Submission to Call for Evidence on the Government’s approach to flood risk of inland flooding in England by the Environment Food and Rural Affairs Committee

On 4 March 2020 the House of Commons Environment Food and Rural Affairs Select Committee launched an inquiry scrutinising the Government’s plans for flood risk management in England. Building on the lessons learned from the 2019/20 winter weather, MPs will question the level of Government investment, the involvement of affected communities in decision making, and how natural flood management measures can be integrated into the Government’s approach. The Committee will also investigate the role of insurance and planning policy in protecting businesses and property from flooding. For more information, see:

This paper summarises the submission to this inquiry by Paola Sakai.

Key messages and recommendations

A unified flood risk management framework for small and medium enterprises (SMEs) is needed urgently, because the negative effects of flooding on SMEs affect entire towns located in flood-risk areas. The Government should prioritise the development of a flood protection policy framework to increase the resilience of SMEs so they are prepared not only for the next flood, but also for future climate change, and other risks.

  • Size matters. Size and turnover should be taken into account when assessing the economic losses of flooding on SMEs and insurance affordability to better understand the extent of the issue. Examining the economic costs relative to turnover and number of employees reveals the real extent of the impacts of flooding on SMEs.
  • Economic costs are significant to towns and cities. The negative consequences of flooding on SMEs exert ripple effects in their communities, thus their protection should be of interest to the wider community, and local and national government.
  • Market failure. Insurers have imperfect information on the economic costs of flooding on SMEs, and the effectiveness of property flood protection.
  • More needs to be done to fill in the gap in the understanding of the economic costs of flooding on SMEs, and the effectiveness of property flood protection. This is key to offering affordable and suitable insurance products in flood-risk areas.
  • Affordable insurance. There is a genuine need to offer better and affordable insurance products to SMEs (particularly the smallest) in flood-risk areas.
  • A new joint partnership of the Government and the insurance industry should be established for towns at flood risk. Insurance could be a driver of self-protection and a driver to unlock investments if it is tied to the take-up of resilience measures and reflected in the price. The Government should seize the opportunity to establish a new scheme focused on SMEs in towns at risk of flooding, and home-based businesses, the smallest businesses and landlords should be prioritised.