Recommendation 16

HM Government Not Addressed

In March 2024, Defra published a report which provided an analysis of spending on flood risk management by lead local flood authorities. The findings of the report informed work with the Ministry of Housing, Communities and Local government (MHCLG) on reforms to the Local government Finance Settlement (LGFS) through the Fair Funding Review 2.0. The Fair Funding Review 2.0 marks the next step in introducing a fairer funding system that targets money where it is most needed, in partnership with local government. This up-to-date approach will use the best available evidence to reflect the varying needs and costs faced by urban and rural local authorities, as well as their capacity to raise revenue through council tax. This approach is both fairer and simpler, with fewer formulae and better alignment to relative need, cost, and resource. From 2026–2027, the government plans to radically simplify the grant system, giving local authorities the flexibility and certainty over a larger share of their income. The government intends to include formulae for individual services, only where there is strong evidence that doing so enhances the overall assessment of need. This will help the government deliver a stronger, more up-to-date distribution model. Flood and coastal erosion risk management revenue funding will continue to be distributed through the LGFS via the “Foundation Formula” which assesses need for most non-social care services and is predominantly based on population with an additional deprivation-based top-up. The LGFS can be used by local authorities to fund their duties under the Flood and Water Management Act 2010 including: developing strategies for local flood risk management and maintaining a register of flood risk management assets. Most local government funding is un-ringfenced, recognising that local authorities are best placed to decide how to meet the rising service pressures in their local areas, including on flood management. In addition, the Environment Agency is helping risk management authorities to build skills and capacity to manage flood risk and coastal change, through its Flood and Coastal Erosion Risk Management Strategy Roadmap to 2026. This includes developing training resources, tools and guidance to support planning, and partnerships to strengthen climate adaptation and enable climate-resilient development. The ‘Building Skills for Community Flood Risk and Resilience Insights Report’, commissioned by the Flood Resilience Taskforce is expected to be delivered in early 2026. The report will assess current and emerging skills needs across risk management authorities, showcase local innovation, evaluate national tools and training, and examine how changes in funding and technology are reshaping workforce needs. It will be designed to help inform the futureproofing of flood and coastal risk management skills and capabilities and will identify where strategic Flood Resilience Taskforce skills support is most needed. Making flood resilience work for households and businesses Recommendation at paragraph 119: ‘The Government should consult on how to make Property Flood Resilience (PFR) a routine part of flood recovery. This consultation should explore options for reforming the existing grant scheme to provide consistent, needs- based funding and wider accessibility, including simplifying the process, updating grant levels, and extending eligibility to renters and social housing tenants. Any changes should be implemented following consultation and evaluation. Local delivery models, such as block grants to councils, direct supplier payments, or insurer-led applications should be explored to increase uptake and reduce barriers.’