Lord Roborough:

Moved by Lord Roborough

256: Clause 56, page 92, line 37, at end insert—“(4) When considering the rates or other criteria to be set out in a charging schedule in the course of preparing an EDP, Natural England must not include any potential capital costs for the purposes of acquiring land.” Member’s explanatory statementThis Amendment prevents Natural England from including Compulsory Purchase Order costs within their budgeting for an EDP.

My Lords, in moving Amendment 256 I will speak also to my Amendments 313, 315 and 317 in this group. These concern the use and governance of the nature restoration fund levy. This is a large group of amendments, so I will use what time I have available at the end to address other amendments. My amendments aim to reinforce the principles of fairness, transparency and proper fiscal stewardship in the deployment of levy funds, ensuring that the mechanisms intended to restore nature do so in a way that commands public trust and delivers tangible environmental outcomes.

Amendment 256 seeks to prevent Natural England from including the costs associated with compulsory purchase orders in its budgeting for environmental delivery plans. The use of CPOs should be the absolute last resort, not a built-in assumption or a line item in standard budget planning. Including such costs up front risks normalising compulsory acquisition, an approach which is both confrontational and potentially costly to the public purse. It also discourages collaboration with landowners, many of whom are keen to play a voluntary role in restoring our natural environment. This amendment therefore promotes a partnership-led model of land restoration rather than a heavy-handed and bureaucratic one.

Amendment 313 builds on this principle by explicitly prohibiting the use of levy funds for land acquisition via compulsory purchase. The nature restoration levy is paid by developers—and ultimately by the public—with the promise that it will support direct and measurable environmental benefits. Using those funds to acquire land through force undermines the voluntary market-based ethos behind the levy and risks reputational damage to the scheme. We must be clear that the levy should support restoration, not legal battles over land.

Amendment 315 would ensure that funds raised through the nrf levy are not squirreled away for indefinite or speculative future use. Money raised should be deployed promptly and transparently to deliver nature recovery now, not be locked up for uncertain projects that may or may not materialise in years to come. The public and contributors deserve to see timely, tangible benefits from these contributions, especially in an era of growing scrutiny over the effectiveness of environmental spending.

Finally, Amendment 317 provides the Secretary of State with the necessary regulation-making power to return surplus or unused funds to contributors. This is a basic fairness measure. Where funds have been raised in excess of what is needed, or where they cannot be spent appropriately, it is right and proper that they be returned. Without such a mechanism, we risk creating a one-way system of financial extraction without accountability. I hope noble Lords will recognise that, taken together, these amendments strengthen the integrity of the nature restoration levy by ensuring that it remains targeted, proportionate and fair. I beg to move.

My Lords, I have added my name to my noble friend Lord Roborough’s Amendment 313 and will speak to that and to my Amendments 311, 316 and 318. I hope my noble friend’s Amendment 313 is an easy one for the Minister to accept or at least confirm that the situation will not take place at all when it comes to compulsory purchase orders.

On Amendment 311, I have three items I would like to see included in the regulations. Two refer to the mitigation hierarchy. We discussed that at some length on Amendment 245, so I will not say anything more about that. One of the items I would like to add to the regulations is that they should require Natural England to consider a delivery hierarchy, such that preference is given to those bodies and persons implementing the EDP. I believe that will encourage the private sector to take its appropriate share of the work of EDPs and keep the money with the people who actually manage the land, tend it and care for it, not just for 10 years of an EDP but for the future generations as well.

Amendment 316 seeks to clarify the legal obligations or liabilities of other parties, such as landowners and farmers, in accepting nrf funds delivered to the EDP. Amendment 318 seeks to provide further clarity on the involvement of an appropriate body, not just a public authority. I hope the Minister will be able to confirm exactly what is meant in the Bill on that point.

My Lords, I wish to speak to a whole raft of amendments in my name in this Marshalled List: Amendments 307, 308A, 309, 310, 312 and 314. All are designed to ensure that the money raised through Part 3 for the nature restoration fund is actually spent on nature recovery rather than bureaucracy and process. This should concern us all because, as we have discussed repeatedly, Part 3 establishes what I see as an elaborate and quite ambiguous mechanism which does, in effect, carve out some developers from certain responsibilities.

