Fifth Delegated Legislation Committee
Wednesday 2nd September 2026
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14:29
14:29
Speaker 2
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Speaker 2
I call the minister to move the motion, Minister. Thank you, sir. It's a pleasure to serve with you in the chair. I beg to move that the committee has considered the Draft Nature Restoration Levy Regulations 2026, which were laid before the House on the 18th of June. So when it comes to development in the environment, this government has 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 to introduce a nature restoration fund that will unlock and accelerate development, while going beyond simply offsetting harm to unlock the positive impact 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 localized and often costly mitigation measures, only to maintain the environmental status quo and replace it with a more strategic approach that will streamline the delivery of new homes and infrastructure, while efficiently delivering improved environmental outcomes by leveraging economies of scale and reducing the need for costly project level assessments.
As honourable members are aware, the core principles and purpose of the NRF were subject to extensive scrutiny by both houses and throughout the passage of the act. Relevant clauses were strengthened in a number of important ways to provide further reassurance that the fund will deliver the improved outcomes for nature that are at the core of the model. While it wouldn't be appropriate here to relitigate the lengthy debates that took place in Bill committee, I will take the opportunity to emphasize that strong safeguards are built into the act to ensure the fund will restore, not harm, nature.
These include a binding overall improvement test monitoring and backup measures, remedial action, and the ability to amend or revoke plans if necessary. Shifting to a strategic approach requires positive planning, which is why the creation of environmental delivery plans sit at the heart of the model. Edps will be developed by Natural England, the government's advisor, in respect of 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.
These conservation measures will then be deployed by Natural England, where they will have the greatest environmental benefit. Each EDP will be subject to public consultation, providing an opportunity for stakeholders to scrutinise the evidence presented by Natural England before an EDP can be made. At the conclusion of that process, the Secretary of State will consider whether the EDP meets the overall improvement test established through the Act before they formally, formally make the EDP. Where an EDP is in place, developers will then have the option to pay the Nature Restoration Levy to discharge the relevant environmental obligations that the EDP covers.
It is that levy that is the subject of the regulations we're considering today. The Nature Restoration Levy regulations before us 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, and they also explain how the amount of the levy will be calculated, when 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 them. 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, which is 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 the passage of the Planning and Infrastructure Act, concerns were raised that funds collected through the NRF might be diverted to pay for other unrelated priorities. I can assure honourable members that these regulations ensure that levy funds can only be used 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.
I want to stress that levy receipts are subject to a statutory ring fence and must be used to deliver the EDP for which they were collected, and only costs that are reasonably be attributable to that. EDP can be funded through levy income. So I'm also aware of concerns regarding the potential impacts of Edps on development viability. However, I want to make clear that we have put in place important safeguards to protect developers who choose to use the NRF from unjustified costs.
Public consultation and rigorous Secretary of State scrutiny of each EDP will ensure that the proposed levy rates are carefully considered before an EDP is made. It's also worth reiterating, and we debated this issue at length in Bill committee, that in almost all cases, Edps will be voluntary and developers will have the option to meet obligations through existing routes if they do not believe that discharging their obligations through the NRF represents good value for money. While the levy regulations are a key part of the new system, we recognise that users will need proper support to navigate the NRF.
I'm pleased to say that 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. And of course, we'll continue to work with stakeholders to identify further areas where guidance might assist as we work to roll out the NRF. To conclude, these regulations will support the effective implementation of the NRF by ensuring that the levy operates effectively, transparently and fairly so that we can build the homes and infrastructure our country needs whilst improving our natural environment for future generations.
And I commend the regulations to the committee here.
To that end, we legislated through the Planning and Infrastructure Act to introduce a nature restoration fund that will unlock and accelerate development, while going beyond simply offsetting harm to unlock the positive impact 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 localized and often costly mitigation measures, only to maintain the environmental status quo and replace it with a more strategic approach that will streamline the delivery of new homes and infrastructure, while efficiently delivering improved environmental outcomes by leveraging economies of scale and reducing the need for costly project level assessments.
