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22 February 2016

FSB warns of ‘flood blight’ risk ahead of Ministerial roundtable

The Federation of Small Businesses (FSB) will be taking part in a Ministerial roundtable organised by DEFRA on Tuesday, 23 February. FSB will use the moment to set out concerns from its members that small firms in many areas will be encouraged to relocate. This could leave many local communities being blighted by the risk of flooding.

Earlier this month Rory Stewart, Parliamentary Under-Secretary of State at DEFRA, suggested that: “We do not want to encourage businesses to locate themselves in flood-vulnerable zones if they have a high fixed structural asset cost.”

FSB believes that flood risks should be tackled, defences improved, and flood insurance schemes put in place so that businesses have the confidence to remain as the lynchpins of their local communities. FSB will ask Ministers to back this plan, to reassure small businesses affected by recent floods that they should now rebuild rather than flee to lower-risk areas. Economic growth should not be confined to areas of the country with low flood risks.

Sandra Dexter, Vice Chairman for the Federation of Small Businesses, said:

“A sixth of all UK properties are located on flood plains and FSB estimates that nine per cent (75,000) of smaller businesses at risk of flooding have found it difficult to find flood insurance.

“Discouraging businesses from these areas could lead to flood blight – a situation where whole communities are damaged because the small business infrastructure that holds them together disappears as quickly as the flood waters recede.

“Small businesses provide valuable services, boost the local economy and contribute to employment. A framework should be put in place to support them, rather than encouraging them to move. For many at-risk businesses – particularly those with high fixed structural assets like farms and restaurants – relocation is not a solution.”

The FSB is working with Government and the insurance industry to identify a solution which enables businesses to increase their resilience to flood damage. Insurance may not be the only solution, but it will play a critical role and must be available and affordable to all. Businesses recognise their own responsibility to invest in resilience, but want reassurances that this investment is worthwhile. Linking resilience initiatives to reduced insurance premiums is a workable option.

The Government’s decision to provide millions of pounds worth of emergency grants to affected businesses following the severe winter flood events of 2013/14 and 2015/16 was a welcome one. But FSB argues it would be better if these businesses are able to adequately protect themselves with affordable flood insurance.

Sandra Dexter concluded: “Flood risk is going to increase in future, with many more communities and businesses facing greater risk of damage or disruption. Firms need to adapt, but Government must provide workable pathways to help them reduce this risk and protect against the worst of the financial damage.”