Overall, my general approach to legislation is that it needs to be as comprehensive, clear and coherent as possible. We should not seek to keep things vague on purpose, because all that does is create problems, issues and delays down the line. Yet, as drafted, I fear that the Bill leaves a huge amount open to legal interpretation and case law. I am not speaking to any agency, body or department—perhaps it is more a reflection of human nature itself—but my experience is that where there is an ambiguous process, there is a tendency for government and others not to feel as much pressure on the need to deliver cost-effectiveness. On something as bold as this scheme, I fear that there is a likelihood of going through copious administrative procedure to mitigate litigation risk. Obviously, these copious administration procedures cost, and I suppose the ultimate question is: is it fair that nature pays that cost?

These amendments seek to limit the power of Natural England to take a cut from the fund at the expense of nature. I am sure that some will balk at this concept and ask where the money comes from, but that is not the debate here. I am seeking to ensure that the funds raised from developers are spent on their proper purpose. We should recognise that Natural England already has generous provisions allowing for it to charge fees for licenses and other work through Section 11 of the Natural Environment and Rural Communities Act 2006.

Amendment 307 seeks to limit the amount that Natural England can charge in accordance with those existing provisions. Could the Minister explain whether they no longer see those existing provisions as sufficient to recover legitimate costs for Natural England?

Amendment 309 seeks to ensure that any charges taken are used to work within the same local authority boundary. I am grateful to the noble Lord, Lord Teverson, who, sadly, is not in his place, for adding his name to the amendment. The amendment makes it clear that the levy raised must be spent within the same planning authority from where the levy originated. I am happy to discuss my reason for tabling the amendment, and there can be debate about whether it is too narrow in its definition. As currently drafted, however, the money raised from one site can be spent anywhere. I am blessed, as I am sure the noble Baroness, Lady McIntosh, will agree, to have been born in God’s own county of Lancashire. More recently, I confess, I have moved somewhere else. Hypothetically speaking, there is nothing in the Bill, as drafted, for a site to be taken out of where I live in Surrey now—

Noble Lords:

Oh!

I know. There is nothing to prevent the EDP deeming that the money raised should not go to replace or improve something near what I have lost, but rather could be spent in beautiful Lancashire. As a result, while my family up there may gain from that benefit, people in Surrey would lose the benefit twice. They lose the site within scope of the development, and they lose the money that should be there to rectify that loss.

Finally, I will speak to Amendment 308A, which seeks to prevent other departments, but mainly the Treasury, effectively siphoning off money for non-related uses. Clause 71(5)(d) allows for Natural England to pass moneys collected under the levy to another public body. Indeed, it goes so far as to say that it would require Natural England to pass it to another public authority. A little later, the rather gloomy entry of Clause 72(7) says:

“The regulations may permit or require a public authority to collect any nature restoration levy charged by Natural England”,

the implication of which is worthy of debate in itself. Which public body do the Government foresee taking on this role if not Natural England? I will leave that to others if they wish to go down that route.

This amendment protects the funds to wherever these moneys may go. It means, ultimately, that their original purpose shall remain. I think everyone can unite around this, from sceptics of the Bill to those supporting it, because it means that money for nature should remain for nature and not be subsumed into a general pot. I am afraid I have the scars from working in government and know all too well what happens if things are not ring-fenced clearly.

As an aside, there is a precedent here. The other day—I cannot remember when—we discussed the community infrastructure levy, and the 2010 regulations include a ring fence to ensure that the income spent is on infrastructure, no matter who is doing the spending. That is in Regulation 59, if noble Lords wish to check. Ultimately, the nature restoration fund needs to be protected and clearly defined in the Bill, and not allowed to be open to interpretation or postponed to secondary legislation.

The remaining amendments in this group in my name, namely Amendments 310, 312 and 314, all seek to tighten further the accountability and transparency around any decision by Natural England to fund its own administrative activities from the nature restoration fund.

