The role of the Nature Restoration Fund

Amongst the bundle of planning reform proposed through the Planning and Infrastructure Bill, is the ‘Nature Restoration Levy’ (“the Levy”).

The Levy would be payable by developers and put into a national fund for environmental restoration projects, instead of undertaking scheme-specific mitigation otherwise required by environmental protection legislation such as the Habitats Regulations 2017 and Wildlife and Countryside Act 1981. The Levy is intended to streamline the development process by reducing the need for individual environmental assessments and interventions, in order to:

facilitate a more strategic approach to the discharge of environmental obligations and result in improved environmental outcomes being delivered more efficiently

The Levy rate would be set out in an Environmental Development Plan (EDP) but will be governed by Nature Restoration Fund Regulations published by the Secretary of State. These EDPs would have to be aligned with Local Plans and Local Nature Recovery Strategies (LNRS) – see our previous blog.

EDPs

An EDP will be prepared by Natural England but made by the Secretary of State if it passes the ‘overall improvement test’ – If the conservation measures are likely to be sufficient to outweigh the negative effect, caused by the environmental impact of development.

The ‘overall improvement test’ must be met for the Secretary of State to make (or amend) an EDP. The test is therefore a key safeguard to secure the level of environmental protection intended by the NRF regime.

The EDP will:

• Define the location, type, and extent of the development covered under the EDP
• Identify environmental features at risk from the relevant development in the area the EDP is covering
• Detail protective measures which Natural England will implement
• Specify the levy amount required to fund those measures
• Clarify which developer obligations are discharged upon payment
• Indicate any areas specifically excluded from the EDP
• Include a map identifying the development boundaries
• Provide justification for applying the EDP to the specified area
• Set out the maximum scale of development the EDP covers
• State the start and end dates (not exceeding 10 years)
• Estimate the total cost of measures over the 10-year period
• Describe Natural England’s monitoring approach to the EDP

Prior to the making of the EDP, Natural England will need to publish a draft for consultation (period of 28 days).

Nature Restoration Levy

As drafted the Bill states that a developer can elect to pay the levy or carry out the measures identified in the EDP. Similar to the Community Infrastructure Levy, the details of the Levy will be set out in regulations issued by the Secretary of State and will include assumption of liability, transfer of liability, charging schedules, right to appeal (on the amount of levy payable), use of the Levy and enforcement.

Whilst this is yet another contribution to be added to any viability calculation, section 62 of the Bill provides some reassurance by stating that the Secretary of State must aim to ensure the Levy can be funded by developers in a way that does not make development economically unviable. In addition, the draft bill also suggests that if any environment issues are covered in an EDP, and a developer contributes towards the Levy, then the developer will no longer need to undertake a site-specific environmental assessments or take any other actions themselves. Instead, it will be Natural England’s responsibility to deliver the measures set out in the EDP using the Levy. However, it is important to note that environmental impacts not covered by an EDP will still require assessment through existing procedures. EDPs will need to be very clear to avoid exposing planning decisions to a source of challenge in terms of what can be said to have fallen between the posts.

At the heart of the Bill is the disconnection between the geographies of where harm occurs and where mitigation/ compensatory works take place. Clause 50(4) provides that conservation measures need not address the impact of development at the relevant protected site but may instead seek to improve the conservation status of the site’s protected features elsewhere. This is currently only possible in very limited circumstances (and if the overall coherence of the protected site network is maintained).

Watch this space

The introduction of the Levy raises important questions about how this mechanism will interact with existing environmental frameworks. Whilst the Levy and EDPs are proposed to streamline environmental assessments, it does raise the question as to whether the proposal creates a more effective system or if it simply adds another layer of complexity or barrier to development.

The Office for Environmental Protection (OEP), in broadly welcoming the proposals, has also highlighted areas that will benefit from consideration as part of the process of scrutinising the Bill. The regime is intended to be different. The extent to which it preserves the level of legal protections for nature will largely come down to the duties that apply to the setting up, implementation and monitoring of EDP-related investment from the Levy.

OEP recommend two main areas for amendments to the Bill, to align it with the stated policy objective of not weakening the level of protection for priority habitats and species: 

• ‘Overall improvement’ test: realigning with the existing ‘no (doubt that there will be) adverse effects’ test rather than the proposed ‘likely to be sufficient to outweigh’ threshold.  This would require changes to clauses 49(7) and 50(4), which as drafted would allow for long-term and non like-for-like assessment of impact mitigation.

• Mitigation Hierarchy: both the NPPF and the Habitats Regulations embed the requirement to avoid or mitigated harm first, before considering compensatory / offsetting measures.

Once the Bill is passed, it will be important to monitor the relationship between BNG plans, LNRS, the new Levy and the traditional environmental impact assessments. In theory, these mechanisms should complement each other – EDPs and LNRS being more strategic and BNG plans being site specific. However, given the contents of these plans and strategies, there is of course a risk of duplication, conflicting requirements and additional costs for developers. It also remains to be seen whether the Levy can be spent on BNG projects which then themselves generate unit value for local authority landowners.

Rohini Vekaria is an Associate in the Planning team at Dentons. This article first appeared on the firm’s Planning Law Blog.