A couple promote the Piccola Venezia Italian restaurant by rowing their gondola through flood waters on February 12, 2014 in Datchet. Photograph: Getty Images.
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Borrowing is the best way to pay for flood protection

As flood defences provide protection for many years to come, it is wholly appropriate to pay for them gradually with long-term borrowing.

Economics is not called the dismal science for nothing. As we watch the shocking images of filthy water pouring into homes and distressed residents leaving in rubber dinghies, economists are already debating what this means for the next GDP figures. This highlights the shortcomings of GDP as a measure of economic progress, but looking at the wider economic impacts can help us deal with the challenges posed by the floods.

Let us start with GDP and the surprising fact that natural disasters can be good for GDP, at least in months that follow. In the case of the floods, there will need to be a lot of extra spending by households, businesses, insurance companies and the government to clean-up and restore damaged property and infrastructure. Some things will work in the other direction, for instance if a lot of people are unable to work due to the floods, but it will be no big surprise if GDP is pushed up for a while.

But as ever in economics, there is no free lunch and someone will have to pick up the tab. If households are not fully insured, it will be them. If they have cover, it will be the insurance companies and, in turn, the owners of these companies, which may include our pension funds. The government will also need to stump up for the cost of repairing public infrastructure. For some households and the government it may mean taking on more debt, while for others it may mean running down savings. In economic terms, the cost of making good the damage caused by the floods will be to lower the UK’s net wealth.

As the crisis is still unfolding, we don’t yet know how big a dent it will make in UK wealth. Some reports have suggested that it may cost insurers up to £1bn but there will also be uninsured losses for some households and substantial damage to public infrastructure. Of course, none of these losses take any account of the human cost of having one’s home flooded.

If climate change leads to more winters like this one, we are going to experience more frequent hits to the country’s wealth. Taking a longer perspective, we need to play our part in decarbonising the world economy to try to keep climate change within reasonable limits. More immediately, we need to prepare for the problems that even moderate levels of climate change may bring, such as increased winter rainfall. 

While the Environment Agency has a long term investment strategy to protect us against flooding and coastal erosion, not enough is being spent to prevent increasing numbers of households being at risk of serious flooding. The Committee on Climate Change estimate that we should have spent over £0.5bn more on flood defences between 2011-15 and that this under-spending could lead to avoidable flood damages of around £3bn in the coming years.

Naturally, there is a need for a rigorous economic appraisal to ensure that each flood defence scheme makes sense, but we should not set the bar too high. These schemes are now expected to show an incredibly high average of £8 of damage avoided for every £1 spent by the government. Compare this with HS2, where most estimates suggest benefits of around £2 for every £1 spent. 

The sums of money that we need to spend on flood defences are not even that large in comparison with overall government spending. For instance, if we were to spend an extra £250m a year over the next five years to make up for the past shortfall and return spending to the Environment Agency’s plan, this would raise annual government spending by less than 0.04 per cent. While this could be covered by lower spending elsewhere or higher taxation, we could also simply accept slightly more government borrowing. Given the small sums involved, it need not derail plans to balance the budget in the next parliament.

Indeed, as flood defences provide protection for many years to come, it seems wholly appropriate to pay for them gradually with long-term borrowing by issuing 30 or even 50 year gilts, especially when the cost of financing is so low. This would mean that the burden would not only fall on the current generation of taxpayers, but would be spread across the current and future beneficiaries of the flood defences.  

The shocking flooding across large parts of our country must focus minds on the urgent need to improve our defences. The economic and human costs of flooding are real and cannot be masked by any short-term rise in GDP. We need to be prepared to make sensible investments to protect the country’s wealth from its increasingly dismal winter weather.

Julian Morgan is chief economist of Green Alliance

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The quiet civil war for control of the Labour grassroots machine

The party's newly empowered far left is trying to wrest control of local branches.

“Party time! PARTY TIME!” A young man wearing a Jeremy Corbyn t-shirt appears on screen and starts dancing, accompanied by flashing emojis of a red rose and a party popper.

“There’s only one game in town and it’s getting our boy J Corbz into Downing Street”, he announces, and to do that, he is planning to explain the “nitty gritty” of local Labour politics, and, promisingly, “give a little gossip on the way”. The man is Michael Walker of online left-wing outlet Novara Media, and the video has been watched more than 38,000 times on Facebook in just two weeks.

So why should Labour members suddenly be made to care about “structures, factions, conference, selections, rule changes”? “There were shedloads of people who got involved in the Labour Party for the first time by knocking on doors during the general election,” Walker explains, “but to make sure that the Labour Party represents their voices as it goes forward, they’re going to need to take getting involved in Labour’s bureaucratic structures seriously.

“There’s a risk that the party structures and bureaucracy will try and shut down participation in the Labour Party just like they did last summer, and we want to make sure that it can’t happen again.”

While the Parliamentary Labour Party is going into recess as a more united group since the election than it had been in the past two years, there is a quiet war still being fought at local level. Now that their man has proved that he could exceed expectations and turn Labour into a solid opposition, Corbynites want to make sure that the centrists cannot keep a hold on the internal party machine.

This involves projects like Walker’s catchy videos, and Momentum’s Your Labour Conference website, which encourages members to get interested in the election of the conference arrangements committee, in order to have more of a say on what gets discussed at the party’s annual conference.

