Impact of Environmental Regulations on Development (Built Environment Committee Report)

That is not the key matter of interest to us. The key matter of interest is that Natural England, an unaccountable agency that exists under statute in the UK, decided that that judgment applied to England as well—we are speaking predominantly of England in this debate, incidentally, as noble Lords will be aware. It was backed up in this, I understand—although, of course, I have not seen it—by legal advice from Defra. As a result, it started to issue advice in relation to applications for residential planning permission which effectively banned them because they would add pollutants to nearby watercourses without any mitigation.

It is not possible for Natural England to actually ban or nullify a planning permission. It does so by way of advice. None the less, it is very potent advice because, first, local planning authorities live in constant terror of having judicial review proceedings brought against them and, secondly, it must be said that many local authorities are delighted to be told that they cannot build anything in their area, which is a further problem we have with our housing market.

In fact, of course, we all know that the pollution in our watercourses comes predominantly from sewage overspills and agricultural practices. These agricultural practices are licensed by the Environment Agency, another player in this complex ecology of quangos running round causing confusion in every direction. Natural England has no purchase on that, but it does have purchase on applications for planning permission—so the whole burden is being put on the housing market when in fact it belongs elsewhere. As a result, 14% of England’s land area is now effectively under a ban for residential development at a time when we need more housing.

Biodiversity net gain offers a contrasting story. What was notable about nutrient neutrality was that it arrived out of the blue, as court judgments tend to do, so those in the development world had no chance to repair or plan for it. In the case of biodiversity net gain, there was discussion and consultation, and the larger housebuilders have incorporated it effectively into what they are doing; but the smaller housebuilders, for whom the committee has great concern, have not managed to do that.

I remind noble Lords that, 20 years ago, 40% of homes were delivered by small and medium-sized housebuilders. That is now down to 10%. We have moved towards a highly oligopolistic market for the provision of homes and we have driven the small builders out, mainly through the costs of planning permission and regulation of this character. If you are building a small site, as smaller builders tend to do, incorporating biodiversity net gain is extremely difficult.

The larger housebuilders often get permission to deliver it off-site, and here we come to another conflict with government policy, because they do that by buying up agricultural land and turning it fallow, yet Defra tells us that it has an objective that we must continue to produce food for this country. At the moment, we produce 60% of our own food. The Defra target is that that figure should not fall, yet it is encouraging people to buy up agricultural land and turn it into a nature reserves, or whatever.

Finally on biodiversity net gain, there are perverse outcomes in relation to derelict sites. Everyone agrees that building on a brownfield site is better than building on a greenfield site. Yet a brownfield site, if left derelict, becomes biodiverse quite quickly. The weeds come, the birds, the bees and the rodents arrive, and so on. So, if you are going to take a brownfield site that has been left derelict for some time and build on it, the first thing you do is contribute negative biodiversity net gain, as you will flatten it and destroy all of that. What you have to supply to make up the difference and the additional 10% starts from a lower base and is a bigger challenge. We are perversely encouraging greenfield site development when we say we want to encourage development of brownfield sites.

Finally under particular problems, I come to the question of what is referred to as “water neutrality”. This is a slightly misleading expression as it suggests some parallel with nutrient neutrality. It is almost better described as “water sufficiency”. We do not have enough water for many of the developments. It was announced in the Sunday Times while we were doing our report that the Secretary of State had said there were going to be 250,000 homes built in Cambridge. It was pointed out that a planning application for 5,000 homes in Cambridge was being held up because the Environment Agency claimed there was insufficient water to supply them.

Happily, when we quizzed the Housing Minister on this, she was able to assure us that the Secretary of State had said no such thing and it had appeared on the front page of the Sunday Times entirely as a matter of speculation. So it was a great consolation to us to know that that article had no basis in the thinking of the Secretary of State, given that there is no water to service these 250,000 houses. But it does raise the question: why have we not built any reservoirs for 40 years, or whatever it is, that might help and contribute to our housing target?

