Flood victims forced to carry out repairs to their damaged properties paid hundreds of millions of pounds in VAT for the work, say insurers.

The news comes amid claims from MPs that Government funding to help flood-prone communities is inadequate.

Research by the Association of British Insurers shows householders affected by the June floods paid £5,250 VAT on average repairs of £30,000, while those hit by floods in July paid £7,000 VAT for £40,000 of repair work.

The Government said yesterday a £31 million hand-out would be made available to local authorities affected by last summer’s floods.

The EU money is on top of the £86 million made available by the Government last year to help flood-hit areas.

However, as victims paid about £525 million in VAT for the repair work it means the Treasury made a whopping £440 million.

Shropshire MP Philip Dunne said: “The Government promised to increase its flood defence spending from £600 million to £800 million a year, but phased over the next three years. The Defra Select Committee has described this as ‘inadequate’.

“Now it appears that the Treasury is making a profit on the floods from its VAT receipt. Ministers are saying one thing and doing another.”

Mr Dunne has written to Floods Recovery minister John Healey asking again for help to cover the county council’s clean-up and reconstruction costs.

Latest figures released by Defra today show some 6,710 households remain displaced by the floods.

These include 16 in south Shropshire, eight in Birmingham, and one each in Worcester and Wyre Forest.