National Recovery Guidance: economic issues
Guidance primarily aimed at local responders covering some economic issues that may arise during the Recovery Phase of an emergency in the UK.
Economy and business recovery
Business and economic recovery following an emergency can be a complex and potentially long term task. More than 15 months after the Buncefield oil storage depot explosion, several businesses had failed and others were under severe pressure to survive, directly as a result of the fire. The local unemployment rate was higher than before the incident and it was not possible to state how many people or businesses had been deterred from moving to the area as a part of its previously expected growth. Manchester City Centre took years to fully recover after the large IRA bomb in 1996.
The 2001 Foot and Mouth Disease outbreak cost the North West of England approx. £550 million in lost local outputs. The second Foot and Mouth Disease outbreak in 2007 is estimated as costing £10m per week to the farming sector – the effects fall nationwide. In some non-infected areas, the restrictions may cause some livestock farmers to lose between 60 and 90% of their annual income, and breeding cycles may take up to 3 years to recover.
The economy constantly changes, whether that be as a result of, for example, a poor crop yield, the identification of new technologies, or changes in government. Businesses too must constantly evolve to meet the demands of a changing market place. The task of recovering businesses and the economy is not, therefore, the same as recovering a water supply system.
The difference between recovery and regeneration
Recovery Co-ordinating Groups (RCGs) should establish the aims and objectives of the recovery phase at the outset.
After emergencies, the recovery phase will often target the restoration of an affected area to its previous condition, i.e. normalisation. However, there may be a strategic opportunity to go beyond ‘recovery’ and achieve longer-term regeneration and economic development – the approach taken in Carlisle after the floods in 2005 as well as in many other areas.
RCGs should make recommendations to elected local authority members on the opportunities for longer term regeneration and economic development at an early stage of the recovery phase based on consideration of the extent of the damage and the cost of recovery.
Relationships with the business community
Lessons learned from a numbers of incidents show that the strength of the relationship between the local business community and the authorities is often key to success. This strength is most effective when business recovery efforts are driven by existing organisations rather than by the creation of new ones.
The results of the 2011 Chartered Management Institute (CMI) Business Continuity Survey, which has been supported by Cabinet Office (CCS) was published on the 19 March 2009. The Institute’s 2009 report marks a decade of research on the subject. The tenth survey reveals a pressing need for UK organisations to guard against disruption and to be wary of complacency towards possible risks.
The survey shows that 52% of organisations across the UK have a business continuity plan (BCP) - the highest level recorded by the survey. However, the percentage of managers reporting that continuity is regarded as important in their organisation has fallen over the past year from 76% to 64%.
There are many risks that can affect an organisation’s ability to continue their day to day business, and these can affect organisations of all sizes, across all sectors, both directly and indirectly. By following the recommendations contained in this document and by drawing on the help and advice set out at the back of the report, you will be making a first step to mitigate the impact an incident will have on your organisation. This is not only good news for your organisation but for national resilience as a whole.
UK policy and guidance
England and Wales
Business rate relief
Properties that have been particularly badly affected by an emergency may be taken off the rating lists which would mean they have no rates liability. This is something that would be decided by valuation officers of the Valuation Office Agency, and the billing authority (the local authority with responsibility for calculating rates liability and sending out rates demands) would be notified so that they can adjust liability accordingly.
In other cases where non-domestic properties have not been removed from the rating lists, billing authorities can decide whether the properties should be liable for empty property rates – no rates liability for the first three months the property is empty, followed by a 50% reduction in liability – and/or whether to exercise their discretionary powers under Section 49 of the Local Government Finance Act 1998 to grant hardship rate relief in respect of occupied or empty properties.
Hardship relief can be up to 100% of the rate liability. 75% of the cost is met by central government (in other words, less revenue goes into the Department of Communities and Local Government (DCLG) centrally managed non-domestic rating pool). The remaining 25% has to be met by the local authority through council tax, so the authority has to consider the impact that granting hardship relief would have on council tax payers in deciding whether or not to grant it.
Roles and responsibilities
Such is the nature of business support that each region, or major city, will have its own specific economic and business advice organisations. This sheet cannot identify every organisation. It will instead identify and describe the roles and responsibilities of four national organisations:
Each local authority is required to provide economic and business advice and support. Among the activities the local authority is likely to be positively engaged in supporting are:
- business continuity planning
- the assessment of needs
- economic and regeneration support
- supporting links to the business community including the identification of businesses needing support
- funding advice
- advice on property availability
- links to local Chambers of Commerce, Business Links, Regional Development Agencies
- legal advice
Chambers of Commerce
The British Chamber of Commerce is a private organisation with a paid membership. It is not, therefore, a recognised responder. It is included in this sheet, however, because of its recognised role among local businesses, and the significant contribution it has made in previous incidents such as Buncefield and the 2001 Foot and Mouth outbreak.
