Defra’s Water Management Grant in full flow

The second round of Defra’s Water Management Grant is now open for applications, closing on 12 July, 2023.

The Water Management Grant sits within the Farming Transformation Fund, which is designed to provide grants for capital items that will improve business productivity, profitability and environmental sustainability.

The grant is open to anybody who grows, or intends to grow, irrigated food crops, ornamentals or forestry nursery plants. It helps with 40% of the costs of equipment, technology and construction to install on-farm reservoirs and irrigation systems. To be eligible, the grant-funded project must be located in England and the total scheme cost must exceed £87,500. The maximum grant payment per applicant in each round of grant-funding is £500,000.

The grant is competitive, so the Rural Payment Agency (RPA) will score applications and award grants to the strongest applications – those which can demonstrate that their scheme will jointly improve productivity, water sustainability, and environmental protection.

Tenants are able to apply for the Water Management Grant provided that they have a tenancy agreement extending to at least 5 years after the project’s expected completion date. There are no other restrictions, but it would be sensible to encourage dialogue and agreement between landlord and tenant.

Eligible costs are tabled below. Please see the Rural Payment Agency page for advice on costs that the grant will not cover.

The CLA has highlighted to Defra the numerous challenges that applicants for Round 1 of this grant have faced in getting their applications for on-farm reservoirs across the line. Applicants have had to align new abstraction licences and successful planning permission with the stipulated three contractor quotes, alongside added costs from archaeological surveys and inflation.

Round 2 of the grant will be formed of two stages. Compared to Round 1, this will provide more time for applicants to obtain planning permission and abstraction licences.

In the first stage, applicants must register their project on the grant’s online ‘checker’ by the 12th July 2023 at 23:59 and provide basic details about the project. The checker will assess the eligibility of an applicant’s project. Depending on the outcome of the checker, the applicant may be invited to progress to the second stage of the grant application, which will involve submitting a full application to the RPA including planning permission and the project’s abstraction licence(s). The deadline for the second stage is 31st October 2024.

If you unsuccessfully submitted an application in Round 1 of the Water Management Grant, or you dropped out because you couldn’t achieve all the necessary permissions within the timeframe, you can reapply in Round 2. Applicants still in Round 1 are also permitted to drop out of Round 1 and reapply to Round 2 with three new contractor quotes. This may be beneficial to you if the cost of the project has increased since you gathered your three initial quotes.

Defra has allocated £10 million to the grant scheme. However, the CLA has been informed that the £10 million is indicative not prescriptive, meaning that if there is substantially more demand, the budget can expand.

Here are some further aspects worth noting at the outset of an application.

1. You need your grant funding agreement in place before you start work or commit to costs (e.g., paying deposits), enter into any legal contracts or place any orders. Paying project costs before your application starts may render your application invalid.
2. Grants are paid in arrears in up to three instalments for work that is finished and has been paid for.
3. The government will be consulting later in 2023 or early 2024 on whether to lower the threshold size at which raised reservoirs legally require regular inspection by an independent engineer – from 25,000 m3 to 10,000 m3. If your proposed reservoir exceeds 10,000 m3, you should prepare to factor in the additional costs of these inspections within your cost-benefit investment analysis, given the government “is minded” to reduce the threshold. The CLA position is that the benefit of reducing the threshold is not proportionate to the added costs to rural businesses.
4. Applications for reservoirs that will wholly supply neighbouring farm businesses with water are ineligible for the grant.