Source · Select Committees · Public Accounts Committee
Recommendation 10
10
Accepted
Environment Agency failed to meet reduced asset condition target, increasing flood risk for 203,000 properties.
Conclusion
The Agency has not been able to reach even the 94.5% level. In summer 2023, only 93.5% of the Agency’s high consequence assets were at the required condition.14 203,000 7 Q 65; C&AG’s Report, para 11 8 Q 65 9 C&AG’s Report, paras 6, 1.8 10 Q 43 11 C&AG’s Report, footnotes 2 & 3 12 Q 51 13 Q 43 14 C&AG’s Report, para 22 Resilience to fooding 11 properties are at increased risk of flooding because of the assets which are below required condition.15 The Agency explained that inflation affects maintenance costs as well as building costs and the recent storms have damaged assets further.16
Government Response Summary
The government acknowledges the committee's observation on asset condition targets, stating the Agency is working to identify the optimal balance of capital and maintenance to maximise value for money. It confirms the transfer of £25 million to the maintenance budget and commits to providing an updated assessment by Spring 2025.
Government Response
Accepted
HM Government
Accepted
3.1 The government agrees with the Committee’s recommendation. Target implementation date: Spring 2025 3.2 The Agency is working on improved evidence to help identify the optimal balance of capital and maintenance in order to maximise value for money. The department agreed with HM Treasury to move £25 million from the capital budget into its maintenance budget for 2023–24. 3.3 Rebalancing budgets is best done in a managed way. Longer term fixed budgets provide stability and certainty, which allows costs efficiencies and productivity improvements through packaging of delivery. However, unexpected events or fluctuations in project delivery, such as storm damage and inflation, means that rebalancing midway through an investment programme can increase value for money. Such switches are always done on the basis of a rigorous assessment between the Agency, Defra and HM Treasury of the value for money, and outcomes achievable. 3.4 The department and the Agency will continue to work together to identify the optimal balance of capital and maintenance, and, following the next spending review, will write to the Committee by Spring 2025 with an updated assessment of value for money and impacts for the remainder of the 6-year programme.