A new report by the National Audit Office (NAO) finds that while the government is on track to achieve its target for better protecting 300,000 more homes from flooding by March 2021, it does not have a comprehensive measure of its progress in reducing the overall level of flood risk across England.

The report - Managing Flood Risk - published today by the UK’s independent public spending watchdog evaluates whether government’s approach to managing the risks of flooding and coastal erosion is achieving value for money.

The Environment Agency (EA) estimates that 5.2 million homes and businesses in England are at risk of flooding and that around 700 properties are vulnerable to coastal erosion over the next 20 years. In addition, more than two-thirds of properties in England are served by infrastructure sites and networks located in (or dependent on others in) areas at risk of flooding.

The report says that since 2015, 728 new flood defence schemes have been introduced, providing better protection for over 242,000 homes. Of these, 16 of the schemes account for more than 50% of the homes and 52% have been dependent on partnership funding.

‘Homes better protected’ target does not provide a good view of progress

The Department for Environment, Food & Rural Affairs has the policy lead for flooding and coastal erosion. According to the report, 31% of the proposed actions in Defra’s policy statement on future flood risk management do not have a measurable outcome.

The EA is responsible for taking a strategic overview of all sources of flooding and coastal erosion. It also has powers to manage the risk of flooding from main rivers, reservoirs, estuaries and the sea.

The government set the Agency a target of better protecting 300,000 homes from flooding between 2015 and 2021, through an investment of £2.6 billion. The EA is on track to meet this target within its budget, the NAO says.

However, the NAO is cautioning that while the ‘homes better protected’ target is an easy to understand performance measure, on its own does not provide a good view of progress in tackling overall flood risk. It does not provide any indication of what has happened to flood risk for non-residential buildings, agricultural land and other infrastructure, the report says.

The NAO is flagging up its concerns about gaps in the government’s current approach to managing flood risk effectively going forward.

According to the report, the autumn and winter floods of 2019-20 were a significant setback for the EA, leaving thousands more properties at risk.

Following the floods, the number of properties at risk as a result of the condition of EA flood defences and other infrastructure assets increased by 171% from 70,000 in 2018-19, to 189,000 in 2019-20 - against a target of 49,000..

In March 2020, the government announced capital funding to EA of £5.6 billion for the six-year period from April 2021 with the aim of better protecting 336,0000 properties and reducing flood risk by up to 11%. This represents a 54% real-terms increase in funding compared with the period 2015-21 and equates to annual average funding of £770 million in real terms.

The report draws attention to research commissioned by the EA which estimates that the cost of repairing and maintaining flood defences could increase by between 20% and 70% a year as a result of climate change.

Gaps in government’s understanding of public spending for flood defence

The NAO has found that there are gaps in the government’s understanding of public spending for flood defence and that without this, it cannot assess whether local authorities and other organisations have the resources they need to manage flood risk effectively.

In July 2020, a ministerial policy statement set out the government’s aim for the nation to be more resilient to the challenges of flooding and coastal erosion and the EA published its new strategy in September.

However, according to the NAO, while the EA’s new strategy and the government’s policy statement are a significant step forward, they lack clarity in important areas. Many of the actions in the policy statement are not time-limited or measurable, and some important commitments are not expected to be implemented until well into the future.

The NAO says that neither the policy statement nor the EA’s strategy quantify the level of risk reduction the government expects to achieve in the long term. The report points out that Defra has committed to developing a national set of indicators to measure and demonstrate success - but not until spring 2022.

Key findings set out in the report include:

• Gaps in government’s understanding of public spending for flood risk management

Funding for floods comes from many sources, including government grant-in-aid, partnership funding, levy charges and contributions from other government departments. The EA captures private and public funding for its own projects and Defra reports on most central government funding.

The Ministry of Housing, Communities & Local Government reports on funding and expenditure by local authorities on flood risk management.

However, Defra does not assess whether funding to local authorities is adequate to cover the level of flood risk individual authorities face. Local funding for flood risk management is not ring-fenced and Defra does not compare what authorities spend on flood risk management with what was allocated.

• Defra does not do enough to challenge EA’s approach and performance

Defra relies on data provided by EA without carrying out any quality assurance and does not produce its own assessment of programme risk separate from EA’s

• EA has to rely on a wide range of other bodies to help deliver its strategy but struggles to coordinate their activities

Responsibility for surface water flooding,which affects more properties than flooding from rivers and the sea, falls to lead local flood authorities but the EA struggles to coordinate their activities and cannot compel them to provide information. The Agency is responsible for 71% of flood defence assets (by length), while third parties own the remaining 29%. The EA needs third parties to better protect 102,000 homes to reach its target.

Its local area teams are not communicating asset maintenance requirements consistently with third-party owners. Defra says it will start a review by the end of 2021

• Little progress made in streamlining local flood and coastal erosion risk management plans

A 2014 report by the NAO found there was a profusion of plans that often create duplication or cross administrative boundaries. At the time, both Defra and EA were looking to streamline the number of plans and strategies in place, but little progress has been made since then. In 2019, the Committee on Climate Change separately highlighted the range of plans attempting to tackle different sources of flooding.

