Response 15-02-11
Future funding for flood and coastal erosion risk management:
consultation on the future capital grant-in-aid allocation process in
England
Cornwall Council’s response to the public consultation, 24th November
2010-16th February 2011
1 Do you think that the existing funding prioritisation and allocation
system should continue, in which Government focuses on funding the
most cost-beneficial projects?
We welcome the debate on changing the funding system.
The existing system tends to benefit the most cost-effective schemes, which
tend to be in more densely populated urban areas. Whilst this is
understandable, the present system excludes many rural schemes that do not
qualify under the present arrangements but nonetheless deserve
consideration and a way forward.
2 Do you have any other comments or anything to add to the analysis in
Section 1?
We particularly welcome the inclusion of funding for surface water projects.
We hope that the proposed arrangements will encourage joint funding
partnerships, such as between LLFAs and private water companies where
there are multiple benefits such as reduced highway flooding and reduced
combined sewer overflows, for example.
We also hope that it eases the way for private developers to part-fund wider
schemes that provide benefits on a wider catchment scale and also unlock
part-funding from central government. However, the inclusion of private
funding requires a much faster response time for the central funding element
than is achieved at present.
We assume that the new arrangements will allow the local levy to be applied
to local schemes, such as surface water management and ordinary
watercourses and also to catchment-approach schemes, which can result in
large downstream benefits for relatively minor upstream interventions.
In all, a wider range of schemes should attract at least part funding than at
present.
The analysis does, however, assume that a similar level of central
government funds will be available overall and if this is not the case then the
advantages referred to will be lost.
Funding formulae should take into account all flooding and erosion source
risks including area/region specific such as wave induced high water which is
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less of an issue elsewhere in the country but a significant factor in the SW
generally and specifically Cornwall and IOS.
3 Do you agree with the objectives in Section 2? If not, which would you
change, or what others would you add?
In order to achieve objective (i), the operating authorities will need to have
some funds to invest, in the first place.
This Section should not lose sight of the aspiration to provide the greatest
support to the most deprived. The statement that ‘levels of activity will
become based on people’s willingness to pay’, does not provide the correct
message. There also needs to be recognition that the beneficiaries of flood
management activities are not necessarily those who created the risk or are in
a situation to pay for its management.
The receptor is not necessarily the cause.
4 Do you agree with the guiding principles outlined in Section 3? If not,
which would you change, or what others would you add?
In general the principles appear to be right. However there may need to be
some flexibility in the cost-benefit analysis in order to unlock match-funding.
Some outcomes may be difficult to measure, such as scenic beauty and
accessibility, particularly in relation to the coast which is enjoyed by far more
people than live there.
The provision for surface water management schemes to access part-funding
for Grant-in-Aid is a big step forward as it may help to realise some of the
actions identified within Surface Water Management Plans.
We would like to see a clearer definition of property level resilience. Does this
refer to grants for moveable flood gates, raising electric sockets, etc, or does
it apply to community sand-bag schemes or small scale surface water
schemes such as retro-fitting SUDS?
Local Levy via the RFCC could be a useful way of “seed” funding potential
FDGiA schemes to provide initial justification. This in turn can then help
prioritise schemes/larger studies on the MTP which might otherwise have
been below the consideration level.
5 In particular, do you agree that the costs of protecting new
development should not fall to the general taxpayer, now or over the
long term?
We agree that new development should bear the costs of flood protection for
that development if flood protection is required, and the construction of that
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development is justified within the context of PPS25. Where integrated flood
risk management is required that crosses the boundaries of multiple
developers the LLFA and the EA will need to take a coordinating role.
We further feel that S.106 agreements may be justified to provide the partfunding element of flood protection measures that benefit the whole
community within which a new development is situated.
The retrospective date of January 2009 for excluding new developments from
the funding formula may be unfair as it predates the Flood and Water
Management Act. Also new development may have a long lead-in time from
design and planning through to construction. We feel that there should be a
period of notice provided rather than a retrospective cut-off date so that
developers can take these issues on board and plan accordingly. Alignment
with the SUDS approval and adoption timescale would seem appropriate.
6 Do you agree with the rationale for the ‘payment for outcomes’
approach?
We would generally agree with the rationale as stated.
Whilst focussing on households may be sensible, for the reasons provided in
the document, there may be cases whereby they do not reflect the costbenefit implications. This is particularly so for coastal erosion whereby very
few, if any, households may be directly affected but infrastructure, access and
amenity are.
Cost savings achieved are likely to result in a reduction in the level of
protection provided. This then creates a circular reference in the calculations.
If an initial proposal specifies protection for a 100 year event but this is scaled
down to a 50 year event with, say, 30% cost savings, the cost-benefit
calculations need to be repeated for the 50 year event, but are the 30%
savings included in the final assessment?
The proposal seems to indicate if an overall scheme cost can be reduced
where it is for instance eligible for 80% FDGiA (20% from other source) the
amount of other source money will also reduce. This seems rather unfair as a
scheme that originally had effective approval for say £80k for a £100k scheme
would have to be funded another £20k from elsewhere. If the overall scheme
cost was reduced to say £80k the FDGiA does not cover the whole amount
but still 80% (i.e.£64k) the remaining £16k to be found still from elsewhere.
