Spending Review: Defra budget cuts in line with most departments

The Defra settlement from last week’s Spending Review provides total administrative funding of between £7.3bn and £7.5bn per year from 2025-2029. The department’s overall budget was cut 15% in real terms, in line with many other government divisions. As a proportion, Defra will account for around 7.5% of the total government budget of £12,597bn by 2029-2030.

Defra will receive £16bn of capital funding over the period, equivalent to an annual average real term growth rate of 2.5%, but only 1.7% of the total government spend by 2028-2029. Highlights include investing £2.7bn in sustainable farming and nature recovery every year from 2026-2027; £4.2bn over three years from 2026-2027 to increase flood defences; and £300m on IT to improve the costs of regulation and increase efficiency.

In terms of overall UK infrastructure, the Government will publish its 10-Year Infrastructure Strategy later in June. This will set out a long-term plan for how infrastructure projects are planned and delivered.

This, combined with a more regional focus on increasing devolved government, may help the water industry to deliver its investment more quickly and efficiently.