Nature Restoration Levy Regulations 2026

My Lords, as Members will recall, the Government have been consistently clear in our commitment to get Britain building and to deliver the homes and infrastructure this country needs, but we have been equally clear that this must go hand in hand with improving outcomes for nature. To honour that commitment, we legislated to introduce the nature restoration fund through the Planning and Infrastructure Act. The Government are incredibly grateful to Members of this House, not just for the late nights on the then Planning and Infrastructure Bill but for the very constructive engagement throughout the Bill’s passage which has ensured that the NRF provides a robust framework to support development and secure a lasting legacy of environmental improvement. The Nature Restoration Levy Regulations provide the statutory framework for the operation of the nature restoration levy which sits at the core of the NRF. Before I get into the detail of the regulations, I want to respond to the amendment before us. I want to be clear that the nature restoration levy has not been designed to undermine development viability. On the contrary, the levy is intended to provide developers with a clearer, more certain and more streamlined route to meeting specific environmental obligations. The legislation includes a number of safeguards to ensure that levy rates are set appropriately and are based on the cost of delivering the conservation measures needed to materially outweigh the impacts of development on a protected site or species. Natural England will be required to consult on proposed charging schedules as part of the environmental delivery plan process and levy rates will be carefully considered by the Secretary of State before an EDP is made. Through this approach, we are ensuring that development contributes fairly to environmental improvement while providing the certainty needed to support the delivery of essential homes and infrastructure. As noble Lords will be aware, the purpose of the NRF is simple—to ensure that vital development is delivered while taking more effective action at strategic scale to deliver better outcomes for the environment. This approach will move us away from piecemeal interventions on a site-by-site basis and will secure the delivery of conservation measures that go further than maintaining the status quo to drive genuine environmental improvement. Before we consider this instrument in detail, it is important to note that we are not today debating the fundamental principles that underpin the nature restoration fund. The enabling powers for these regulations are contained in the Planning and Infrastructure Act, which was subject to extensive scrutiny by both Houses and approved by them. Shifting to a strategic approach requires proper planning, which is why the creation of environmental delivery plans sits at the heart of this new approach. EDPs will be developed by Natural England, the Government’s adviser on the natural environment, and will demonstrate how the proposed package of conservation measures delivered by the EDP will materially outweigh one or more impacts of development on a protected site or species. Each EDP will be subject to public consultation, providing an opportunity for stakeholders to scrutinise the evidence presented by Natural England. At the conclusion of that consultation process, the Secretary of State will consider whether the EDP meets the overall improvement test established through the Act before they formally make the EDP. Where an EDP is in place, developers will have the option to pay the nature restoration levy to discharge the relevant environmental obligations that the EDP covers. That brings us to the subject of our discussions today, as the Government have been clear that the action delivered through the EDP will be funded through proportionate contributions from development. This ensures that developers continue to address the environmental impacts of development. The Nature Restoration Levy Regulations set out how the levy mechanism will work in practice. They provide the statutory framework for key elements of the levy’s operation, including how liability to pay the levy may be assumed, imposed or transferred. They also explain how the amount of the levy will be calculated, when the payment will be due and the enforcement mechanisms available to Natural England where obligations are not met. The purpose of the nature restoration levy is to enable the delivery, management, maintenance and monitoring of the conservation measures identified in the relevant EDP. These regulations therefore provide clear safeguards to support the effective delivery of EDPs. They ensure that payments from developers are sufficient to meet the costs of the relevant conservation measures, are properly recovered in a timely manner and are aligned with the commercial realities of development. Levy rates will be set through individual EDP charging schedules which will form part of the EDP consulted on. These charging schedules will be based primarily on the cost of delivering the conservation measures that are needed to materially outweigh development impacts. At times during passage of the Planning and Infrastructure Act, concerns were raised that funds collected through the nature restoration fund might be diverted to pay for other, unrelated priorities. However, I can reassure noble Lords that these regulations ensure that levy funds can be used only for the delivery of conservation measures set out in the relevant EDP and administrative expenses connected with that EDP. Clear reporting requirements around how levy receipts are spent will further enable the NRF to operate transparently and with appropriate scrutiny. While the levy regulations are a key part of the new system, we recognise that users will need proper support to navigate the NRF. Initial guidance has now been published by MHCLG, Defra and Natural England to support the implementation of the first EDPs. This guidance sets out the key steps for NRF users and explains the core operational processes that will underpin the NRF system. The Government will continue to work with stakeholders to identify further areas where guidance might assist in the delivery of the nature restoration fund. I trust that the House will agree that these regulations will support the effective implementation of the NRF and the rollout of EDPs. I beg to move.