It was a pleasure to follow the last two speakers, as they adroitly picked their way through the thickets of these various amendments. I will briefly touch on theirs before getting to mine. As regards Amendments 256 and 313, where land is CPO’d from its owner, it is manifestly unfair to include in the levy the cost of acquisition. It is reminiscent of the victim of an execution being made to pay for the bullet. As regards Amendments 307, 312 and 314, I support clear limits being set on the ability of quangos—particularly quangos in a monopoly situation—being able to overegg their charges.

Amendment 307A in my name requires Natural England to provide a proper budget breakdown for the use of levy funds requested from a developer. Indeed, it is hard to imagine how a required levy could be quantified in any other way. In the event that there is an underspend of the developer’s levy, then the amount not spent to meet the purpose of the levy should be promptly returned to the developer. It has always been my understanding that the specific purpose of the levy is to enable the offsetting of environmental degradation caused by specific developments. Such environmental degradation is to be defined, calculated and quantified by Natural England or its appointees to arrive at a numerical amount of the levy sum payable by the developer. Natural England has confirmed to me that that sum will in each case include an amount for contingency. That is a normal part of any budgeting process for what could be a complex project.

Where the system departs from normal practice is: what happens to any unspent funds once the quantum of environmental benefit that the developer has paid for is achieved? When I asked Natural England executives about this, they told me to my great surprise that any unused funds would simply be kept by Natural England and spent on unspecified further work. The levy amounts are likely to be substantial. It is not unreasonable to anticipate millions of pounds in some cases. To allow Natural England to retain any unspent funds for its own purposes flies in the face of standard contractual practice. It is also an open invitation to overprice the levy for any project as a means of generating revenue for Natural England above and beyond what is reasonably required for the agreed environmental benefits.

Therefore, the amendment requires a transparent calculation and budgeting process, accountability for how these large sums are spent, and the timely return of unspent funds to their rightful owners, rather than them being pocketed by Natural England. The amendment would thereby prevent such temptations being placed in the path of Natural England—the temptation that my recent discussions with it already suggest it may be succumbing to.

My Lords, in the absence of the noble Lord, Lord Teverson, who had to go back to Cornwall this afternoon, I speak to his Amendment 301A, which is very simple and straightforward. It basically makes the point that the money that the developers pay should go to the schemes that they are expecting to come to fruition and should not be used by the Government, as too often happened in the past, to reduce the core funding of the department or, in particular, that of Natural England.

The noble Lord, Lord Teverson, was hoping that the Minister might be able to give from the Dispatch Box some reassurances that that would not be the case, and equally—although I know the Government cannot ring-fence—that the Treasury will not try to claw back any of the additional money that has gone to Natural England for funding of the delivery of the EDP, when developers had given it in good faith.

The noble Lord very much wanted to support Amendment 309, in the name of the noble Lord, Lord Gascoigne. I do so too—and not just because I am a resident of Surrey.

My Lords, we are really getting under the bonnet here, looking at the minutiae of the EDP, and we are missing the bigger picture.

I speak in support of the noble Lord, Lord Cromwell, on Amendment 307A, and Amendment 256, in the name of the noble Lord, Lord Roborough. We find ourselves in this situation because the organisations with the statutory duties, powers, staff, income and systems to clean up our rivers, in so far as nutrient neutrality is concerned, have not been doing so. Defra, the Environment Agency, Natural England, the water companies in particular and the drainage boards are all in scope. They have got their job, but they have not been doing it.

I am concerned about the levy. We are talking about how we are going to charge this levy, but we are not really talking about where the money is coming from to deliver the EDPs. In effect, Part 3 lets these statutory undertakings off the hook. Instead, it falls to those people who do not have the powers or responsibilities, such as councils and local developers. If my noble friend Lady Neville-Rolfe was in her place, I am sure she would intervene and tell us that it will also fall to the small builders and small companies that spend money in local supply chains and so on. Here, we have the ultimate moral hazard; it is the reward for failure.

I do not deny that the costs of these EDPs could be apportioned appropriately across the canvas that is required for the purposes of the EDP and in proportion to the number of units it is going to sell. However, I am disappointed that the Bill does not require those with the responsibilities—Defra, the Environment Agency and so forth—to have the first pull. It is an omission, and one we should place on the record and return to later on Report.

