Committee publication · Correspondence · 2 September 2025

Correspondence from the Secretary of State regarding the Spending Review, dated 1 August 2025

From: Environment, Food and Rural Affairs Committee

Inquiry: Work of the Department and its arm’s-length bodies

Summary

Secretary of State Steve Reed responds to Environment, Food and Rural Affairs Committee questions on the Government's Spending Review. Defra outlines its approach to the reformed Sustainable Farming Incentive scheme (targeting £2.7 billion over 2026/27–2028/29), flood resilience investment (£4.2 billion over three years), R&D funding allocation across statutory research and innovation programmes, digital transformation priorities (£300 million), and administrative efficiencies including 10% administration budget cuts balanced with staff wellbeing measures.

Key findings

Defra secured £2.7 billion annually for sustainable farming and nature recovery (2026/27–2028/29), with a reformed SFI scheme to better target spending; details to be published summer 2025.
Flood risk management investment of £4.2 billion over three years (2026/27–2028/29) represents a 5% increase on current levels; new Floods Investment Framework to launch April 2026.
R&D budget allocation spans statutory research (£200 million over 2022/23–2024/25), Net Zero innovation (rising to £42 million by 2024/25), NCEA/DASH programmes (£85 million by 2024/25), and National Biosecurity Centre redevelopment (£1 billion to 2029/30).
Digital transformation investment (£300 million 2026/27–2028/29) prioritises legacy system replacement and cyber resilience; 20% paper forms digitisation target on track with 30+ RPA processes and Wildlife licensing forms completed.
10% administration budget savings to be delivered through phased, people-centred approach; AI and automation to unlock capacity in frontline roles while maintaining service quality and supporting staff wellbeing.

Tone

Procedural

Topics

public-financeagricultureenvironmental-policyflood-managementdigital-transformation

Key actors

Steve Reed, Secretary of State for Environment, Food and Rural Affairs, Alistair Carmichael MP, Chair of Environment, Food and Rural Affairs Committee, Department for Environment, Food and Rural Affairs (Defra), Environment Agency, Natural England, Rural Payments Agency, Animal and Plant Health Agency

Notable line

“SFI will continue to support sustainable food production and nature's recovery, so we can clean up our polluted rivers and welcome wildlife back to our farms.”

Key Quotes

“The new and improved SFIs offer will better target SFI in an orderly way towards our priorities for food, farming and nature.”
— Steve Reed · On reformed Sustainable Farming Incentive scheme design

“We will not have fixed allocations of money ring fenced to different schemes. Instead, we will learn as we go and find the best ways to manage the overall budget to respond to demand in a way that helps us …”
— Steve Reed · On funding allocation approach and scheme caps

“We are investing £4.2 billion over three years (2026/27 to 2028/29) to construct new flood schemes and maintain and repair existing defences across the country.”
— Steve Reed · On flood resilience investment commitment

“… significant cyber risks will persist unless we can remove all legacy systems from our services.”
— Steve Reed · On digital transformation and cybersecurity challenges

“Defra is committed to delivering the Government's fiscal ambitions while safeguarding high-quality service delivery and supporting our people.”
— Steve Reed · On balancing 10% administration budget cuts with staff wellbeing

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Source · parliament.uk record ↗