My Lords, I thank the Minister for introducing these regulations. Although I am pleased to see her in her place, I wonder why they are being introduced by the Minister of State for MHCLG, when we were assured during debate that the responsible department and Secretary of State for administering EDPs and Part 3 of the Act would be Defra. I draw the House’s attention to my entry in the register of interests as a landowner with land that has planning consent for residential development, although I believe it is not captured by the regulations being debated today. These regulations follow the Planning and Infrastructure Act 2025 and form part of this Government’s new approach to mitigating and compensating for environmental impacts caused by developments. Under this new regime, it will be for Natural England to determine the environmental impact of developments and the conservation measures required through new environmental delivery plans. Natural England will determine the levy as well as how the funds will then be spent. Natural England’s recent performance has undermined confidence. The High Court found that the quango had acted irrationally and beyond its powers in the licensing of game bird releases. Its approach to reduce livestock grazing on Dartmoor caused controversy, as the unintended consequence would have been a sharp reduction in pony numbers, which apparently caught it by surprise. The quango then tried to shift the blame on to the Government. Its track record in planning is also poor, with the infamous bat tunnel on HS2 and the fish disco at Hinkley Point both being designed to meet its onerous demands, as well as the unnecessary Ebbsfleet SSSI jumping spider decision. My main concern with these regulations is that they make no mention of considering the financial viability of developments. This puts Natural England’s demands over and above education, health, transport infrastructure, affordable housing and other things. We on these Benches care deeply about the importance of protecting and improving our natural world. However, putting the demands of nature over and above our health, our housing and our children’s education is dangerous as, for many of our countrymen, it will make nature a threat to their direct needs. How can we trust Natural England to assess environmental impact accurately when the greater that assessment, the greater the funds it receives? When creating EDPs, how can we trust Natural England to deliver value for money without any market competition? Is Natural England really the right body to be making balanced judgments about how much should be contributed under the NRL? This is simply extending the size and power of the state, always with good intentions but always with the same negative results. This cost, without any accountability, risks making even more developments unviable. Many housing schemes are already stalled due to financial viability issues, as developments have been treated as a Christmas tree that can solve all of society’s demands. Developers may still opt for site-specific mitigation measures, but this means carrying out assessments separately from the EDP. Even then, Natural England can choose to make the NRL mandatory. Can the Minister clarify in what circumstances the levy payments could be made mandatory? Can this apply when a developer is willing and able to comply with the existing mitigation hierarchy? Will developers still be allowed to opt for existing compensation measures through the nutrient neutrality and biodiversity net gain markets within that hierarchy? This is an important element of nature restoration and financial underpinning for many land managers. Not only does Natural England compete unsuccessfully with private sector BNG and NN developers but it can also now eliminate that competition, apparently at will. It looks as though the charging rates may be set very differently for each environmental delivery plan, and the Secretary of State will also have the power to change the payment rate of an EDP without consulting Natural England or developers. How will the Government ensure consistency for developers? What happens when a development happens to cross two or more EDP areas? These regulations are disappointing. They put nature in opposition to core societal needs by ignoring the financial viability of the levy. They put the bureaucrats of Natural England in charge of nature restoration, undercutting private markets without any apparent limitations on what it can extract from developers. There is no acknowledgement of the mitigation hierarchy, nor recognition of the importance of nutrient neutrality and biodiversity net gain markets. In fact, in many regards they seem to have been drawn up as though the debates and commitments that we heard in Committee and on Report on the Planning and Infrastructure Act never happened. I look forward to hearing the contributions of other noble Lords and the Minister’s response. Perhaps the Minister could at least commit to restricting these EDPs to nutrient neutrality, where they will do the least harm. Following the Government’s bizarre determination to impose habitats regulations on Ramsar sites, limiting the development of at least 100,000 houses, there is clear demand for nutrient neutrality units. The Minister was very generous with her time in discussing this when we brought the Bill through the House. If she is unable to give consideration to that, perhaps she could commit to withdrawing these regulations and thinking again. If neither of those things is possible, I would be minded to test the opinion of the House. I beg to move.

