Will FCERM funding reform deliver for the coast?

23 June 2026

Mark Stratton, chair of CIWEM’s Flood and Coastal Erosion Risk Management Specialist Panel, considers the impact of new rules on coastal communities at risk

After more than two decades of working within the flood and coastal erosion risk management (FCERM) sector, currently as head of policy, environment and research at Coastal Partners, a local authority partnership on the south coast of England, I’ve seen the ebb and flow of policy, the shifting focus of outcome measures, and the peaks and troughs of funding as government priorities change.

Yet despite this constant flux, many of the fundamental challenges facing practitioners, especially at the coast, have remained stubbornly consistent. Now, with the introduction of the long-awaited funding reform from the Department for Environment, Food and Rural Affairs (Defra), the rules governing how we plan and deliver FCERM schemes have changed once again. The key question is: how will these reforms shape the outcomes for coastal communities at risk?

Out with the old

Partnership funding was introduced in 2011 with the ambition to bring in funding from the private sector to supplement grant-in-aid investment from Defra. In essence, the more homes that are better protected, the more grant funding a project could receive. Where shortfalls existed, funding from other partners and beneficiaries needed to be found to close the gap.

There is no doubt that partnership funding was transformative. It supported a cultural shift towards collaborative working and led to the delivery of many projects that might never have progressed under a traditional grant‑only approach. As a result, many projects have been delivered which not only better protect communities, but which also enhance their lives, their wellbeing and their economic prosperity.

However, whilst of its time, complexities around the partnership funding policy meant that even projects that were recommended by shoreline management plans and FCERM strategies, had strong benefit-cost ratios, and which could reduce risk to hundreds or even thousands of homes, still required significant contributions from alternative funding sources. The economic climate changed, contributions became harder to come by and even when they were found, the intricacies within the complex partnership funding process meant that practitioners spent a disproportionate amount of time trying to make the funding process work rather than getting on with delivering projects. Change was inevitable.

In with the new

In 2025 Defra announced and consulted on FCERM funding reform, with a vision to move towards a more flexible, proportionate, efficient and inclusive approach. This reform sits within the government’s £10.5 billion commitment to long‑term resilience and came into action on 01 June 2026. A central change is that funding levels will now directly depend on project classification: refurbishment of existing assets is eligible for 100% funding; while replacement and new or improved schemes are fully funded up to £3 million, with 90% funding available above that threshold.

However, funding is still finite, and projects will now be assessed in terms of their value for money and on the societal benefits they provide, relative to the government grant being requested. This new, transparent method for calculating a project’s return on government investment will help create a nationally prioritised list of projects.

Defra’s funding reform demonstrates the clear intention to shift towards prioritising a broader range of outcomes beyond traditional benefit-cost ratios. Conceptually, this aligns with recent updates to The Green Book – the Treasury’s guidance on appraisal – and could introduce a more balanced, place-based approach to FCERM investment. This potentially marks a significant shift toward greater clarity and consistency for risk management authorities (RMAs) such as local authorities, lead local flood authorities and internal drainage boards.

So what will this mean at the coast and who will be the winners and losers?

Large coastal FCERM schemes

Coastal schemes can typically require more funding upfront to deliver than non-coastal schemes given their exposure to tides, surges, currents, saltwater, future sea level rise and waves.

There have been very few coastal schemes under £3 million, so it seems likely that very few will benefit from 100% grant funds in the future. It’s concerning that large capital coastal schemes running into the tens or hundreds of millions of pounds may rank much lower nationally than their inland equivalents using the value-for-money approach, despite potentially protecting thousands of homes from flooding and erosion. On top of this, local authorities are very unlikely to be able to secure the remaining 10% of funding contributions given that they will be entering an era of local government reorganisation from 2027/28 onwards.

The era of partnership funding demonstrated that local authorities could no longer afford to plug funding gaps. While the new rules reduce the scale of contributions needed compared with partnership funding – an outcome which can only be heralded as very positive – this is only helpful if schemes rank highly according to Defra’s value-for-money metrics. Positively, attracting more funding contributions can push a project up the national prioritisation list; but will this actually happen given the potential scale of funding required for expensive coastal projects?

Asset refurbishment

It’s fantastic to see the refurbishment of assets playing a greater role. It’s an acknowledgement that investment in existing assets can delay major capital replacement costs for many years. These sorts of smaller scale interventions will certainly help the government unlock significant short-term outcome measures in terms of homes better protected.

Whether coastal FCERM schemes will benefit here remains to be seen given that many local authority-owned coastal assets have suffered from significant long-term underinvestment due to past exclusions from grant-in-aid funding, with a large proportion of them at the end of, or past, their intended design lives. Ultimately, a significant number of coastal flood and erosion risk assets now urgently need capital replacement. This presents a risk given that the proposed split of funding as set out in Defra’s funding reform consultation shows an overall reduced availability for capital schemes compared to refurbishment.

Unfortunately, the Defra funding reform also makes no mention of providing local authority risk management authorities with grant funding for maintenance of their existing flood and erosion risk assets. This long-established disparity results in a postcode lottery for communities at risk.

Further benefits for coastal communities

Static homes are acknowledged as a specific form of residency within the context of flood risk. The reform seeks to increase the weight given to social vulnerability, and residential caravans and park homes can now be counted as households, provided they meet the criteria for permanent occupancy. This is a great outcome for many coastal locations where often quite large caravan parks exist as a significant proportion of housing. So now if a caravan park is severely affected, the economic cost of damages can be factored into the cost-benefit analysis which will help to drive up the priority score of any schemes in these locations.

