Environment, Food and Rural Affairs Committee - Natural Environment White Paper - Minutes of EvidenceHC 492

Back to Report









Evidence heard in Public Questions 132 - 216



This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.


The transcript is an approved formal record of these proceedings. It will be printed in due course.

Oral Evidence

Taken before the Environment, Food and Rural Affairs Committee

on Wednesday 25 January 2012

Members present:

Miss Anne McIntosh (Chair)

Thomas Docherty

George Eustice

Barry Gardiner

Mrs Mary Glindon

Neil Parish

Ms Margaret Ritchie

Dan Rogerson


Examination of Witnesses

Witnesses: Councillor David Parsons, Chair, Local Government Association (LGA) Environment and Housing Board, Tony Bradford, Head of Countryside Management Service, Hertfordshire County Council, representing the LGA, and Dr Hugh Ellis, Chief Planner, Town and Country Planning Association (TCPA), gave evidence.

Q132 Chair: Good afternoon and welcome. Just at the outset if I could just explain that we are on running parliamentary business so if the bell does go I will call an adjournment at the most appropriate moment and we will come back, if there is only one vote, within the 15 minutes, if we can possibly manage it. If you can bear with us if that happens we will be very grateful. We welcome you and thank you very much indeed for participating in our inquiry into the Natural Environment White Paper (NEWP). Perhaps, for the record, if you would like to introduce yourselves. Councillor Parsons, if you would like to start?

Councillor Parsons: I am Chairman of the LGA Housing and Environment Board and I am also leader of Leicestershire County Council.

Tony Bradford: I am Tony Bradford. I am Head of Countryside Management Service for Hertfordshire County Council and working with many of Hertfordshire’s district and borough councils.

Dr Ellis: I am Dr Hugh Ellis. I am Chief Planner at the Town and Country Planning Association.

Q133 Chair: Thank you very much, indeed. Can I ask at the outset, do you believe that the environment cost and benefit of the ecosystem services have been properly thought through?

Tony Bradford: I think this is quite a new area and I gather it is something that particularly Defra advisers, Natural England, will be working on. I think from Hertfordshire’s point of view, it is something we are looking at and tying into green infrastructure strategies, looking at how that will fit to ensure that our green spaces and green infrastructure fulfil a multitude of benefits across Hertfordshire and how we tie that in then to our arrangements around Community Infrastructure Levy (CIL) and section 106.

Councillor Parsons: The Chairman stressed the costs; at the moment the local authorities are finding things pretty difficult so undoubtedly there will be benefits to what is proposed here, but I cannot underrate the pressure that local authorities are under at the moment.

Dr Ellis: From our point of view, I think the only overall point we would make about it is that in reviewing and assessing costs, much of the work that TCPA has done on climate adaptation means that the scale and threat to the natural environment of things like climate change and the value of green infrastructure that has just been mentioned need to be effectively valued and it is not quite clear how that process will take place.

Q134 Chair: Do you think there are enough incentives for businesses to participate in these ecosystem services?

Councillor Parsons: I think there are probably lots of opportunities. I think I am here to stress the local. This Government, Chairman, is avowedly localist and I welcome that. I think there are a large number of arrangements that can be entered into locally, but I think that to do that successfully, that has to be down to local authorities with their local knowledge rather than some sort of direction nationally.

Q135 Chair: I might be barking up completely the wrong tree, but I care passionately about Sustainable Drainage Systems (SUDS) and, in the scheme of things, obviously we are looking after the development has been completed. Who will take responsibility? Is that something that might possibly fall within the remit of ecosystem services?

Tony Bradford: Oddly enough, we were discussing SUDS while we were sitting on the benches outside.

Q136 Chair: I know that people share my passion.

Tony Bradford: Clearly SUDS provide more of an opportunity than just managing water that comes into them and ensuring that the silt and other nasties that they carry do not then enter our valuable watercourses. My understanding around ecosystem services is that currently it is voluntary. I think there are a number of challenges around those, in terms of ensuring that the private sector place a value and deliver that value. To my mind where a private body is looking to invest in development is the key opportunity. Clearly we recognise that everybody is suffering the pinch and, firstly, being able to encourage, because that is what is available, the private sector to contribute in that way is a challenge. Secondly, where there are mechanisms like section 106 and CIL, having the money available up front so that those ecosystem services can be ensured before the development is made, as opposed to what is the case currently, where that sort of money is delivered, say, when 20% or 30% of the homes are occupied. It is a little bit too far down the line. I think the Government perhaps should be looking at mechanisms or enabling mechanisms that support local government to make sure that that investment is enabled at the beginning of the development, as opposed to further down the line.