My Lords, I am conscious that we spent a lot of time on the primary legislation trying to understand this, and I am not overly convinced that these regulations help. I have been carefully reading Commons Hansard, with Minister Matthew Pennycook explaining. Some things in there surprised me. It should be a matter of concern for the Government that, for example, the tech needed to undertake this whole process is still not ready, and it is unclear how this will move forward. I also share my noble friend Lord Roborough’s concerns. I had a response from the Defra Minister saying that the Secretary of State for Defra would be issuing the guidance on all these matters. It is accurate to say that Defra issued guidance, but it did so in conjunction with MHCLG. This comes back to some of the ongoing nervousness about who is really driving this. Is Defra just an add-on? The reason I say that, in a different way, is that yesterday Minister Matthew Pennycook talked about wanting to make clear that the Government would protect developers who choose to use the NRL from unjustified costs. It is unclear to me who will determine which costs are unjustified. We know we are proceeding in a novel way in trying many years ahead to forecast how much the costs of these different EDPs are going to be, and there will be scrutiny of that. I understand that the first EDP addresses nutrient neutrality in Norfolk. I would like to understand from the Minister why the consultation on the EDP is expected to last for only 28 days. That feels a very short time for the first ever of these models, and a considerable amount of effort will need to be put in to assess them. The other surprise is that that part of the country is one of the better areas for having got a green finance market going. This is undermining a lot of the issues that we face in trying to make these a success, so it would be useful to understand from the Minister why we are starting there. There are plenty of other places dealing with nutrient neutrality issues—I think of the Solent, parts of Somerset and the like—where there is not the same level of green finance market already under way. I do not know whether it is the regulations or the primary legislation that allows the Secretary of State to change the levy rate at any time without notice, but I am trying to understand when that would be the case under these regulations and why that would not require any consultation. I was pleased to see Minister Matthew Pennycook say: “In the case of the first EDP that we bring forward, it will be the DEFRA Secretary of State who makes the judgment on whether the EDP is to be made following consultation ”.—[Official Report, Commons, Fifth Delegated Legislation Committee, 2/9/26; col. 9.] Based on what was said in this Chamber, my hope and expectation was that the Secretary of State for Defra would make all the decisions on every EDP, not just on the first. As we embark on these novel ways of trying to improve nature—I respect that the Government are trying to do that—I would be grateful if the Minister could try to answer those questions. There is another surprising element that is also surprising developers. I know that a developer can ask for several quotations—I think the word used is “quotes”—to understand what it might be getting into, but, in effect, once it has made its planning application and the commitment to pay, it is locked in. That is an interesting challenge. I know that Natural England, in trying to develop the EDP, will need some certainty on financing, but, bearing in mind what my noble friend has just referred to, confidence is not high. The other issue, which I hope does not come through, is that in the primary legislation Natural England was able to delegate EDPs to anybody. Again, it is not clear how that bit is monitored and managed through these regulations, especially considering the 28-day consultation period. There are many issues to raise, and I am sure that others will bring up various points. All I can say is that this does not feel as though it has made the whole process clearer; in fact, it has genuinely muddied the waters, particularly those around nutrient neutrality.

My Lords, these regulations have been drawn to the special attention of the House by the Secondary Legislation Scrutiny Committee on the basis that they are politically or legally important or are a public policy likely to be of interest. I have some points to raise. I am not necessarily coming from the point where my noble friends are, or from the point of developers, but I recognise the importance of getting developments properly done. The new impact assessment has not been conducted, despite the prior impact assessment not assessing impacts beyond those relating to nutrient pollution. This also means that we still have not seen sufficient evidence to justify the need for these new provisions. The draft regulations are not strong enough to safeguard against abuse of the system. The details set out in the draft regulations will not protect local protected species and sites from the Planning and Infrastructure Act 2025. Natural England will be expected to pick up the bill for developer obligations in several scenarios, despite being under massive, sustained budget pressures itself. These include not being able to apply surcharges for failure to pay sums under £1,000, not being able to enforce local land charges with less than £2,000 outstanding, and having to absorb some degree of cost where material changes occur that will cost more money. Under draft Regulation 23(2), Natural England could reduce levy fees if it is expecting other sources of funding, which I understand means that public money could be used to offset the harm done by private development. It is unclear to me whether Natural England can include the cost of designing the conservation measures in the levy amounts. Failure to do so will heavily incentivise generic copy-and-paste measures over more ecologically appropriate measures. The Secondary Legislation Scrutiny Committee has highlighted several issues, including the lack of clarity over what the fund levy would look like in practice. Environmental organisations strongly oppose the environment delivery plan model. Nonetheless, if it is going to go ahead—and I believe it will do—some measures must be taken to limit the damage done by this model. Natural England should be driven by environmental outcomes, not financial viability for developers. Public funding should not be used to reduce the rates in a charging schedule for private developers, as would be possible under Regulation 23(2) of the draft text. Natural England should be explicitly permitted to include the cost of designing conservation measures within the charging schedules. Appeals should be dealt with by independent, non-political actors and not a Secretary of State. A full assessment must be conducted on the impacts of the environment delivery plan system before the first plans are enacted. These impacts should be considered during the design of the plans to avoid avoidable harms to protected species, protected sites and other environmental features, and the stakeholders involved. I urge the Government to make meaningful changes to tackle the issues that are raised here as I suspect that, despite the endeavours of many, these regulations will go ahead. But as my noble friend has said, there is a good case for taking these away and thinking again.