I will be very brief now. Is there a problem? I think there is a problem at the moment. Does there need to be a problem? Of course not. We are a reasonably well-off country. A reasonably well-off country can both build houses and improve the environment. It should not be that difficult. There should not be a conflict. But it requires a vision and a plan—and, in the case of pollution in rivers, a plan that will take at least 30 or 40 years to deliver. It requires buy-in to that plan; it requires leadership and selling that vision, and then delivery with cross-party support.

I think that can be done. The current way is to go around insisting that you are entitled to have what you want now. Well, nobody is going to get what they want now. The only answer will be a long-term plan. Somebody has to take the lead. I look to my noble friend on the Front Bench to do that as she steps forward and explains how the Government are going to resolve these problems for future generations. Sadly, it is unlikely that she is going to resolve them for this generation. If we can cast light on that and point at a path, we can feel that we have done something very valuable.

The best example is the latest plan—which I hope has been cancelled now—from South West Water, because there is a water shortage in Cornwall. Some of us might doubt that after last winter, but that is what they say. It had a plan to carry water in seagoing tankers from the port of Fowey in south Wales, discharge it into a tank and pump it up-river in the new pipe to some kind of reservoir further up the hill. Importing water from Wales to Cornwall does not seem to be the most useful means of using our resources. The company now intends to have solar panels instead, which do not take fresh water but take a great deal of electricity. Again, do we need solar panels in the south-west of England, especially after this last winter?

In addition to what the noble Lord, Lord Moylan, has mentioned, something else that came to mind in the course of our inquiry, which goes back a long time, was the lack of planners. Local authorities do not have enough planning officers, and that is causing delays to planning applications. The Government are blaming that on the local authorities, but most of us would say that planners do not grow on trees—you have to train them and so on—and the local authority has to have money to pay for them. A big issue that we are facing at the moment is the lack of finance for local authorities, and that is just one example.

There is a surprising lack of off-site prefabricated construction, which I think is a really good idea. The noble Lord, Lord Moylan, mentioned that the large builders have a high proportion of orders now, but we also interviewed a lot of people who said it is very difficult doing it off-site because people do not like them.

I recommend that noble Lords read the response from the Government to our report, because it shows a complete lack of joined-up government. Although it could go better, and the Minister has said it will, a great deal of work needs to be done.

In my humble opinion, the general government response to the inquiry to date has been poor. The Government have not adequately engaged with or addressed many of the key areas, while in others they have provided the stock answer of blaming nutrient neutrality for the problems. The report went out of its way to search for potential solutions and point out clearly where the systems and processes in place were not working. Ideas put forward included giving housebuilding a statutory footing.

Underlying the key report is a continued trend of poorly thought-out processes, a lack of coherent policies, a lack of support for developers and a hodge-podge of systems and processes that work for no one. We have planning authorities that lack funding, a lack of planners and general systemic problems across many sectors that are inhibiting the need and the demand for housing.

When we need policy implementation across all areas of government to be a co-ordinated dance, we have something that in reality is much more akin to Laurel and Hardy than to Torvill and Dean. The idea that we can have either new housing or nutrient neutrality but not both is a false dichotomy; to accept that would be to reward past failure and to agree to continue to fail in future as well. We can and must have both, and the Government need to work to achieve that at speed and at scale. The idea that environmental targets are somehow of secondary importance is alarming. Environmental commitments must not be a convenient scapegoat for inaction, a lack of coherent policy or an inability to meet the Government’s own obligations.

We are one of the most nature-deprived countries in the world, while England has the lowest numbers of houses available in the developed world and the highest rate of inadequate housing in Europe. The Government must act at scale and at speed to change that.

Moreover, the SME housebuilders, and we need more, not fewer, of these, are taking the biggest hit. They are often ill-equipped to deal with the plethora of planning and permit requirements. Unlike the major housebuilders, they cannot afford specialist consultants to assist in completing all the necessary—and sometimes quite unnecessary— assessments and form-filling. They cannot switch production to a different area because they operate only locally.