I want to question the noble Lord, Lord Cromwell. He talks about the surplus. In a previous group, I explained how I have been involved in this for some time. There will be no surplus, because we are talking about 80-year tail liabilities. The money that is ponied up front to deliver an environmental improvement is going to have to be jam-spread over 80 years, in the case of nutrient neutrality, or 30 years, in the case of biodiversity net gain, and whatever other regulations come along. We are not going to know whether there is enough money in the kitty until year 79. I do not think this is fully understood.

Other noble Lords in previous groups have given numbers. Earlier, the noble Earl, Lord Caithness, spoke about £1,900 versus £2,300, and he was concerned—on the current account, if you like, or this year’s P&L—what the extra margin might be. But there has been a fundamental misunderstanding of how the accountancy works. That is why I wanted to explain it in an earlier group, and why I will talk about it in a later group when we get to private involvement. We need to have proper accounting standards for how we will approach accounting for these 80-year tail liabilities.

Nevertheless, until we do, when we are setting this levy it should be on the basis that those who are required to and paid to do this work should carry the first burden. Otherwise, small family building businesses will be cross-subsidising the large water companies which raise business water rates and should be upgrading their own sewage plants. Instead, the owners and purchasers of new homes—young families trying to get their foot on the ladder—are, in effect, going to be cross-subsidising. EDPs should be explicit in asking those who are paid and have the duty to do this work to do it first, and then, if there is any requirement left over thereafter, that has to be apportioned to the developers and, in due course, passed on to the purchasers of new homes.

In this group we have really only scratched the surface as regards the costs, accountancies and financial models. We need to do a lot more work on this, otherwise the money will run out in year 42 or 52. It does not really matter when, because we are not going to get to year 80, and, in the meantime, the costs of EDP and annual inspections, renewals and accountancy and everything else have not been factored in at all. This is not at all straightforward. As we get to Report, we will have to dig much more deeply into who pays, who should pay, and how we are going to value these tail liabilities. It is almost an actuarial problem. Until we do that, there will be no money to go back to anybody.

Very briefly, I found that a fascinating exposition and would happily discuss it further outside the Chamber with the noble Lord. The logical corollary of it is that it is therefore almost impossible to calculate what the levy should be, because you are dealing with unknowns into an 80-year period. But let us not discuss it now—let us move on.

My Lords, I agree—let us not discuss it now.

Amendment 309A in my name may not be required, but I would like some reassurance from the Minister. As currently drafted, the Bill outlines Natural England’s role under the nature restoration levy in spending funds and in monitoring the implementation of the EDPs—monitoring, as it were, the inputs and actions that are needed under the EDPs. There is no explicit duty as far as I understand—but I would like clarification —to ensure that the plans result in real ecological improvements and outcomes on the ground. By that I mean not just whether the EDP has done was it said it would but whether it has delivered the goods as a result of those actions. My amendment would make sure that Natural England had to demonstrate that the outcomes planned were being delivered and the plan was working.

The only requirement I can find—I am sure the Minister will say that this is sufficient—is that the EDP reporting requirements that are laid on Natural England in Clause 62 already ensure that it will report on whether the conservation measures are having or have had their intended effect. It would be good to have confirmation that she believes this means that it has to report on outcomes.

My Lords, I am supportive of my noble friend Lord Gascoigne’s amendments, and will speak also to those from my front bench.

There are a couple of factors in this. The Treasury hates ring-fencing, because, right now, it pretty much controls every penny that leaves the Government’s hands, whether it goes off to local government or similar. Other departments then want to try to control money that is coming out of existing government departments and how that should or should not be done, and so conventions start to happen within government. That frustrates, at times, the very purpose the levy is there for in the first place. There is precedence, as has already been said by my noble friend Lord Gascoigne, in CIL and the Act that brought that in.

There are other aspects. The Amendment in the name of the noble Lord, Lord Teverson, would make sure that this is additional money. It basically says that Natural England should not become self-financing and that every single penny raised should go to nature restoration.