Defra has promised reform of local flood and coastal erosion risk planning so that every area of England will have a more strategic and comprehensive plan - but not until 2026

• Need to adhere to strict funding cycles impacts the value for money of the programme

Rigidly applied funding periods can sometimes create risks where there is pressure to spend money or achieve targets by the end of the period.

Government’s approach is designed to ensure deprived areas do not miss out on funding, but the proportion of funding to these areas has reduced substantially since 2014.

• EA has been successful in securing partnership funding - but this is almost all from the public sector

Just over half (52%) of the 728 projects that had better protected homes between April 2015 and March 2020 had been dependent on partnership funding, where local communities raise funding towards a scheme.

The EA estimates that it has attracted £530 million of partnership funding in the period 2015–2021, exceeding its target of £390 million. However, more than 90% of this came from local authorities and other public sector bodies, with only £39 million (7%) from the private sector - even lower than when the NAO last reported in 2014 that between April 2011 and March 2015, 25% of partnership funding had been secured from the private sector

• Policy and strategy lack clarity in important areas

While the government’s new policy statement and EA’s strategy are a significant step forward, they lack clarity in important areas. Many of the actions in the government’s policy statement are not time-limited or measurable, and some important commitments are not expected to be implemented until well into the future. Neither the policy statement nor the strategy quantifies the level of resilience or risk reduction the government expects to achieve.

• Despite substantial increase in future capital investment government reliant on other uncertain sources of funding to meet long-term aims

In March 2020, government announced grant-in-aid capital funding to EA of £5.2 billion for the six-year period from April 2021, equating to annual average funding of £770 million in real terms.

However, the EA’s long-term investment scenarios indicate that annual investment from all sources of around £1 billion in real terms is needed.

The NAO says that while Defra is confident that revenue funding and funding from other sources, including partnership funding, will take total annual investment above £1 billion, but the level of this additional future funding is uncertain.

• EA has no plans to monitor its progress towards reduce flood risk by up to 11% by 2027

Defra plans to set out more detail on what it aims to achieve from the programme and how it will be managed in 2021 and also recognises the need to improve how it monitors progress. However, while Defra plans to develop a national set of indicators by spring 2022, it has not specified whether this will include a measure of overall risk reduction nor, if it does, how it will calculate what it has achieved .

• Requirement for revenue funding is likely to increase as assets deteriorate more quickly due to climate change and as capital investment growth results in more assets

• Capacity and skills shortages could impact EA’s ability to deliver its investment programme and strategy

The EA has skill shortages in a number of areas, including engineering, digital and commercial. The shortage of qualified engineers is a long-standing concern and EA saw a 33% fall in qualified civil engineers between 2013 and 2018.

Key recommendations

The NAO report has put forward a number of recommendations which Defra should act on, including:

• provide a clearer sense of direction to all the bodies involved on what government aims to achieve, and what the measures of success will be - before the start of the new investment period in April 2021
• work with the Ministry of Housing, Communities & Local Government and HM Treasury to develop a clear understanding of whether flood risk management funding for local authorities is adequate to cover the level of flood risk individual authorities face, and report on this annually starting from 2021-22
• by April 2021, review its oversight of the programme to ensure it is making the most of existing opportunities to appropriately challenge EA’s approach, performance and investment decisions and that it has its own assessment of programme risks
• ensure that, where possible, its policy statement actions are measurable and time-limited;
• work with the EA to understand what is driving the profile of investment in deprived areas and whether there are any underlying structural issues behind the decline in investment since 2014; and
• work with the EA and HM Treasury to ensure funding cycles do not have an adverse impact on the EA’s ability to manage their investment programme and optimise value for money.

It is also calling on the EA to report publicly on annual progress towards reducing risk by 11% for each year of the new programme and on the geographical distribution of investment, including the impact of changes to the partnership funding model and the amount of investment directed to deprived areas.

In addition, by April 2021, the EA should review and update its current approach to communicating with third-party asset owners, develop supporting tools and a communication plan for EA’s local area teams to work with third-party asset owners to ensure they are aware of the condition of their assets and of the need for maintenance where required.

Lack of robust measures to track progress make it difficult to show £5.6bn spend offers adequate response to changing risk and good value for taxpayers

Alongside today’s report, the NAO has launched an interactive data visualisation tool which helps people to understand the flood risk and investment in flood defence in their area.

Commenting on the findings, Gareth Davies, Comptroller and Auditor General and the head of the NAO said:

“Flooding and coastal erosion put lives, livelihoods and people’s well-being at risk. As our climate continues to change, and severe weather events become more common, flooding will impact more people.

“Although EA is on track to better protect 300,000 homes from flooding by 2021, there is still no comprehensive measure to show that flood risk in England has reduced, even though the current programme is coming to an end.

“Looking ahead to 2021-27, although the government has set a clear ambition, the lack of robust measures to track progress mean it will be difficult to demonstrate that its £5.6 billion investment provides an adequate response to the changing risk and good value for taxpayers.”

Click here to download the report in full

Click here to access the data visualisation tool