I see what you mean. However, it does sound like you're going to have some serious repairs done, so you're probably going to end up shelling out the excess one way or another.

I wonder if you can pursue the council for a refund if the survey shows they are at fault. I can see why they wouldn't want to pay up front, given that it's public money. I had subsidence in a house that I had very recently bought and my insurers pursued the surveyor and previous insurer, but meanwhile got on with the repairs. In the end I think they all split the costs between them. However, and sadly, no one offered to split the excess with me!