Biba commits to keep monitoring that funds are spent as promised.

In the Spring Budget of 2016 then chancellor George Osborne raised Insurance Premium Tax (IPT) by 0.5% committing that it would raise £700m to be spent on flood protection measures.

Yesterday (12 June) David Rutley, interim parliamentary under secretary of state for the environment revealed that the Department for Environment, Food and Rural Affairs (Defra) has been allocated £446.6m while the Department for Transport received £150.5m.

There was no clarification of the discrepancy to the £700m figure originally touted.

The figures came in response to a question posed by former insurance broker Craig Tracey MP.

Spending
As well as asking how the funds to boost spending on flood defences and resilience had been allocated Tracey checked how much had actually been spent.

According to Rutley £406.6m of Defra’s funds has already been targeted at specific defence improvements or ways of better managing flood risk with a decision on the remaining £40m expected this summer.

However only £117.9m had been spent by March.

The Department for Transport has committed £73.7m to be spent in 2018.

One insurance expert explained that it was logical for the Department for Transport to get a slice of the tax raised pointing out that transport links were key to the process.

In their view roads could be modified to make sure water could run off properly in the event of a flood and storm drains could be better maintained to make sure they functioned during heavy rain rather than being blocked.

Monitor
The British Insurance Brokers’ Association (Biba) has previously monitored, via the Treasury, that the money raised was being spent as promised.

Graeme Trudgill, executive director at Biba welcomed the latest news.

“We are happy that the money has been allocated to flood related projects as that was specifically what the increase [in IPT] was for,” he told Insurance Age.

The trade body flagged IPT – which has risen to 12% since 2016 – as an ongoing issue in its most recent manifesto and Trudgill committed that the organisation would continue to keep an eye on the situation.

“Bearing in mind this is a permanent change to IPT we will always want to know in the next spending period what the extra £700m is going on in addition to the normal Defra budget,” he concluded.

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