As honourable members are aware, the core principles and purpose of the NRF were subject to extensive scrutiny by both houses and throughout the passage of the act. Relevant clauses were strengthened in a number of important ways to provide further reassurance that the fund will deliver the improved outcomes for nature that are at the core of the model. While it wouldn't be appropriate here to relitigate the lengthy debates that took place in Bill committee, I will take the opportunity to emphasize that strong safeguards are built into the act to ensure the fund will restore, not harm, nature.
These include a binding overall improvement test monitoring and backup measures, remedial action, and the ability to amend or revoke plans if necessary. Shifting to a strategic approach requires positive planning, which is why the creation of environmental delivery plans sit at the heart of the model. Edps will be developed by Natural England, the government's advisor, in respect of 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.
These conservation measures will then be deployed by Natural England, where they will have the greatest environmental benefit. Each EDP will be subject to public consultation, providing an opportunity for stakeholders to scrutinise the evidence presented by Natural England before an EDP can be made. At the conclusion of that process, the Secretary of State will consider whether the EDP meets the overall improvement test established through the Act before they formally, formally make the EDP. Where an EDP is in place, developers will then have the option to pay the Nature Restoration Levy to discharge the relevant environmental obligations that the EDP covers.
It is that levy that is the subject of the regulations we're considering today. The Nature Restoration Levy regulations before us 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, and they also explain how the amount of the levy will be calculated, when 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 them. 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, which is 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 the passage of the Planning and Infrastructure Act, concerns were raised that funds collected through the NRF might be diverted to pay for other unrelated priorities. I can assure honourable members that these regulations ensure that levy funds can only be used 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.
I want to stress that levy receipts are subject to a statutory ring fence and must be used to deliver the EDP for which they were collected, and only costs that are reasonably be attributable to that. EDP can be funded through levy income. So I'm also aware of concerns regarding the potential impacts of Edps on development viability. However, I want to make clear that we have put in place important safeguards to protect developers who choose to use the NRF from unjustified costs.
Public consultation and rigorous Secretary of State scrutiny of each EDP will ensure that the proposed levy rates are carefully considered before an EDP is made. It's also worth reiterating, and we debated this issue at length in Bill committee, that in almost all cases, Edps will be voluntary and developers will have the option to meet obligations through existing routes if they do not believe that discharging their obligations through the NRF represents good value for money. While the levy regulations are a key part of the new system, we recognise that users will need proper support to navigate the NRF.
I'm pleased to say that 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. And of course, we'll continue to work with stakeholders to identify further areas where guidance might assist as we work to roll out the NRF. To conclude, these regulations will support the effective implementation of the NRF by ensuring that the levy operates effectively, transparently and fairly so that we can build the homes and infrastructure our country needs whilst improving our natural environment for future generations.
And I commend the regulations to the committee here.
14:35
14:35
Speaker 4
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Speaker 4
Sir Alec, it's a pleasure to serve under your chairmanship on this committee this afternoon, as the Minister has set out in his introduction, the debate on the lead up to this set of regulations during the passage of the bill, which brings them to life and was extensive. There certainly was a lot of cross-party debate about the impact that this would have, and that does reflect the degree of public interest in the impact on nature and wildlife , in particular, that development can have.
Now, when we undertook that debate, whilst there was a degree of political disagreement about the policy itself, I think we all shared the objective of having a more functional system. And clearly that is the government's objective, and therefore we will not seek to divide the committee on this matter this afternoon. But I have some questions which I'd like to put to the minister. And I recall that when we were debating this, one of the things he was very clear about was that in due course, this legislation would come forward and there would be the opportunity to look at some of the points of detail which members had raised.
The first question is around any assessment that he has undertaken of the capacity that Natural England has to administer this process. We heard in the evidence at the committee stage, a number of different development organisations talked about how difficult it was sometimes to get a decision from Natural England because of their lack of capacity when a development had been approved. But there were elements of that which Natural England needed to sign off. So clearly this envisages a significant role for Natural England in the planning process, much larger than it currently occupies, one which I know they set out in evidence to the committee that they would welcome, but it will come at a significant cost, both in terms of people and skills, to make those decisions and the financial underpinning of it.
