The 2025 Spending Review must prioritise climate change adaptation as a cross-cutting issue

Successive UK governments have failed to grasp the urgent need to adapt to the risks posed by a changing climate. Daisy Jameson, Anna Beswick and Candice Howarth explain what needs to change and how this can be facilitated by next June’s Spending Review.

The third National Adaptation Programme, published in 2023, outlined the Government’s plans to ensure the country is resilient to the impacts of climate change, but was heavily criticised as falling short and lacking ambition to address the magnitude and urgency of the issue.

In her Autumn 2024 Budget, the Chancellor set out an increase in capital investment of over £100 billion over the next five years. This scale of additional public sector investment, to be allocated in  the upcoming Spending Review (which will now be published in June 2025), presents an opportunity to create a step-change in action on climate change adaptation, but only if it is prioritised as a cross-cutting issue.

Adapting to climate change matters and the UK is under-prepared

Climate change is already affecting communities across the UK. Storm Darragh, which caused significant damage across large parts of the country last week, is the latest in a long line of severe weather events which highlight how vulnerable our energy systems, transport networks and homes are to extreme weather events. Climate change means that events like Storm Darragh are happening more often and are more severe when they do occur.

The UK is also exposed to climate change impacts that hit other countries. These shocks can disrupt supply chains, causing shortages and increasing the cost of goods, including food, that the UK imports. It also creates risks to the UK financial sector.

The UK is under-prepared for the impacts of climate change. We are stuck in a cycle of reacting after climate impacts strike – be that severe floods or heatwaves, such as those experienced during summer 2022 when there were around 3,000 excess deaths in the UK. Failing to prepare increases harm to people and communities and is highly inefficient. The economic benefits of taking planned, proactive action to increase resilience and adapt to climate change are clear. Adaptation should be seen as an investment into the country’s resilience, not an added cost.

A good start would encompass considering adaptation in existing policy measures, including making sure that energy efficiency measures do not contribute to overheating buildings, that the promised 1.5 million new homes are resilient to a changing climate, and ensuring that new hospitals do not flood. Flooded newbuild homes in Blyth, Northumberland, remind us that the success of these commitments and lives of individuals will be seriously undermined if climate resilience investments are not included and delivered.

Why is the Spending Review relevant?

Currently, adaptation is primarily the responsibility of the Department for Environment, Food and Rural Affairs (Defra), with the responsibility of individual risks being held by other departments. This may be why the focus of adaptation to date has been concentrated on areas under Defra’s remit, including flooding and climate change science research.

Spending Review processes do not currently enable investment in climate adaptation, which is a cross-cutting priority. The issue does not fit neatly within the institutional boundaries of government departments or services. Historically, Spending Reviews have allocated spending at a departmental level and negotiations for funding occur bilaterally between individual departments and the centre of government, meaning cross-cutting issues such as climate adaptation are not given priority. The new Government has recognised this and introduced five ‘missions’ in response, as a way of prioritising policymaking. This is a welcome reform to central government organisation and decision-making but the approach fails to incorporate climate adaptation and resilience into these cross-cutting missions, which threatens their achievability. We expect the upcoming Spending Review to prioritise bids that somehow address one or more of the ‘core missions’, risking failure to prioritise adaptation.

The upcoming Spending Review determines government spending decisions until 2029, which could risk locking-in decisions that do not reflect the range and severity of climate risks facing the UK. Climate change also poses a threat to some of the missions, particularly the clean energy and economic growth missions. Not prioritising adaptation action within these missions will fail to optimise critical direct and indirect benefits, such as reduced disruption from extreme weather events, job creation and technology development. It also risks an ever-increasing ‘adaptation gap’ forming – the gap between what is required to deliver a ‘well-adapted UK’ and the rate of current investment. It is the responsibility of government to identify major programmes and investment that will address priority climate risks and provide finance for local action. This will require joint work and bids across government departments to build an integrated approach to funding, avoid inefficiencies and duplication of effort. Working in this way would additionally enable better tracking of the spending on adaptation measures – a process that is currently missing in UK public spending processes.

Another problem is that the UK’s Fourth Climate Change Risk Assessment will be published a year after the next Spending Review. This is a shortcoming in the current reporting cycles, and these timelines should be revisited for future budgetary cycles. For this round, existing estimates on the costs and benefits of adaptation action should be used.

Actions to inform the Spending Review

For the June 2025’s Spending Review we specifically call for:

1. A cross-cutting review that fully considers climate adaptation as a priority. This would build on the third National Adaptation Programme and replicate the Dutch model of ‘spending reviews’. ‘Dutch-style’ spending reviews are interdepartmental and focus on thematic policy areas. The review should be broader than just the Government’s five missions and include a specific review of climate change adaptation, conducted to identify areas where additional investment will be required to a) adapt relevant new bids to a changing climate (e.g. building resilient publicly-owned buildings or infrastructure projects); and b) invest additionally in national and local resilience projects, including emergency response to extreme weather events and retrofitting of existing publicly owned buildings to make them resilient to extreme heat. Including adaptation as a cross-cutting priority in this Spending Review is an urgent priority, given the decade-long wait for meaningful progress and the reality that climate impacts are increasingly affecting the UK. We are running out of time to increase resilience and adapt. Delaying until the next Spending Review would result in higher costs in the long term.
2. Adaptation to be included in the framework government uses to define its priorities and assess Spending Review bids, with higher priority given to projects that can demonstrate that they increase the country’s resilience to climate change. A thorough approach to addressing adaptation in the Spending Review will need to be cross-departmental and may therefore be more effective if run by a department with a relatively greater coordinating function, such as the Cabinet Office. All departments should be required to consider potential climate change impacts on any bids they submit and identify where additional funding allocations will be required to address these risks.
3. The Government to collaborate with the UK’s policy banks (e.g. the National Wealth Fund, British Business Bank, and British International Investment) to develop sectoral strategies that set out investments required for adaptation in the UK and how these organisations will develop innovative financing products for financing adaptation measures, alongside central government grants. These products should consider the most effective way of attracting private finance by reducing the risk associated with these investments. (See here for a previous blog on integrating these policy banks more effectively in government decision-making.)
4. Include a particular focus on increasing funding for local action to respond to climate hazards and shocks, including resources for local authorities. The impacts of climate change will affect communities across the UK in many ways, and many of these local communities are already significantly stretched in terms of resources and capacity. Partners who are responsible for delivering local services, including local authorities, health boards, government agencies, local businesses and non-governmental organisations, are jointly affected by and often responsible for responding to climate risks. Resourcing and supporting partnership approaches to climate adaptation at the local level can help make best use of limited resources and ensure that local priorities are addressed. This is reinforced by the recommendation from the London Climate Resilience Review to develop funding programmes and increase fiscal devolution for regional and local organisations to accelerate climate adaptation.

The upcoming Spending Review will lock in funding decisions until 2030. The coming decade is critical for investing in the country’s resilience, and failing to provide additional public investment will lead to an even greater adaptation gap and fail to catalyse the private investment required to meet the country’s adaptation needs. We therefore recommend that processes are established at the start of the Spending Review to ensure adaptation is made a cross-cutting priority next June.