What do Labour’s financial plans mean for flood and water management

The Chancellor, Rachel Reeves by HM Treasury (CC BY-NC-ND 2.0)

By Innes Thomson BSc CEng FICE, Chief Executive, ADA

Chancellor Rachel Reeves made a pretty damning statement about the state of the UK’s finances to the Commons on Monday 29 July, saying that her team had identified a £22 billion hole in the country’s spending plans, a fact contested from the other side of the dispatch box by the now Shadow Chancellor, Jeremy Hunt. Putting political histrionics to one side, it was clear that Rachel Reeves wants to run a tight fiscal ship and that any plans she makes will have to seek to balance the books and the UK’s financial markets remained un-spooked by her statement.

So what does it mean for water level and flood risk management? Speaking to the BBC’s Victoria Derbyshire on Sunday 28 July, Environment Secretary, Steve Reed said: “It’s not far until the autumn now and that’s when we move into the flood season. We’re finding that the condition of flood defences is far worse than we were led to believe. Therefore, that puts more pressure on the public finances if you want to sort that out.”

Clearly this will be a challenge, albeit one that ADA members were already acutely aware of. Given that all government departments are going to be expected to make back-office economies to help find at least £3 billion in savings between them. HM Treasury have said that they will be targeting non-essential consultancy and communications spending by government departments in particular.

Those working in the public sector can expect their salaries to rise in line with pay review body recommendations, which after several years of frozen or low increases will be welcome.

It was also clear that the Chancellor is on the warpath to deal with delayed and overbudgeted projects and has created a new Office of Value for Money “with an immediate focus on identifying areas where we can reduce, stop or improve the value of spending”. That will of course cover all public spending, but flood risk management will be in the mix too.

Perhaps the biggest immediate news for our sector is the launching of a multi-year Spending Review that will set departmental budgets for at least three years, something ADA called for in their manifesto asks ahead of the election. As part of that process, the Chancellor announced that final budgets for this year and budgets for next year (2025-26) will be set alongside the Budget, which is scheduled for 30 October.

Given the concerns laid bare by the new Environment Secretary, ADA very much hopes to be able to work closely with the Environment Agency team on this to help shape future plans and hopefully influence a better balance between capital and revenue spending allocations. Fiscally, this will not be easy but the new Government understands the increasing need to focus on the managing and maintaining all the infrastructure we have, including flood and coastal risk management assets.

Chancellor Reeves admitted that the “Budget will involve taking difficult decisions to meet our fiscal rules across spending, welfare and tax”. ADA’s hope is that Government sees the crucial, value for money role of flood & coastal risk management in being a key foundation of a robust set of policies around social, economic, and environmental wellbeing and we will do our bit to push hard on that message. There are undoubtedly opportunities to invest money in the management and maintenance of flood and water management assets that can enable longer term savings for the Exchequer.

I am reassured by noises that the Government will be looking to devolve more powers to local areas and look to helping those who deliver local services. The bolstering of EA area teams will be welcome, the support to local authorities in recruiting people to ever-dwindling flood risk management and planning teams is crucial and the role of efficient, effective internal drainage boards can only go from strength to strength by working closely with their local partners.

There is a window of opportunity for carefully considered change and it is with us right now.

My challenge to IDBs is to take a close look at your current operations and governance, ask questions of yourselves about how you evolve and develop over the next 5 – 10 years to be large enough, resilient organisations that can work strategically with other local partners in your patch to manage water levels sustainably. ADA is here to help you move forward with such changes, to help you build capacity, share resources with one another, and work more closely with other public authorities, so please do not hesitate to get in touch if we can be of assistance.

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