So it'd be helpful if the minister could set out what assessments have been undertaken to ensure that this does not lead to further delays through the administration of the levy scheme? The second question related to a point which we did touch on in committee, which isn't fully addressed, certainly in the papers as far as I can see, and that is the treatment of levy payments in kind. We heard examples of where developers had said that rather than make a cash contribution, they would seek to offer another site where they would create an appropriate wetland habitat, or they would create habitats for birds, or whatever it may be, that would have a value attached to it.
And it is already the case that in the normal course of events, government will negotiate where a financial contribution is required to determine whether that can be made in the form of an asset that has a value rather than in cash. It isn't immediately clear how that type of situation would be handled, especially given that Natural England will be separate from the planning authority that is making the decision on the scheme that is before it.
So be helpful. If the Minister could tell us how that is envisaged to be, to be dealt with. And then finally, again, a point that was raised at committee, which, again, I don't think the papers entirely address is how this will operate when we are talking about cumulative impacts. So it's very straightforward for a developer who has needed to raise a woodland to demonstrate that they're providing the finances for an alternative site that will be managed by Natural England, that will recreate that habitat elsewhere.
But where we see developers with numerous smaller sites, how the accumulated contribution that all of those will make will then be used to ensure that there is an appropriate level of remediation, and in particular, where those sites are in different planning authorities, there can be an appropriate negotiation. So effectively things are not held up because one planning authority is trying to determine what the impact is. Another planning authority has of a separate application. But where the contributions from both are key to ensure that the remediation is sufficient.
So with those questions, I will close for the opposition. I'm sure the minister will be able to respond to them in due course.
Now, when we undertook that debate, whilst there was a degree of political disagreement about the policy itself, I think we all shared the objective of having a more functional system. And clearly that is the government's objective, and therefore we will not seek to divide the committee on this matter this afternoon. But I have some questions which I'd like to put to the minister. And I recall that when we were debating this, one of the things he was very clear about was that in due course, this legislation would come forward and there would be the opportunity to look at some of the points of detail which members had raised.
The first question is around any assessment that he has undertaken of the capacity that Natural England has to administer this process. We heard in the evidence at the committee stage, a number of different development organisations talked about how difficult it was sometimes to get a decision from Natural England because of their lack of capacity when a development had been approved. But there were elements of that which Natural England needed to sign off. So clearly this envisages a significant role for Natural England in the planning process, much larger than it currently occupies, one which I know they set out in evidence to the committee that they would welcome, but it will come at a significant cost, both in terms of people and skills, to make those decisions and the financial underpinning of it.
So it'd be helpful if the minister could set out what assessments have been undertaken to ensure that this does not lead to further delays through the administration of the levy scheme? The second question related to a point which we did touch on in committee, which isn't fully addressed, certainly in the papers as far as I can see, and that is the treatment of levy payments in kind. We heard examples of where developers had said that rather than make a cash contribution, they would seek to offer another site where they would create an appropriate wetland habitat, or they would create habitats for birds, or whatever it may be, that would have a value attached to it.
And it is already the case that in the normal course of events, government will negotiate where a financial contribution is required to determine whether that can be made in the form of an asset that has a value rather than in cash. It isn't immediately clear how that type of situation would be handled, especially given that Natural England will be separate from the planning authority that is making the decision on the scheme that is before it.
So be helpful. If the Minister could tell us how that is envisaged to be, to be dealt with. And then finally, again, a point that was raised at committee, which, again, I don't think the papers entirely address is how this will operate when we are talking about cumulative impacts. So it's very straightforward for a developer who has needed to raise a woodland to demonstrate that they're providing the finances for an alternative site that will be managed by Natural England, that will recreate that habitat elsewhere.
But where we see developers with numerous smaller sites, how the accumulated contribution that all of those will make will then be used to ensure that there is an appropriate level of remediation, and in particular, where those sites are in different planning authorities, there can be an appropriate negotiation. So effectively things are not held up because one planning authority is trying to determine what the impact is. Another planning authority has of a separate application. But where the contributions from both are key to ensure that the remediation is sufficient.
