EIA Raises Concerns Over DEFRA Cuts and Potential Delays to Environmental Permitting
London, 12 June 2025 — The Environment Industries Association (EIA) today voiced serious concerns
over the implications of recent funding decisions for the Department for Environment, Food and Rural Affairs (DEFRA), warning that budget cuts could lead to further delays in environmental permitting and licensing processes managed by the Environment Agency.
Following the Chancellor’s Spending Review announcement yesterday, the EIA policy team have been closely analysing the details behind the headline figures. While the review outlines long-term investments in infrastructure—including rail, nuclear, carbon capture, NHS, and housing—these projects are unlikely to deliver immediate economic growth. This concern is underscored by today’s Office for National Statistics (ONS) report showing a 0.3% contraction in the UK’s economy.
Michael Lunn, CEO to the Environmental Industries Association stated “While we welcome the government’s commitment to long-term infrastructure, the lack of short-term support for business and specifically the Environmental Services and Technology Sector and continued constraints on specialist environmental consultancy spending are troubling”.
“The Chancellor is clearly banking on future growth, but the timeline for returns is uncertain—and the risk of further tax measures in the Autumn Budget remain high”.
Buried within the 128-page Spending Review document, the EIA has identified specific concerns regarding DEFRA’s financial settlement. Although DEFRA is set to receive £7.4 billion in total funding by 2028–29, and £16 billion in capital funding over the review period (representing an average real-terms growth rate of 2.5% per year), this comes with a mandate to deliver at least 5% in savings and efficiencies during Phase 2 of the review.
These savings include £144 million in technical efficiencies identified through the Zero-Based Review (ZBR), and a shift toward increasing in-house digital capabilities to reduce reliance on external contractors. While digital transformation is welcome, the EIA warns that such measures must not come at the expense of timely and effective environmental regulation.
To meet these financial targets, DEFRA will explore a range of cost-saving measures, including the integration of advanced artificial intelligence (AI) technologies. With rapid advancements in AI capabilities, the department is assessing which operational workloads—such as data entry, support services, analytical functions, and communication roles—could be enhanced or replaced by automation.
AI systems offer significant potential to improve efficiency through faster data processing, streamlined communication, and reduced administrative overheads. Technologies such as AI-native languages, including Gibber Link, enable machines to exchange and interpret data at unprecedented speeds, offering a transformative opportunity for internal operations.
While AI cannot replace all human-led tasks—particularly those requiring in-person research and fieldwork—it can support the department by accelerating data interpretation and publication, ultimately reducing wage costs and enhancing service delivery.
In parallel, DEFRA is reviewing its permitting and licensing frameworks. Many current processes are seen as overly complex and time-consuming. By redesigning these systems, the department aims to reduce administrative burdens, improve user accessibility, and lower operational costs.
However, DEFRA acknowledges the potential risks associated with regulatory relaxation. Looser controls could lead to increased environmental degradation, including higher emissions, waste, and habitat destruction. The department remains committed to balancing efficiency with its core mission: protecting green spaces, promoting soil health, supporting agricultural productivity, and conserving wildlife.
Peter Atchison, Chair of the Remediation of Land Working Group stated that “Delays in permitting and licensing not only hinder environmental protection but also stall investment and innovation in the green economy. We urge the government to ensure that cost-cutting within DEFRA does not compromise the Environment Agency’s ability to deliver on its critical responsibilities.”
The EIA will continue to monitor developments and engage with DEFRA and other stakeholders to advocate for a balanced approach that supports both fiscal responsibility and environmental stewardship.
Flood Defence Funding
- The government has committed £4.2 billion in Total Departmental Expenditure Limit (TDEL) over the period 2026–27 to 2028–29 specifically for flood defence infrastructure.
- This represents a 5% annual increase in the flood defence budget, aimed at protecting communities across England from increasing flood risks due to climate change and extreme weather events.
Nature-Based Solutions and Reservoirs
- While there is no direct mention of new reservoir construction in the Spending Review, the funding strategy includes nature-based solutions that may indirectly support water storage and flood mitigation.
