One year on from some of the worst flooding in 2012, latest research by the Environment Agency reveals that last year’s record-breaking wet year in England could have cost the UK economy close to £600million.
The overall financial cost to businesses of the extreme weather was up to £200m as total commercial property and contents damage totalled up to £84m, and further indirect impacts – such as staff working days lost – hit companies and local economies for up to £33m.
Every affected business was setback an average £60,000
While 1 in 4 days were officially in drought, with 20m people affected by hosepipe bans, flooding occurred 1 in every 5 days last year affecting over 7,000 properties.
The latest assessment on the financial cost of the 2012 floods reveal that every affected business was setback an average £60,000 but flood defences protected 200,000 properties – worth up to £1.7 billion to the UK economy.
In England and Wales, 175,000 businesses are at risk of flooding and, in a recent survey, 1 in 5 members of the Federation of Small Businesses said flooding had had a negative impact on their company over the past 12 months.
Businesses urged to prepare for future flooding
The Environment Agency, as part of its annual Flood Awareness Campaign, is urging businesses to sign up to receive flood warnings and make a flood plan so they are well prepared for periods of extreme weather.
In the wake of the 2012 floods, around 50% of managers have reported to the Chartered Management Institute that severe weather caused disruption to their organisation last year. Nearly two-thirds of UK businesses have also reported that they suffered supply chain problems because of the extreme conditions.
Disruption caused by flooding to transport, communications and utility links in 2012 is estimated to have cost the economy a further £82m.
In the face of more extreme weather businesses are increasingly coming forward to contribute to local flood defences that would otherwise not get full government funding.
Business funding local flood protection projects
The Swiss food giant Nestlé is the latest in a series of private companies to fund local projects to protect their operations and safeguard opportunities to expand.
Over 1,600 homes and businesses are now protected from the River Dove in Derbyshire after Nestlé, which has a factory in the village of Tutbury, contributed nearly £2m to new defences. As a result of the improved flood protection, Nestlé has been able to expand its coffee operations in Staffordshire– creating over 400 jobs.
Since 2011, the partnership funding initiative has attracted nearly £150m of external funding for flood defences, on top of Government’s £2.3billion investment. Other partnership funding schemes underway include a £50m project in Leeds, which will protect 500 businesses and 3,000 city centre flats. The scheme has secured £31m of funding from the Environment Agency and Government as well as £10m from Leeds City Council.
Government funding for flood defences
Chief Secretary to the Treasury, Rt. Hon Danny Alexander MP said: “The Government is getting on with building better flood defences across the country. At the Spending Round we set out long term funding for flood defences, protecting over 300,000 homes over the next 6 years, giving homeowners and businesses security, and unlocking new development and job opportunities.
“The private sector is also doing its part with companies across the UK contributing £148 million to the government’s partnership funding scheme, so that local communities and businesses can share the benefit of better defences, creating a stronger economy and a fairer society for us all.”
Flood Minister Dan Rogerson said: “Flooding can cause lasting damage to property, stock and supply chains. That’s why it’s so important that businesses plan ahead.
“Many businesses are already helping to build a stronger economy in areas previously at risk by contributing £148m in partnership funding.
“On top of this we’re also investing over £2.3 billion in tackling the risk of flooding. Together with contributions from other partners, this is more money than ever before.”
David Rooke, Director of Flood and Coastal Risk Management at the Environment Agency, said: “Extreme events, such as the flooding and drought in 2012, are likely to become more frequent and more severe in the coming decades.
“It is vital that businesses plan for weather impacts to safeguard their operations today and in the future. Every £1 spent on preventing flooding saves £8 in repairing damage.”
Fiona Kendrick, CEO and Chairman at Nestlé UK & Ireland, said: “Nestlé were pleased to support the Lower Dove flood scheme with a £1.65million contribution. The works will provide flood protection for the local community which includes many of our employees, as well as our factory site.
“After more than 100 years on the Tutbury site the factory is developing its operations, creating many hundreds of new jobs.”
The overall economic cost of 2012 flooding
- Damage from flooding of all property is estimated to be up to £277million
- Overall impact on businesses in England was up to £200m (£84m in property damage)
- The indirect impacts on businesses and local economies was up to £33m
- Disruption to transport, communications and utility links was up to £82m