So with those questions, I will close for the opposition. I'm sure the minister will be able to respond to them in due course.
14:39
14:39
Speaker 5
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Speaker 5
Thank you. So honored to serve with you in the chair. I'm going to try and keep my questions very brief. I want to be clear from the outset, I'm not here to speak today to oppose the principle of of the regulations. And indeed, I agree with the Minister that they must work for the sake of nature restoration. But perhaps due to the fact these regulations haven't gone through a formal consultation process, some serious concerns have been raised with me about the way that they are drafted, and I am going to focus on one.
One key point, which is that there is no, as I understand it, no third party oversight to ensure that the levy is calculated at the right amount to secure the objectives of the EDP, which I and again understand, is is there that third party oversight is there within comparable regulations for the Community Infrastructure levy and chair, this matters because a key element, again, as I understand it, of the primary legislation, is the overall improvement test is based on whether the EDP, if delivered in full, would secure an overall improvement in the environmental feature in question.
So if the Nature Restoration Fund levy amount is not set at an appropriate level, there is a risk that the overall improvement test. Whilst the EDP might be sound, the funding is not actually there at the right amount and therefore the overall improvement test could be null and void. I also understand that the regulations allow the Secretary of State to change the levy rate at any time without notice, which presumably creates considerable jeopardy for developers who don't have a legal route to exit once they have committed, and also would seem to create an avenue for a lot of political pressure to be brought to bear, or to potentially reduce the amount of levy, possibly to improve the viability of certain development schemes.
So I would welcome the minister's response to those concerns, and would encourage him to consider how they might be addressed before the regulations come into effect. Thank you, Chair Minister.
One key point, which is that there is no, as I understand it, no third party oversight to ensure that the levy is calculated at the right amount to secure the objectives of the EDP, which I and again understand, is is there that third party oversight is there within comparable regulations for the Community Infrastructure levy and chair, this matters because a key element, again, as I understand it, of the primary legislation, is the overall improvement test is based on whether the EDP, if delivered in full, would secure an overall improvement in the environmental feature in question.
So if the Nature Restoration Fund levy amount is not set at an appropriate level, there is a risk that the overall improvement test. Whilst the EDP might be sound, the funding is not actually there at the right amount and therefore the overall improvement test could be null and void. I also understand that the regulations allow the Secretary of State to change the levy rate at any time without notice, which presumably creates considerable jeopardy for developers who don't have a legal route to exit once they have committed, and also would seem to create an avenue for a lot of political pressure to be brought to bear, or to potentially reduce the amount of levy, possibly to improve the viability of certain development schemes.
So I would welcome the minister's response to those concerns, and would encourage him to consider how they might be addressed before the regulations come into effect. Thank you, Chair Minister.
14:41
Speaker 2
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Speaker 2
Thank you, Sir Alec and I thank both my hon. Friend and the Shadow Minister for those questions. Let me deal with them each in turn. And as I do so, it may be useful if I set out in a bit more plain terms how an EDP will be made, and the levy will be set specifically on the Shadow ministers. First question on Natural England capacity, we believe, and we debated this again at length during the passage of the Bill.
Natural England are the appropriate delivery body for the NRF, given their internal expertise and their ability to operate effectively across the whole of England. It is also worth saying, Sir Alec, again, a point of debate in the Bill. But when carrying out their functions under the Nature Restoration Fund, Natural England obviously remain bound by their wider statutory duties and general purposes as set out in the Natural Environment and Rural Communities Act 2026, and they include promoting nature conservation and protecting biodiversity.
So we think it's the appropriate body. They will be supported to take strategic action to deliver the conservation measures set out within individual edp's using income from the Nature Restoration Levy, and this is a really important point. The levy is based on full cost recovery. I've made clear in my opening remarks that the levy can be used to support administrative duties that are tied to the EDP, but primarily to fund those conservation measures that they will bring forward.
