I understand the noble Baroness’s concerns, and I will take that back to my colleagues in the department.
Flood Re was designed to provide available and affordable insurance for households. It does not cover businesses. Business insurance operates differently from
household insurance: it is often bespoke, based on the individual nature of the business. Flood Re is funded via a levy on UK household insurers. Expanding its scope to cover businesses would create a new levy on businesses and could result in businesses across the country—and, indirectly, customers—subsidising profit-making organisations in locations at flood risk. Often, businesses placed near rivers or the coast benefit from their position.
There is no evidence of a systematic problem for businesses at high flood risk accessing insurance, but I appreciate that this is an issue for some. Businesses in high flood risk areas can shop around for the best insurance quote and can use alternative brokers. A number of innovative products are offered to businesses by the industry, including insurers that offer increased flood excess with reduced premiums, and parametric insurance, which allows property owners to set the level of premiums in line with an agreed level of risk.
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The Government are working with the insurance industry and the wider commercial sector, through the joint government and industry property flood resilience round table, to help businesses become more resilient to flooding. The Government have also committed to set policy direction for property flood resilience measures that supports consumer and industry confidence, and therefore increases take-up. I hope that this explanation provides enough reassurance to allow the noble Baroness not to move her amendment.
I turn now to Amendment 312K, tabled by my noble friend Lady McIntosh of Pickering, which would prevent planning permission for residential development in high-risk flood areas and functional floodplains, which are described as flood zone 3a and flood zone 3b, as assessed by the Environment Agency. The Government recognise that flooding presents a risk to people, homes, villages, towns and cities; it goes right to the heart of our communities, so the Government take this risk very seriously. The National Planning Policy Framework sets out a clear, overarching policy on flood risk. It states that inappropriate development in areas at risk of flooding, whether an existing or a potential risk, should be avoided, and that, where possible, alternative locations at a lower flood risk should be identified—this is known as the sequential test. Where development is necessary, and where no suitable sites are available in areas with a lower risk of flooding, the proposed development should provide wider sustainability benefits to the community which outweigh the flood risk and be made safe without increasing flood risk elsewhere, and, where possible, reduce flood risk overall—this is the exception test. Where those strict tests are not met, new development should not be allowed.
Three national flood zones are identified by the Environment Agency’s flood map for planning. Flood zone 3, which is commonly referred to as high risk, is split into two separate zones by the local council: flood zone 3a and flood zone 3b. The latter is classified as a functional floodplain and has the highest likelihood of flooding. Large parts of many major towns and cities comprise land classified as flood zone 3. However, I must stress that building on land assessed as high risk is not the same as building on land assessed as a
functional floodplain. It is clear that new housing and most other forms of development are not appropriate in a functional floodplain—flood zone 3b—where water has to flow or be stored in times of flood. The framework is clear that a site-specific flood risk assessment should accompany all proposals in flood zone 3.
This policy approach recognises that it is unrealistic to ban completely all development in flood risk areas, as it would mean that land that could be built on safely could no longer provide the economic opportunities that our coastal and riverside settlements depend on. Instead, trusting our local authorities to make sensible decisions about what development is appropriate in their area ensures that some development can go ahead when it is in the interests of the surrounding area. In addition, where a major development within flood zone 3 is proposed and the Environment Agency raises objections on flood risk grounds, the local council is required to consult the Secretary of State if it is minded to grant planning permission. That provides the Secretary of State an opportunity to call in the decision.
The National Planning Policy Framework was amended in 2021 to make sure that all sources of flood risk need to be considered, including future flood risk, to ensure that any new development is safe for its lifetime, and without increasing the risk of flooding elsewhere. This is supported by the planning practice guidance on flood risk and coastal change, which was significantly revised in August 2022 and advises on how to take account of, and address the risks associated with, flooding in the planning process. Through the reforms to the national planning policy consultation, which closed on 2 March this year, we will keep the important flood risk and coastal change aspects of national policy under review to ensure that it is sufficiently robust to keep future development safe from floods and not to increase risk elsewhere.
My noble friend Lord Caithness asked specifically about the flood resilience measures relating to climate change and storm overflows. A significant amount of funding has already been made available to local government, providing it with the opportunity to take a place-based response to climate change reflecting local circumstances.
We will continue to support local government by investing a further £200 million over six years from April 2021 to pilot innovative actions that can improve the long-term flood and coastal resilience of 25 local areas. The building regulations specify that systems which carry rainwater from the roof of a building to a soakaway or some other suitable rainwater outfall area must be adequate for these purposes. Furthermore, they specify the use of flood resilient and resistant construction in flood-prone areas. Therefore, while I appreciate the spirit of these amendments, the Government do not feel they can support them, given the strong use of planning policies and because the amendments may prevent much-needed development from taking place in areas which can be made safe without increasing flood risk elsewhere.
I hope that I have given my noble friend Lady McIntosh enough reassurance not to press her Amendments 291 and 312K, and for the noble Baroness, Lady Hayman, not to press her Amendments 303 to 308.