Each local Chamber of Commerce is a part of the British Chambers of Commerce. This is a national organisation, regionally based, with 56 local chambers. It has a multi-sectoral approach with broad representation across Small and Medium-sized Enterprises (SMEs). Every Chamber sits at the heart of its local business community but achieves national reach and representation.
Members of the Chamber of Commerce can receive the following support:
- making new business contacts
- legal expenses
- business helpline
- HR advice
- health and safety service
- payment services
- risk insurance
Business Link is not a designated responder as directed by the Civil Contingencies Act. It does, however, play a key role in business support and has made a significant contribution to recovery during previous incidents.
The Business Link service is a crucial part of the government’s campaign to promote enterprise and to make the UK the best place in the world to start and grow a business. Business Link is available locally, quality assured regionally, and organised nationally to clear national standards. It is primarily funded by the Department of Business, Enterprise and Regulatory Reform (BERR), supported by a number of other government departments, agencies and local authorities.
Business Link provides information, advice and support to businesses and individuals to help them start, maintain and grow a business. Rather than providing all the advice and help itself, it fast-tracks customers to the expert help they need. This role will be especially important post an emergency.
Business Link will fast-track customers to support and advice on the following:
- Start ups
- finance and grants
- employing people
- health and safety
- IT and e-commerce
- sales and marketing
- international trade
- business continuity and disaster recovery
Regional Development Agencies (RDAs)
The UK employs a system of RDAs to:
- further economic development and regeneration
- promote business efficiency and competitiveness
- promote employment
- enhance the development and application of skills relevant to employment
- contribute to sustainable development
Consequently, each RDA will be very interested and involved in business and economic recovery.
The RDAs are not required responders as defined by the Civil Contingencies Act. They are included in this topic, however, because of their nationally directed role and because of the contribution they have made to recovery post previous incidents.
RDAs provide support and advice on the following:
- economic development and regeneration
- business efficiency, investment and competitiveness
- sustainable development
- links to local or sub-regional development organisations including local authorities, Business Links, Chambers of Commerce and specific regional bodies
One of the important roles RDAs can assist in is the marketing of a region nationally and internationally.
Trade bodies and organisations
In addition to the 4 bodies already mentioned, trade bodies must be considered. Depending upon the nature of the emergency, valuable advice and support may be available from national trade bodies or organisations. A good example where this has worked is the 2001 Foot and Mouth outbreak, when farming and tourist bodies provided valuable support.
Business Link deals primarily with England. The service to Scotland, Wales and Northern Ireland is delivered through different organisations (see Contacts below).
In Wales, the Department for Economy and Transport leads on economic development and business in Wales.
In Northern Ireland support and advice to business is provided by district councils and by Invest NI, a Non-Departmental Public Body of the Department of Enterprise, Trade and Investment. The requirement under Part 1 of the Civil Contingencies Act 2004 to provide business continuity advice does not apply to district councils in Northern Ireland.
None of the primary organisations described guarantee any funding. All of them are, however, charged with, and positioned to; provide direction and advice about from where funding may be received. This includes access to European funding.
Buncefield: 11 December 2005 (PDF, 25.1KB, 3 pages)
Foot and Mouth Disease Outbreak, 2001 (PDF, 22.6KB, 2 pages)
Lewes flooding: 12 October 2000 (PDF, 21.1KB, 2 pages)
Flooding in England, Northern Ireland and Wales, June/July 2007 - Restoration Fund (PDF, 21.9KB, 2 pages)
Cumbria Floods 2009 (PDF, 53.6KB, 4 pages)
Rural Recovery after Foot-and-Mouth Disease, Christopher Haskins, October 2001 (PDF, 34.1KB, 14 pages)
The Report of the Buncefield Community Recovery Taskforce (PDF, 400KB, 32 pages)
Pre-incident preparations - additional sources of business continuity advice
Every year nearly one in five businesses suffers a major disruption, and planning to deal with those disruptions is widely regarded as good business sense. Effective business continuity planning is critical to ensuring that the essential functions of your business can carry on despite an emergency.
Many businesses will already have plans to deal with sudden commercial risk. These may include events such as the failure of critical suppliers, an unexpected bad debt, industrial action or the discovery of a serious fault in a product or process. Planning for the aftermath of a major incident is very similar.
