The unprecedented floods of Boxing Day 2015 had a serious impact on the borough of
Calderdale, and the Upper Calder Valley was particularly badly hit.
Small and medium sizedbusinesses (SMEs), which make up the majority of the local businesses in the economy, were worst affected. Understanding the situation of SMEs is important, as they represent key drivers in achieving the growth and development needed for economic recovery.
This report presents an economic impact assessment of the flooding on SMEs. This study will support the evidence that the Calderdale Flood Commission collates to make recommendations to Government, the Council, the Environment Agency, the community and businesses, about the effects of recent flooding and lessons for possible future flooding. This report will assist policy makers and local stakeholders to take effective action based on what the community of SMEs needs to recover and continue to provide jobs, products and servicefor local communities.
Background
The Calder Valley has a long history of flooding, but the regularity and scale of
flooding appears to have increased since 2000. In 2012, a month’s worth of rain fell in
less than 24 hours, affecting numerous businesses and households.
On Boxing Day 2015 even higher levels of water were recorded, which deluged a
much wider range of properties from Todmorden to Brighouse along the River Calder.
Over 2,800 houses and 1600 business premises were affected by the flooding
Calderdale Council’s Business & Skills team has been administering the package of
Flood Recovery grants for businesses, and has processed almost 900 applications.
The sector most severely affected by the December 2015 flooding is retail, especially
in Hebden Bridge, Mytholmroyd/Luddendenfoot and Todmorden.
As of 31 March 2016, around 83% of flood affected businesses were back in
operation across Calderdale, but the picture is not consistent. Just 61% of Hebden
Bridge businesses are open.
Initial scoping by Upper Calder Valley Renaissance (UCVR)
Immediately after the flooding, the ‘UCVR Business Flood Recovery Team’ was
formed to assess the initial extent of the impact. They conducted a basic online
survey.
150 businesses in total responded to this initial survey, including those located in
Sowerby Bridge and Luddenden/Luddendenfoot.
The data obtained by the survey was useful to Calderdale Council to assist in their bid
for emergency funding from central government. It also helped identify businesses in
need of support, as well as contact details of affected businesses.
Economic impact assessment
The University of Leeds, in conjunction with the Council’s Business team and UCVR,
conducted an economic impact assessment of the floods on SMEs.
The data was collected via an online questionnaire administered to businesses in the
borough of Calderdale.
The majority of the respondents are business owners (~80%) and around six in every
ten firms have less than 5 employees.
Half of the sampled businesses have been operating for less than 10 years and
approximately 60% rent their premises.
Almost three quarters of the sampled businesses were in operation at the time of the
2012 floods.
The estimated value of the overall costs to the business during the 2012 floods was
£26,000, and half of the businesses reported having losses for £5,000 or less.
The greater intensity of the 2015 floods, compared to those of 2012, translated into
higher costs. The 2015 flooding was 1.3 times more damaging to businesses, while
the total losses suffered by SMEs almost doubled.
Hebden Bridge reported the largest number of cases. However, Mytholmroyd suffered
the highest losses per SME.
The total amount of losses reported by the surveyed businesses is almost £47 million,
which represents around 12% of their annual turnover. Excluding a small amount of
enterprises that reported total losses above £500,000, the average loss per firm was
around £47,000.
The total reported losses (£47 million) account for 5.4% of the business sector GVA in
Calderdale and Kirklees.
The amount of losses were almost twice as high for businesses with less than 4
employees than for businesses with more than 20 employees.
On average, businesses with less than 4 employees have recovered 45% of their
sales, in comparison to 66% by larger businesses.
The surveyed firms are considering laying off a total of 124 employees in the next 3
months, which would represent a loss of around £2.3 million or 1.8% of their annual
wage bill.
The total amount of lost sales amounted to nearly £7 million at the time the survey
was conducted. The sector worst hit worst is Retail and Wholesale, followed by
Manufacturing.
When taking into account direct and indirect losses, the total economic impact to the
Calderdale and Kirklees regional economy amounts to a total of approximately £170
million. This figure represents 1.1% of the total output of the region (Office of National
Statistics – ONS). For every £1 reported in direct losses, another £0.6 on average was
lost indirectly throughout the regional economy.
Three out of five businesses have recovered 50% of their normal sales. On average it
has taken almost twice the time for firms to recover their monthly average sales,
compared to the 2012 floods.
Three out of five of the surveyed businesses have at least one type of insurance.
Nevertheless, around 14% had an insurance excess that was so high it has not been
worth submitting a claim.
70% of the surveyed forms mentioned they have received grant aid from local or
central government, followed by business rebate (43%) and advice from Council or
business support organisations (42%).
Almost half of surveyed businesses do not set aside time for planning for flooding,
and less than a quarter monitor free flood warning systems.