But it's based on a full cost recovery basis. The regulations also enable targeted use of levy funding, as I said, to cover management and maintenance and other things. This will enable Natural England to build and maintain the capacity and capability needed to design, implement and monitor Edp's effectively. I think the really important to point to convey to the committee is that each EDP will be subject to public consultation in bringing forward an EDP, and we're already working as you'd expect and have been for many, many months with Natural England and Defra on the first EDP, which we committed to in the other place to deal solely with nutrient pollution.
It's the best constraint, we thought, to to take the first EDP forward on. In bringing forward an EDP, natural England will have to project. Estimate the maximum amount of development that that EDP can cater for, and set a levy rate based on what is necessary to deliver the conservation measures required to discharge and meet that overall improvement test. I'll come back to that in a second. So Natural England will set a levy for each individual EDP that will be subject to public consultation.
So when it comes to environmental groups, local residents, local authorities, developers, each will have a say on the particular levy that's being consulted on. And so that gives a chance for the public to input into what is taken forward. But I will give way.
Natural England are the appropriate delivery body for the NRF, given their internal expertise and their ability to operate effectively across the whole of England. It is also worth saying, Sir Alec, again, a point of debate in the Bill. But when carrying out their functions under the Nature Restoration Fund, Natural England obviously remain bound by their wider statutory duties and general purposes as set out in the Natural Environment and Rural Communities Act 2026, and they include promoting nature conservation and protecting biodiversity.
So we think it's the appropriate body. They will be supported to take strategic action to deliver the conservation measures set out within individual edp's using income from the Nature Restoration Levy, and this is a really important point. The levy is based on full cost recovery. I've made clear in my opening remarks that the levy can be used to support administrative duties that are tied to the EDP, but primarily to fund those conservation measures that they will bring forward.
But it's based on a full cost recovery basis. The regulations also enable targeted use of levy funding, as I said, to cover management and maintenance and other things. This will enable Natural England to build and maintain the capacity and capability needed to design, implement and monitor Edp's effectively. I think the really important to point to convey to the committee is that each EDP will be subject to public consultation in bringing forward an EDP, and we're already working as you'd expect and have been for many, many months with Natural England and Defra on the first EDP, which we committed to in the other place to deal solely with nutrient pollution.
It's the best constraint, we thought, to to take the first EDP forward on. In bringing forward an EDP, natural England will have to project. Estimate the maximum amount of development that that EDP can cater for, and set a levy rate based on what is necessary to deliver the conservation measures required to discharge and meet that overall improvement test. I'll come back to that in a second. So Natural England will set a levy for each individual EDP that will be subject to public consultation.
So when it comes to environmental groups, local residents, local authorities, developers, each will have a say on the particular levy that's being consulted on. And so that gives a chance for the public to input into what is taken forward. But I will give way.
14:44
14:44
Speaker 4
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Speaker 4
That's right. I'd just like to seek a point of clarification. The minister, I think, is really helpfully set out how he expects EDP process to work in in practice, when he was talking about the way that it would be financed . And he's described lengthy, what could be anyway, extensive and lengthy public consultation requiring expert input in terms of designing habitats and so forth. Clearly, that will come at a significant cost. Is it the case that the cost to Natural England of administering the scheme will 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?
14:45
14:45
Speaker 2
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Speaker 2
It's a it's an appropriate question to put. Sir Alec, the Shadow Minister, may recall that we committed during the passage of the bill to some upfront funding for Natural England. But the point is, and we've come to the regulations before us, 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.
So, in setting up and consulting on an EDP, some of the levy can be used on those costs, but primarily in terms of bringing the conservation measures forward. In terms of his question about payments in lieu, as I took it, off site payments, the regulations don't provide for that. That's not the assumption that we are working on. Again, I come back to what an EDP means in practice. Natural England will have put together, let's take the case of nutrient pollution.
That will be the first one. We consult on a suite of conservation measures across a designated area that it can call upon to ensure that the overall improvement test is met. Now, when each individual individual developer comes to decide whether they want to discharge relevant environmental obligations through the EDP. As I said in my opening remarks, they can still choose to do so under current arrangements. If they don't feel that the levy rate is one that provides them for value for money.
