The Spending Review 2025 was presented to Parliament by the Chancellor of the Exchequer, Rachel Reeves, yesterday (Wednesday 11 June 2025).
Most departments will gain a real-term increase of around 2-3%, but three departments face real-term cuts, one of which is Defra. Day-to-day spending for Defra is set to drop from £4.8 billion in 2025-26 to £4.7 billion by 2028-29, a decrease in real-terms of 2.7% annually, and matching the £4.7 billion that was allocated back in 2023-24.
However, the Review has allocated £4.2 billion for flood defences from 2026–27 to 2028–29, a 5% rise in annual flood budget.
Chancellor of the Exchequer Rachel Reeves said:
“The Department for Environment, Food and Rural Affairs (Defra) settlement provides total funding of £7.4 billion in 2028‑29. Over the Spending Review period, Defra will receive £16 billion of capital funding, equivalent to an annual average real terms growth rate of 2.5%.
“This settlement also prioritises progress on the government’s growth mission by committing £4.2 billion TDEL over three years (2026-27 to 2028-29) to build and maintain flood defences, protecting communities across England from the dangers of flooding.”
The government will invest more than £2.7 billion per year in sustainable farming and nature recovery from 2026‑27 until 2028‑29, increasing support for nature-friendly farming through Environmental Land Management schemes from £800 million in 2023-24 to £2 billion by 2028‑29.
£9.4 billion has been allocated to Carbon Capture, Usage and Storage (CCUS) over the Spending Review period.
Due to the interconnectivity of industries like agriculture, carbon capture, nature recovery and nature based solutions for problems like flooding, the water and wastewater industry could benefit indirectly from some of this additional funding.