Dr Ellis: Could I say in relation to planning, I think there is a very big concern for local government about development values and where that money might go? Development values are a limited pot and there are certainly a whole range of issues that are being thrown on that limited pot. To give you one clear example, the new funding metric for the Environment Agency on flood defence means that part of the money for flood defence comes out of, if you like, development values from new projects. CIL and section 106 again draw down on that core value. At the moment, that value obviously is highly variable and, in principle, regressive. It yields most in those areas with highest development values and least in those areas undergoing restructuring and regeneration just because of the difference in development profit. There is a real issue about whether or not we see the delivery, for example, of green infrastructure as integral to the way that we plan or, if you like, something that we yield out of the funding that goes with development. I think there is a very strong case for ensuring that, at least partly, issues like green infrastructure are embedded in the scheme stage, scheme design.

Chair: Thank you very much indeed.

Q137 Neil Parish: Just on that point, Dr Ellis, you are right because 106 agreements work better when the economy is booming and there is plenty of money in a project. At the moment I think what you are saying is a lot of these projects are getting squeezed and, of course, then how much can we tap into that money? Is that what you are saying?

Dr Ellis: Yes, it is, particularly in those areas where there are multiple problems. If there is a very significant flood risk the Environment Agency has now moved to this process of looking for match funding so the developer has to fund that. They now have to fund existing CIL requirements and 106. The question, I suppose, is, how can you ensure that green infrastructure and ecosystem services are properly resourced? That is a real tension, is it not, because if we are in a localist world, that is up for local authorities to decide, but, at the same time, it seems to me a fairly obvious risk about what might be marginalised.

Q138 Neil Parish: My general question is that the local government has raised a number of issues about how the White Paper aims will be delivered in practice. Six months on from publication of the White Paper, do you think the Government has shown sufficient commitment to delivering against what I think is some 90 plus actions in the White Paper?

Councillor Parsons: The formal answer we have is, yes. We don’t have problems about that. I think the problem we have, I hate to be a moaner here about money, but I think if you want to deliver more then you have to start finding some money and £7.5 million, or about £8.5 million, for the programmes that are in here will not buy you an awful lot. But local authorities are engaged, other organisations are engaged as well, and we are perfectly happy that we can do what is in the White Paper.

Tony Bradford: I would add to Councillor Parsons’ comments, from the point of view of the Lawton Review and some of the findings within that. Lawton’s review suggests that the budget required to deliver his aspirations is between £600 million and £1.1 billion per annum. Clearly the figure for NEWP is considerably short of that and I think just a one-year figure.

Q139 Neil Parish: My second question is, does the White Paper have sufficient detail about how environment protection and improvement will be delivered? The second part to it is that several witnesses have argued for a timetable to deliver the White Paper’s ambitions. Would you support that approach and how would it help councils and planning within the community?

Councillor Parsons: Mr Parish, my general answer to you would be that I do not particularly like prescription by national Government. In a sense, I see this as a co-operation so I would like to see some general outlines, but I do not want to see a rigid timetable or rigidly defined programmes. I think that, in general, if we can work together and not have hugely rigid timetables and hugely rigid things we want to achieve, then you will probably achieve more.

Q140 Neil Parish: You would see the White Paper as having a sort of framework and then localism allowing some of that to be delivered. Is that how you see it?

Councillor Parsons: I would, yes. Local government has a good record of delivering stuff, but it is not only local government; there are other organisations like Wildlife Trust, people like that, who I am sure-I cannot speak for the Wildlife Trust-would welcome that as well. The less prescriptive you are, the more co-operation there is with local government, I think, the better you could deliver what you want to deliver.

Q141 Barry Gardiner: Councillor Parsons, you have said-I think I quote you-that you are perfectly happy that local government can do what is asked in the White Paper, but you have equally stressed the resources available are pretty tight and you mentioned the figure of £7.5 million plus £1 million there. In your submission, you say the LGA supports the funding offered to Local Nature Partnerships (LNPs), but you considered that funding levels for those and for the Nature Improvement Areas (NIAs) are unlikely to be sufficient, given local aspirations. How do you think that is going to play out?

