Fair shares for all?

This was originally published on Peter Delow’s blog, HS2 and the Environment.

For a while this winter politicians and media persons appeared to be falling over themselves to find a stretch of often rather putrid flood water in which to be photographed, wellies decently immersed. Some enterprising TV journalists even managed to buy or borrow a pair of waders so that they could get really stuck in. All of the rubberised legwear has now been returned to the shed (or garage), or rightful owner, and the poor residents of places as widespread as Hemsby, Weybridge, Worcester, Datchet, Torcross, Looe and Muchelney, to name just a selection, have been left to begin the slow process of getting their lives back together. For those on the Somerset Levels the start of the restoration of normality remains largely on hold; they are still waiting for the flood levels to subside.

I was somewhat surprised that the HS2 project became embroiled in the inevitable inquisition. I make no secret of my view that HS2 is an invention of the devil, but even I would blanch at blaming the proposal for all of the rain that we had this winter and the consequential flooding. Nevertheless, comparisons with HS2 just kept cropping up whenever politicians or the media applied themselves to the flooding issue and possible remedies. Now you might think that this was the result of some mischievous lobbying by the campaign against HS2, but as far as I can tell, apart from one reactive press release issued by the HS2 Action Alliance, this was most definitely not the case. The good people of the South West, and those speaking on their behalf, appear to have made the connection all on their own.

The first murmurings against HS2 came with suspicions arising from the situation in the Somerset Levels that the Environment Agency (EA) had been cutting back on maintenance tasks, such as dredging, in order to live within budget reductions imposed by the Government’s spending review. Voicing such opinions led to inevitable denials from the Government that the EA’s budget was being squeezed. This was even the topic of an exchange in the Commons between the Prime Minister and Leader of the Opposition during Prime Minister’s questions on 12^th February, with Mr Cameron claiming an increase in EA budget for 2010-14 over 2006-10 and Mr Miliband pointing out that 550 EA employees dealing with flooding were facing redundancy (see footnote 1).

For the truth of the matter we have to forsake the “Punch and Judy show” and seek the calmer, and somewhat more forensic, arena of a House of Commons Select Committee; to be precise we must refer to an oral evidence session held more than a year ago by the Environment, Food and Rural Affairs Committee – the date was Wednesday 13^th February 2013 – at which the Rt Hon Lord Smith of Finsbury, Chairman of the Environment Agency, and his Director of Flood and Coastal Risk Management, David Rooke, were the witnesses. Lord Smith was asked by the Chairman of the Committee, Anne McIntosh MP, “… can you assure the Committee today that there is no threat of less maintenance being performed, such as regular dredging?”

It would appear that Lord Smith was unable to provide that assurance:

“We will have progressively less money available for maintenance work, as a result of the spending review settlement, over each of the next two years.”

In an ensuing clarification he advised the Committee that the budget for “asset management”, “… is £169 million this year, £146 million next year and £136 million the year after, so it is a slightly reducing line” (see footnote 2).

Later in the session Lord Smith bragged that, “In virtually all the schemes that [the EA] do at the moment, the benefit to cost ratio is 8:1, in terms of the value of property protected in the event of a flood happening.” He described that as “extremely good value” and commented that this BCR “compares very robustly with virtually any other bit of infrastructure development that the Government seeks to undertake” (footnote 3).

What he did not make clear in his evidence, at least not as far as I am concerned, was that the high BCR of 8:1 was achieved in “virtually all the schemes” because this was a lower limit set by HM Treasury to allow a scheme to go ahead. Speaking to Evan Davis on the BBC Radio 4 Todayprogramme on 10^th February (transcript), Lord Smith said:

“It’s a [Treasury] cost-benefit rule that we have to abide by with any flood defence scheme that we do, whether we’re building millions of pounds’ worth of flood defences round a city or whether we’re looking at the dredging of a river. And it has to come to at least £8 of benefit to every £1 of cost. And on the basis of that calculation, it’s determined what we can contribute to any particular flood scheme.”

He further explained that twelve months ago the EA had been prepared to put up £400,000, the maximum allowed under the Treasury rules, for work on the Somerset Levels, including dredging, but that it had been unable to raise the balance of the funds needed for the work from other sources – he didn’t say how much of a top-up was required, though.

Faced with this evidence from the horse’s mouth that flood defence work that might have reduced the devastation in the Somerset Levels had not been carried out due to a lack of funds, I suppose that I shouldn’t really have been surprised that some people, including a number of journalists, were drawn to make the comparison with the HS2 project. After all HS2 appears to be an enterprise that is getting special treatment from HM Treasury (footnote 4). Shortage of money does not appear to be an issue for HS2 Ltd; the company has recently appointed Simon Kirby as Chief Executive on a salary of £750,000 (six times the salary of the previous incumbent) and is luxuriating in a budgetfor the current year of around £150 million. It will also not have escaped your notice that HS2 is struggling to achieve a (claimed) BCR of 2:1, let alone 8:1.

I’m not totally sure that such comparisons are entirely fair or relevant – this is something that supporters of HS2 have not been slow in pointing out – but they do bear witness perhaps to how unpopular the project has become, in that it appears to be taking the role of general whipping boy.

An article by London Evening Standard property and planning correspondent and columnist forThe Independent, Mira Bar Hillel, is typical. Under a headline that calls for the Government to “divert the HS2 budget now” she concludes:

“So here we have it: a desperate – and extremely popular – cause without a budget [flood defences and support for flood victims], and a huge budget with a controversial – and arguably redundant – cause [HS2].  A marriage made in heaven. Let the banns be read!”

Footnotes:

1. The exchange is reported in columns 839 to 842 of the House of Commons Official Report for12^th February 2014.
2. Refer to Q94, and the answer thereto, in the Minutes of Evidence (HC 330) of the Environment, Food and Rural Affairs Committee.
3. Refer to the answer to Q100 in HC 330.
4. As I reported in my blog Meanwhile, in another committee room, part 2 (posted 20 Aug 2013), in the words of the Chairman of the Commons Treasury Committee, Andrew Tyrie MP, “it has got a bye”.