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Shadow minister fears Flood Re is ‘a waste of public money’

The UK's Flood Re scheme could prove a waste of public money, according to the shadow minister for environment, food and rural affairs.

Barry Gardiner MP made the comments last week (15 September) when the remaining secondary legislation to make Flood Re fully operational was considered by a House of Commons Delegated Legislation Committee of MPs.

"It is likely that the transition [to risk-reflective pricing] will compromise the availability and affordability of flood insurance, and that needs to be recognised," Gardiner said.

"Flood Re could help to reduce flood risk, the cost of flooding and the pain and suffering of the households that the minister [Rory Stewart] eloquently discussed at the beginning of this debate.

"It does not do those things currently, and I fear that it may well waste public money that could be better spent on reducing those flood risks by increasing our flood defences," he summarised.

Earlier during the debate, Rory Stewart, parliamentary undersecretary of state for environment, food and rural affairs, argued that Flood Re would be a progressive measure that ensured that the least well-off paid less in premiums.

"We were potentially facing a crisis in insurance. All of us would have received emails, letters and pleas from constituents desperately worried about insurance," he added.

The Flood Re scheme will come into effect in April 2016 and is subject to regulatory authorisation from the Prudential Regulation Authority and Financial Conduct Authority.

Flood Re CEO Brendan McCafferty said that the scheme needed to be tested and scrutinised thoroughly if the team was to get it right first time for UK home insurance customers.

"We are delighted to see that MPs have agreed the regulations should proceed to the next stage, which brings the date of Flood Re's designation as the scheme administrator closer," he added.

The committee gave formal and unanimous approval to the draft legislation, which has now moved onto the next stage towards implementation.

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