My Lords, environmentalists are up in arms on the nature restoration fund and EDPs because they break the link between a development and its nature mitigations. Developers are saying that the cost, risks and delay are making development unviable, while everybody argues that nothing is getting built in those areas of the country with the greatest housing potential. Taken together with all the environmental fees, charges and other levies, it has put the price of a new home up by about £30,000 to £40,000 in the last five years. The hard truth is that well-meaning but counterproductive nature levies and other levies are damaging our economy, with brickies, ground workers, sparkies and chippies all sitting idle. Of course, the simple truth is that not building new homes—especially social homes, which are the first to get the chop when viability is in question—is not going to clean up the rivers. The organisation that is meant to grip this has singularly failed in the five years since it misdirected Ministers that families trying to get their feet on the housing ladder should bear the brunt of upgrading the sewage treatment works, rather than the water companies whose job it really is. The situation we find ourselves in today is a direct result of Natural England misdirecting itself as to the science and arithmetic of nutrient mobility. It confused absorption with adsorption and has misrepresented scientific papers that it purports support its position when the reverse is true. By way of a declaration of interest, I am involved in the fertiliser industry, so understanding nutrient mobility in soils is one of my specialist subjects. About four years ago, when it became obvious that Natural England had stymied housebuilding in my area and was incapable of addressing river pollution, I established the Norfolk Environmental Credits company, which is owned by all the councils of Norfolk, to do the job that Natural England has the staffing, powers, software and responsibility to do, but does not. I was the person who set up that green financial market referred to by my noble friend Lady Coffey. Five years on, if it were not for people like me rolling up my sleeves to get this problem addressed—and franchising it to other council areas in other catchments—no new homes would have been built in the entirety of this Parliament. I would like to take credit for this, but I am anxious that all this hard work will have been for nothing if Natural England takes our homework, runs away with it and leaves us high and dry. The problem is that Natural England has been allowed to get away with being simultaneously the regulator, adviser, enforcer, operator, pricer, procurer and competitor in a market in the grossest case of multiple conflicts of interest that, in any other walk of life, would be closed down for being contrary to the public interest. Its advice has caused us to sleepwalk into an Alice in Wonderland situation where a fertiliser colleague could sell a farmer a kilo of phosphate for 85p, but a developer must spend £50,000 to remove it from the treatment works at the other end. If that was not crazy enough, the Government have made the river problem even worse by subsidising the production of over 20 million tonnes of biogas digestate—applied to the land at the wrong time of year—which does more than anything else to turn the rivers green. Yet these polluters do not pay a penny into the fund. It is wrong. All these levies have brought developers to their knees. All they wanted to know was how much, when, where and how these charges would be applied, as well as the scope, extent, cost and regulation that the EDPs require in an evidence-based and transparent manner, with a degree of consistency from one place to another. But it was too much to hope for. When the regulations were laid in June, the first were all about how Natural England could charge and enforce its fees. We are still none the wiser on the important things. The credibility of the Nature Restoration Fund ultimately rests on a simple question: will levy income be sufficient to fund conservation measures for as long as they are required to deliver the promised environmental outcomes? When we went through the then Planning and Infrastructure Bill, we warned of the consequences of allowing Natural England to lead on this when it could not even get their stories straight on the jumping spiders or the ponies or the advice on bird flu, which was used as a bogus pretext to license shooting in the land use framework. It has ceased to be trusted. Through its indolence, we still have no idea whether the EDPs would issue some sort of permit or a licence for the resident to flush his lavatory in his new home. That distinction is important. A permit is an asset that is tradable on the secondary market—repeating the milk quota disaster of the 1980s—whereas a licence, if no longer needed, perhaps because a sewage treatment works has been upgraded, can be surrendered so that the mitigation can be applied again for the benefit of the taxpayer for the remainder of the 80-year term. Is it a licence or a permit? We do not know. It is an important matter. Now we get to the pricing. The market for phosphate credits has settled at around £5,000 per dwelling. That fee covers not just the immediate costs of introducing a mitigation but those tail liabilities of management for at least 80 years together with inspection and regulatory costs along the way. As I explained during the passage of the Planning and Infrastructure Bill, this is an actuarial evaluation problem. The problem is that Natural England exhibits little understanding of this simple economic reality. All indications are that it will just pick a number out of the air that is wholly unrelated and untethered to those liabilities, and, in so doing, chop off at the knees people—like me, through our councils—who rolled up their sleeves to fix the problem when Natural England would not. If it does that, it will at a stroke further damage our economic reputation, because there is one area in which the UK has developed some quite interesting and valuable intellectual property: the running of nature markets. All the indications are that Natural England’s cack-handed ignorance would completely destroy the accumulated value of these nature markets. Our company has already had to take an impairment. When are the Government going to get a grip and rein in this organisation that has so wilfully misunderstood the science, made our economy smaller and homes more expensive, left social homes unbuilt and workers and professionals sitting at home, delayed mitigations and imperilled our global leadership in the nature market—all when Natural England’s first priority, through its regulations, was simply to featherbed their own bureaucracy?