Councillor Parsons: Tony Bradford here will have some examples from Hertfordshire he was telling me about earlier and perhaps you would comment on that. But you will not get all that many schemes with the money that is proposed here. On Local Nature Partnerships, £1 million is not going to get you an awful lot. The one thing I don’t want to do, as I think I said earlier, is come here and just carp over money. The one thing I hate about assemblies of councillors is that all they talk about is money and not wise ways of spending it. In my own county we have never had any money-I shouldn’t say this, should I-but we have done pretty well. You can be innovative, but for £1 million on Local Nature Partnerships that is, from what we can see, not sustainable because that money is for one year. You are not going to get too much out of it.

Q142 Barry Gardiner: But local government is being expected to take the lead in establishing these Local Nature Partnerships, is it not? That inevitably-to get the expertise and the technical knowledge and back up-is not a cost-free process. I do understand that this is not just about money, but what it is about, as you rightly stressed, is delivery. What I am keen to find out and what the Committee needs to know is how does local government view their capacity to deliver this agenda because it is a very big agenda? From Government this is the most important environmental White Paper that has come out for many a long year. If we seek to deliver on it, you are key elements of that at a time when we all know, and this is common across the parties, that local government is feeling the pinch.

Councillor Parsons: Fair comment. Capacity will undoubtedly be an issue so the more capacity you can give to these programmes, not necessarily to local projects, the more you will achieve. You are not going to achieve an awful lot with the amount of money that is at present being allocated. Do you agree with that?

Tony Bradford: Yes, I think that is a very fair point. As David asked me to, just to add a bit of colour, I believe there are 47 successful Local Nature Partnership applications so that £1 million-worth that David was talking about is split between those 47 partnerships. In terms of the way that is being taken forwards and the leadership for it, I think local government feel and recognise that they should be taking that forwards. But if you look at the variety of organisations that are leading on those partnerships, only 14 of those 47 are being led by local government.

Q143 Barry Gardiner: That is against the Government’s expectation, is it not? They said they expected that local government would take the leadership.

Tony Bradford: That is correct, yes. In Hertfordshire the county council has taken the view that they will support the Wildlife Trust, to take that forwards, and that is to some degree because of the reduced capacity within Hertfordshire to drive that forwards. As with most local authorities, it has been a 25% cut over three years and a number of officers in my part of Hertfordshire County Council are no longer there and-

Q144 Barry Gardiner: Mr Bradford, you are leading me in the direction that I want to go. You are Head of Countryside Management, are you not, at Hertfordshire? What has been the net effect over the past few years on your resources, human and financial, and those of your colleagues in similar posts around the country? What I am asking, I suppose, is how much of a priority do you think this is for most councillors?

Tony Bradford: Your first question is purely about resources. From my own position I take exactly the view that Councillor Parsons has taken-I am not here to carp on. Quite specifically, my organisation will see, over the past two years and the coming year, a 25% reduction in resources.

Q145 Barry Gardiner: In human resources?

Tony Bradford: In human resources I have seen the loss of three staff, from 17 to 14. In other parts of the county, the broader county council are facing the same pressures. We have responded to those positively. We have reduced the impact on the number of staff because we recognised, as does the LGA’s comments today, that that expertise is valuable and our response to the reduced finances available from the county and the districts with whom we work is to go out and find the money. I employ staff who do that for me. But I would say quite honestly that it is one of the most interesting parts of the job and most important.

Q146 Barry Gardiner: The second question was, when it compares with the responsibilities that councils have with health or housing, for roads and highways, what relative status do you honestly believe that this is given by most councils?

Tony Bradford: Certainly within the executive of Hertfordshire County Council, the activity that my organisation undertakes is very well supported. I can say from the seven local authorities out of 10 within Hertfordshire, at district and borough level, that is similarly reflected. In fact, just before Christmas I had written to those districts that support my organisation asking of their future funding for my organisation in the coming 12 months and they have all responded positively, although reflecting the difficult times by constraining the budget somewhat.

Q147 Barry Gardiner: They have spoken nicely to you, but they have cut your budget by 25%?

Tony Bradford: Not quite that much, but, yes, everybody is under pressure and the resources available are affected.

Q148 Barry Gardiner: Let me move on a little. In delivering ecosystem services payments, which is where this White Paper is headed, going from the theoretical to the practical, it is departments like yours that are going to have to see these schemes implemented on the ground. What do you think are the key drivers to make that happen? Is it money? Is it political will? Is it regulatory change? Is it technical know-how? How are you going to take this from a theoretical White Paper to implementing payment for ecosystem services schemes on the ground?