Like my noble friend Lord Gascoigne, I was born in the county of Lancashire and I am very proud of that—don’t worry, I will not start singing the cricket song. There is something to be said, building on the principle of rectification at source, for trying to have that biodiversity as near as possible. Very occasionally, there have been infrastructure projects, such as the Channel Tunnel, for which it has simply not been possible to re-create the relevant habitat for certain displaced species, and it has had to go further away. It is a bit like what HS2 found: there is no point in planting trees at the wrong time of year, not watering them and then finding that—what a surprise—70% of them are dead. More money is spent on fixing the problem, instead of sorting it out in the first place. There is an element of co-ordination involved here, which I think Natural England is reasonably well-placed to do.

When we were setting up the BNG pilots, local developers sometimes could not do it, and there was then an opportunity to buy national credits. The department and Natural England were very keen for Natural England to be the only body to have this national pot, but I ensured that a few more bodies were available. It is important to have not necessarily competition but a variety of people who can provide this, as opposed to resource constraints becoming the great determining step or not helping progress. I come back to the Environment Act 2021 and its species abundance target for 2030.

There are other examples. It might be surprising to hear that the Treasury regularly holds back over a billion pounds from the collection of the apprenticeship levy, which it will often use to pay for various training here and there. Nature is too important. I thought it was no longer the Cinderella of the climate and nature environment, but I am afraid that it is back in that sad era. We need to ensure that it receives its fair dues, which is why I support the amendments in this group.

My Lords, I wish to make a brief Intervention. In terms of infrastructure, nothing has had a more devastating effect on the countryside and nature than HS2—for no purpose at all, which is very sad. The point I wish to put to the Minister relates to compulsory purchase orders. I do not know whether she is aware that the farmers have been paid only 90% of the value of the farmland taken for HS2, which seems grotesquely unfair. I wonder whether she would take that on board and perhaps comment on it or think about it.

My Lords, I rise briefly to support those who have argued that the levy must be spent exclusively on nature. That is what it is collected for. The Government, who administer these things more generally, have enormous resources at their disposal and they are ordaining that this is the way things will be done. As part of that, they should foot the bill for their own activities.

If I may, I will also turn briefly to Amendment 309, tabled by the noble Lord, Lord Gascoigne. I have great sympathy with it, but it might be better to include a spatial measure, rather than a local authority boundary measure, behind the approach we adopt. If we have a development very close to a local authority boundary, it may be that the right place to spend the money is just over the boundary. Equally, I have suddenly discovered that I live in the county of Westmorland, when previously I had always lived in Cumberland. The distance from Alston to Barrow-in-Furness, which are in the same county, is over 100 miles, and I think that would throw up problems.

There is also a deeper, fundamental problem, to which I do not know the answer. Part of the emotional element of the levy is that the money is to be spent on nature and environmental improvements quite close by—that is the psychology of it. As the noble Baroness, Lady Coffey, said, in cases such as the Channel Tunnel, that is not really possible. Speaking as someone from the north of England, where we have plenty of projects which could benefit from money of this kind, if all the money raised is in the south of England and cannot be spent in the north, you would find a very considerable feeling of discontent. A lot of the problems, once you get away from the immediate locality of any particular project, may well be, at the most extreme, quite a long way away.

My Lords, this group of amendments relates to the regulation-making powers governing the nature of the restoration levy. The powers provide the framework for how the levy will operate and how it will be used to unlock development and deliver nature restoration. Let me reassure the noble Lord, Lord Framlingham, that we have a whole group on CPO powers, group 9, so I am sure we will have further discussions about that then. The substance of the levy will be governed by secondary legislation, which will be laid under the affirmative procedure following Royal Assent. It is worth highlighting that, as well as receiving scrutiny from Parliament, the relevant charging schedule will form part of the consultation on each EDP, and, to reiterate, the use of an EDP will be a choice for developers.

Turning to Amendments 256 and 313, tabled by the noble Lord, Blencathra, the Government have designed the nature restoration fund to work on a cost-recovery basis, with actions required to deliver EDPs funded by the developers who use the EDP. The framework of powers ensures that the levy can be designed to achieve this aim, and that all appropriate costs can be met through the levy. This follows the polluter pays principle, as the EDP will address the negative impact from development, so it is right that these costs be met through the levy. Given the range of matters that may need to be addressed through an EDP, there may be circumstances where the acquisition of land is required. Where this is the case, it is only right that this cost be recovered through the levy, rather than through public funds, whether the land is acquired by agreement or through compulsory purchase.

