Government submits application for EU flood funding

Published	20 August 2007

The Government has today submitted an application to the European Commission for support from the European Union Solidarity Fund (EUSF) to help recovery from the recent flooding in the UK. Flood Recovery Minister John Healey said that a provisional assessment of damage caused by the June and July floods lies at over €4 billion - significantly above the € 3 billion threshold required for a Member State to make an application.

Whilst this is currently the best working estimate based on work with local authorities and other agencies, the final and confirmed costs will not be known for some time. We will continue to work closely with Government offices and other authorities and agencies to update this information. The application is being submitted today in order to meet the deadline set out by the Commission but the ability to revise information is standard practice when submitting a bid covering a recovery operation of this size.

Although the calculations used to assess whether an application meets the threshold includes insurable costs, the aim of the EUSF is to help Member States meet some of the uninsurable costs of dealing with natural disasters, for example, supporting the costs of emergency services, cleaning up and putting infrastructure back into working order.

The European Commission will decide if the application is successful. If successful we would expect resources to be available in nine to twelve months time.

The Commission do not provide full funding for the cost of damage. They would only provide a proportion of the costs which they decide - insurers will also have a key role to play as well as central government, local government, industry and other agencies playing their part as well.

John Healey MP said:

"This summer's floods caused widespread damage across large parts of the country. The insurance industry estimate that there will be around 45,000 insurance claims from households and 14,500 from businesses with further damage to schools, roads and leisure facilities. There has also been a significant impact on agriculture and the tourist industry.

"A huge amount of work across Government has taken place to support the local recovery operation and help communities get back on their feet. Over £16million has already been paid out to local authorities to help those people most in need, £14million to support schools and family services and £3million has been made available for transport infrastructure. In addition over £10million has been announced to support businesses and local economies including money to promote rural destinations and visitor attractions. More Government help for local authorities will follow through the special Bellwin scheme.

"As part of this cross-Government work we are exercising our right to apply for support from the EU Solidarity Fund and have today submitted a provisional application. This fund was set up specifically to help countries who have experienced extensive damage from natural disasters such as floods. I would like to thank all those authorities and local agencies who have worked hard to help us put together this complex application so swiftly - and within a month of the July floods.

"It will be for the Commission to decide whether our application is successful and this process may take up to a year. If successful we would only receive a proportion of the total costs. That's why it's important we continue to work with insurers, local government, industry and other agencies to ensure life gets back to normal as quickly as possible. We know this will not happen overnight but are firmly committed to working in partnership to achieve this for as long as it takes."

Notes to Editors

The latest figures from the Association of British Insurers on the cost of the June and July floods, and the number of claims received, are as follows:

Total cost: approaching £3bn
Total number of claims: almost 60,000
Total domestic claims: 45,000
Total commercial claims: 14,500

Cost of June floods: £1.5bn
June domestic claims: 27,500 (average cost £30K)
June commercial claims: 7,000 (average cost £90K)

Cost of July floods: almost £1.5bn
July domestic claims: 17,500 (average cost £40K)
July commercial claims: 7,500 (average cost (£90K)

Issues covered in the Government's application for funding from the EUSF include:

The initial flooding began in the Yorkshire and Humber region and Midlands regions being affected on 12 June as areas received a month's precipitation in just 24 hours, with some residents requiring rescue by the RAF as floodwaters rapidly rose. 24,000 residential properties were seriously flooded, with many more affected in some way.
In July further rainfall affected the Midlands and South West England and parts of London, with more than 15,500 residential properties affected. The Association of British Insurers estimate around 60,000 householders will claim on their insurance as a result of the June and July floods.
466 Schools were damaged in the June flooding covering 199,172 pupils and a further 390 schools covering 160,735 pupils were damaged in the July floods. Of these 27 have severe damage with pupils requiring temporary accommodation when the new school year commences in September.
A number of major roads are closed for repairs. Many other minor roads and bridges are still to be repaired and a full survey of roads is currently being carried out.
Many railway lines were submerged or damaged and a number of lines were closed while inspections carried out.
A number of utility sites - including water treatment works and pumping stations - were flooded meaning thousands of households were without running water. The Army was deployed to distribute water to those affected.
Many areas of agricultural land were affected. Some harvests will be considerably lower this year due to the affects on yield and quality.
Livestock has been lost. Other losses include the milk that had to be disposed of due to it not being able to be collected as normal.
Damage has occurred to museums, libraries, archives or galleries in flood hit areas as well as to sports facilities such as public leisure centres, sports clubs and pitches and racecourses.
A number of historic sites have also been affected, for example Birdoswald Roman Fort within the Hadrian's Wall World Heritage Site.
There are also losses to the tourism industry. Areas beyond those actually flooded have been affected resulting in cancelled holidays and trips.
Businesses were affected by both premises being flooded, as well as by people being unable to visit business premises because of roads being closed. More than 4000 businesses were flooded, and the Association of British Insurers expects the industry to receive more than 14,500 claims from business.

The EU Solidarity Fund (EUSF)

The EU Solidarity Fund (EUSF) was established in November 2002 to provide financial assistance in the aftermath of major disasters in Member States and pre-accession countries, which cannot be covered by the regular EC Budget. Under the provisions governing the EUSF up to EUR 1 billion can be provided in a given budget year to fund uninsurable costs including emergency relief and reconstruction operations, above that provided for in the EU's spending plans for the period 2007 to 2013, which are known as the Financial Perspective.

Before a Member State can apply for support from the Fund, the total amount of damages incurred in a major disaster must exceed a certain amount. The EUSF's eligibility threshold for what are termed "National Level Disasters" is for all damages, insurable and uninsurable damage to exceed EUR 3 billion (2002 prices) or 0.6 per cent of the affected country's Gross National Income (GNI) in order to qualify for assistance, whichever is the lower. In the UK's case, the threshold is now € 3.2 billion at current prices.

The assistance from the EUSF is apportioned progressively such that the portion of the damage exceeding the 0.6 per cent GNI threshold gives rise to aid amounting to 6 per cent of total direct damage while the rate is 2.5 per cent for the total direct damage under the threshold. The aid provided - were the thresholds met - would only be a small proportion of the total aid required. Between 2002 and 2005, member States have received from the Fund between 2.5 per cent and 5 per cent of the total damage suffered - so if the UK's total damage is £2.5bn, we might expect between £62.5 million and £125 million.

Application Process

The UK has to complete a detailed application form including a description of which of the UK was affected, the economic and social repercussions of the disaster and the total amount of direct damage caused.

UK and Commission officials will then discuss the final detail of the application and resolve any issues. The Commission will then carry internal consultations and determine an amount of grant that would be appropriate in the circumstances. The Commission will then recommend a grant for approval by the European Council and European Parliament. The UK and the Commission then sign an agreement on how the grant will be implemented and the money paid.

Any funding received has to be spent within one year of receipt. If the UK receives any money from the Fund, then it will be required to report on what that money has been used for. If not all the money received is spent, then it will have to be returned to the Commission. Likewise, if the expenses for which the Fund is asked to support turn out to be less than we estimated, then any excess payment will have to be reimbursed to the Commission.