But we hope and would hope by the workings of the EDP to show that it is a very effective, efficient way to discharge those obligations. More developers will come in as those levy payments come in. Natural England will begin to draw on the suite of conservation measures that is available to it. There are separate regulations we're taking forward on the prioritisation of conservation measures, where, as part of an EDP, Natural England will have to set out in general terms a prioritisation and a sequencing of conservation measures.
They're not mutually exclusive. Some might be relevant in use in different instances, if you like, but what it brings forward to meet those requirements and as more developers come in with within the given area in which the EDP is operating, Natural England will therefore be able to leverage those economies of scale. That is the that is the big win here, allowing those economies of scale and that strategic approach. So payments in lieu.
The regulations are not designed for. I hope I've dealt with the cumulative impact in the sense of. When it comes to individual planning applications. Again, developers will have to indicate that they wish to discharge their obligations through the EDP. At that point, there will be a commitment to pay on the part of Natural England. The developer can then use that commitment to take that through the relevant planning process. Planning process may not be successful, but if it is, then the liability to pay is ensured and they pay into the scheme.
So hopefully in terms of cumulative impact, it may be the case that some developers again, we would hope not. We want as many developers to be using Edp's as possible. A developer on a particular site may seek to discharge its obligations on a site by site, project level basis and on two other sites in the catchment use EDP. I think that's probably unlikely if developers are seeing the Edp's are working for them as an efficient way to discharge those obligations. They will, I'm sure, start to make better use of the scheme.
Let me address my hon. Friend's points a couple of points he raised changing the levy without consultation. So the Planning and Infrastructure Act sets out the circumstances where reconsultation on an EDP is required, such as where new conservation measures are proposed or the amount of development coverage is increased. There's a couple of scenarios where this might work, say the projected development of homes or infrastructure increases. There may be a need to amend the EDP or if additional conservation measures are required, the Secretary of State, under the powers in the act, may direct Natural England to Reconsult, where there are changes to the EDP charging schedule.
This allows the levy rate to change to meet the cost of EDP in line with the overall improvement test, but it doesn't require Reconsultation in all circumstances. We wouldn't want to have a wholesale public consultation on very minor changes to the levy rate, where there are significant changes that the Secretary of State has the power to do that. The levy rate for developers is set at the point. Natural England, as I've said, accepts that commitment to pay if the levy rate subsequently needs to be increased to ensure the required conservation measures can be delivered.
The new levy rate will only take effect for future requests to be made to the EDP. In terms of independent oversight, Edp's are not going to be black box exercises. As we've said, they're subject to public consultation. In the very near future, we will launch that consultation on the first EDP on nutrient neutrality before an EDP can take effect. As I said, local authorities, environmental groups, others will have a chance to scrutinise it in its entirety.
Natural England then must consider consultation responses before finalising EDP, and the Secretary of State retains statutory oversight through the approval of the EDP itself on whether it meets that overall improvement test. And I in a sense, Sir Alec don't want to relitigate the extensive debates we had in committee, but that overall improvement test is the test that must be met. In the case of the first EDP, we're being told it will be the Defra Secretary of State who is making that judgement as to whether that EDP is to be made following consultation.
I think I've covered whether the levy funds are not required to meet costs in full, the absence of a legal route. My hon. Friend raised to exit a commitment if circumstances change. We've designed the regulations to accommodate the changing circumstances that developers might face. The regulations allow for levy related commitments to be cancelled in specified scenarios, ensuring that the system can respond where development does not proceed as anticipated. This reflects a proportionate approach, in our view, that provides certainty for Natural England in delivering the necessary conservation measures, while recognising that plans can change over the lifetime of a development.
I will go.
So, in setting up and consulting on an EDP, some of the levy can be used on those costs, but primarily in terms of bringing the conservation measures forward. In terms of his question about payments in lieu, as I took it, off site payments, the regulations don't provide for that. That's not the assumption that we are working on. Again, I come back to what an EDP means in practice. Natural England will have put together, let's take the case of nutrient pollution.