While I recognise the concern around the use of compulsory purchase, these are important powers to ensure sufficient certainty that, where necessary and appropriate, land can be acquired for delivering conservation measures. This again highlights the importance of consultation on each EDP to ensure proper scrutiny before the EDP is considered by the Secretary of State.

I am sorry to interrupt again, and I appreciate that other amendments deal with this, but the very simple principle is that if you are buying somebody’s land, you should pay a fair market price for it, surely.

The noble Lord is correct, and there are provisions for that in the process.

Turning to Amendment 307, tabled by the noble Lord, Lord Gascoigne, I note that he is a non-native species of Surrey; I hope he is not an invasive species of Surrey. His amendment would limit what administrative expenses could be included within a charging schedule to those included in Section 11 of the Natural Environment and Rural Communities Act 2006. These powers were drafted long before the nrf and extend solely to charging for providing a service and for licences. Natural England’s role in the NRF is wider than simply providing a service. It will be drafting EDPs, conducting surveys and analysis to work out the most appropriate conservation measures, and consulting on them and presenting them to the Secretary of State. It will subsequently have administration costs as part of implementation, such as contracts with service providers and administration of levy collection. Many noble Lords have also referred to the need for a proper scientific basis, and it will be important that it be able to deliver that scientific evidence.

As mentioned previously the Government’s objective is for the NRF and Natural England’s role in delivering it to operate on a cost-recovery basis, which would not be possible if we were to accept this amendment. To ensure value for money for the taxpayer, it is important that Natural England can recover all appropriate costs as part of the levy.

I turn to Amendment 308A from the noble Lord, Lord Gascoigne. We agree with the noble Lord. The Government are clear that money from nature restoration levies will be used to deliver the EDP and secure the necessary conservation measures. While Natural England will be the organisation drafting EDPs on behalf of the Secretary of State, it will not always be best placed to deliver the conservation measures, so we will work with other bodies when securing those measures. We will set out a procurement strategy in due course that will speak to the issues the noble Lord is driving at through his amendment.

When Natural England works with or through partners it will remain bound by the provision in Clause 71 to

“spend money received by virtue of the nature restoration levy on conservation measures that relate to the environmental feature in relation to which the levy is charged”.

Money used in this way cannot simply be used for other purposes. For that reason, Clause 71 still requires that this money be monitored and accounted for. On the basis that there is always a link between the levy and the delivery of conservation measures, regardless of whether Natural England is the body delivering them, I hope that the noble Lord will not press his amendment.

I turn to Amendment 309, again tabled by the noble Lord, Lord Gascoigne. As the noble Lord will be aware, the Government have tabled an amendment making it explicit that Natural England can only deliver network measures—measures that do not directly address the impact on a protected site but improve the same feature elsewhere—where it considers that they will make a greater contribution to the improvement of the environmental feature in question than measures that address the impact of development locally.

Under these proposals, Natural England will be required to state how it reached this conclusion with reference to the best available scientific evidence. Crucially, network measures could never be used where to do so would result in the loss of an irreplaceable habitat, as this would inherently not pass the overall improvement test. More generally, the amendment would limit actions within the boundary of a local planning authority that may not align with the ecological boundary of, or environmental impact on, a protected site. I trust that this speaks to the substance of Amendment 309, given that the Government’s amendment provides an ecological lock on the use of these measures by requiring Natural England to pay regard to the need to protect the overall coherence of the relevant site network.

Amendment 310, also from the noble Lord, Lord Gascoigne, would require the Secretary of State to bring forward regulations covering all the matters listed within Clause 71(3). There are many indispensable elements to the levy regulations that will be brought forward to ensure that this legislation can operate effectively. However, framing the power as a “may” rather than a “must” provides the Secretary of State with discretion when deciding whether it is necessary to bring forward specific requirements in regulations.

I turn to Amendment 312 from the noble Lord, Lord Gascoigne. The Government agree that transparency is vital throughout the EDP process. That is why the Bill already includes reporting requirements at the midpoint and endpoint of an EDP that will include information about the cost of conservation measures. In addition, Natural England will be required to publish annual reports across the NRF that will include a summary of Natural England’s accounts, with information about the total amount of levy received and the amount spent on conservation measures each year. Through this process, we are confident that there will be an adequate level of transparency in respect of both costings and expenditure.

