The majority of the funding for flood and coastal erosion management is through grants from Defra to the Environment Agency.
Environment Agency
The majority of the funding for flood and coastal erosion management is through grants from Defra to the Environment Agency (EA). The EA maintains existing infrastructure relating to "main rivers" and tidal defences, invests in new and improved risk management infrastructure and administers a linked capital grant allocations procedure to local authorities and internal drainage boards (IDBs).
In recent years, large numbers of applications for this funding led to an increase in the priority for eligibility, so that only high-priority investments were likely to be successful. However, recent changes in the allocation of Defra funds mean that any worthwhile project is eligible for at least some funding based on the benefits being delivered in each case. This is known as Flood and Coastal Resilience Partnership Funding. The EA also invests in reducing the consequences of flooding through better risk mapping, strategic planning, flood forecasting and warnings, and development control.
Additional income can also be raised by the EA through charges, precepts, levies and from contributions secured from major beneficiaries.
Grant allocations procedure – on the EA website
Local authority and internal drainage board funding – on the EA website
Local authorities
Local authorities can apply for grant for capital investment from the EA to create new or improved flood risk and coastal erosion management infrastructure and tackle groundwater and surface water issues.
Revenue and non-grant eligible expenditure by local authorities is supported by formula grant from the Dept for Communities and Local Government (DCLG), but it is not ringfenced for flood and coastal risk management. Individual authorities can decide how much to spend, subject to limits on overall budgets and the need for investment on other priorities. In the future, local authority flood and coastal risk management activity will be funded through the business rates retention system.
Business rates retention system – on the DCLG website
Additional income can also be secured through the planning system, from contributions secured from major beneficiaries and through fees, charges and local taxation.
Dept for Communities and Local Government
A practical resource was produced in March 2012 to support Lead Local Flood Authorities in the development and application of their Local Flood Risk Management Strategies particularly relating to partnership funding and collaborative delivery of local flood risk management.
Internal drainage boards
IDBs can raise funds through charges and special levies on local authorities and drainage rates from agricultural land owners. They can also apply for capital grant at varying rates for capital improvements from the EA. The balance of IDB costs after grant and local authority special levies has to be met by local agricultural drainage ratepayers.
IDBs also receive payments from the EA in relation to water entering their districts from higher ground. They can also secure other contributions from major beneficiaries.
Other funding
Surface water and groundwater flooding – on the Defra website
Improving surface water drainage – on the Defra website
Flood and Coastal Resilience Partner funding – and introductory guide (PDF, 7 pages, 428KB) – on the Defra website
In May 2011, Defra announced changes to the way funding will be allocated to flood and coastal defence projects from now on. Instead of meeting the full costs of just a limited number of schemes, the new partnership approach to funding flood and coastal resilience will mean Government money is potentially available towards the costs of any worthwhile scheme.
Funding levels will be based on the numbers of households protected, the damages being prevented, and the other benefits a project would deliver. Overall, more schemes are likely to go ahead than if the previous ‘all or nothing' approach to funding were to continue.
The reforms also aim to provide improved transparency and greater certainty over potential funding levels from the general taxpayer for every flood and coastal defence project. It will also allow local areas to have a bigger say in what is done to protect them.
The new approach puts added emphasis on providing support to those most at risk and living in the most deprived parts of the country.
Up until March 2015, the Government has pledged to spend at least £2.1 billion. In this time, at least 145,000 households are expected to be better protected. Following the Comprehensive Spending Review, this works out at approximately 6 per cent less than in previous years (£544 million spent a year instead of £579 million). However, it is worth noting that Defra are fully committed to funding the new burdens placed on local authorities as part of the FWMA. Up to £36 million a year will be provided direct to LLFAs.
Defra has also published a policy statement on the new funding approach. This document provides further details for the Environment Agency and other risk management authorities to follow in implementing the scheme.
Flood and Coastal Resilience Partner funding – Defra policy statement (PDF, 11 pages, 168KB) – on the Defra website
In April 2012, the Environment Agency published guidance, case studies and other resources for those wishing to build successful funding partnerships for flood and coastal defence schemes.
Environment Agency's e-learning module on Partnership Funding