Flood risk to commercial property is rising

“Don’t let flooding drown your business.” A worrying message from the Environment Agency following severe gales and rain that swept across the UK in February 2009. So exactly how great a threat does flooding pose to commercial properties? Warnings from the insurance industry that it may refuse customers in low lying areas suggest the problem is real. Claims that Government is not doing enough to protect both business and residential sites have done little to ease concerns.

Worrying signs were there in 2007 when more than 55,000 homes and firms across central, northern and south west England were devastated by floods, which killed nine people. The insurance industry was left to pick up a £3bn bill on the back of 180,000 claims. The cost to businesses and landlords was of course much greater. Since then, Ministers have repeatedly suggested the £800m a year for flood management by 2010/2011 will allow Government to deal effectively with future crises.

Association of British Insurers On April 2, 2008, the Association of British Insurers (AIB) joined the campaign to raise the level of contingency planning among the 4.3 million small to medium-sized businesses in the UK. The AIB said it recognised many firms were in danger of going out of business due to lack of planning for the unexpected. It claimed more than two thirds had no contingency plan to deal with an emergency such as a major flood.

Launching a business guide at a joint ABI, Department for Business, Enterprise and Regulatory Reform and Defra seminar, Stephen Haddrill, the ABI’s Director General, said: “Small to medium-sized firms are particularly vulnerable to the unexpected event that could bring them down. “We have produced this guide following last summer’s floods, when insurers dealt with over 27,000 claims from flooded firms and paid out £1bn to them.

 “During that time it became clear that many firms had inadequate or no plans in place to help them survive a major incident. I urge all firms to plan for the unexpected – doing so will make the difference between survival and going under should the worst happen.” But the problem with flood defence is it’s about more than local business planning. Large scale investment is the only sure way of protecting properties from rising waters.

Promise Despite the Government’s promise of £1.5bn for flood defences between 2009 and 2011, by November 2008, the ABI was demanding faster action, calling on the Chancellor Alistair Darling to bring forward his spending plans.  
This would protect more properties and help boost expenditure projects to the benefit of the wider economy, the ABI insisted. Investing in flood defences was much less complicated and cumbersome than other capital expenditure projects. And it would allow the Government to quickly inject a fiscal stimulus to the economy.

Stephen Haddrill, the ABI’s Director General, explained: “Turning promises for tomorrow into action today on flood defences makes sense. It will enhance protection for households and businesses from the threat of flooding; is much less complex and contentious than other possible capital projects; and can be rolled out faster.” And then came the February rain – just as the Environment Agency waded in to criticise planning authorities for allowing new builds on flood plains against its advice.

Report On February 9, 2009, the Agency released a report signalling its ‘disappointment’ that 16 major developments, including offices, apartments, a business park and a ferry terminal had gone ahead in 2007 and 2008. The report came as the Agency announced £700m of funding across England, up from £650m in 2008/2009. Projects included:

£3.1m investment in the St Germans pumping station in Norfolk protecting over 20,000 properties and agricultural land valued at £3.6bn;

£4.7m investment in defence work along the River Thames at Deptford and Bermondsey in London;

£3.4m investment to upgrade the Hull Tidal Surge Barrier, which protects 17,000 properties from flooding.

The next day the Environment Agency issued 38 flood warnings as heavy rain, gusting winds and snow hit the South West. More than 48 flood watches were put out as the rainfall threatened to melt existing snow on saturated ground. Landlords, businesses and households were advised to take action to protect themselves and their property from flooding in Devon, Dorset and Somerset.

Met Office The Met Office issued a severe weather. Cornwall and Devon had an average of between 25-35mm of rain with 64mm falling at Yeolmbridge in Cornwall.

In Somerset and Bristol, rainfall ranged between 15 to 41mm, with an average of 25mm, with Dorset and Wiltshire having between 22 to 35mm of rain in 24 hours. River levels continued to rise on the River Stour, Hampshire Avon and Wylye.

On February 12, more warnings were issued and fears grew about areas surrounding the River Thames. To protect Windsor, Eton and Maidenhead the Flood Alleviation scheme on the Jubilee River was put into operation. The scheme had also opened in July 2007 and January 2008. Homes and businesses along the River Thames, from Shiplake to Hurley Lock, including Lower Shiplake, Wargrave, Henley and Medmenham were affected.

On Friday February 13, the Thames region remained at risk and The Thames Barrier closed to protect Central London from flooding – the fifth time in a week and only the 114th since it became operational in 1982. There were other successes too. Washlands Flood Storage Area was operated over successive tides to draw down the level of water in a reservoir protecting a car factory, in Dagenham, East London, and 570 local properties.

East Peckham Properties in East Peckham were saved from certain flood thanks to a dam that was called into action for the first time since it was built. Built in November 2005 and costing £1m, it was designed to protect 50 houses and businesses from the Coult Stream. Sue Chalkley chair of the East Peckham flood group said: “It is a huge relief to know it is working and that when it rains we can relax a bit more.”

Almost 50,000 warnings were issued via phone and text message and people were urged to listen to local news and weather forecasts and remain vigilant each day during the February floods. Summertime is here, but the alarms bells are still ringing. The message from the Environment Agency to commercial property owners and businesses is take your own steps to protect assets.

“Businesses are more likely to flood than to burn down,” said an EA spokesman. “Floods are one of the most common of all disasters and are growing in frequency and severity due to the impact of global warming.”

Expect more Government funding to be announced sometime over the next 12 months. Advice for landlords and owners in the meantime: Find out if properties are at risk from flooding; find out about flood warnings; plan to prepare property and minimise financial risks.