What our Select Committee’s report advocates is a balanced approach which considers the underlying causes of environmental problems and seeks to address these fairly, openly and consistently. The Department for Levelling Up, Housing and Communities and Defra, with its agencies, must act jointly and not in opposition. Perhaps the forthcoming national land use framework will help bring things together. At the local level, local planning authorities must have the central role, despite cuts in planning department budgets. Increased planning fees coupled with more efficient models, as in Warwickshire, for sharing expertise and the necessity of having up-to-date local plans can all help. But responsibility comes back to central government and its agencies to engage with all the relevant stakeholders, to provide clear guidance, to introduce new measures only with proper transition periods and to ensure mitigation schemes are in place so that, at the end of the day, environmental improvements work hand in hand with securing much-needed new homebuilding.

I also want to refer to biodiversity offsetting, which I have debated with many other Ministers, so I will not go in depth on it now. But with the local elections approaching, I have been travelling around the country a lot by train recently. Looking out the window at new estates, with biodiversity net gains often being off-site, we are all too often looking at biological deserts—homes set on tiny pocket-handkerchief lawns, while for street after street there is not a tree or even a shrub to be seen. Increasingly, we know that that has massive negative impacts on human health.

For the next part, I should probably declare my position as vice-president of the Local Government Association to pick up the points made by the noble Lord, Lord Berkeley, about the resources available to local councils. I have to note the Government’s response to paragraph 59 of the committee’s report:

“A well-resourced local planning authority is crucial to the delivery of all planning functions”.

I can hear the hollow laughs in councils up and down the land at this moment. We know that local authorities have been starved of resources and of the power to make decisions.

I note also that paragraph 120 of the committee’s report states:

“Public bodies are facing challenges recruiting and retaining ecological expertise. It is necessary to bring expertise into the system through recruitment or training”.

Unfortunately, the Government’s response to that paragraph says absolutely nothing about education or training, yet there is an issue with green skills. When I talk to local councillors—noble Lords might be interested to know that 10% of councils in England have Greens as part of their administrations—they basically say that ecologists are like hens’ teeth. It is not that they are not trying to recruit them. These ecologists do not exist, and those green skills do not suddenly pop up out of nowhere. People need to be trained; I do not know whether the Minister is able to comment on that, but it would be very useful.

Finally, I have to come back to the Office for Environmental Protection’s report in January. I am sure that many noble Lords will say, and have already said, that we need housing, but we need a healthy environment for our people to live in. The Office for Environmental Protection said that the Government are well off track to meet their long-term water targets, that there are issues of water scarcity—to pick up what the noble Lord, Lord Berkeley, said—and that there is not sustainable resource use. None of this is working and the answer is not just build, build, build; it is to build the right house in the right place at the right price. I look forward to the noble Lord’s maiden speech.

I now turn to the subject matter of today’s debate. I have had some difficult briefs in my time at the Bar, but few have been as challenging as maintaining the convention that maiden speeches must be uncontroversial while also offering a meaningful contribution to a debate about the impact of environmental regulations on development.

I start with the easy bit: declaring an interest. As a King’s Counsel specialising in planning and environmental law, it will not surprise your Lordships to hear that I have acted and continue to act for many clients in relation to the impact of environmental regulations on development, including in relation to nutrient neutrality, which will be the focus of my observations today.

Most of those clients are developers and land promoters who have felt that the current level of environmental regulation of development is disproportionate and ineffective. That is not, however, my only perspective. Until last month, I was for six years a board member, and latterly interim chair, of the Joint Nature Conservation Committee, or JNCC, the UK-wide statutory nature conservation advisory body. Although work on nutrient neutrality is currently led by the statutory nature conservation bodies of the four component countries of the UK rather than by JNCC at a UK-wide level, my engagement in that role with Natural England’s leadership and that of the other statutory conservation bodies has helped me see things from their standpoints too.