That will be the first one. We consult on a suite of conservation measures across a designated area that it can call upon to ensure that the overall improvement test is met. Now, when each individual individual developer comes to decide whether they want to discharge relevant environmental obligations through the EDP. As I said in my opening remarks, they can still choose to do so under current arrangements. If they don't feel that the levy rate is one that provides them for value for money.
But we hope and would hope by the workings of the EDP to show that it is a very effective, efficient way to discharge those obligations. More developers will come in as those levy payments come in. Natural England will begin to draw on the suite of conservation measures that is available to it. There are separate regulations we're taking forward on the prioritisation of conservation measures, where, as part of an EDP, Natural England will have to set out in general terms a prioritisation and a sequencing of conservation measures.
They're not mutually exclusive. Some might be relevant in use in different instances, if you like, but what it brings forward to meet those requirements and as more developers come in with within the given area in which the EDP is operating, Natural England will therefore be able to leverage those economies of scale. That is the that is the big win here, allowing those economies of scale and that strategic approach. So payments in lieu.
The regulations are not designed for. I hope I've dealt with the cumulative impact in the sense of. When it comes to individual planning applications. Again, developers will have to indicate that they wish to discharge their obligations through the EDP. At that point, there will be a commitment to pay on the part of Natural England. The developer can then use that commitment to take that through the relevant planning process. Planning process may not be successful, but if it is, then the liability to pay is ensured and they pay into the scheme.
So hopefully in terms of cumulative impact, it may be the case that some developers again, we would hope not. We want as many developers to be using Edp's as possible. A developer on a particular site may seek to discharge its obligations on a site by site, project level basis and on two other sites in the catchment use EDP. I think that's probably unlikely if developers are seeing the Edp's are working for them as an efficient way to discharge those obligations. They will, I'm sure, start to make better use of the scheme.
Let me address my hon. Friend's points a couple of points he raised changing the levy without consultation. So the Planning and Infrastructure Act sets out the circumstances where reconsultation on an EDP is required, such as where new conservation measures are proposed or the amount of development coverage is increased. There's a couple of scenarios where this might work, say the projected development of homes or infrastructure increases. There may be a need to amend the EDP or if additional conservation measures are required, the Secretary of State, under the powers in the act, may direct Natural England to Reconsult, where there are changes to the EDP charging schedule.
This allows the levy rate to change to meet the cost of EDP in line with the overall improvement test, but it doesn't require Reconsultation in all circumstances. We wouldn't want to have a wholesale public consultation on very minor changes to the levy rate, where there are significant changes that the Secretary of State has the power to do that. The levy rate for developers is set at the point. Natural England, as I've said, accepts that commitment to pay if the levy rate subsequently needs to be increased to ensure the required conservation measures can be delivered.
The new levy rate will only take effect for future requests to be made to the EDP. In terms of independent oversight, Edp's are not going to be black box exercises. As we've said, they're subject to public consultation. In the very near future, we will launch that consultation on the first EDP on nutrient neutrality before an EDP can take effect. As I said, local authorities, environmental groups, others will have a chance to scrutinise it in its entirety.
Natural England then must consider consultation responses before finalising EDP, and the Secretary of State retains statutory oversight through the approval of the EDP itself on whether it meets that overall improvement test. And I in a sense, Sir Alec don't want to relitigate the extensive debates we had in committee, but that overall improvement test is the test that must be met. In the case of the first EDP, we're being told it will be the Defra Secretary of State who is making that judgement as to whether that EDP is to be made following consultation.
I think I've covered whether the levy funds are not required to meet costs in full, the absence of a legal route. My hon. Friend raised to exit a commitment if circumstances change. We've designed the regulations to accommodate the changing circumstances that developers might face. The regulations allow for levy related commitments to be cancelled in specified scenarios, ensuring that the system can respond where development does not proceed as anticipated. This reflects a proportionate approach, in our view, that provides certainty for Natural England in delivering the necessary conservation measures, while recognising that plans can change over the lifetime of a development.