Whilst we would not necessarily say the whole scheme should be funded
100% (though if it still provides the same degree of protection etc. then
perhaps it should) but we would have thought the FDGiA element should
perhaps be re-evaluated to reflect the benefit from overall scheme savings
slightly more in favour of the “other source” proportion to be found.e.g. saving
of 20% overall shared evenly between FDGiA and other source. This would
make the £80k reduced cost scheme £72k = FDGiA and £8k = other source.
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7 Do you agree that a ‘payment for outcomes’ system would be more
likely to deliver the objectives stated in Section2, in comparison with the
current prioritisation and allocation approach? An accompanying
impact assessment provides a more detailed comparison.
We believe that the proposed system is more likely to achieve the objectives
than the existing system, not withstanding any reduction in total central
funding available.
In the case studies provided, the local input of funds is obtained from
community groups, local chamber of commerce, local flood risk partners and
“other community interest”. The case studies assume that this local input is
easily forthcoming. There will need to be a degree of public awareness
raising as the local taxpayer, private or business, will not readily accept
responsibility to pay for rectifying problems generally seen as being not of
their making. The EA and LLFA will need to coordinate funding partnerships.
One way of increasing incentives to invest in flood risk management schemes
would be for insurance companies to guarantee a reduction in premiums to
those affected. Insurance companies may need to take a more active role in
planning and investing in flood risk management along with the EA and LLFA.
Revenue Support Grant (RSG) or whatever it now might be called? Is
allocated to LA’s to provide funding source for ongoing maintenance etc. but
in the past hasn’t been ring-fenced for this sort of work and consequently has
often been “redirected” to other seemingly more pressing areas of Council
business. In the future this money will be important to provide that ongoing
provision for maintenance without which funding may not be supportive
through FDGiA as this is not intended to replace years of underinvestment in
day to day repair.
8 Do you have any comments or suggestions on the role of RFCCs and
the local levy?
The RFCCs have a role to play in coordinating the allocation of funds across a
region, particularly with respect to schemes that cross LLFA boundaries.
The new coastal role is a challenging one and the RFCCs will need to take
account of the Shoreline Management Plans along with the Catchment Flood
Management Plans, Surface Water Management Plans and Local Flood Risk
Management Plans in addition to Outcomes of Measures.
There may be a case for the LLFAs to have a greater say in the allocation of
local levy funds, as it is the LLFA that is responsible for local flood risk
management strategies, plans and actions.
Local Levy via the RFCC could be a useful way of “seed” funding potential
FDGiA schemes to provide initial justification. This in turn can then help
prioritise schemes/larger studies on the MTP which might otherwise have
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been below the consideration level.
9 Do you have any comments on the analysis in Section 6, or your own
views of the potential benefits and risks of the ‘payment for outcomes’
approach?
We are unsure of the statement: “In every case, projects would only be
deferred if the local area, local flood risk partnership and the RFCC between
them all decide that the benefits are not sufficient to warrant the remaining
costs involved, in lieu of other priorities at that time”. Surely a scheme can
still be deferred by the RFCC, even though the local area/community believe it
should go forward but are unable to secure the necessary match-funding or
cost efficiencies to meet the formula requirements and so anticipate the local
levy being used to support the scheme.
The RFCC will need to consider how proposed schemes fit in with local
strategies, as well as the other factors mentioned when deciding how to
allocate top-up funds from the local levy or recommend deferment. The
priorities for a LLFA may not fit entirely with the payment for outcomes
formula.
Whilst the inclusion of infrastructure and businesses in the OM is welcome,
the fund ratio of 18:1 does not reflect the importance of some assets to
isolated communities where the road link for instance effectively acts as the
only means of access and would impact the community functioning capacity
and economy disproportionately to one where several roads could act as
alternatives. Likewise, where a business below may be flooded, this in itself
might reflect the 18:1 inclusion but often in these coastal villages, the lower
floor is also the only access to the upper floor which may be residential but
unusable/inaccessible due to damage to the lower floor. Whilst we accept the
principle of the lower rate for infrastructure and business premises generally,
it would be useful to have some flexibility to enable a special case to be made
in certain circumstances (this may be achievable through Moderation but not
clear as my interpretation of this is that is strengthens the overall case but
would not improve scoring).
10 Do you have any suggestions for improving the way a payment for
outcomes systems might work?
Ultimately, the goals are only achievable if the funding is available.
The LLFAs are charged with determining Local Flood Risk Management
Strategies. These then need to be turned into Actions. The inclusion of local
flood risk issues, such as surface water and property level resilience within
the FDGiA system is welcome, but will lead to an increase in the number of
applications for funding. Central government funding for FDGiA should
actually be increased in order to provide the same level of commitment across
a wider remit.
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To provide economy of scale it would be useful to be able to combine
schemes/studies where works of a similar repetitive nature allow e.g. a
condition survey of multiple harbour sites.
Overall, we agree that the proposed system should lead to a larger number of
schemes becoming realised, but the ability to raise other sources of funding
and efficiency savings may be over-optimistic.
LLFAs will need to put extra resources into the preparation of funding bids
and the coordination of local groups and funding streams.
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