My Lords, this discussion is the first chance that this House has had to really try to understand exactly how the Government intend to implement the new EDP process, which we debated at such considerable length during the Planning and Infrastructure Bill. As certain noble Lords have already said, these regulations give us very little clarity about the process. It was these Benches which secured at Third Reading of the Planning and Infrastructure Bill that there would be greater clarity from Natural England as to how it would prepare EDPs and prioritise actions to minimise the potential environmental damage by the developments resulting from these EDPs. The negative statutory instrument laid in June talked about how Natural England had to take account of the mitigation hierarchy. However, there was the rider that it could do that only when it thought it was appropriate to do so, so it was almost a “get out of jail free” card. The issues which the noble Lord, Lord Krebs, and the noble Baroness, Lady Willis, focused on, on getting clarity upfront about the scientific evidence to provide the baseline environmental assessments, were not mentioned at all in those regulations and are not covered in the regulations before us today. Therefore, it seems that we will have to wait for the consultations on each individual EDP, as they come forward, to try to assess those critical environmental issues. The noble Baroness, Lady Coffey, made a very important point: it has become clear that we are going to get only 28 days for each of those consultations—for that very complex job of understanding those environmental factors. That is something that we regret. We ask the Government to think again about limiting the public consultation on those EDPs to 28 days. Given that there has been so little detail in the regulations, it is necessary that we get greater clarity during the public consultation. I have three substantive points of concern on the regulations before us. Like the noble Lord, Lord Roborough, but for different reasons in the main, I regret these regulations. The first point is that the levy can be paid in instalments by developers, whereas in the present system for developers that are bringing forward a development that will cause environmental damage, the payment and the environmental mitigation have to be upfront. In these regulations, the only tied-down part of the funding that the developer will have to produce is the first instalment. This was an issue that the Secondary Legislation Scrutiny Committee picked up and, as we have heard, it got a response that that was clearly around the issue of cash flow and the viability of buildouts and development. In a sense, that is understandable. However, we have seen in other areas, in which developers have argued about viability at later dates, that protracted arguments about funding constraints can lead to the environmental improvements that we want not coming forward. It is a concern for us that only the first instalment is fixed. Secondly, as the noble Lord, Lord Randall, raised, there can be a reduced fee for developers if other sources of funding can be found. From my point of view, it seems that if charities or the public purse are funding environmental improvements in an EDP area, that means that somehow developers can get out of paying the amount that they should be paying. That does not seem right, and I would like the Minister to clarify exactly what funding they think this is referring to. Could it be funding coming from charities or the public purse, either through Natural England or through other schemes that the public purse is funding? In the end, it does not seem right that there can be reduced levies for developers if other actors are funding environmental developments in that area. The third issue, which the noble Lord, Lord Roborough, raised and which I feel particularly strongly about, is that the Explanatory Memorandum to these regulations says that for some EDPs the levy will be mandatory. We have 16 EDPs that the Government have said they are producing, and it would be good to know how many of those they think the levy will be mandatory for, because it effectively kills dead the private market green schemes that are out there. I think none of us would wish to see that. Indeed, the Government have said they want to see a plurality of solutions to address the development and environmental challenges that we face. During the Recess, I went down to the Solent and saw the very impressive nutrient management market down there which has been developed by a combination of the Wildlife Trusts and local authorities. The Wildlife Trusts bought up an intensively managed piece of land, stopped using fertiliser and sold credits to developers. That scheme has resulted in 2,500 homes being built in the Solent in an area where there are big nutrient problems. As soon as the EDP scheme was announced, that was put on hold and now has effectively stopped, and this is equally so—this will be of concern to the noble Baroness, Lady Coffey, and the noble Lord, Lord Fuller—for a scheme in Norfolk. Therefore, we are really concerned about the mandatory nature of this scheme. We need to encourage a plurality of systems, and these regulations do not do that.

