Chancellor Rachel Reeves’ recently announced Spending Review, which includes an additional £29 billion per year for the NHS in England, is drawing scrutiny from the insurance sector, particularly over the adequacy and future of flood defence funding.
Among the measures outlined, the government pledged £4.2bn over three years for new flood protection infrastructure across the UK. The review also included a £39bn allocation over a decade for housing and a planned increase in defence spending from 2.3% to 2.6% of GDP by 2027.
However, the absence of a commitment to continue flood funding beyond 2026 has prompted industry reaction, particularly from stakeholders in property insurance and climate resilience.
Bridget Rosewell (pictured), chair of Flood Re, welcomed the current funding but emphasised the need for effective implementation.
“With one in four homes at risk of flooding, the UK faces one of its greatest climate change challenges,” said Rosewell. “The Government has made difficult choices in its Spending Review but remains committed to tackling this issue, pledging £4.2 billion over the next three years for new flood defences.”
The government’s consultation on how the funding will be spent offers a chance, she said, to refocus on resilience, maintenance, and innovation. She added that infrastructure cannot be the sole solution, advocating for household-level adaptation measures and broader community engagement.
Meanwhile, RSA Insurance’s chief underwriting officer Nathalie Dufresne voiced concern that the £4.2bn earmarked falls £300m short of the National Infrastructure Commission’s recommended threshold. She warned that underfunding could have long-term fiscal consequences and that the uncertainty around post-2026 funding may impact public confidence and the insurability of at-risk areas.
“With nearly four out of five people already convinced the UK isn’t prepared for climate change, this move risks not just damage to homes, businesses and infrastructure, but to political and public trust,” said Dufresne.
The BBC reported that the chancellor’s choices are shaped by two fiscal rules: avoiding borrowing for day-to-day spending and reducing government debt as a share of national income by 2029–30. These constraints led to reductions in spending for several departments, including a 6.9% cut for the Foreign Office and a 2.7% reduction for the Department for Environment, Food & Rural Affairs.
With the Spending Review setting the fiscal tone until the end of the decade, questions remain about whether the balance between investment and risk management has been struck.
Do you think the government’s current flood defence funding is enough to safeguard the UK’s insurability in a changing climate? Share your views in the comments.
