Industry fears further cuts in the comprehensive spending review

The government has slashed a further £15m from flood defence programmes despite repeated warnings that more cash investment is desperately needed, Insurance Times has learned.

The cuts from Defra's 2007/2008 flood budget come just months after £15m was slashed from the 2006/2007 finances. The complexity of the sums led industry leaders to assume an increase had been implemented. But further scrutiny reveals that the cuts are in place for the second year running.

Alan Gairns, property development manager for Royal & Sun Alliance, raised fears that further cuts could be made to the budget during the 2007 comprehensive spending review.

"What is concerning is that it is less money this year and the signal is that there will be lower figures in the spending review," said Gairns. "It is moving in the wrong direction.

"The biggest threat is to existing build and, because we have had three years of benign weather, the eye has been taken off the ball."

But the ABI said it was in "ongoing discussions" with government and insisted its concerns were "being listened to".

"Being pragmatic, we understand that there are pressures on the budget," an ABI spokesman said. "But we will not stop applying pressure for increased funding."

In 2004 the Department of Trade and Industry (DTI) carried out the biggest research project to date into the impact of flooding in the 21st centry.

The Foresight Future Flooding report concluded budgets should be increased immediately year on year by between £10m and £30m. It is a recommendation which has been ignored.

Neither has there been consideration of the 2006 Stern Review which called for increased funding.

The Treasury has also not taken into account inflation increases since prior to 2004.