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Healey announces £31m restoration fund for flood-hit communities

Floods Recovery Minister John Healey today said that all the extra money the UK is receiving from the European Union (EU) to help with flood recovery will be passed on to communities affected by last summer's floods.

Mr Healey announced that the Government was able to set up a Restoration Fund of almost £31 million for English local authorities affected by last summer's flood to support their continued efforts to rebuild their communities because of the success of the UK in bidding for the European Union Solidarity Fund. This money is the net receipt from Europe and is on top of up to £88 million already made available to flood-hit areas to help them get back on their feet - with more financial support to follow. Funding will also be allocated to the Northern Irish and Welsh devolved administrations in line with the damage they suffered.

Clearance was given for the funding on 7 April, when the European Commission approved the amended EU Budget, and today we will consult local authorities on how it will be distributed. The new fund will be made available to Local Authorities, Police Authorities, Fire and Rescue Authorities on the basis of costs incurred in dealing with the problems since the summer. Local authorities will be free to spend this money as they decide according to local priorities. They are best placed to take these decisions.

Government will account for the spending of the European Union Solidarity Fund directly to the EU which means local authorities can continue to get on with the job of leading recovery efforts in their communities without having to deal with additional bureaucracy and associated costs or strict rules the EUSF involves.

The European Commission approved payment to the UK of around £110 million from the European Union Solidarity Fund, as a contribution to the costs of recovery. However, due to the UK 'abatement mechanism', agreed between Government and the EU and in place since 1984, the net value to the UK of this allocation is an extra £31m. John Healey confirmed that all this extra funding received from the EU will be paid to flood-hit local areas.

John Healey said:

"Last summer's exceptional floods caused widespread damage and misery for thousands of people. But the response was equally exceptional - from local authorities and other local agencies, the fire and rescue service, the military and neighbours helping each other. Government played its part and we have made up to £88 million available so far to help flood-hit communities get back on their feet.

"Building on the immediate recovery work, the Government is today announcing a further £31 million Restoration Fund for local authorities to help affected communities. This extra money comes from the application I submitted to the European Union Solidarity Fund. This fund was set up specifically to help towards the costs in countries who have experienced extensive damage from natural disasters such as floods. We have worked closely with the Commission on this application and I went to Brussels myself to discuss and promote it. So I welcome the EU's decision to clear the funding to the UK and, in particular, I would like to thank Commissioner Hubner for the key role she played in securing it.

"The EU Solidarity Fund grant is set up to help with the public costs incurred in the immediate recovery from the floods. However it is right that communities themselves should benefit from all of this additional money and so I am today confirming a new Restoration Fund of almost £31 million for local authorities. This will be made available to local authorities, police authorities and fire and rescue authorities on the basis of costs incurred in dealing with the problems since the summer. Because central Government will formally account for the EUSF grant, local government can be free to use this money as they see fit to ensure it makes a real difference."

Local authorities will be consulted on how to allocate this money. Authorities will be asked about the costs they have incurred to help us take decisions about payments to be made to them in due course.

Notes to editors

1. Following the floods the Government submitted an application for funding from the European Union Solidarity Fund. The European Commission recently approved payment of around £110 million as a contribution to the costs of recovery.

2. Due to the UK abatement mechanism, agreed between Government and the EU and in place since 1984, the net value to the UK of this allocation is around £31m, of this a small amount will go to Wales and Northern Ireland, which is in proportion to the level of damage incurred between the three countries. The net value to the UK is around one third of the EUSF payment. It is calculated as the full benefit (around £110m) minus the UK contribution through the EC Budget (around £19m) and the resultant reduction to the UK abatement (around £60m).

3. The UK abatement is an important mechanism to promote fairness with respect to the UK's contribution to the EC budget. It is calculated by the Commission each year on the basis of a formula contained in the Own Resources Decision and does not permit individual exemptions. By the end of 2007-08 it is estimated that the abatement has been worth around £55 billion to Britain since its introduction in 1984 and is forecast to be worth an average of around €6bn per year in the current EC Budget period (2007-13).

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