Tony Bradford: Dr Ellis will be able to talk about this a little bit more, I am sure. I think the mechanisms to enable-when the development comes-local government to attach the type of initiatives that my organisation delivers to that development so that it releases investment are going to be quite important.

Q149 Barry Gardiner: I do not think that was quite the question I asked you, though, about development releasing investment. I was talking about payment for ecosystem services.

Chair: I think we will move on. I don’t know if you want to answer that.

Tony Bradford: I think it could well work in a similar way and being able to create those mechanisms rather than it being currently a voluntary process.

Q150 Barry Gardiner: Do you really believe that most councillors even understand what payment for ecosystem services is all about?

Tony Bradford: I cannot answer for other local authorities.

Q151 Barry Gardiner: I asked you what you believed.

Tony Bradford: Perhaps some of the diminishing capacity in local government will challenge that.

Q152 Mrs Glindon: The White Paper aims to put Natural Capital at the centre of economic thinking. Has the case been made for embedding the value of environmental services more firmly in economic assessments of policy across all government departments?

Councillor Parsons: Shall I kick off, Chair? One of the things this might do, if I might be so bold, is encourage government departments to talk even more to each other about these issues and that is beginning to happen. These proposals could have a big impact, for instance, on health, the ability of people to get out, walk, see nature trails and all this sort of stuff. It is actually happening in Leicestershire in my own county. I think there are huge potentials. I am not getting at Defra here because Defra has spoken well to the LGA. I have met the Secretary of State, I have met ministers of state, so I would praise Defra for what they have done. But anything that can be done to encourage Whitehall departments to talk to each other, as I say, even more, and develop these cross-party issues would really be a bonus to us.

Dr Ellis: I would just comment-we may explore this perhaps a bit later-but one of the examples about the need for, I would say, a step change in the way the government departments talk to each other is the absence in the National Planning Policy Framework (NPPF) of any kind of understanding of this approach in the White Paper. A key delivery mechanism might be the existing planning regulation, for example. But the new National Planning Policy Framework draft does not contain any kind of core reference to the agenda, which the Natural Environment White Paper sets out, and that worries me because it seems to exhibit perhaps that communication is not as good as it could be.

Q153 Mrs Glindon: Do you think there is anything you could say to government departments that could help achieve more inter-departmental work, to get things brought forward in that way?

Councillor Parsons: If I might say, one thing is saving money. Duplication of effort across departments wastes money. If we could persuade Government nationally that by co-operating they will save money, perhaps that would be money that could go to local authorities to develop these cross-ministerial, cross-subject boundaries.

Q154 Mrs Glindon: Dr Ellis, you talked about the National Planning Policy Framework. Is there anything that you think could be done to improve that?

Dr Ellis: This is an extraordinarily big issue because the first principle would be a cross-departmental, cross-Government understanding of an agreed definition on sustainable development, for example. That is important because if sustainable development is the core objective, as I earnestly believe it should be, all subsidiary mechanisms, particularly an attempt to value ecosystem services and, if you like, value the wider environment, need to flow from that understanding. I think there are considerable questions about the successful ability for us to do all that valuation work and develop the metrics to deliver it, and I look forward to them being developed, if they can be.

But at the moment the difficulty is, to give you a really concrete example, the NPPF departs significantly from the 2005 UK Sustainable Development Strategy in one important regard-it no longer discusses environmental limits. Environmental limits is probably the most important principle in planning to delivering the agenda, which we welcome very much, set out in the Natural Environment White Paper. I earnestly hope that the Communities and Local Government Select Committee have pointed that out and I would earnestly hope that ministers will be considering revisions to the NPPF. I think we are at a very foundational stage, if you like. If we cannot agree even our core objective on sustainable development then it is very unlikely, I think, that we will be able to agree down the line on ways of implementing it.

Q155 Mrs Glindon: Can I also ask, have non-Defra Departments such as Communities and Local Government (CLG), the Treasury and the Cabinet Office, demonstrated tangible commitments to turning the principles in the White Paper into practice, particularly on embedding the value of nature in national accounts?

Councillor Parsons: I think that they could do better, not to put too fine a point on it; speaking together and co-operating-I am sure that is happening-would greatly assist the process.

Q156 Mrs Glindon: Could I ask you, Councillor, and, Mr Bradford, do you think it is clear what the local authority role will be for embedding the value of nature in accounts?