It is with that rounded perspective that I seek to cut the Gordian knot of meaningfully contributing to a controversial subject in a speech that cannot itself be controversial. I propose to highlight five areas of apparent common ground which, if considered carefully by all stakeholders, might help provide some focus on how to solve the current stalemate.

First, everyone seems to agree that the status quo in relation to nutrient neutrality cannot continue. In the middle of a housing crisis, the building of new homes is subject to an effective moratorium in many parts of the country because of currently unachievable requirements for them to be nutrient neutral. In the middle of a nature crisis, the main causes of the nutrient pollution of river habitats—farming practices and water companies’ underinvestment in their infrastructure—continue to damage the environment.

Secondly, requiring developers to pay farmers to take land out of beneficial agricultural production, thus offsetting the nutrient generation of new development, is not the solution. It is unsustainable in every sense of the word to take productive agricultural land out of use. Moreover, a fundamental tenet of environmental law is “the polluter pays”, yet in this situation the polluter gets paid.

Thirdly, the long-term solutions plainly lie in improving agricultural practices and upgrading water infrastructure, but that will take time. The key question then is what can be done in the meantime to allow the much-needed housing to go ahead before the farming and water industries get their acts together. What quick wins can be achieved in the meantime to reduce phosphate levels in rivers and provide headroom for new development? An answer to this question must urgently be found.

Fourthly, as the committee’s excellent report makes clear, a joined-up approach across government is essential in finding a way to reconcile these considerations, which straddle the departmental responsibilities of DLUHC and Defra, as well as others. I suggest that there may be lessons that can be learned from previous Governments in which responsibility for both planning and environmental matters fell under the same departmental roof.

Finally, one of the most important things for the development industry is predictability. Land use regulation is called “planning” for a reason—the clue is in the name. Unplanned and sudden changes to rules and requirements undermine market and investor confidence. There appears to be broad consensus that the impact of nutrient neutrality requirements on the development sector has been significantly exacerbated by the lack of advance warning or consultation. Lessons can surely be learned about the need for fair notice of future environmental regulation of development.

There is not much more I can say within the limitations of this maiden speech, but I hope to make further contributions to the House’s consideration of these important issues in future.

We have also seen over a number of years regulatory and quango overreach, judicial activism and policy capture, which is a very regrettable situation. The proposal in 2023 to roll out a national credit-based scheme to address the imperative for nutrient neutrality would have entailed more than 30,000 acres of productive agricultural land being taken out of use for that purpose. I was interested to see that that is 61,000 tonnes of wheat, which is 35 million boxes of Weetabix.

It also has not produced, as at 2023, 142,000 homes which could have been built across 70 discrete local planning authorities. As other noble Lords have made clear, that has had a particular impact on small and medium-sized enterprise builders, who have suffered significantly since the downturn over 15 years ago. In fact, the Government’s own research shows that agricultural runoff and inaction by the privatised water companies in maintaining water infrastructure are the main reasons for the discharging of raw sewage into rivers and issues around nutrient neutrality. Indeed, new development accounts for less than 5% of phosphate and nitrate loads in our rivers. Of course, we also have the rather pernicious decision of the European Court of Justice in the so-called Dutch nitrogen case in 2018, which has resulted in what I would call the judicial activism in respect of the habitats regulations.

We are left with just one weapon in the armoury. That intervention is the sledgehammer used by Natural England to block much-needed new residential development. So, to quote Lenin, I ask the question: “What is to be done?” We need new primary legislation. We absolutely must have new watertight legislation and, I am sorry, but I believe that we must scrap the existing nutrient neutrality rules—needs must.