“We recognise the fact that sometimes the Labour Party can be a bit of a labyrinth and something which can be pretty hard to work out, and we want to push people forward and help them get more involved,” a Momentum spokesperson says. “We’re trying to make it more open and more accessible to younger people and help people understand what’s going on.”

With tens of thousands of people joining Labour over the past few months – including around 20,000 since the election – their intentions seem noble: the Labour party internal structure is, after all, notoriously complex. However, it isn’t clear how the existing members who are involved in local organising – a lot of whom are or were until recently sceptical of Corbyn – will deal with this new influx of activists.

“Corbyn supporters are no longer the underdog in the party, and understandably people who joined recently are highly motivated to get their opinions across, so they’ve been turning up in droves at local meetings,” says Richard Angell, the director of Blairite organisation Progress.

“They’re not brilliantly organised but they’re there, and they turned up with this sense of 'we told you so', so they’re starting to win things that they wouldn’t have before the election.”

Centrist and centre-left Labour factions have often been the most organised campaigners in constituency Labour parties, and they’re now worried that if they were to get ousted, the party would suffer.

“Lots of our members are the people who hold the CLPs together – lots of people turned up in certain places to campaign, and the people who organised the clipboards, the data, did the work to make that happen are still a network of moderates,” Angell adds. “If Momentum tried to sweep them away in a vindictive wave of jubilation, it would backfire, and that’s what they have to think about now.”

Though the people at the helm of Momentum have never explicitly called for a takeover of the party at local level, some CLPs are struggling with bitter infighting. Lewisham is home to some of these battlegrounds. With three CLPs in the borough, the local Momentum branch is trying to gain more power in the local parties to implement the changes they want to see at that level.

“There’s an organised left-wing presence in all three CLPs in Lewisham,” a local Momentum organiser, who did not want to be named, says. “We want the CLPs to become outward-looking campaigning bodies, and we want them to be functionally democratic.”

What the branch also wants is to have a radical rethink of what Labour does at council level, and the activist was critical of what the councillors have been doing.

“Under the right-wing, Lewisham CLPs never really campaign on anything – they’ll occasionally have these set pieces, like the Labour day of action on education, which is good, but in reality there’s no one going campaigning on anything,” he says.

“The other thing is about the record of the council - no-one would deny that Labour councils are in a difficult situation, in terms of getting cut again and again and again, but equally at the moment, the attitude of a lot of Labour councils in Lewisham at least is 'it’s not just that there’s nothing else we could do, we’re actually going to go further than the Tories are demanding'."

“It’s not just that they’re saying 'oh, there’s not really anything we can do to fight back against cuts' but it’s also that they’ve actually absorbed all the neoliberal stuff.”

The response to these allegations from a long-term Labour member, who wants to remain anonymous but is close to the currently serving councillors, was unsurprising.

“It is utterly absurd to suggest that councillors want to cut services – Labour members stand for council because they want to stand up for their community and protect local services,” he says. 

“As for campaigning and taking on the Tories, it was the 'right-wing' Lewisham Council which took the government to the High Court over their plans to close Lewisham Hospital – and won. The 'right wing' CLPs worked tirelessly with the Save Lewisham Hospital campaign, and we won.”

According to him, Labour is doomed to fail if it doesn’t unite soon, and he worries that left-wing activists may be getting carried away. “The vast majority of members in Lewisham are really pleased with the result and with the way the party pulled together – locally and nationally – for the election campaign,” he says.

“At the second members' meeting after the election, we had a discussion about how we all needed to carry on in the spirit of unity that we'd recently seen, and that if we did so, we have a good chance of seeing a Labour government soon.”

“It's a shame that some people want to label, attack and purge fellow members, rather than working together to beat the Tories. The more they focus on internal, factional in-fighting, the less chance we will have of seeing a Labour government and ending the cuts.”

Beyond the ideological differences which, as the election showed, can mostly be smoothed over when the party senses that it’s getting close to power, an explanation for the Labour left’s occasional bullishness could be its sense of insecurity.

After all, the wave of new members who joined after Corbyn became leader was hardly welcomed by the party’s mainstream, and the narrative quickly turned to Trotskyist entryism instead.

Momentum also spent many of its formative months being treated with suspicion, as a Trojan horse aiming to get MPs deselected, which is yet to happen two years on. Painted as the opposition to the opposition, activists from the Labour’s left had become used to being party pariahs, and need to figure out what to do now that they are in a position of power.

“They’re behaving like an insurgency still, but they’re in charge”, says Angell. “It’s quite a big change in mindset for them, and one I don’t think they’re really ready for.”

“We have shown that we will campaign for the Labour Party anywhere in the country, whoever the candidate is, to try and get the best result in a general election, and there is no acknowledgement of that from them at all.”

This was, amusingly, echoed by the Momentum activist – if there is one thing all factions agree on, it seems to be that the Labour left needs to figure out what it wants from the party machine it’s in the process of inheriting.

“Momentum nationally had a very good election, it mobilised a lot of people to go to marginals, and got a lot of people involved in campaigning, and that’s a step forward, to go from getting people to vote Corbyn to getting them on the doorstep,” he says, “but it’s another step from actually having a vision of how to transform the Labour Party.”

Marie le Conte is a freelance journalist.