The existing British Standard BS 25999-1 sets out six elements to the Business Continuity Management process:
- BCM programme management – Programme management enables the business continuity capability to be established and maintained in an appropriate manner
- Understanding the organisation – Prioritisation of an organisation’s products and services, identification of critical supporting activities and the resources that are required to deliver them
- Determining business continuity strategies – Identifying an appropriate response to be chosen for each product or service Developing and implementing a BCM response – Developing incident management, business continuity and business recovery plans
- BCM exercising, maintaining and reviewing BCM arrangements – The ability to demonstrate the extent to which strategies and plans are complete, current and accurate and identify opportunities for improvement
- Embedding BCM in the organisation’s culture – BCM becomes part of the organisation’s core values and instills confidence in all stakeholders
In addition to the Business Continuity advice provided by the organisations described in Roles and Responsibilities, there are many useful sites which provide valuable advice for businesses in developing their own disaster recovery and business continuity plans. Along with the Insurance Industry, three such useful ones are:
- The Centre for the Protection of National Infrastructure (CPNI)
- The Chartered Management Institute paper on Business Continuity Management 2008 providing facts and figures on BCM
Chambers of Commerce
- Business Link. The link to Business Link also takes you to the links for the Scottish, Welsh and Northern Irish delivery organisations.
Regional Development Agencies (RDAs)
The RDAs are:
- Yorkshire Forward
- The NorthWest Regional Development
- Advantage West Midlands
- The East Midlands Development Agency
- The East of England Development Agency
- The SouthWest of England Development Agency
- The SouthEast of England Development Agency
- The London Development Agency
- The Welsh Assembly Government
- Scottish Enterprise
- Invest Northern Ireland
Financial impact on local authorities
During the recovery phase of an emergency, local authorities will often incur expenditure. This may be costs arising from clean-up, provision of security to damaged properties, repairs to infrastructure, provision of humanitarian assistance, or from many other sources.
Some of these costs will be covered by insurance policies or local funding streams, however some will not. In these instances, local authorities will often look to central government departments for support in meeting the additional costs incurred.
Policy and guidance
The flooding incidents of summer 2007 were both widespread and exceptional in nature. In response to the flooding and Sit Michael Pitt’s recommendation on recovery funding, government put together, for the first time, a financial package to assist affected local authorities with the costs of recovery.
In the event of an exceptional emergency, individual departments, DCLG, Department for Transport (DfT), Department for Environment, Food and Rural Affairs (DEFRA) and Department for Education (DfE), will now consider providing financial support for various aspects of the recovery effort.
The supporting guidance for these funding arrangements can be found using the links below:
- DCLG: Support for Recovery from Exceptional Emergencies
- DfT: Emergency Capital Highway Maintenance scheme
- DEFRA: DEFRA recovery funding arrangements
- DfE: DfE recovery funding arrangements
DCLG’s recovery funding arrangements may be activated at ministerial discretion in the event of an exceptional emergency which has a major impact on communities.
There is no automatic entitlement to financial assistance: ministers will decide whether to activate the arrangements based on the impact of a particular emergency and whether funding is available from within existing departmental resource.
The DfT will consider bids from local authorities for additional funding to cover reconstruction/repair work following an emergency. Each application is considered on its merits and requires ministerial approval.
These arrangements are similar to the Bellwin scheme.
The guidance for claiming emergency capital highway maintenance funding sets out how claims should be progressed with the DfT. This guidance has been produced following the June / July 2007 floods and may be subject to change.
To be considered, the damage must be such that it needs capital investment to rectify, works must be required urgently and cannot wait to be completed over a number of years as per normal funding.
DfT expects a local authority to find funds from its own resources of up to 15% of the in-year Local Transport Plan highways maintenance capital allocation provided to the authority. There is no set minimum or maximum amount DfT would consider funding (subject to the 15% figure).
The DEFRA funding scheme may be activated at ministerial discretion in the event of an exceptional emergency which has a major impact on the environment causing significant, long lasting or permanent damage, pollution and contamination.
The scheme is designed to help meet some of the costs associated with the long term environmental damage that results from an exceptional emergency. These costs must be over and above those normally incurred by local authorities and outside those met by other funding schemes.
The scheme does not replace the existing Bellwin arrangements.
DfE funding support may be activated at ministerial discretion – subject to the availability of funding – in the event of exceptional emergencies that have a major impact on communities, and the services to those communities that fall within the policy remit of the DfE.
Emergency support will be intended to help meet some of the exceptional costs incurred by local authorities in supporting affected communities during the recovery phase after an emergency; only costs relating to schools or services for children, young people and families will be considered, and only top tier authorities will be eligible. Any such costs would have to be over and above those normally incurred by local authorities and outside those met by other funding schemes (e.g. Bellwin). No insurable costs would be met by DfE funding – authorities that choose to self-insure will not receive any more favourable treatment.
Read National Recovery Guidance: infrastructure issues for further information on funding issues related to schools.