I cannot analyse all the recommendations in the report and the Government’s comprehensive reply, but there are a few things that I think are important. Ministers need to be able to exercise powers to grant planning permission and bypass local planning authorities that wilfully refuse to prepare timely and comprehensive plans. We need to refocus on the funding, capacity and expertise of local planning authorities. As an imperative, we obviously must have a review by the Environment Agency of environmental permits and plots that discharge effluent into rivers and areas impacted by nutrient pollution, especially agricultural activity. We also need a long-term look at historic housing stock and existing agricultural practices, as outlined in paragraph 89 of the report. We of course also have to look again at a greater emphasis at development on brownfield sites and remediation of brownfield land.

In conclusion, I commend this report. It is detailed and comprehensive and, more importantly, as my noble friend rightly said, it has signposted this and future Governments to find a way to reconcile two extremely important objectives: protecting biodiversity, species and quality of life; and building homes for people who desperately need them.

I raised with the Secretary of State the impression that we had clearly been given in our evidence sessions of the lack of joined-up working in the siloed systems of the state for which his department was responsible. We were told time and again about the fragmentation in many of the processes of those bodies that his department was responsible for, about people not communicating effectively with each other and about the machinery’s lack of fitness for purpose, with questions over whether any real learning was going on between these various bodies dealing with these important issues.

Instead of serious engagement and grown-up discussion about the challenges—which certainly predate Michael Gove—in the systems and processes that sit below him, we were told that all was fine and dandy in the kingdom. I do not believe it for a minute, and our evidence clearly suggests otherwise. If everything is fine with the machinery below the Secretary of State’s office, why were we told, in the recent Public Accounts Committee report on levelling up, that only just over 10% of the promised funds had actually been spent and were making a difference on the ground? That report asks why the Government are unable to provide any compelling examples of what levelling-up funding has delivered so far in one of the Government’s flagship policies.

As a person with direct experience of these issues on the ground, I declare my interest. This all speaks volumes as to the challenges of this department’s machinery—top, middle and on the front line—and accords with the evidence that we heard. Our encounter with the Secretary of State was disappointing, and an opportunity for real, informed dialogue and learning was missed. These machinery issues are not a party-political matter, of course. They will equally apply to, and have to be faced by, any new and incoming Government—they are not going away any time soon.

To move on, I agree with the conclusions of our report and think that their implications are very serious. All parties are promising to solve the housing crisis, but I am afraid that this will not be possible until we are all willing to have hard, honest and grown-up conversations about the challenges that we all face with the top, middle and front line of the machinery of the state, its fitness for purpose and its ability to deliver. Trust in our democracy depends on it. There is a desperate need for innovation, new ways of working and what I call a learning-by-doing culture at all levels of the state apparatus. But what does this look like in practice?

One very interesting piece of innovation that we heard about during our evidence sessions was from the Honourable Justice Brian Preston, Chief Judge of the Land and Environment Court of New South Wales. Having done several speaking tours in Australia, I know that Australians can sometimes—given our shared history—unfairly feel a little dependent on the UK and often want to learn about our latest thinking and practice on this small island. In this case, I suspect we may have important lessons to learn from them, and rightly so. Justice Brian told us about the Land and Environment Court in New South Wales, of which he was the Chief Judge. It was established in 1979 by legislation. At that time, we were told that planning and environmental law was quite primitive and even incoherent—sound familiar? The resolution of planning and environmental disputes was dispersed between multiple institutions, not only courts and tribunals but boards and government bodies. If you had one dispute, you could go to six different courts, tribunals or boards. This led to delay, transaction costs, inconsistent decision-making and incoherence in the administration of the legislation. In New South Wales, there was a desire to rationalise this fragmentation process and bring everything into one place to create, in effect, a one-stop shop. The consequence, we were told, has been the much speedier resolution of conflicts.

There is so much more to say about the lessons that we can learn from the Australian approach but, frustratingly, we have not been given the time to have a proper discussion about it. The Secretary of State could learn a lot. This learning-by-doing environment—the 360-degree approach—may not be perfect but I suspect that it has much to teach us all. My question to the Minister is: what are we actually learning about how to resolve the tensions between environmental issues and housing, and how are we applying these lessons to practice?