England’s poorest families are most exposed to the financial consequences of flood events

Expected increases in the frequency and severity of flood events – a consequence of climate change – will hit poorer families hardest due to their lack of insurance cover, according to new research published today (Saturday) by the Resolution Foundation.

The Foundation’s quarterly Housing Outlook notes that it is neighbourhoods with middling levels of deprivation that have the highest chance of flooding – the poorest neighbourhoods are often found in cities, currently less exposed to significant risk of flooding than other types of settlements.

However, the Foundation says around 95,000 homes in the most deprived one-fifth of English neighbourhoods are currently at medium or high risk of flooding.

Although the poorest places are not at highest risk of flooding, lower-income households are most exposed to the financial consequences of a flood when it occurs, the Outlook finds.

Insurance is key for minimising the financial impacts of flooding, yet just one-in-three (33 per cent) of the poorest households currently have contents insurance. A further one-in-three (36 per cent) say that they would like to have contents insurance but are unable to afford it, compared to just 1 per cent of those on the highest incomes.

Concerningly, the Outlook finds that flood-prone areas have seen higher rates of house building in recent years than those where there is no risk of flooding.

Between 2015 and 2021, neighbourhoods that have some risk of flooding from either rivers or the sea saw their housing stock increase around 50 per cent faster than those with no flood risk.

During this period, the majority (56 per cent) of the new homes built in England were in neighbourhoods where some flood risk exists, with 543,000 properties built in areas in which at least one postcode is at medium or high risk of flooding. The Outlook notes however that many of these new homes are in places where demand for housing is especially acute.

The Foundation’s report notes that flood defence spending is currently skewed towards cities and urban areas. This has some benefit for low-income people living in these areas: almost four-in-ten (38 per cent) of the properties benefitting under the 2015-2021 Flood Fisk Capital Investment Programme are located in the most deprived one-fifth of local authorities. However, this focus on cities means that lower-income people living in more rural areas may miss out when it comes to flood defence.

The Foundation says this rising risk of flooding will require policy responses on multiple fronts – from ensuring that the next round of flood defence spending, totalling £5.2 billion out to 2027, reaches deprived neighbourhoods at risk of flooding in rural areas, to ensuring the growing number of new homes being built in at-risk areas as flood-safe as possible.

In the short-term, the Foundation adds that helping low income families afford contents insurance is key.

Jonathan Marshall, Senior Economist at the Resolution Foundation, said:

“Rising rainfall levels, combined with increased rates of house building on flood-prone land, means that serious flooding events will become much more frequent in the UK and that the number of people exposed to flooding will continue to grow.

“This is of particular concern for poorer families who are the least protected from the consequences of flooding, as they are much less likely to possess contents insurance than their wealthier counterparts.

“Tackling the climate change that lies behind much of this increased risk remains a vital long-term goal. But, in the meantime, policy makers must ensure new homes are flood-safe, and that flood defence spending is targeted in a way that helps these at-risk families.

“Improving households’ financial resilience so that those already living with the risk of flooding are better able to afford appropriate levels of contents insurance in case the worst should occur must also be a priority.”