The DCLG, DfT, DEFRA and DfE funding arrangements outlined above are in addition to the support provided in the response phase through the existing Bellwin scheme in England. The Bellwin scheme does not apply in the recovery phase.
Bellwin scheme of emergency financial assistance to local authorities
The government operates a scheme of emergency financial assistance (Bellwin) to assist local authorities in covering costs they incur as a result of work in coping with emergencies such as, typically, floods.
A ‘Bellwin’ scheme may be activated in any case where an emergency involving destruction of, or danger to, life or property occurs and, as a result, one or more local authorities incur expenditure on, or in connection with, the taking of immediate action to safeguard life or property, or to prevent suffering or severe inconvenience, in their area or among its inhabitants.
Bellwin is not, however, applicable for the recovery phase of an incident, since the grant is limited by Section 155 of the Local Government and Housing Act 1989 to contributing to immediate costs incurred on or in connection with safeguarding life or property or preventing inconvenience following an incident. It is important to be aware that precautionary actions and longer term clearing up actions are ruled out by the terms of the statute.
General guidance notes are issued from time to time, which set out the conditions applying and more general information about the Bellwin Scheme. This includes qualifying emergencies, who can claim, grant rates and thresholds and how to notify an incident or make a claim.
The new departmental funding arrangements outlined above do not apply to Wales.
Functions under the Civil Contingencies Act 2004 are not devolved and remain with the UK government on an England and Wales basis. The assembly government cannot provide funding directly under the provisions of the Act. The assembly government does however have the power to fund Local Authorities, the Police and Fire and Rescue Services (local government bodies) who are all ‘category 1 responders’ for purposes of the Act.
The Government of Wales Act also gives the assembly government the power to do anything it feels necessary in respect of the whole of Wales, or any part of Wales, to promote the physical, social and economic well-being of its people.
The main source of funding for local government bodies in Wales is revenue support grant (which from 2008-09 onwards includes unhypothecated funding for civil contingencies). The assembly government also has the power to provide emergency financial assistance to meet specific recovery related events, should the need arise.
In Wales, financial assistance to local authorities, fire and police comes under the Emergency Financial Assistance Scheme – formerly known as the ‘Bellwin scheme’. These matters are devolved and there are separate but similar arrangements in place to those in England.
Emergency assistance is considered on a case by case basis using the issued guidance to help decide if assistance can be considered. It is important to understand that there is no automatic right to financial assistance but help is considered on a case by case basis when all factors are considered.
Representations can be made following any emergency and it will in the first instance be considered within the context of the issued guidance on Emergency Financial Assistance for Local Authorities (EFALA). Where appropriate and in the particular circumstances, financial help could also be considered for support that falls outside the scope of EFALA. This may be in the form of a grant under s31 of the Local Government Act 2003 which has wide powers to issues grants and set terms and conditions depending on the circumstances.
The Welsh Assembly does not hold a dedicated funding ‘pot’ for EFALA. A token budget of only £1k is held. Where an emergency arises that the relevant minister decides support can be given to, the funding will need to be found from within reserves or moving funds from elsewhere within the Welsh Assembly’s committed funding.
Information on the Bellwin Scheme in Scotland is available on the Scottish government website.
District Councils in Northern Ireland are able to apply for funding from the Dept of the Environment in certain circumstances – ‘Schemes of Emergency Financial Assistance to District Councils’.
Roles and responsibilities
Local and regional
If the financial burden on a local authority is such that it believes it needs support from central government, the first point of contact should be through the relevant government Office. Government offices will liaise with central government departments as appropriate.
Regional Development Agencies co-ordinate economic development in their regions. Local responders should engage with the relevant Regional Development Agency to ensure that all interventions to promote economic recovery after an emergency are co-ordinated. Responders should also have regard to the Regional Economic Strategy.
Lead Government Department
DCLG is the lead department for considering Bellwin claims.
There is no agreed protocol to identify a Lead Government Department (or co-ordinating government department) in relation to claims that fall outside the Bellwin scheme. Each individual government department will consider what, if any, financial support it can provide.
The Welsh Assembly Government is the Lead Department for financial assistance for areas of devolved responsibility.
See the Scottish government website.
Yorkshire and Humber Flooding - Rotherham, June 2007 (PDF, 64.6KB, 12 pages)
Buncefield: 11 December 2005 (PDF, 15.2KB, 2 pages)
Flooding in England, Northern Ireland and Wales, June/July 2007 - Restoration Fund (PDF, 21.9KB, 2 pages)
Published: 20 February 2013
From: Cabinet Office
Related guides: National Recovery Guidance: humanitarian issues National Recovery Guidance: infrastructure issues National Recovery Guidance Business continuity planning for museums and galleries National Recovery Guidance: common issues National Recovery Guidance: environmental issues