I turn to Amendments 314 and 315, tabled by the noble Lords, Lord Gascoigne and Lord Blencathra. As I set out previously, removing Natural England’s ability to recover administrative expenses would require the Government or Natural England—and as a result, the taxpayer—to shoulder the cost of creating EDPs and any administrative costs of implementing them. Similarly, removing Natural England’s ability to include previous expenses would directly impact this and remove the Government’s ability to forward conservation fund measures to Natural England, which would then recover the money through the levy when development proposals come forward before repaying the Government. Furthermore, limiting the ability of Natural England to reserve money for future expenditure would restrict its flexibility to secure the most appropriate conservation measures and plan for unforeseen circumstances. Allowing these costs to be included within a charging schedule will ensure the long-term viability of the nature restoration fund and provide greater certainty that environmental outcomes will be achieved.

In a similar vein to previous amendments, Amendment 301A, tabled by the noble Lord, Lord Teverson, and spoken to by the noble Baroness, Lady Parminter, would require that money accepted through the nature restoration levy be classified as additional to the core funding of Defra or Natural England. I can assure the noble Lord that the legislation is clear that the nature restoration levy is provided to Natural England to deliver on the EDP and cannot be used for purposes outside the EDP. As part of this, and to ensure transparency, regulations may require Natural England to account separately for any money received through the nature restoration levy that would prevent this from being merged with central budgets.

Although the levy can be used by Natural England for administrative expenses in connection with an EDP, this must, as the drafting suggests, be in connection with an EDP. This might cover the costs of drafting and implementing a specific EDP, or a proportion of the cost of setting up a digital platform for the NRF generally, but the nature restoration levy would not affect the core budget of either Natural England or Defra, which remains a matter for the Government. With this explanation, I hope that the noble Lord will feel comfortable to withdraw his amendment.

On Amendment 307A, the nature restoration fund is being established to support development, so it is vital that the nature restoration levy does not undermine the economic viability of development while still being able to secure sufficient funding to deliver the necessary conservation measures to meet the overall improvement test. There is no legislative requirement to include contingency in the levy, as framed by this amendment. However, it is important that the regulations allow for circumstances where it may be necessary or prudent to include a precautionary buffer to support the delivery of conservation measures, whether through back-up conservation measures or simply because the primary conservation measures may cost more than originally anticipated.

Crucially, a draft charging schedule will include details of how the levy has been calculated. If a contingency were included in the charging schedule, this would form part of the draft EDP, which will be subject to consultation before being considered by the Secretary of State. While I am confident that the nature restoration levy will be set at a fair price that supports development, the use of EDPs will remain voluntary in all but the most exceptional circumstances. A developer is therefore free to use the existing system if they do not think the EDP or the levy is appropriate. Developers will have full clarity on what they are paying—

I thank the Minister for explaining those points, but I just want to clarify something. I think that we were both at the same meeting where I challenged Natural England on this, and it assured me that there would be a contingency. For a large project, I think it is perfectly sensible to have a contingency, but when I questioned what would happen to the contingency, or indeed any unspent funds, after of meeting the required level of environmental reparation, I was assured, to my astonishment, that it would not be handed back as excess but would spend it on some more good environmental stuff, above and beyond what was anticipated for the levy. That is a sleight of hand, if I can put it in those terms, to use money that was not needed for the purpose for which it was provided for another purpose. Perhaps, at best, there is a difference in understanding between the department and Natural England, which it would be helpful to clarify.

I thank the noble Lord for that point; I will attempt to clarify that for him. There are potentially significant complexities and legal and financial liabilities introduced by requiring the return of the money with interest to developers. Given that developers will have already received the benefit they paid for, it would be more proportionate, and better for nature, for Natural England to use any excess funds to the benefit of the environmental feature. With this explanation, I hope that the noble Lord will consider withdrawing his Amendment.

I think that the Minister has just confirmed exactly what I said, which is that if there is any money left over, it will be spent on some other good stuff. That is rather unfair on the developer who has paid for something, and now the excess that was not spent is being used on something else.

