PARLIAMENTARY DEBATE
Environmental Audit Committee - 8 May 2025 (Commons/Commons Chamber)

We now come to the Select Committee Statement on behalf of the Environmental Audit Committee. Mr Toby Perkins will speak for up to 10 minutes, during which no interventions may be taken. At the conclusion of his statement, I will call Members to ask questions on the subject of the statement; these should be brief questions, not speeches. Questions should be directed to the Select Committee Chair, and not the relevant Government Minister, and Front Benchers may take part in questioning.

I am pleased to present the Environmental Audit Committee’s report on the role of natural capital in the green economy. This report was initiated by my predecessor as Chair, the right honourable Philip Dunne, the former Member of Parliament for Ludlow. I wish to pay great tribute to him for his excellent contribution as Chair. Mr Dunne enjoyed what I suspect is an unusual distinction of having both asked questions and answered them in the witness sessions that led to this report. Having originally initiated the report in January 2024 and then seen Parliament dissolve before the report could be published, he was kind enough to return as a witness in December 2024 to brief the successor Committee on the evidence that his Committee had heard and to provide his own insights.

I wish to take this opportunity to place on record my gratitude and, I know, the gratitude of members of the Committee past and present to our former Clerk, Martyn Atkins, who recently left the service of the Committee for a period of absence after many years of service to the House. Martyn has played a huge role in the work of this Select Committee and many others and will be very much missed, as will Chloe Jago, who recently stood down as press officer on the Committee after five years of excellent service to take up a role closer to home.

I thank all those who have contributed to this report, the many people and organisations who submitted written and oral evidence, the Committee staff—particularly Alex Farnsworth, who has worked tirelessly to complete the report—and the members of the current and predecessor Environmental Audit Committee.

Let me turn to the report itself. We were delighted to see that recommendation No. 1—that the Government should produce an impact assessment of the Planning and Infrastructure Bill—was satisfied within a day of our report being published. At this pace, we really could get somewhere. However, we still need to learn more about how the nature restoration fund will interact with biodiversity net gain. I am glad to see that the Minister is here to expand on that in his response.

The Dasgupta review made clear the value of nature. Nature and the services that it provides underpin both our economy and our way of life. In 2022, the Office for National Statistics found that the UK ecosystem’s services were equivalent to 3.5% of GDP, or £1.8 trillion. The UK has experienced significant biodiversity loss in recent decades, with the “State of Nature” report 2023 showing an average of 19% species abundance decline across more than 750 species between 1970 and 2021.

The Committee agrees with the Government that economic and financial decision making should support the delivery of a nature-positive future and we would like to hear a repetition of that commitment and, indeed, to see it actualised in the forthcoming spending review.

The Committee agrees with the assertion of this Government and the previous Government that, in a time of spending restraint, taxpayer money alone is no longer sufficient to deliver the necessary level of environmental restoration, so private finance must play its part. We were pleased to hear from the Minister for Nature that work is ongoing to better quantify the current size of the annual investment in natural capital. The Committee therefore recommends that, within 12 months, the Government provide a report to Parliament on current and projected levels of private investment into nature recovery in England, so that we can see both the progress that has been made and the size of the funding gap.

For the Government to deliver on protecting 30% of land by 2030, they must provide landowners with the confidence to invest in nature restoration. The long-promised land use framework will help, and will give assurance that there is a strategic approach to balance the competing needs for our land in regard to food production, nature restoration, renewable energy, residential and commercial development, and other areas. It will, however, require a natural capital approach to be embedded throughout Government.

The Committee heard concerns that the changes to the agricultural property relief regime had added to uncertainty, although the Government’s decision to give nature investments equal treatment under inheritance tax at least answers the charge that the Government were prioritising nature recovery ahead of food production.

Voluntary drivers of market demand alone will not deliver the demand that the Government need. Compliance mechanisms and the expectation of future compliance requirements will drive market demand, so the Government should look at bringing in increased compliance requirements, such as by expanding biodiversity net gain requirements or mandating corporate disclosure of nature-damaging activities.

The Committee seeks assurances that the proposed new nature restoration fund is an addition to, rather than a replacement for, Government investment in nature recovery. Without clear support for biodiversity net gain, Ministers risk causing uncertainty in nature markets, which could undermine investment in restoring nature. It will be good to hear a full-throated defence of BNG from the Minister in his response to the report—a defence that we heard from him, and indeed from myself, when in opposition.

Although the Committee supports an approach that allows nature recovery initiatives to be pooled, the Government must ensure that we do not end up with nature recovery miles away while there is a further eradication of nature within urban settings. One of the strengths of BNG is that the communities that suffered the nature blight also benefited from the recovery of nature locally. It will be good to get a commitment from the Minister about that principle remaining in place under the nature restoration fund proposals. Nature can grow hand in hand with our economy, and money from growth should go back into helping nature thrive.

