Should we be paying for people to live on flood plains?

Unless we want to rehouse hundreds of thousands of people: yes.

Another bucketload of rain emptied over another part of Great Britain has reignited the debate about how and whether the state should spread the risk of flooding.

On the Today programme this morning, Mary Dhonau, a flood campaigner, went to the heart of the matter:

The statement of principles [the deal between the insurance industry and the government, where the industry provides cover and the government provides money and pays for flood defences] is going to expire. It was only ever a temporary sticking plaster…

Now I hear that the talks have broken down. This has the potential to be huge for many flood victims. 200,000 [households] deemed at significant risk of flooding could find that their flood insurance is removed altogether, and then – if we enter a free market – we could enter a crazy market where the normal man on the street will be unable to afford flood insurance. They could also be penalised with huge excesses.

The average insurance claim is about £30,000, so unless we can knock heads together and get government and the industry talking again, and find a suitable solution, then the solution for all the flood victims that I care so much about looks really bleak.

The problem is that there isn't widespread agreement that it would be a bad thing for people who live on flood-plains to be charged the market cost of insuring their homes.

The justification for the state of affairs at the moment is two-fold. Firstly: people currently live in flood plains, in huge numbers. Rendering their housing situation precarious, as it would be if they were unable to purchase flood insurance, would obviously be a really bad idea. And secondly, the country as a whole is experiencing a squeeze on affordable housing which would only get worse if the large number of houses in flood plains became uninhabitable.

However, there are arguments for the alternative side: in the "crazy market" which Dhonau fears, the cost of those houses would fall to a level which rendered the insurance affordable to people moving in to the area. Your choice would be normal priced house with normal priced insurance, or very cheap house with very expensive insurance. That solves the second of the fears, because we wouldn't be rendering those houses unusable – merely ensuring that the owners take the risk they have chosen to assume on themselves.

The big problem isn't the market in equilibrium, but the market at the point of the changeover. That is: the hitch in the policy is that there are 200,000 homes which were bought with the assumption that they would get subsidised insurance, and now may not. When that sort of thing happens to one person, the public policy response is usually "unlucky" – but when it happens to hundreds of thousands, there needs to be a more nuanced response.

As we wrote in July – when Caroline Spelman was apparently on the cusp of announcing a solution, before she was sacked from her role as environment secretary – the problem becomes even more acute if we factor in the fact that flood-prone areas are likely to grow in number:

The problem is that large swathes of the UK are prone to serious flooding. And as climate change bites, that's only going to get worse. It doesn't necessarily mean your house is definitely going to go underwater – if that were the case, you really should move – but it may be enough to render many places uninsurable.

And what then? It's all very well telling, say, the entire population of London, Kent and Essex east of the Thames Barrier that they are prone to flooding, but that isn't going to lead to them moving. Or, even worse, it might; Britain would be subject to development pressures like never before if that were the case.

With the comparatively small numbers involved, it may be possible to come up with some sort of legacy insurance – where your rate is subsidised provided you moved into the area before a certain date – which would impact the resale value of your home, but not render you without insurance while you still live there. But that solution isn't really scaleable.

Instead, the situation we are in is that we want people to carry on living in flood plains, because moving hundreds of thousands of people is basically impossible, but we also want them to have insurance, because otherwise we are one flood away from an even bigger crisis. And with those two priorities, it seems like spreading the cost out over the entire nation is the only real solution we have.

In the long run, there are things we can do: we can exempt new builds on flood plains from that subsidy; we can require gradually stricter "flood-resilience", as Mary Dhonau's house has, to qualify for the subsidy; we can even phase out the subsidy entirely, ensuring that we don't render any one generation suddenly homeless or uninsured. But in the short run – and the "principles" expire in just six months – there isn't much we can do other than carry on as we are. While that does mean we continue to (slightly counter-productively) subsidise people to live in flood plains, it is the least worst option.

Anne Bartlett and her dog Henry look out from their flooded property in the centre of the village of Ruishton, near Taunton. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
Show Hide image

How a small tax rise exposed the SNP's anti-austerity talk for just that

The SNP refuse to use their extra powers to lessen austerity, says Kezia Dugdale.

"We will demand an alternative to slash and burn austerity."

With those few words, Nicola Sturgeon sought to reassure the people of England, Wales and Northern Ireland last year that the SNP were a party opposed to public spending cuts. We all remember the general election TV debates, where the First Minister built her celebrity as the leader of the anti-austerity cause.

Last week, though, she was found out. When faced with the choice between using the powers of the Scottish Parliament to invest in the future or imposing cuts to our schools, Nicola Sturgeon chose cuts. Incredible as it sounds the SNP stood shoulder to shoulder with the Tories to vote for hundreds of millions of pounds worth of cuts to schools and other vital public services, rather than asking people to pay a little bit more to invest. That's not the choice of an anti-austerity pin-up. It's a sell-out.

People living outside of Scotland may not be fully aware of the significant shift that has taken place in politics north of the border in the last week. The days of grievance and blaming someone else for decisions made in Scotland appear to be coming to an end.

The SNP's budget is currently making its way through the Scottish Parliament. It will impose hundreds of millions of pounds of cuts to local public services - including our schools. We don't know what cuts the SNP are planning for future years because they are only presenting a one year budget to get them through the election, but we know from the experts that the biggest cuts are likely to come in 2017/18 and 2018/19. For unprotected budgets like education that could mean cuts of 16 per cent.

It doesn't have to be this way, though. The Scottish Parliament has the power to stop these cuts, if only we have the political will to act. Last week I did just that.

I set out a plan, using the new powers we have today, to set a Scottish rate of income tax 1p higher than that set by George Osborne. This would raise an extra half a billion pounds, giving us the chance to stop the cuts to education and other services. Labour would protect education funding in real terms over the next five years in Scotland. Faced with the choice of asking people to pay a little bit more to invest or carrying on with the SNP's cuts, the choice was pretty simple for me - I won't support cuts to our nation’s future prosperity.

Being told by commentators across the political spectrum that my plan is bold should normally set alarm bells ringing. Bold is usually code for saying something unpopular. In reality, it's pretty simple - how can I say I am against cuts but refuse to use the powers we have to stop them?

Experts - including Professors David Bell and David Eiser of the University of Stirling; the Resolution Foundation; and IPPR Scotland - have said our plan is fair because the wealthiest few would pay the most. Trade unions have backed our proposal, because they recognise the damage hundreds of millions of pounds of cuts will do to our schools and the jobs it will cost.

Council leaders have said our plan to pay £100 cashback to low income taxpayers - including pensioners - to ensure they benefit from this plan is workable.

The silliest of all the SNP's objections is that they won't back our plan because the poorest shouldn't have to pay the price of Tory austerity. The idea that imposing hundreds of millions of pounds of spending cuts on our schools and public services won't make the poorest pay is risible. It's not just the poorest who will lose out from cuts to education. Every single family and business in Scotland would benefit from having a world class education system that gives our young the skills they need to make their way in the world.

The next time we hear Nicola Sturgeon talk up her anti-austerity credentials, people should remember how she did nothing when she had the chance to end austerity. Until now it may have been acceptable to say you are opposed to spending cuts but doing nothing to stop them. Those days are rapidly coming to a close. It makes for the most important, and most interesting, election we’ve had in Scotland.

Kezia Dugdale is leader of Scottish Labour.