My Lords, I thank the noble Baroness, Lady Taylor of Stevenage, for her introduction to these regulations and my noble friend Lord Roborough for his amendment and thoughtful words. I also thank other noble Lords who participated in this debate for their thoughtful words. I think there is universal agreement that these regulations do not work. We all want to see our natural environment preserved, but people also need somewhere to live. There are 1.34 million people on council waiting lists. Homes in many parts of England are simply unaffordable, with the average home costing 10 times average London wages. For private renters, rent is taking an increasing proportion of household income, about 40% in England and nearly two-thirds for some of the lower-income households. The situation is worsening, with Pepper Money estimating that there are 220,000 fewer rental properties as landlords exit the market following the Government’s Renters’ Rights Act. We have a housing crisis, but the Government continue to make the situation worse. Despite their commitment to build 1.5 million new homes, only 200,000 were delivered last year, down 4% on the previous year. By contrast, the Conservatives delivered 1 million homes, as promised, over the last Parliament, and that included the impact of Covid. The Government continue to increase the burdens on housebuilding, which ultimately increases the cost to home buyers and renters. It is not just any one regulation or levy but the continual layering of additional burdens: the building levy, landfill tax, high-rise building safety, Section 106 and the future homes standard, among others. The Home Builders Federation estimates that the cost of building a low-rise home has increased by 76,000 since 2020. It is easy to say that this should be reflected in the price of land, but often the value is simply not there, particularly for brownfield land. With the poor economic outlook and increasing interest rates, people cannot afford higher house prices or rents. If the cost of building is greater than the sales price, homes will not be built, and I fear that in many areas of the country we are approaching that point. We do not dispute that harm to nature must be managed, mitigated and compensated for. It is a crucial consideration for any planning application, but people also need somewhere to live. During debates on the Planning and Infrastructure Bill, mitigation hierarchy, viability and mandation were discussed and assurances sought by this House. We need developments to provide infrastructure, whether it is schools, roads or health facilities, as well as affordable homes, but these regulations risk cuts to these in order to make sites viable. My noble friends Lord Fuller, Lord Roborough and Lady Coffey all raised the effectiveness and efficiency of Natural England. Do we really want it to be judge, jury and executioner, setting the policy, determining whether it has been met and then setting up its own schemes and levies with no accountability? Do we want it to be able to create its own monopoly and eliminate competition, as in the Solent, mentioned by the noble Baroness, Lady Parminter? The Minister has said that Natural England will be accountable to the Secretary of State, but is it realistic that the Secretary of State will be able to evaluate fully the financial effectiveness of every EDP and all the potential competing schemes that are being eliminated for it, not to mention the needs of every single site that might be affected by it? I am not sure that this is realistic. The Minister has said that this will not be an obligation on developers. However, the regulations are littered with words such as “obligation”, “imposed”, “mandatory” and “enforcement”. We must also reduce our reliance on major housing developers, yet it is the smaller developers which will be most exposed to the individual costs and levies of these regulations. What assurances can the Minister give that viability will be a core part of these regulations; that schools, infrastructure and affordable homes will not lose out; that Natural England will not be able to impose a mandate; and that consideration will be given to SME builders, with recognition of the need to prioritise brownfield? As my noble friend Lord Randall of Uxbridge pointed out, when will we see the impact assessment of these regulations? We need a balance between the need to preserve our environment and the need for housing. Regulators need to be accountable.

