Update: Defra commissioned IDB Funding & Cost Study

by William Riley, Senior Consultant, ICF

 After several months of evidence gathering, analysis and engagement across the sector, the Defra and MHCLG commissioned review of internal drainage board (IDB) funding and costs is moving into the next phase: developing options for future funding models and modernising IDB reporting arrangements.

Since September 2025, the research team has undertaken a wide‑ranging programme of data analysis and fieldwork to build a detailed picture of how IDBs are funded, how they operate, and the pressures they face. This has included cleaning and analysing ten years of IDB1 financial data and balance sheet data for 65 IDBs, delivering a sector‑wide survey (with 75 responses), and carrying out interviews with a range of stakeholders including IDBs, other comparable water management organisations, local authorities, and beneficiary groups. Eight case studies are currently underway, covering IDBs of different sizes, funding structures, and operating contexts, alongside comparator studies with other water‑management bodies.

Initial findings point to a sector experiencing rising financial pressures. An increasing number of IDBs are operating at a net loss, often with limited reserves, while facing increases in energy, administrative and climate‑related costs. Capital expenditure is also rising, though largely driven by a small number of major schemes. The analysis suggests that efficiency varies noticeably across the sector, influenced by size, management arrangements and the nature of each IDB’s asset base. Transparency in reporting and governance practices is similarly mixed, with some larger, special levy‑dominant IDBs showing opportunities for improvement.

Alongside the financial and operational diagnostics, the team has developed a framework to help assess IDB benefits across effectiveness, efficiency, equity, and transparency. This framework will be refined through the ongoing case studies and stakeholder discussions.

With this evidence phase nearing completion, attention is now turning to forward‑looking components of the review. Upcoming work includes long‑term financial stress‑testing, examining how different funding arrangements might perform under a range of scenarios, and developing a menu of potential funding model options. In parallel, the team will explore how the IDB1 form and wider reporting processes could be modernised to improve transparency, usability, and reduce administrative burden.

The final outputs will include a full report with findings and a proposed set of options for reform. These will be disseminated via a series of webinars with stakeholders later this year. Engagement with IDBs, councils, and other partners will continue throughout, ensuring that the insights and proposals are grounded in real‑world experience across the network.

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