From figures and estimates currently available, the floods and storms that hit the United Kingdom during late 2013 and the first two months of 2014 are likely to cost the UK insurance, small business and transport sectors a combined total of at least £2.5 billion. Furthermore, Oliver Dudok Van Heel, director of Aldersgate Group, suggested in the Guardian that the recent floods could cost the UK economy as a whole as much as £14 billion.
Yet the UK government fiddles while England drowns, trying to avoid the fact that the UK desperately needs to invest in upgrading flood defences.
Shortfall in Flood Defence Funding
The £2.5 billion insurance, small business and transport sector costs of the floods should put flood defence spending into some kind of persepective. But areas of England hit by the recent floods are still struggling to find the money for local flood defence projects.
In Hull, for example, local authorities are currently seeking ways to bridge a £60 million shortfall in the budget for flood defence projects on the Humber.
In Somerset, the UK government announced it will contribute £20 million to a 20-year flood action plan for the Somerset Levels. But according to The Guardian, this is a mere £80 million short of the mark of what is actually required:
…the funding falls far short of the expected £100m total cost of the plan, which includes a tidal barrage across the River Parrett costing £30m, as well as river dredging and raising the level of roads to prevent communities such as Muchelney being cut off by floods.
The Costs so far…
While the UK government ignores the reality, the bills for flood damage have started to come in. We have put together some figures from the insurance, transport and small business sectors in order to get a better picture of the costs of the flooding. Note that the figures do not come from the UK government and therefore should not be considered “official figures”.
Insurance Costs: £1.5 billion
When it comes to costs to the UK insurance industry as a whole, we are still seeing varied estimates. Last month Deloitte said the cost of the clear-up could cost insurers £1 billion. After further flooding, they later revised that figure upwards to £1.5 billion.
Credit Suisse suggest that the insurance costs could reach £1.2bn, whereas Merrill Lynch say it costs could be even steeper at around the £1.5bn mark.
As for individual insurance companies, Aviva Insurance Group say the floods are likely to cost them £120 million. Aviva is Britain’s largest insurer. The group is still heading for a rise in annual profits but the floods will have made a significant dent in that.
Direct Line faces similar costs, and is expecting the floods cost the company between £90 to £110 million. RSA expect costs of between £45 and £60 million from claims related to flooding in the UK.
Small Businesses: £830 million
On Wednesday 5 March, the Federation of Small Businesses (FSB) in UK said that the recent flood events have costs small businesses more than £830m. The losses are as a result of reduced demand, transport disruption, staff absences and flood damage. The FSB said the average cost to each business in flood-hit areas was £1,531.
The figure of £830 million applies only to small businesses. Estimates made by Aldersgate Group, a UK alliance of sustainability leaders from business, politics and society, say the recent floods could cost around £14 billion to the UK economy.
Roads and Transport Infrastructure: £258 million
The endless rain and floods took their toll on England’s roads and left them in a desperate state of repair. Local Councils and authorities responsible for the upkeep or roads require an additional £140 million to fix roads damaged by England’s record wettest winter, which the Government is to fund.
As for the railways, flooding in 2013 alone cost Network Rail (the organisation responsible for railway infrastructure in UK) around £12 million in compensation and a further £15 million in damage repairs. However, after further, prolonged flooding, Network Rail are now faced with extra costs to improve the railway’s ability to withstand extreme weather. Mary Creagh, the UK shadow transport secretary, claims that Network Rail was now facing extra costs of £118m because of the flooding.
17 Dead, 5,000 Homes Flooded
The above is a list of financial or material costs of the floods and storms. This is not to forget the 17 people who lost their lives during the severe weather, nor the 5,000 families who had their homes, possessions and even livelihoods damaged or destroyed in the floods.