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The consultation is asking for feedback on two main proposals:

• The first is a proposed simplified approach to funding new flood resilience projects.
• The second is a proposed approach to prioritise flood resilience projects.

The new approach will be launched in time for the start of the new flood investment framework in April 2026.

Routine maintenance is managed under a separate programme to the major refurbishment and replacement of existing assets and is not part of this consultation.

The current flood funding approach

The current approach has been in place since 2011. Funding is currently allocated to projects using a two-step process. A project must pass through both steps to progress to delivery:

Step one: Project funding

This determines how much Defra funding each project is eligible for using a complex calculator which provides a score for each project. Depending on the score the scheme will be fully or partially funded by Defra. Partially-funded schemes must seek other sources of funding before they can start construction.

The weighting towards people and property means many rural places are unable to compete for funding and they will never score highly enough to receive any. Projects where the main benefits are focused on reducing flood risk to land or dispersed rural communities, with limited numbers of properties, are likely to require significant, if not all funding, from partners other than Defra.

Step 2: Programme prioritisation

An annual process that determines which projects are prioritised. Funding is confirmed first to projects designed to meet legal requirements, followed by those already in construction (and delivered over multiple years). Funding is then allocated to projects with the highest score from Step one.

New proposed approach

Step 1: Project funding

The government’s proposed approach has three overarching principles:

• Introducing a contribution-free allowance so all flood and coastal erosion risk management projects have the first £3 million of their project costs fully funded by government.
• Providing 90% of the funding for project costs above £3 million. The remaining 10% of costs for new projects would need to be secured through partnership funding contributions.
• Fully funding projects to refurbish existing assets which currently find it challenging to attract funding.

The government expects this approach:

• Will boost capital refurbishment projects to restore existing flood defence assets that have fallen below designed levels of operation. In the current approach, the vast majority of funding ends up going to projects for new defences.
• Will address one of the key challenges of the current approach where the costs associated with securing partnership funding from sources beyond government, can exceed or be disproportionate to the costs of the project itself.
• Will speed up delivery for projects, reducing development costs.

The government acknowledges that the greater the number of projects that are fully funded by government, the less funding will be available for partially funding other projects.

The government believes this disadvantage could in part be addressed through responses to the Call for Evidence for other sources of funding.

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Natural flood management

The government believes the above approach will boost investment in NFM (Natural Flood Management) by fully funding most NFM schemes.

• It is also planning to remove the requirement for projects to demonstrate that properties would move from one risk band to a lower risk band to qualify for government funding, which would also make more NFM projects eligible for funding.

In addition to these proposals, the government is considering:

• Allowing non-risk management authorities to apply for flood investment to deliver natural flood management and sustainable drainage projects. Under the current system, only risk management authorities can apply for government funding for FCERM (Flood and Coastal Erosion Risk Management) projects.
• Updating the assessment and appraisal process for NFM to make it easier and simpler to determine the flood and wider environmental benefits of a project.

Step 2: Project prioritisation

The need for government funding from all eligible projects that have their full funding in place typically exceeds the total amount of funding available from the government.

The government has developed three proposals for prioritising projects for delivery:

1. By value for money and flood risk.
2. By value for money and flood risk with additional priority given to bolster specific policy outcomes.
3. Providing additional priority to projects which raise additional partnership funding beyond their required amount (this could be done alongside approaches 1 or 2).

Approach 1: Prioritising projects by value for money and flood risk

This approach is designed to ensure public resources are used in the most efficient way, maximising flood risk reduction and return on taxpayers’ investment by focusing on communities at the highest risk.

Approach 2: Prioritising projects by value for money and flood risk whilst also bolstering specific policy outcomes

This approach would prioritise certain policy outcomes on top of the value for money approach (approach 1). To ensure transparency with communities and the taxpayer, the government says this approach would only be effective and maintain simplicity where the benefits are easily quantifiable and measurable, and the project must primarily deliver flood risk benefit.

Five potential outcome groupings that could be prioritised:

1. Supporting economic growth and the wider economy – prioritising flood defences in highest growth areas to support local and national resilience while underpinning the government’s number one mission.
2. Deprived areas – these areas find it harder to recover from the impacts of flooding and struggle to attract sufficient partnership funding so need additional support from Defra.
3. Specific types of flood resilience interventions – such as natural flood management, sustainable drainage and property flood resilience schemes
4. Specific types of communities – prioritisation could be provided to specific types of communities which could face barriers to having their scheme delivered given the cost of building flood defences compared to the size of the community that would benefit. These could include rural, agricultural, coastal or frequently flooded communities.
5. Local choice – the ideal project for an area may not be immediately prioritised by value for money alone. Eg, frequently flooded areas, coastal communities and projects protecting agricultural land. There may be an option to give RFCCs (Regional Flood and Coastal Committees) the ability to give additional preference to such projects.

Approach 3: Prioritising projects by value for money and flood risk with additional preference for projects which raise additional partnership funding beyond their required amount

Projects could be incentivised to voluntarily secure higher levels of partnership funding if it means they are more likely to be prioritised for delivery.

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Call for evidence on alternative sources of funding for flood risk management

The government is interested in views on how national funding can be bolstered and how more local funding can be raised. This Call for Evidence is to gauge initial views on five broad areas proposed to identify alternative sources of funding for schemes.

The government wants to explore five areas:

1. Insurance sector

By boosting investment in flood risk reduction and other resilience measures, the government wants to lower risk exposures for property insurers and, consequently, costs for policy holders, ensuring more people can access affordable insurance for their homes and businesses.

2. Water and sewerage companies

Water and sewerage companies have a statutory duty to provide, improve and maintain a public sewer system to drain their areas. Lead local flood authorities are responsible for managing local flood risks from surface water, groundwater and ordinary watercourses.

Water and sewerage companies and local authorities therefore have a shared interest in reducing surface water flooding. The government believes there is more to do to unlock efficient and joined up working between the private and public sector on addressing surface water flooding, ensuring taxpayer money and water customer bills are put to the most efficient use.

3. Land and property value uplift

Flood alleviation schemes increase the resilience of the areas they protect; this can increase demand for the land. Investments made in schemes such as NFM (natural flood management) may also increase the desirability of an area which can also increase demand and thus result in financial benefits for the landowner.

The government wants to explore how to capture this and how it could then be used to help cover the costs of the flood defences that create the benefits.

4. Local funding

The government is deepening devolution across England, which creates opportunities to strengthen local funding and revenue raising powers for flood and coastal erosion risk management. The government is keen to explore opportunities for how mayors could support flood risk management alongside local growth.

5. Building on the existing system

The current Partnership Funding model already brings in funding by beneficiaries, including the private sector.

The government wants to understand where private investment is already happening, what is making it attractive as an investment opportunity, and how to create more of these opportunities to maximise Partnership Funding contributions.

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