Defra has not established what the appropriate balance is between building new defences and maintaining existing ones. The Agency is responsible for maintaining its existing assets and has assessed that optimal value for money is achieved when 98% of its high consequence assets are maintained at their required condition. A lack of funding means the Agency has not been able to maintain assets at this level. 203,000 properties are at increased risk because assets are below their required condition, more than the 200,000 better protected through the capital programme. Because of the slow start to the capital programme, the Agency spent £310 million less than planned in the first two years. Neither Defra nor the Agency considered whether to use some of this underspend to meet the shortfall in maintenance funding and instead agreed with HM Treasury to defer it to the remaining four years of the programme. For 2023–24, Defra has provisionally agreed with HM Treasury to transfer £25 million from the capital programme to maintenance. This is only enough to get to 94.5% of assets in target condition, still well below the Agency’s target of 98%. Recommendation 3: For the remaining years of the capital programme, the Agency should set out the value for money of different options for the balance between capital and maintenance budgets, and whether there is a case for transferring funds between the two. This should be reviewed annually. The results of the review should be reported to the Committee as soon as completed and used to inform Defra’s and HM Treasury’s funding decisions.