Draft Nature Restoration Levy regulations 2026
House of Commons · General Committees · 2 Sep 2026 · 36 speeches · Official Report
The Committee consisted of the following Members:
Chair: Sir Alec Shelbrooke
† Charters, Mr Luke (York Outer) (Lab)
Cocking, Lewis (Broxbourne) (Con)
Farron, Tim (Westmorland and Lonsdale) (LD)
† Gilmour, Rachel (Tiverton and Minehead) (LD)
† Hayes, Tom (Bournemouth East) (Lab)
Hinder, Jonathan (Pendle and Clitheroe) (Lab)
† Onn, Melanie (Great Grimsby and Cleethorpes) (Lab)
† Pennycook, Matthew (Minister for Housing and Planning)
† Pitcher, Lee (Doncaster East and the Isle of Axholme) (Lab)
Quigley, Richard (Isle of Wight West) (Lab)
† Rand, Mr Connor (Altrincham and Sale West) (Lab)
† Simmonds, David (Ruislip, Northwood and Pinner) (Con)
† Smith, Rebecca (South West Devon) (Con)
† Taylor, Rachel (North Warwickshire and Bedworth) (Lab)
† Turner, Laurence (Birmingham Northfield) (Lab)
† Welsh, Michelle (Sherwood Forest) (Lab)
Whittingdale, Sir John (Maldon) (Con)
Beth Goodwin, Committee Clerk
† attended the Committee
The following also attended, pursuant to Standing Order No. 118(2):
Hinchliff, Chris (North East Hertfordshire) (Lab)
Fifth Delegated Legislation Committee
Wednesday 2 September 2026
[Sir Alec Shelbrooke in the Chair ]
Draft Nature Restoration Levy Regulations 2026
I beg to move, That the Committee has considered the draft Nature Restoration Levy Regulations 2026. It is a pleasure to serve with you in the Chair, Sir Alec. The draft regulations were laid before the House on 18 June. When it comes to development and the environment, this Government have been clear that we want to unlock a win-win for the economy and for nature. To that end, we legislated through the Planning and Infrastructure Act 2025 to introduce a nature restoration fund that will unlock and accelerate development, going beyond simply offsetting harm to unlock the positive impact that development can have in driving nature recovery. The purpose of the NRF is simple: to end the current suboptimal approach to discharging environmental obligations, in which developers are required to pay for localised and often costly mitigation measures, only to maintain the environmental status quo; and to replace that with a more strategic approach that will streamline delivery of new homes and infrastructure, while efficiently delivering improved environmental outcomes by leveraging economies of scale and reducing need for costly project-level assessments. As hon. Members are aware, the core principles and purpose of the NRF were subject to extensive scrutiny by both Houses. Relevant clauses of the original Bill were strengthened in a number of important ways during its passage to provide further reassurance that the fund will deliver the improved outcomes for nature that are at the...
It is a pleasure to serve under your chairmanship, Sir Alec. As the Minister set out in his introduction, there was extensive debate during the Committee on the Bill that has brought this set of regulations to life. There was certainly a lot of cross-party debate about the provision; that reflects the public interest in the impact that development can have on nature and wildlife in particular. Although there was a degree of political disagreement about the policy itself, I think we all shared the objective: having a more functional system. That is clearly the Government’s objective, so we will not seek to divide the Committee this afternoon. However, I have some questions for the Minister. When we debated the issue in Committee, he was clear that in due course this legislation would come forward and there would be an opportunity to look at the points of detail that Members had raised. My first question is about any assessment that he has undertaken of Natural England’s capacity to administer the process. We heard in the Committee evidence sessions from different development organisations that talked about how difficult it sometimes was to get a decision from Natural England because of its lack of capacity when a development had been approved but there remained elements that Natural England needed to sign off. Clearly, this legislation envisages a significant role for Natural England in the planning process-much larger than it currently occupies, and one that it said in...
It is an honour to serve with you in the Chair, Sir Alec. I will try to keep my questions brief. I want to be clear from the outset: I am not here to oppose the principle of the regulations-indeed, I agree with the Minister that they must work for the sake of nature restoration. However, some serious concerns have been raised with me about how they are drafted, perhaps because they have not gone through a formal consultation process. I will focus on one key point. As I understand it, there is no third-party oversight to ensure that the levy is calculated at the right amount to secure the objectives of the environmental delivery plans, although I understand that there is third-party oversight within comparable regulations for the community infrastructure levy. That matters because I understand that a key element of the primary legislation is that the overall improvement test should be based on whether the EDP, if delivered in full, would secure an overall improvement in the environmental feature in question. Although the EDP might be sound, if the nature restoration fund levy amount is not set at an appropriate level there is a risk that the overall improvement test could be null and void because there would not be the right amount of funding. I also understand that the regulations allow the Secretary of State to change the levy rate at any time without notice. That presumably creates considerable jeopardy for developers who do not have a legal route to exit once they have...