My Lords, I am grateful to all noble Lords for their considered contributions. It has been a useful debate, but some of it has reflected some of the issues that we rehearsed in the Planning and Infrastructure Bill and has not focused as much on the regulations. I will try to touch on as many points as I can, but I am sure noble Lords will appreciate that, in a short debate such as this, if I do not get to them, I may have to respond in writing. The noble Lord, Lord Roborough, raised the key issue of the balance between MHCLG and Defra, both specifically around EDPs but also more widely about the nature restoration fund. We are going to have to get used to working across more than one department on some of these issues. Defra clearly has a key role, but MHCLG is the ministry responsible for planning, so we have to make sure that we get that balance right. As far as I know, Defra will continue to be responsible for EDPs. We had long discussions on the Bill about the Secretary of State for Defra signing off EDPs. If that is not the case, I will come back to the noble Lord, but my memory is that it is. A number of noble Lords raised issues that were discussed during the passage of the Bill around the capacity and capability of Natural England. The noble Lords, Lord Roborough and Lord Jamieson, and the noble Baroness, Lady Coffey, mentioned this. Natural England is the appropriate delivery body for the NRF. It has internal expertise and is able to operate effectively across the whole of England. By providing an alternative to the existing approach of the fragmented, site-by-site mitigation that we saw, through the introduction of a strategic, plan-led system, the NRF enables Natural England to deploy more expertise more efficiently across regional geographies. It will be supported to take strategic action and to deliver the conservation measures set out within individual EDPs using income from the nature restoration levy. The regulations also enable targeted use of levy funding to cover the administrative costs, which there were a number of questions about. It can be used for the administrative costs associated with the delivery of individual EDPs, not spread across the country. This will enable Natural England to build and maintain the capacity and capability to design, implement and monitor EDPs effectively. The noble Lord, Lord Roborough, focused a lot of his comments on viability, as did the noble Lord, Lord Fuller, and I understand the reasons for that. I point out initially that the NRF is not the only consideration in planning in relation to infrastructure. The whole planning system—we have just republished the NPPF—makes it very clear that all issues around infrastructure must be taken into account. On the NRF, Natural England will have the flexibility to set rates that reflect local circumstances and capture specific environmental and delivery considerations across the EDP. Where levy rates need to be higher, this will reflect the genuine cost of securing required conservation measures to address the impact of development. The vast majority of EDPs will be voluntary—I will come on to the mandatory issue in a moment—so developers will be able to choose between using the EDP or meeting environmental obligations through existing means. Rates will be set out in the individual EDP charging schedules, alongside information regarding how they have been set. It will therefore be a requirement on Natural England to set out how it has set its rates. Levy rates will vary between EDPs and can be calculated for specific development by reference to factors including the type of development, the location and environmental impact. On the mandatory EDPs, which the noble Lord, Lord Roborough, and the noble Baroness, Lady Parminter, both mentioned, we would expect EDPs to be made mandatory only in very limited circumstances—for example, where Natural England has worked directly with a developer on a specific EDP to cover its project alone. All EDPs will be subject to a full public consultation before they can be made by the Secretary of State. Given that the vast majority of them will be voluntary, if an EDP is not a viable, competitive or attractive option, developers can continue to use existing routes to meet their obligations, limiting the ability of Natural England to deliver the wider environmental benefits that the NRF is designed to achieve. So, in all but exceptional circumstances, EDPs will be voluntary. The noble Lord, Lord Roborough, raised the issue of the mitigation hierarchy and whether this is being weakened by this process, leaving Natural England with too much discretion. Throughout the passage of the Bill, we were clear that the mitigation hierarchy lives on in this model, but that Natural England is not required to apply it in the inflexible way that has often constrained strategic nature recovery. To make sure the Government were as transparent as possible on this point, a specific duty was introduced in the House requiring regulations to be made setting out the appropriate prioritisation, by Natural England, of the different ways of addressing any negative effect of development. The Environmental Delivery Plan (Appropriate Prioritisation) Regulations, laid alongside the regulations before us, deliver on that commitment. They make clear that Natural England must consider the mitigation hierarchy when developing an EDP, while they preserve the discretion of Natural England to determine the appropriate conservation measures in the circumstances. The noble Lord, Lord Krebs, and the noble Baroness, Lady Willis, have been working very effectively with Defra on these issues, and I am very grateful to them for their input. Issues were raised around gold-plating of conservation measures, notably by the noble Lords, Lord Roborough and Lord Fuller. While Natural England must prepare EDPs based on the best available scientific evidence and explain why the proposed conservation measures are appropriate, it is also required to set levy rates that will enable the recovery of the costs of delivering the EDP, rather than generate surplus funds. All EDPs, as I said, are subject to public consultation and approval by the Secretary of State. Finally, Natural England will be incentivised to ensure that the levy remains competitive and attractive to developers, as EDPs will be voluntary in almost all circumstances. So, if it gold plates them, developers will not accept them. It is as simple as that. The noble Baroness, Lady Coffey, and the noble Lord, Lord Roborough, raised issues around consultation. There are government consultation guidelines which I am assuming have been recognised in the consultation on this but, if the noble Baroness