I will go.
14:51
14:51
Speaker 4
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Speaker 4
want to test the Minister's thinking on this particular point. So the experience which many of us would have heard about as constituency MPs of section 106, where you have a significant number of contributions that are made that may be attached to school places or road improvements or whatever it may be. One of the issues is that in cases where the money is not spent within a specified period of time, the developer can reclaim it. So it cannot be redirected to other purposes depending upon what's in the agreement.
And indeed, the challenge of what happens when developers in an area, for example, in Newtown where there's a high level of development going on, may prefer to pay the levy, but the total of all of those payments, because of the extent of the development, exceeds the value of the work which Natural England are undertaking, and therefore something else needs to be substituted. So could he just set out briefly how the government proposes to address those issues, so that this does not, in practice, turn out to be a bit of a bureaucratic nightmare for many of the communities that are going through it.
And indeed, the challenge of what happens when developers in an area, for example, in Newtown where there's a high level of development going on, may prefer to pay the levy, but the total of all of those payments, because of the extent of the development, exceeds the value of the work which Natural England are undertaking, and therefore something else needs to be substituted. So could he just set out briefly how the government proposes to address those issues, so that this does not, in practice, turn out to be a bit of a bureaucratic nightmare for many of the communities that are going through it.
14:52
Speaker 2
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Speaker 2
I think the shadow minister for his question. I think that brings me back to the point that I made about how the levy is set and how it's tested through public consultation. It will be for Natural England to judge the quantum of development, to be taken forward and to divide that either on a per hectare or a per dwelling basis. As to what is the most appropriate way to break down the individual charge. But at the point the developer seeks to discharge its environmental obligations through the use of the levy, they will have consented to pay that levy amount.
We'll test that levy amount through consultation, but the test of whether the levy is set effectively and that will be tested through public consultation, is that it allows for those conservation measures to be deployed. As I've said, there is a statutory ring fence on the funds, so it's not that the funds could be diverted to other uses, but that's what we're testing. Edp's as we made clear repeatedly throughout the passage of the bill, based on the best scientific evidence available, all that expertise that's in Natural England to allow them to judge whether they have the levy rate right.
But that, as I said, will be tested in through consultation, so it shouldn't exceed the value to the shadow ministers point. Sir Alec, to wind up, I think I've responded to all points. I want to thank all members for those questions. This instrument, just to be clear, sets out a framework for the Nature Restoration Levy provides Natural England with the tools they need to effectively implement the Nature Restoration Fund. These regs are a necessary precursor to that first consultation, which, as I've made clear, will concern nutrient pollution only.
That's the commitment we gave will return to the House with an evaluation of how that consultation worked before we proceed. Although Natural England and Defra are working on Edp's early stages of what edp's for other interventions, great crested newts is a priority for colleagues in Defra, but I hope these regulations will be welcomed by members of the committee and I commend them to them.
We'll test that levy amount through consultation, but the test of whether the levy is set effectively and that will be tested through public consultation, is that it allows for those conservation measures to be deployed. As I've said, there is a statutory ring fence on the funds, so it's not that the funds could be diverted to other uses, but that's what we're testing. Edp's as we made clear repeatedly throughout the passage of the bill, based on the best scientific evidence available, all that expertise that's in Natural England to allow them to judge whether they have the levy rate right.
But that, as I said, will be tested in through consultation, so it shouldn't exceed the value to the shadow ministers point. Sir Alec, to wind up, I think I've responded to all points. I want to thank all members for those questions. This instrument, just to be clear, sets out a framework for the Nature Restoration Levy provides Natural England with the tools they need to effectively implement the Nature Restoration Fund. These regs are a necessary precursor to that first consultation, which, as I've made clear, will concern nutrient pollution only.
That's the commitment we gave will return to the House with an evaluation of how that consultation worked before we proceed. Although Natural England and Defra are working on Edp's early stages of what edp's for other interventions, great crested newts is a priority for colleagues in Defra, but I hope these regulations will be welcomed by members of the committee and I commend them to them.