I thank both my hon. Friend the Member for North East Hertfordshire and the shadow Minister for those questions. Let me deal with them each in turn. It may be useful if I set out in plainer terms how an EDP will be made and how the levy will be set. The shadow Minister asked first about Natural England capacity. We debated that at length during the passage of the Bill: we believe that Natural England is the appropriate delivery body for the NRF, given its internal expertise and ability to operate effectively across the whole of England. It is also worth saying that when carrying out its functions under the nature restoration fund, Natural England remains bound by its wider statutory duties and general purposes, as set out in the Natural Environment and Rural Communities Act 2026. Those include promoting nature conservation and protecting biodiversity. We think that Natural England is the appropriate body. It will be supported to take strategic action to deliver the conservation measures set out within individual EDPs, using income from the nature restoration levy. This is a really important point: the levy is based on full cost recovery. As I made clear in my opening remarks, the levy can be used to support administrative duties tied to the EDP, but is primarily to fund conservation measures that EDPs will bring forward, on a full cost-recovery basis. The regulations also enable targeted use of levy funding to cover management, maintenance and other things. That will enable...
The Minister has helpfully set out how we expect the EDP process to work in practice. When he was talking about how it would be financed, he described what could be extensive and lengthy public consultation, requiring expert input in designing habitats and so forth. Clearly, that will come at a significant cost. Will the cost to Natural England of administering the scheme be paid for out of the levy income itself or is there a separate funding mechanism that will enable Natural England to carry out that work?
That is an appropriate question. The shadow Minister may recall that during the passage of the Bill we committed to some upfront funding for Natural England. However, we have come to the regulations before us: the point is that the levy is designed to operate on a full cost-recovery basis. Rates are required to reflect the cost of delivering the necessary conservation measures, as well as covering the costs of monitoring and maintenance activities. Some of the levy can be used on the cost of setting up and consulting on an EDP but it is primarily for bringing the conservation measures forward. The shadow Minister also asked about payments in lieu-off-site payments, as I took it. The regulations do not provide for that. That is not the assumption that we are working on. I come back to what an EDP means in practice. Let us take the case of nutrient pollution, which will be the first we consult on. Natural England will have put together a suite of conservation measures across a designated area that it can call on to ensure that the overall improvement test is met. As I said in my opening remarks, each individual developer can still decide to discharge relevant environmental obligations under current arrangements if they do not feel that the levy rate provides value for money. However, we hope that the workings of the EDP will show that it is a very effective, efficient way to discharge those obligations. We hope that more developers will come in. As the levy payments come in,...
I want to test the Minister’s thinking on that point. As constituency MPs, many of us have heard about section 106, where a significant number of contributions may be attached to school places, road improvements or whatever it may be. When the money is not spent within a specified period of time, the developer can reclaim it so that it cannot be redirected to other purposes, depending on what is in the agreement. Another challenge is what happens when developers in a new town, for example, prefer to pay the levy, but the total of all the payments exceeds the value of the work that Natural England is undertaking because of the extent of the development, so something else needs to be substituted. Will the Minister set out briefly how the Government propose to address such issues so that the legislation does not, in practice, turn out to be a bit of a bureaucratic nightmare for many of the communities involved?
I thank the shadow Minister for his question. That brings me back to my point about how the levy is set and how it is tested through public consultation. It will be for Natural England to judge the quantum of development to be taken forward and to divide the individual charge on a per-hectare or per-dwelling basis in the most appropriate way. However, at the point when the developer seeks to discharge its environmental obligations through the use of the levy it will have consented to pay that levy amount. We will test the levy amount through public consultation, but the test of whether the levy is set effectively is that it allows for the conservation measures to be deployed. There is a statutory ringfence on the funds, so it is not as if the funds could be diverted to other uses. As we made clear repeatedly throughout the passage of the Bill, EDPs will be based on the best scientific evidence available and on all the expertise in Natural England to allow it to judge whether it has the levy rate right. As I said, that will be tested in consultation. To answer the shadow Minister’s point, I should say that the value should not be exceeded. I think I have responded to all the points. I thank Members for their questions. To be clear, this draft statutory instrument sets out a framework for the nature restoration levy and provides Natural England with the tools it needs to implement the nature restoration fund effectively. The draft regs are a necessary precursor to that first...
Committee rose .