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Last Updated: Wednesday, 10 October 2007, 18:14 GMT 19:14 UK
Flood defence money 'falls short'
A flooded village near Sheffield, South Yorkshire
Many parts of the UK were left under water in the summer floods
Insurers say they may not be able to provide cover despite the government pledging more money for flood defences.

The Association of British Insurers says the 800m a year the chancellor has pledged by 2011 is not enough.

Environment Secretary Hilary Benn said the 800m allocation was announced in July, and that the government had doubled investment in the last decade.

Parts of south-west England, the Midlands and Yorkshire were left under water during the summer.

On Monday, AA Insurance said home insurance costs had risen at their fastest rate since 1994 as a result of the flooding.

Buildings premiums jumped by 3% in the past quarter, reflecting the estimated 3bn cost of flood damage across much of the UK in June and July.

We actually announced more than the ABI was calling for at the time. The really important task is to get on with spending that
Alistair Darling
Chancellor

ABI director general Stephen Haddrill said the money pledged by Alistair Darling in Tuesday's Comprehensive Spending Review was so low that it could lead to a review of insurance services in the UK.

"We really want to carry on being able to provide this service. But obviously we can't keep providing it at significant loss.

"So what we are going to be looking for from the government is a recognition of what happened this summer and an increase on the level they have announced today," Mr Haddrill said.

'Deeply unhelpful'

But Mr Benn told BBC News: "The 800m that I announced to the House of Commons on 2 July followed a call from the Association of British Insurers in June of this year for us to get to 750m.

"So we actually announced more than the ABI was calling for at the time. The really important task is to get on with spending that."

Before this year's flooding crisis, the ABI had called for the government to spend 2.25bn on flood defences during the coming three years - the equivalent of 750m a year.

It's not Christmas and birthday yet, it's good but it's not the end of the road
Baroness Young

But Mr Darling has announced spending between 2008 and 2011 which will total just 2.15bn. The amount spent will rise incrementally from 600m this year to 650m in 2008/9, 700m in 2009/10 and then 800m in 2010/11.

Former home secretary David Blunkett, whose Sheffield constituency was among areas badly hit by floods in June, said the ABI's comments were "deeply unhelpful".

Speaking during Prime Minister's Questions, he said: "It will lead people to conclude that the industry wishes to remove any commercial risk to their own profits and place that risk instead in the current and future policy holders."

Meanwhile, head of the Environment Agency Baroness Young has told MPs on the Environment, Food and Rural Affairs Committee that she welcomed the extra funding - but more would be needed to cope with climate change and increased building developments.

"It's not Christmas and birthday yet. It's good but it's not the end of the road," she said.

It would help clear the backlog of communities which currently did not have sufficient defences - like Leeds - and to pay for more maintenance of existing defences, she said.

She said money had to be prioritised on densely populated urban areas and said several billion pounds might have to be spent on bringing the Thames Barrier "up to scratch".

Drainage questions

INSURANCE COSTS OF EXTREME WEATHER

Date Incident 2007 cost (m)*
Dec '81-Jan'82 Arctic weather/rapid thaw 630
Jan '87 Severe snow nationwide 551
15-16 Oct '87 Hurricane force winds hit SE England 2,089
Jan/Feb '90 Storms and flooding 3,370
Dec '95-Jan '96 Severe snow, Scotland and NE hit 427
Jan '05 Carlisle floods 259
Jun-Jul '07 Floods 3,000**

Note: * Actual cost of insurance claims paid, rounded up to 2007 figures.
** Estimated figure.



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