Government plans that force residents and businesses to fund flood defences from April 2012 could cause uncertainty that might delay vital regeneration schemes and damage the economy, says the British Property Federation (BPF).

Responding to a consultation on future funding for flood defences, the BPF also criticised government’s intention to give households greater flood protection than businesses – a move which it argued was not only impractical but could cause the damage from future floods to ripple out into the wider economy and cause damage beyond the immediately flooded area.

Currently central government provides 95% of the cost of protecting society from flood events. The BPF said it broadly supported government proposals to increase the amount of investment in flood defences beyond that supplied by the state, but it did not believe that the sums that Government are seeking from private contributions are realistic.

The BPF are sceptical that households and businesses would be able to make up the shortfall caused by government spending cuts, and warned the proposed system would not provide sufficient certainty to property investors – and insurers – that the risk of flooding was being managed.

The cuts are being made despite Defra figures showing that each £1 spent on flood defences generates £8 in savings.

James Anderson, Assistant Director at the British Property Federation said: “It is right that those who benefit from flood defences help to fund them, but we struggle to see how, particularly given the state of the economy, private investment can reach the levels government is expecting.

“Given the emphasis on private contributions it must also be made clear that development cannot deliver innumerable benefits to the local community. The demands of flood protection, when added to other planning obligations, all have an impact on development viability, which local authorities must recognise.

“Protecting households above businesses is simply illogical – householders are currently better insured against flooding and at lower cost. It also fails to take account of the wider impacts that the flooding of commercial premises cause, which spread into the wider economy and cause damage beyond the immediately flooded area.”