Ministers to abandon 'flood tax' plan

Plans to impose a "flood tax" on two million homes in Britain's low-lying areas are about to be abandoned by the Government amid fears of an electoral backlash.

Plans to impose a "flood tax" on two million homes in Britain's low-lying areas are about to be abandoned by the Government amid fears of an electoral backlash.

The idea of a flood plains levy was raised by a Department for Environment, Food and Rural Affairs (Defra) working group earlier this year as a means of raising funds to improve defences.

Huge sections of Britain, including East Anglia, the Thames Estuary, Humberside, Sussex and Gloucestershire, are liable to flooding but are protected by funding from the general taxpayer. Under the flood plains levy proposal, homeowners and businesses in such areas would be forced to foot the £600m-a-year bill spent on their flood defences.

Ministers have now been advised that the levy will prove impractical and unpopular, in preparation for a Government announcement on an overhaul of flood policy in the autumn. The advice follows warnings from councils that the idea would be "unsustainable". Labour chiefs have said that the party could lose key marginals as a result.

The issue of flooding has risen up the political agenda dramatically in recent years, with the floods of 2000 – the worst in 400 years – affecting some 10,000 homes.

Some experts argued that a flood plains levy would be fairer because it would force parts of the country that benefit from investment to pay for it. But ministers now favour two other options: a levy on developers and a precept-raising power for new regional flood bodies.

Under the plans, developers would have to pay a one-off "connection charge" to fund extra works in the area.

Regional consumer bodies would also be created to take over flood defences from local authorities. They would be made up of councillors from areas surrounding strategic rivers and may be allowed to make funding more transparent by charging a local precept for flooding on top of council tax.

A senior Government source said: "The flood plains levy was an idea from the steering group. It has dropped so far down the list of possible options it is virtually dead."

Derek Bateman, chairman of the Local Government Association's Environment and Regeneration Executive, said: "The most appropriate way would be to allow a precept to be charged. A flood plains levy is just not sustainable."