Built Environment Committee report: Impact of environmental regulations on development

In February 2023, the House of Lords Built Environment Committee launched an inquiry into the impact of environmental regulations on the development of the built environment.^[1] The committee published its report, entitled ‘The impact of environmental regulations on development’ in September 2023.^[2] The House of Lords is scheduled to debate the committee’s report on 19 April 2024.

1. Committee’s conclusions and recommendations

The committee considered the interaction between the government’s development and environmental policies and whether its objectives in both areas were achievable. These objectives include the target to supply one million new homes by the end of the current parliament and to “become the first generation to leave [the] environment in a better state than we found it”.^[3] However, the committee said it found this was not being achieved in practice. It argued delivering on these two sets of objectives had been “hampered and sometimes completely blocked by lack of co-ordination in policy-making and haphazard and unbalanced implementation”.^[4]

The committee argued there were several ways in which the implementation of environmental protection rules were obstructing developers. These included water pollution and the rules on nutrient neutrality. Nutrient neutrality rules require new housing developments in certain areas to prove that they will not increase the amount of nutrient pollution in the water catchment if they are located near protected habitats that are already in an “unfavourable condition”.^[5] The committee argued the way in which the current rules on water pollution were being applied was creating an “effective moratorium” on house building in affected areas.^[6]

In a wide-ranging report, the committee made several recommendations on how to balance the government’s environmental and development priorities. It also suggested measures intended to provide greater support to those responsible for operating the planning system and to developers, especially smaller businesses. The recommendations included that the government should:

• Commission a review of the costs faced by house builders and larger infrastructure projects in conforming to environment regulations.
• Set statutory housing targets to ensure that its development priorities are given equal weight to the existing statutory requirements concerning the environment.
• Review the requirements that the mitigations to prevent adverse environment effects on habitat sites are either available at or directly linked to a planning application.^[7] The committee argued this requirement resulted in local planning authorities rejecting planning applications even though they were in line with the local plan.
• Consider how best to ensure that local planning authorities maintain up-to-date local plans (including new legislation) and provide more support to local planning authorities in order to help them achieve this.
• Ensure the Department for Environment, Food and Rural Affairs (Defra) and the Department for Levelling Up, Housing and Communities (DLUHC) work together to review the planning and permitting requirements for brownfield land and eliminate the overlap between these two requirements.

The committee also concluded the focus on schemes which mitigate pollutants and establish biodiversity net gain at the development project level was not an effective approach. Instead, it argued local habitats should be “understood or considered in the round” rather than as “isolated pockets of mitigation”.^[8]

2. Government response to the committee report

The government published its response to the committee’s report in December 2023.^[9] It noted the committee’s concern that the government’s environmental and development aims needed to be reconsidered and said there was “a fine balance to strike between these interests”.^[10] However, it said it was taking actions to achieve this balance and it would be able to meet both sets of objectives.

The government argued mechanisms were already in place to balance the needs of the environment and delivering housing in the planning system. It said the existing system allowed for planning decisions to take account of competing objectives to support sustainable development. While it acknowledged the habitat regulations had led to some local authorities failing to make these balanced judgements, it said it did not plan to introduce new legislation in this area. It argued that to do so would risk “over-legislating”.^[11]

On the specific issue of nutrient neutrality rules, the government said it had tabled amendments to the Levelling-up and Regeneration Bill during the 2022–23 session to remove these rules for housing developments. It said this would have “[unlocked] 100,000 homes between now and 2030”.^[12] It noted the House of Lords had voted against these proposals, which it described as “extremely disappointing”.^[13] It said, while it had considered introducing separate legislation in the 2023–24 session to implement this change, it had not done so because it “recognised the significant risk of extended uncertainty for developers and local planning authorities if a new bill were to be delayed in its passage”.^[14]

The government said it agreed a review of the costs arising from environmental regulations as recommended by the committee would be beneficial, stating it “could supplement the existing evidence base for government decisions on environmental regulation”.^[15] However, it did not say when or how such a review would be carried out.

Responding to the committee’s recommendations concerning local plans, the government said it had introduced reforms to the plan-making system in the Levelling Up and Regeneration Act 2024. It said the regulations, policy and guidance to implement these reforms would be in place by Autumn 2024 and there would be a requirement for local planning authorities to update their plans within five years of the adoption of the previous plan. It also said these updates would be subject to full consultation.

On the issue of developing brownfield land, the government did not commit to a joint review by Defra and the DLUHC as recommended by the committee. However, it said the Environment Agency was reviewing some of the guidance on developments on brownfield sites, including on those sites where the “planning and permitting interface is more complex”.^[16] It also said local planning authorities were expected to give “substantial weight” to the value of using brownfield sites for development under the existing national planning policy.^[17]

3. Recent developments

In February 2024, the House of Lords Built Environment Committee held an oral evidence session with Secretary of State for Levelling Up, Housing and Communities Michael Gove. During this session, the committee asked Mr Gove to clarify the government’s position on the balance between increasing house building and environmental protection and improvement.^[18] Mr Gove said that “if you have the right overall strategy” there was no “necessary conflict” between these two priorities.^[19] On the specific issues concerning nutrient neutrality rules, he said the way in which they were being applied was currently “inflexible” and did not “deal effectively with the real problem”.^[20] He said this was something the government needed to continue to monitor. On the defeat of the government’s amendments to the Levelling-up and Regeneration Bill, Mr Gove said, he had been “keen” to bring forward primary legislation to change the existing rules on nutrient neutrality.^[21] However, he told the committee that “in a congested King’s Speech at the end of this parliamentary session, we simply could not find time in our legislative timetable for it”.^[22]

The committee also asked Mr Gove for an update on the government’s plans to review the impact of environmental regulations on developers.^[23] He agreed to write to the committee. In his subsequent letter, Mr Gove repeated that such a review would be useful and added the government were “determining how such a review would most effectively be structured and operate”.^[24] He said he would provide a further update “in due course”.^[25]

4. Read more

• House of Lords Library, ‘River pollution and the regulation of private water companies’, 19 February 2024
• House of Lords Library, ‘Long-term plan for housing’, 13 February 2024
• House of Lords Library, ‘Meeting housing demand: Built Environment Committee report’, 4 November 2022
• House of Commons Library, ‘Debate on reform of the planning system’, 12 March 2024

---

Cover image by Kevin Grieve on Unsplash.