I have listened very carefully. The developer knows what he has paid for. The developer has bought something. The developer has purchased an 80-year project, but he has not bought anything until year 79. I We have to get our heads around the money side and the financials—we are not going to know. I will dwell on this a bit more on a later group. The suggestion that someone has bought something and it is done and dusted on day one is a false premise; we have to understand that.

The noble Lord and I are starting to repeat ourselves, so perhaps we can talk about it outside. However, that is not the reply that the Minister has given me.

I am happy to continue the conversation on this, but I would reiterate that it is up to the developer whether they enter into an EDP. They will have a charging schedule set out before them and, if they feel the contingency is too great, they can argue it or not take part in the EDP.

On Amendment 309A, tabled by my noble friend Baroness Young, I reassure my noble friend that the intention of her amendment is already captured. I agree that it is crucial that Natural England ensures the effective delivery of conservation measures, which is why Clause 55 sets out that the conservation measures in an EDP

“are to be taken by, or on behalf of, Natural England … to … address the environmental impact of development”,

as well as

“contribute to an overall improvement in the conservation status of the identified environmental feature”.

Natural England will be responsible for securing the delivery of conservation measures and required to monitor and report on their progress, with government Amendment 248A also requiring mandatory back-up measures to be deployed where monitoring and mid-point reporting demonstrates that they are needed. If, at the EDP end date, the outcomes originally envisaged have not been delivered, the Bill, supported by the government amendments, would require the Secretary of State to carry out any remedial measures that they consider appropriate to secure those outcomes. For this reason, it is not necessary to restate this obligation through the levy regulations and I hope my noble friend will agree to withdraw her amendment.

I turn to Amendment 311. We have already discussed mitigation hierarchy at some length and, I hope, provided suitable assurance that the mitigation hierarchy is already given effect through this new model. In contrast to the well-trodden territory of mitigation hierarchy, the concept of a delivery hierarchy is new. The noble Earl is likely introducing this to support Amendment 274, which was debated on Monday, where expressions of interest are sought from bodies other than Natural England to deliver conservation measures to give preference to those bodies.

It is most appropriate for Natural England, in individual EDPs and in relation to individual conservation measures, to decide whether it is best to deliver conservation measures themselves or through procuring services from external providers. For the reasons given just now, the Government cannot support the noble Earl’s Amendments 316 and 318 and argue that it is unnecessary either to allow Natural England to provide loans to third parties or to pass money to them. Where Natural England proposes to procure services from the private market to deliver conservation measures, I can assure noble Lords that they already have sufficient powers to do so. With those explanations in mind, I hope that the noble Earl will not move his amendments.

On Amendment 317, tabled by the noble Lord, Lord Blencathra, I reassure him that the regulation-making powers in Clause 71, in line with wider precedents, are framed around indicative lists to demonstrate how the powers may be used, so we feel comfortable that the scope of this power is already sufficient to allow for the appropriate management of any unspent funds, as well as to deal with refunds in the event of overpayments. With those explanations, I ask noble Lords not to press their amendments.

It is clear from the amendments in this group that there is broad consensus across the Committee on a number of key principles in the use and governance of the nature restoration fund’s levy. The first is transparency, the second is fairness and the third is value for money. The fourth is my noble friend Lord Gascoigne’s point that the funds should stay local, as far as possible. We discussed, in a previous group, the implications of that for the BNG market.

Frankly, I agree with all the amendments. The Minister has given us a very comprehensive answer to the amendments, which was helpful. There was definitely some reassurance in there about the potential for ring-fencing the nrf; I will take those away and study them further, but I suspect this might be something that we return to on Report.

I think the Committee is concerned that this could become a slush fund. We know from the water restoration fund how resistant the Treasury is to the hypothecation of funds and how keen it is to get hold of penalties to the water industry and so on. We do not want to see this turning into a slush fund used to acquire land at will by Natural England, spent on bureaucracy or even returned to the Treasury. For now, I will withdraw my Amendment, but I would very much like to return to this.

Amendment 256 withdrawn.

Clause 56 agreed.

Clause 57: Other requirements for an EDP

Amendment 256ZA not moved.