Government announces £3 million to support local authorities with IDB levies

Government announces £3 million to support local authorities with IDB levies

On 16 May 2023 Lee Rowley MP, Parliamentary Under-Secretary of State for Local Government & Building Safety in the Department for Levelling Up, Housing & Communities published a statement on Local Government Finance relating to internal drainage board special levies.

The statement announced a further £3 million in grant funding for 2023/24 to support 15 local authorities significantly impacted by increases in special levies made by IDBs. This funding is additional to the overall Local Government Finance Settlement for 2023/24 made on 6 February 2023. The 15 local authorities in scope are those whose IDB levies account for over 3% of their average Core Spending Power over five years.

This is an important announcement for IDBs and those local authorities that have faced the most significant funding burdens as a result of increasing energy costs in their essential management of water levels. Councillors and officers from local authorities facing significant increases in IDB special levies had been making representations to DLUHC about these cost pressures.

Welcoming the statement from Minister Rowley, ADA’s Chief Executive, Innes Thomson said:

“We [ADA] are pleased that Government has recognised the unprecedented cost pressures facing IDBs and the key role that IDBs play in protecting our businesses, homes and agriculture.

“IDBs’ compact size, limited reserves, and important flood risk management role, all restricted their ability to absorb these increases alone without cutting back on essential operations, maintenance, and future investment that is needed to adapt to the demands of climate change.

“The announcement is a real endorsement of positive support for the critical role of IDBs, and we look forwards to continuing to work closely with both national and local government to continue IDBs’ vital work.”

It is an important outcome for ADA, which has been active in writing to Ministers within Defra and DLUHC, liaising closely with Defra staff on this matter, and gathering and collating accurate data from every IDB regarding the drainage rates and special levies set for each local authority in 2022/23 and 2023/24. It is this data that has assisted the government in making this sensible decision. Our thanks to every IDB for sharing their data in a timely fashion and providing wider context and information about the costs they are facing that has helped make that case to government.

The cost pressures facing IDBs

Following a year of soaring fuel and electricity costs, IDBs across the country budgeting for the forthcoming financial year set drainage rates and special levies averaging in the region of twelve percent higher . Historically, IDBs have kept their costs low, and indeed for many this has been the first substantial increase in drainage rates and special levies in over a decade.

Broadly speaking those IDBs with a greater proportion of electrically powered pumps have seen the greatest increases in drainage rates and special levy. Pumping water is one of the most energy intensive activities undertaken by flood risk management authorities. The majority of the 620 pumping stations operated by IDBs across lowland England run on electricity, as do the 360 pumping stations run by the Environment Agency.

All these pumps are essential assets for managing water levels that keep our country running, and people and environment defended, especially when weather conditions are at their worst. Too often unbeknown to the general public, these pumps are working hard to keep their feet dry when we are at greatest risk from floods. To reduce the impacts of flooding, these pumps lift water up and out of lowland areas, such as The Fens, into rivers or out to sea, diverting floodwaters to protect people, properties, and the environment. In drought too they move water to supplement supplies elsewhere so that domestic consumers, farmers, and industry continue to have the water they need, whilst also supporting the environment and protecting habitats.

For some IDBs, these energy cost increases have coincided with the conclusion of longer-term contracts that had helped to keep down electricity costs in preceding years, and coupled with rising insurance premiums and wider inflationary pressures that are particularly acute within the engineering sector.

For a more detailed analysis of the cost pressures facing IDBs please read the headline from the Spring 2023 edition of the ADA Gazette.