to cope this time, but if there was another serious flood tomorrow, some wouldn't have enough money in reserve. Central and local government now need to get together to discuss risk sharing of major disasters in the future.'

The report concludes that the government needs to give more certainty about the funding of future emergencies which are inevitable nationally, but impossible to predict geographically. The Audit Commission warns that the current lack of clarity about central government financial support could lead individual local authorities either to under-insure their assets, putting council taxpayers and services at risk, or to over-insure them and waste public money.

Councils are responsible for assessing the risks of emergencies in their areas, and need to take appropriate mitigating action. But there is evidence that, although some areas were prepared both practically and financially, some local authorities were caught out. This could be a combination of bad luck and poor risk assessment, but highlighted the difficulties of assessing risks of catastrophic events locally.

ENDS

FOOTNOTES

(1) 70 per cent of the quarter of a billion pound costs was incurred by just four local authorities (East Riding, Gloucestershire, Hull and Sheffield). After government help and insurance claims, the proportion of the total cost each local authority will have to find varies from 3 to 73 per cent. The predicted net cost, although probably not in any one financial year, ranges from £1 per household in Cherwell to £317 per household in Hull.

Notes to editors

1. Eighteen local authorities took part in our research. They are: Barnsley, Cheltenham, Cherwell, Doncaster, East Riding, Gloucester City, Gloucestershire, Hull, Oxford City, Oxfordshire, Rotherham, Sheffield, Tewkesbury, Vale of White Horse, Warwickshire, West Berkshire, West Oxfordshire and Worcestershire. The study team visited each area and carried out structured interviews with key staff. All of the local authorities completed a detailed proforma setting out their costs, sources of funding and statistics on the numbers of publicly owned properties affected.
2. There were four sources of government funding. Two are based on claims for expenditure incurred, and two are grant schemes. These are: Claims: • Bellwin is the government scheme administered by Communities and Local Government (CLG) for reimbursing the costs of dealing with emergencies. The national total to be paid out is not yet known, but £22 million is expected to be claimed by the local authorities in this study. • Department for Transport has set aside £50 million to cover road damage, but £73 million is expected to be claimed by the authorities in this study. Grants: • Flood Recovery Grant from CLG. Over £17 million has been distributed with no restrictions on how it could be spent. • Department for Children, Schools and Families has paid over £13 million to education authorities.
3. Although the work focused mainly on local authorities, other public bodies, such as the police and health services, have been included in areas where they experienced serious financial consequences from the flooding.
4. The Audit Commission is an independent body responsible for ensuring that public money is spent economically, efficiently and effectively, to achieve high quality local services for the public. Our remit covers around 11,000 bodies in England, which between them spend more than £180 billion of public money each year. Our work covers local government, health, housing, community safety and fire and rescue services.
5. As an independent watchdog, we provide important information on the quality of public services. As a driving force for improvement in those services, we provide practical recommendations and spread best practice. As an independent auditor, we seek to ensure that public services are good value for money and that public money is properly spent.