The report provides the Government with a road map to restoring nature by capitalising on our huge national strength as a global financial leader. It cautions the Government not to undermine the progress already made and offers our support for the measures that help nature’s recovery come hand in hand with the economic growth that the Government rightly demand.

I am delighted to speak in support of the Committee’s report, and I congratulate my hon. Friend the Chair of the Select Committee on the way in which he has led the Committee and on how he took up the remnant of this report from the last Parliament as the first report for our Committee in the new Parliament. He is right to recognise that natural capital is the foundation of our economy. With the spending review next month, does he agree that the Government should set out precisely how they have taken a natural capital approach to the evaluation of spending decisions? Does he agree that the new national wealth fund should be empowered to invest in the natural capital project, as highlighted in our report?

To return a compliment, my hon. Friend is the only person who was there at the start of the evidence and at the end, and we are very grateful for the continuity he provides. He is right that, as the Committee’s report lays out, we need to see a natural capital approach embedded right through Government. The forthcoming spending review is a great opportunity to see that, and I really hope that we do. He makes an important point about the national wealth fund; it provides a huge opportunity and we look forward to hearing what the Minister has to say on that both at this juncture and in his response to the report, which we will get from the Government in due course.

I commend the hon. Member for the quality of the Committee’s first report of this Parliament. The National Trust has warned that the Planning and Infrastructure Bill is a “licence to kill nature” and the Office for Environmental Protection has advised the Government that it is a “regression” in environmental law. Does he share my concern that a nature restoration fund could create risks to the UK economy by undermining our natural capital, and does he agree that without substantial private investment in nature, Government pledges to protect 30% of land by 2030, halt the decline of species and improve people’s access to green spaces could be at risk?

I thank the hon. Member for his kind words. I will start at the end of his question. He is absolutely right, and we agree with the Government that we need to be able to attract more private investment if the 30 by 30 aspiration is to be realised. It was notable that when the Government came to the Committee, they made it clear that they did not yet know—as their predecessor Government did not know—exactly how much was being raised by the private sector. The starting point of assessing whether the Government are on track to meet their targets is knowing how well they are doing right now. One of the recommendations in the report is therefore that the Government should get on with identifying the full scale of the current level of private sector investment. We will absolutely look to do that.

The jury is still out on whether the nature restoration fund will be a good or a bad thing. It offers real potential. A one-for-one approach on small schemes is sometimes expensive to provide and offers relatively limited value, so there is real value to a pooled approach that enables money to go in so that wider-scale improvements can be delivered. However, as I said, we need to be really sure that that does not mean that urban areas get the blight and rural areas get all the nature gain. We need to see it delivered close to where the initial plans are being delivered.

I welcome the publication of the report, which reminds us all once again that nature is the true foundation of all wealth in our country and around the globe. A wide range of environmental organisations and eminent academics —including Sir Partha Dasgupta, professor emeritus of economics at the University of Cambridge, whose review for the Treasury underpins the Committee’s entire report—have publicly written to warn that proposed plans in the Government’s Planning and Infrastructure Bill are

“not a tool for ecological recovery”

but

“a licence to kill nature, with no evidence to suggest this would in any way help our economy.”

Does my hon. Friend agree that when leading economists, former Government advisers and leading conservationists with decades of collective experience have expressed such deep concerns about Government legislation, Ministers must listen and think again?

I thank my hon. Friend for that and for the excellent contribution he is making to the Select Committee. Professor Dasgupta is hugely respected, and his warnings should be taken very seriously indeed. I think that all Labour Members recognise the need for growth, but we demand that it comes hand in hand with nature recovery. We are one of the most nature-depleted nations on Earth and, as my hon. Friend rightly said, nature is the foundation stone on which all economic growth should be built. A nation that prioritises economic growth over our environment is one heading down a dangerous and foolish path. We have heard some really positive commitments from the Government, but we need to see them actualised. I completely agree with what he said.

I congratulate my hon. Friend and welcome this excellent report, with its focus on the value of natural capital. On such an important day as Sir David Attenborough’s 99th birthday, I am sure that Members across the House will wish to join me in expressing many happy returns to him for his important work in this space.

In coastal and rural constituencies like mine in South East Cornwall, the natural world and its biodiversity are both cherished and central to local jobs and to the economy. Does my hon. Friend agree that integrating natural capital into policy through tools like the nature restoration fund and the nature markets framework offers a vital opportunity for the Government and land managers to restore and increase the UK’s natural capital in ways that strengthen nature, boost local resilience and improve wellbeing for communities and for future generations?

I thank my hon. Friend for her congratulations. As I say, it is not my report; it is ours. I thank her for her contribution to the Committee. She is right about that commitment, and I think all of us on the Committee are driven to make sure that growth is hand in hand with nature, rather than at its expense. I agree with her entirely.