Environment, Food and Rural Affairs

The first role of any Government is to protect their citizens. Yet the previous Conservative Government left flood defences in their worst condition on record. This is a dereliction of duty.

Economic growth is the No. 1 mission in the Government’s plan for change. Resilience and adaptation to climate change are essential foundations to this mission—better protecting all communities from the risk of flooding increases investor confidence, the viability of businesses, the resilience of critical infrastructure, innovation, and tourism. This is why we are investing a record £2.65 billion over the two years to March 2026.

We are committed to making every pound we invest count, and to ensuring that our flood resilience and coastal erosion investment policy enables new innovative approaches that respond to current challenges and prepare us for the future. Today, the Department has launched a consultation on reforming our approach to investing in flooding and coastal erosion for communities across the country.

We have a bold, strategic vision for the future. Our objectives are for the new approach to be simple, flexible, and strategic—so that we can deliver timely, data-driven interventions that build national resilience. It will have a stronger focus on investing in our existing assets and enabling a broader range of resilience interventions, including natural flood management and property flood resilience measures. It will be informed by a 10-year pipeline of project opportunities based on the Environment Agency’s new national flood risk assessment, which brings together key national and local evidence.

We want to ensure that funding for flood defences is distributed more effectively across the country—including for rural and coastal communities. We are proposing to stop using the current outdated funding formula entirely and replace it with a simple two-step process. The first step determines how much Government funding a project will get. We are proposing to fully fund the first £3 million of all projects and apply a flat rate of 90% Government contribution towards the remaining costs. This approach means that more schemes will see their funding gaps filled. It will make it simpler and faster for all risk management authorities to calculate their funding—benefiting all councils, including poorer councils that have less resource to commit to the application process.

We have also listened to stakeholders who have told us about their difficulties in securing external funding contributions for capital works to existing assets. We are therefore proposing to fully fund the refurbishment of existing flood and coastal erosion risk management projects to reduce these pressures.

The second step will be to prioritise projects for funding. We are seeking views in our consultation on a range of options, including prioritising by value for money; weightings to bolster priority outcomes, such as for deprived communities and natural flood management; and providing incentives for projects to secure additional external funding contributions.

Today, the Independent Water Commission has published an interim report setting out its preliminary conclusions on water sector reform.

In October 2024, the UK and Welsh Governments appointed Sir Jon Cunliffe, former Deputy Governor of the Bank of England, to chair the commission and make recommendations to reset the water sector in England and Wales.

The Government set the Independent Water Commission a considerable task in reviewing the water sector in its entirety. Our water system must serve both its customers and the environment, but we inherited one that did neither. I thank Sir Jon for his interim report.

Today’s report focuses on five key areas:

Strategic direction and planning

Legislative framework

Regulatory reform

Company structures, ownership, governance and management

Infrastructure and asset health.

I remain of the view that transformative change across the water sector is needed. We need to create the conditions to attract future long-term investment, ensure resilient finances and contribute to economic growth, while supporting affordable customer bills.

The Government will review Sir Jon’s interim findings in detail and look forward to receiving his final recommendations later this summer.

We will respond in full later this year following the commission’s final recommendations. This will include a detailed transition plan for the water sector. This will form the basis of further legislation to reset the sector and attract the investment we need to ensure its resilience for decades to come.