The National Audit Office has highlighted ongoing challenges facing the Department for Environment, Food and Rural Affairs as it seeks to reform the water system and improve environmental delivery. In its overview of Defra’s 2025-26 performance, the NAO identified water reform as one of the department’s priority outcomes, alongside protecting consumers, supporting growth and enhancing the environment.

The NAO said environmental targets remain largely off track despite some delivery improvements. It also found that outdated IT systems, fragmented data, capacity constraints and difficulties measuring productivity continue to limit Defra’s progress.

Defra is responsible for strengthening resilience across areas facing increasing pressures, including climate change, flooding, animal disease and disruption to food supplies. While the department has made progress on preparedness, the NAO said significant challenges remain in improving long-term resilience, adapting to future climate risks and strengthening critical infrastructure.

The NAO’s earlier environmental-regulation report also found that Defra’s oversight and funding arrangements do not give regulators enough flexibility to prioritize activities likely to deliver the greatest environmental outcomes. It said regulators’ performance measures are mainly based on detailed inputs rather than broader environmental outcomes.

The Environment Agency and Natural England have been constrained by limitations in their systems and how they collect and use data. The NAO also identified skills shortages, limited resources, a culture of risk aversion and gaps in the regulatory and legislative framework as barriers to effective regulation.

The NAO said Defra’s regulatory approach has tended to focus on short-term priorities or high-profile issues, such as waterway pollution and waste crime, rather than following a coherent strategy. It recommended that Defra and regulators take a focused, integrated approach to reform.

The report comes as water reform and environmental delivery remain central priorities for Defra. The NAO’s findings underline the need for stronger data systems, better regulatory planning, improved resilience and clearer links between investment, regulation and environmental outcomes.