Scots may be hit by ‘flood tax’ due to high risk areas south of the border


By a Newsnet reporter
The heavy rainfall that has caused severe flooding in some areas south of the border will cost people living in Scotland extra premiums on their house insurance.
According to Professor David Crichton, who is an expert on flood prevention, insurance levies for everyone are to go up in order to help keep costs down for homeowners whose properties have been built on areas prone to flooding.

The levy proposal was announced by UK Minister Caroline Spelman last week after flooding caused major damage to property and infrastructure mainly in England, costing insurance firms hundreds of millions of pounds.

Some victims of the recent flooding have seen premiums rise by up to five times, while others have been told they must pay the first £5,000 of any future claim.

Professor Crichton said that discussions in March between the UK Treasury and the Department for Environment, Food and Rural Affairs (DEFRA) resulted in an agreement to increase by 10 per cent the little known subsidies which are paid by all households, regardless of their location.

Insurance companies already add on a small levy to cover the costs of insuring properties in high risk areas.

Speaking on BBC Radio Scotland, the academic claimed that Scots would be hit by the ‘flood tax’ because of the “ignorance” of decision makers in London who were not aware that Scotland had stopped building on flood plains years ago.

Explaining the decision to apply the tax equally north and south of the border, Professor Crichton said: “I think it’s because in London they don’t realise that Scottish local authorities have spent the last twenty years working very hard to reduce flood risk in Scotland.

“Scotland stopped building in flood zones fifteen years ago, whereas in England some eleven per cent of all new housing is in a flood risk area.”

“So I think it’s just ignorance that they don’t realise that Scotland is different when they’re working in London.”

The academic said he warned the Scottish Government and even petitioned the Scottish Parliament back in March regarding the agreement he claims was reached between the two London based bodies without the Scottish government’s knowledge, but had received no response.

Professor Crichton claimed that the issue regarding the improved situation in Scotland was known about amongst insurers and advised potential customers to look out for firms owned in Scotland who he said may offer better premiums.

The levy, according to Professor Crichton, cost on average £35 per year and is unlikely to fall given that building in high risk areas will continue south of the border.

Commening Ashwin Mistry, the chairman of Brokerbility, a network of independent insurance brokers, accused the UK Government of introducing a “stealth tax” instead of dealing with the underlying issue of poor flood defences.

He said topping up the insurance of flood-hit households is simply “papering over the cracks”.

“Should we be subsidising all those in flood zones continuously rather than dealing with the long-term problem?” he said. “The extra cost would range from anything from £10 to £20 more per policy on top of everything else.

“It’s another tax by stealth, rather than addressing the critical issue of climate change and better infrastructure.”