The reforms also intend to relax the historic "2012 rule" that excluded newer housing developments from consideration in cost‑benefit analysis. This is a double-edged proposition: while it broadens the assessment of what’s at risk, it raises questions about future planning decisions at the coast. There is a danger that developers may become less incentivised to design safe, future‑proofed coastal developments if they expect FCERM investment to protect new assets. Including post-2012 properties may improve scheme viability and outcome measure reporting for areas where recent development has taken place, but it also risks incentivising poor planning decisions at the coast that future generations will not thanks us for.

A shingle beach at Eastoke Corner, created as part of a beach recharge project in 1985, protects this part of Hayling Island from storm events.

The reform’s prioritisation of funding towards deprived areas is a positive signal for coastal towns. The requirement for at least 20% of national investment to be directed to deprived communities is very welcome, particularly focusing on reducing flood risks in socio-economically deprived areas. With significantly higher, often overlooked, deprivation in many of England's coastal towns compared to inland areas, this can only be seen as a hugely positive outcome of the funding reform for the coast.

Prioritising tailored support for rural or coastal communities that may face distinct or higher levels of flood and erosion risk is loosely referred to in the funding reform. How this will play out remains to be seen until clearer guidance has been published, but there is some hope that it could bring improved benefits for rural isolated communities which would otherwise be unlikely to benefit from risk reduction schemes.

Missing pieces

Coastal adaptation is still missing from the funding framework. The Defra reform disappointingly makes no mention at all of the need for adaptation along the coast and instead focuses on the protection of homes at risk now. So where does this leave all the locations that won’t get prioritised for new schemes or where property flood resilience (PFR) will not be possible? Adaptation to flood risk is likely to be equally if not more important than adaptation to erosion risk as sea levels rise over the next century.

Notwithstanding the use of £200 million of government funding to support the Flood and Coastal Resilience Innovation Programme (FCRIP) and Coastal Transition Accelerator Programme (CTAP) – aimed at improving community resilience and furthering the understanding of the need for coastal adaptation to erosion risk – there remains no wider policy or funding in place to help practitioners develop investment, transition and adaptation plans at the coast to either erosion or flood risk. There is also no mention in the reforms of funding to help adapt to the risk of flooding and erosion to legacy coastal landfill sites, of which there are up to 1,200-1400 sites nationally, depending on how one classifies risk.

The reform’s approach to natural flood management (NFM) could also be problematic at the coast. That’s because the new rules will prioritise projects that incorporate NFM, with the guidance setting minimum programme targets for NFM investment. What this means for the coast is uncertain, with often limited space for NFM along long coastal linear strips. Mainstreaming NFM is of course very welcome, but caution is needed to ensure that prioritising it does not distract from community level projects with longer lasting benefits.

Prioritising innovative resilience measures such as sustainable drainage systems (SuDS) and PFR is part of the reform’s ethos. This will hopefully help alleviate flood risk in areas where large capital schemes are simply not possible. However, whilst PFR can be a positive option, at the coast it only offers temporary benefits to flood risk (10-15 years) and isn’t always technically achievable. Beyond this the only real solutions left are either large-scale capital schemes – which are often difficult to justify on cost or technical grounds in these locations, hence why PFR is the option in the first place – or serious conversations about adaptation and relocation. So, there is a pressing need to pair PFR with longer term adaptation and transition planning beyond 10-15 years for these coastal communities.

How costs and optimism bias is treated will be important. For all FCERM schemes the reform introduces a higher standard uplift to early cost estimates to account for optimism bias (the tendency to underestimate costs at the early planning stage). Large, heavily engineered coastal FCERM schemes may face the highest uplifts due to their scale, complexity, climate-change driven costs and construction risk. The effect of this could be significant – projects that seem viable at outline stage may fall below funding thresholds once the uplift is factored in.

Pathways ahead

The Defra funding reform offers hope for the coast, but significant gaps remain. Whilst the proposed model includes welcome elements such as simplified contributions, a more holistic approach to benefits assessment and targeted help for various known challenges, it also risks overlooking the complexity, cost and the strategic importance of coastal projects as well as long-term adaptation planning.

With largely no more funding being made available than before, the cake will still need to be cut up. Without sight of the nationally prioritised list and an understanding of the proportionality of the funding split between project classifications, which schemes come out on top is, at the time of writing, anyone’s guess. Will all the funding get eaten up by small schemes – NFM, SuDS or PFR projects under £3m? Or will capital maintenance win the day and fix years of underinvestment in important infrastructure? How will large coastal FCERM schemes fare in the prioritisation process and will there be enough funding to deliver them if we include the high levels of prescribed optimism bias?

Finally, will the sector and supply chain be ready for the many shifts in focus? There are still many more questions that need to be answered.

As an FCERM practitioner it can sometimes be easy to get lost in the guidance and the many competing pressures that shape coastal projects, from funding rules to political priorities. At its core, though, the aim is straightforward: as public servants working for risk management authorities, the responsibility is to deliver projects that ultimately lead to outcomes which improve the quality of life of those living at the coast. With this in mind, let’s welcome the Defra funding reform and do our best to implement it for the betterment of society.

--

Learn more about CIWEM’s Flood and Coastal Erosion Risk Management Specialist Panel here. If you'd like to join the panel, please email policy@ciwem.org.

This article appeared in the Summer print edition of The Environment. Become a member of CIWEM today to gain access to the quarterly magazine, as well as digital access via MyCIWEM. Non-members can also access the monthly The Environment digital newsletter.

Mark Stratton is chair of CIWEM’s Flood and Coastal Erosion Risk Management Specialist Panel and head of policy, environment and research at Coastal Partners