will allow me, I will go back and check that this type of consultation follows those guidelines and respond in writing on that point. On the issue of setting the levy, raised by the noble Lords, Lord Randall and Lord Fuller, and the noble Baroness, Lady Coffey, the levy regulations establish clear parameters that Natural England must follow when setting the levy rates. They also recognise that the costs underpinning EDPs will vary according to the environmental impacts being addressed and the conservation measures required. This framework provides Natural England with the flexibility to set levy rates that reflect local needs and delivery requirements. The levy is designed to enable full cost recovery, so there should not be a cost to Natural England for that, and rates are required to reflect the costs of delivering the necessary conservation measures as well as administration, monitoring and maintenance activities. The governing test remains the overall improvement test, whereby an EDP will materially outweigh the negative effects of development. Although I understand some of the concerns, particularly around viability, we cannot carry on with a situation where developers were doing development that was polluting our rivers in a way that has caused inordinate damage to them. We had to take some action on this. Levy rates will also take account of relevant administrative costs necessary to the delivery of the EDP under which the levy is charged. There were questions on funding from other sources—the noble Baroness, Lady Parminter, raised this and the noble Lord, Lord Randall, had some concerns about this issue as well—and about whether the ability to reduce levy payments where there is funding from other sources will result in developers not paying their fair share. That is not the case. The provision is intended to allow a targeted flexibility in very limited circumstances, enabling the Government or other sources to contribute to the costs of delivering an EDP where appropriate to support viability for certain types of priority development. That is what that provision in the regulations is for. The noble Baroness, Lady Parminter, asked about the timing of levy payments, which is a very important point. I know she is concerned about the payments by instalment. The regulations enable payments to be made in instalments to better align with the realities of build-out phases, but this will be possible only where expressly provided for by Natural England through instalment plans. Instalment plan options may vary between EDPs. Where an instalment plan is used, payments will typically be spread across the development period rather than being required in full up front. However, even where an instalment plan applies, the first instalment must be paid before development can commence. I will not go into the detail because I do not have time, but there are clear provisions to help Natural England with enforcement and the follow-up if payments are not made. We have looked very closely at that. In conclusion, the instrument sets out a framework for the nature restoration levy and provides Natural England with the tools it needs to implement the NRF. In response to the noble Lord, Lord Jamieson, whose points were mainly about the housing crisis—a housing crisis that his Government caused and we are now trying to fix—I make no apologies for wanting to build these homes, for the £39 billion we are investing in housing, for wanting people’s homes to be safe and secure and for wanting their environments to be sustainable. I trust that the House agrees that these regulations will support the delivery of the nature restoration fund and our shared ambition more widely to grow both nature and the economy. I hope that these regulations will be welcomed. I beg to move.

Before the Minister sits down, can I just clarify a couple of comments that she made? She was very clear that there would be an option as to whether one went with the Natural England EDP. Can we be absolutely clear that that will always be the case, particularly when Natural England is marking its own homework and deciding whether the mitigation put in place by a developer, whatever that is, is sufficient or not? Secondly, she said that it would be mandatory only in very specific situations and gave the example of an EDP that was specifically brought forward for a particular large development. Can she be clear that that is the only instance in which it would be mandatory? Thirdly, I think she said that developers cause pollution. I believe additional housing results in additional burdens on nutrient neutrality; it is not necessarily that the developer itself is polluting. The Minister might want to clarify that one.

I will clarify that, in all but exceptional circumstances, EDPs are voluntary for developers. The Planning and Infrastructure Act establishes that Natural England can recommend that use of an EDP be mandatory only where it deems it to be necessary. This is a high legal bar, and it would ultimately be for the Secretary of State to consider whether an EDP is made. Given that the vast majority of EDPs will be voluntary, if an EDP is not a viable, competitive or attractive option, developers will continue to use existing routes to meet their obligations, limiting the ability of Natural England to deliver the wider environmental benefits that the NRF is designed to achieve. We want to make this process work better for nature while continuing to allow the growth we all want to see take place, particularly housing growth. There is no doubt in my mind that we could not carry on as we were. We have had to make some changes to make sure that we protect our natural environment and get the growth we want to see.

My Lords, I am very grateful to all noble Lords who have spoken in this short debate. I will clarify one point made by my noble friend Lord Randall. I hope no one thinks I am speaking on behalf of developers; I am speaking on behalf of nature. My concern is that if we give nature too much power in this debate, it will be seen as a blocker of development, and that is not necessary. That is why I am concerned about this viability test. I am very grateful to the Minister, who made a lot of helpful comments at the Dispatch Box. People will read Hansard avidly, I am sure, for guidance from what she has said and, in particular, for the clarification about the role of the mitigation hierarchy. However, I remain concerned about the viability impact of these regulations on housebuilding and other development. I also remain very concerned about the impact on private nature markets, where we currently lead the world, and therefore I would like to test the opinion of the House.