- DEFRA’s broader capital funding of £16 billion over the review period includes investments in sustainable farming, nature recovery, and environmental resilience, which are often linked to catchment-based flood management and wetland restoration.
DEFRA Operational Budget
- Despite capital investment increases, DEFRA’s day-to-day spending will decrease in real terms—from £4.8 billion in 2025–26 to £4.7 billion by 2028–29, a 2.7% annual reduction.
- This may place pressure on staffing and operational delivery, even as capital projects expand.
But there were some winners:
The government will invest in the critical national infrastructure needed to connect this country‘s cities and towns. The settlement will provide £10.2 billion for rail enhancements (excluding HS2) over Phase 2, including:
- £3.5 billion to drive delivery of the TransPennine Route Upgrade, improving connectivity and reducing journey times between Manchester and Leeds, from 55 to 41 minutes. This will be delivered by the early 2030s;
- Continued delivery of East-West Rail with £2.5 billion investment to provide new connectivity and unlocking growth across the Oxford-Cambridge corridor;
- £300 million for rail investment in Wales, including for the Burns Review stations, North Wales Level Crossing, Padeswood Sidings and Cardiff West Junction. This SR and the upcoming 10-year Infrastructure Strategy will recognise Wales’ long-term infrastructure needs and will deliver at least £445 million of rail enhancements to realise them;
- Funding to progress the next stage of Midlands Rail Hub West, strengthening connections from Birmingham across the West Midlands and to other regions.
- £25.3 billion is provided under this settlement to progress delivery of HS2 from Birmingham Curzon Street to London Euston. This funding will support the full reset of the HS2 programme under the leadership of the new Chief Executive, addressing longstanding delivery challenges.
Angela Rayner’s department emerged as one of the biggest beneficiaries of the Spending Review, despite a challenging fiscal environment:
- Capital Investment:
The department secured £39 billion in grants over the next 10 years to support new housing developments. This funding will be distributed among local authorities, private developers, and housing associations to accelerate housebuilding and regeneration efforts. However, with the current skills shortages the delivery of spades in the ground will be challenged in the short term. - Day-to-Day Spending:
Despite the capital boost, the department faces average annual cuts of 1.4% in its day-to-day operational budget from 2025–26 to 2028–29. The total settlement for this period is £16.7 billion - Policy Focus:
The funding is intended to support Rayner’s ambitions to revitalise local communities, expand affordable housing, and devolve more powers to local governments. However, the operational cuts may challenge the delivery of frontline services unless offset by efficiency gains. This may lead to Councils turning to the need to uplift their local Council precepts to balance Council budgets.
Local Government and Devolution
- The Spending Review includes a renewed focus on regional rebalancing, with significant infrastructure investments directed toward Northern and the Midlands regions.
- Local transport projects, such as tram expansions in Manchester and Birmingham and upgrades to the Tyne and Wear Metro, are part of a broader strategy to stimulate regional growth
Sunil Shah, Chair of the EIA Sustainable Buildings Working Group said
“We welcome the Government’s £13.2 billion commitment to home decarbonisation through the fully funded Warm Homes Plan”
This initiative represents a vital step forward in delivering warmer, more energy-efficient homes, reducing household bills, and addressing the climate crisis. Last week’s announcement that all new homes in England will be equipped with renewable energy as standard was a significant milestone. Yesterday’s announcement builds on that momentum, offering much-needed certainty for both industry and consumers.
By supporting the rollout of low-carbon technologies, including retrofitting, the Warm Homes Plan will help accelerate the UK’s transition to a cleaner, more sustainable future. We look forward to reviewing the full details of the plan in due course.”
Jim Mills, Chair of the EIA Air Quality Working Group expressed disappointment that Air Quality did not feature significantly with only one mention, however, that was in the context of agricultural impacts presumably linked to methane emissions.
For more information please contact:
Environment Industries Association (EIA)
Membership@EIAssociation.co.uk
www.EIAssociation.co.uk
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