Tony Bradford: I think it leads us in the right direction, but I think some greater clarity on that-Dr Ellis has pointed to an area, which, much more clearly, regarding the NPPF, probably needs some clarification, in terms of the way that local government are going to place value on those ecosystem services, and then what mechanisms are going to exist to ensure that the funding is driven from that.

Q157 Mrs Glindon: Has the LGA had any contact with the Treasury about feeding into the Natural Capital Committee?

Councillor Parsons: I cannot answer that. I am happy to get some stuff back to you, ma’am, if I may, after this.

Mrs Glindon: Thank you.

Chair: If you could drop us a note that would be helpful. Does anybody else wish to answer? No.

Q158 George Eustice: You mentioned in, I think, your written evidence about Local Enterprise Partnerships (LEPs) and how they might fit in. Can you just expand on those? They were very focused on economic delivery and job creation.

Councillor Parsons: They are and, of course, they are largely unfunded so there is a great danger of putting too much stuff on them. I think they are ideal, from the point of view that they do cross boundaries. If you go to LEP you will get a variety of local councillors there from a variety of areas and, more importantly, I think, you will get business there as well. If you want business involved in this, and maybe business helping to pay for this, then that is important. I see LEP as a big untapped resource, but I would be a little wary of putting too much on to them because, as you say, their principal focus is economic development, and naturally there is a huge need, I think, for economic development, certainly in my neck of the woods at the moment.

Q159 George Eustice: Dr Ellis, I know you mentioned this as well.

Dr Ellis: We did. I think this is an argument that I have a perfect record of losing, but I need to run it anyway, and that is, I think, TCPA’s concern about the join up, duty to co-operate, LEPs and the strategic question around the Natural Environment White Paper. The Local Enterprise Partnerships have boundaries there, but they are non-statutory bodies without a brief on this agenda and, as you have heard, with a focus on economic development. What we certainly do face is that while there is really genuinely much to welcome about local approaches, there is an open question now overall as to how they relate to each other, how Nature Improvement Areas relate to each other and how we can take strategic approaches to the natural environment. After all, the natural environment plays out, as the White Paper rightly says, as a catchment area on a large spatial scale. There is not an absolute delivery mechanism at a large spatial scale in England at all-in fact on any issue, but particularly on this one.

Q160 George Eustice: Do you think they have the balance right, in terms of having a workable framework, seeing the national ambitions they have for this Natural Environment White Paper and the principle of localism that says things should be done locally, or is there just a conflict there?

Dr Ellis: I don’t think there has to be a conflict because I think with the right structures implemented in the right way it can be enabling and there can be guidance. But I think at the very least you must have a national and sub-regional understanding of progress on the natural environment and I do not see that the mechanisms are there to deliver that. A clear example of that would be that there is no longer an accounting mechanism through planning, for example, because monitoring and review now are completely localised and not passed up the line, if you like. If we are going to make progress, you have to have milestones and you have to have an evidence base and that does not reflect at sub-regional national level. I am just thinking particularly about coastal change practices on the east of England; they are extraordinarily important over the next 50 to 100 years and they are dramatic sub-regional processes with huge implications for the natural environment. For example, climate change has a much greater land use impact than build development will have, by a huge margin, over the next 50 years. England must have, it seems to me, a sub-regional way of dealing with that. It doesn’t have to be a top-down way-it doesn’t even necessarily have to be a tier of local government-but it must be a place where understanding can take place and co-operation can be ensured.

Q161 George Eustice: Are any of you familiar with the report Professor Lawton did, "Making Space for Nature"? Do you think the structure statement-from memory, it is about ecological resilience, talking about corridors that might need to expand in different areas-has enough flexibility to fit that?

Tony Bradford: I think so. Certainly the Nature Improvement Areas mechanism and the challenges it lays out are very clearly targeted at implementing landscape scale change and that is clearly what is set out in the Lawton Report. The landscape scale he is talking about would be the creation of hedgerows to link woodlands, the re-establishment of woodlands and woodland management to ensure that those resources remain sustained in the landscape and that their biodiversity benefit continues. There are some existing mechanisms that contribute to that, such as Defra’s environmental stewardship scheme, although clearly that has quite a short life, currently, and we look forward to hearing Government’s proposals on environmental stewardship too, depending how it develops.

I think, yes, some of the mechanisms are there and they are sufficiently flexible to allow organisations to invite local government to take a lead and to adapt those for the local context. I think one issue that we have discussed around Local Nature Partnerships is how they are established and how they develop the gravitas to be able to influence the Local Enterprise Partnerships, the LEPs.

Q162 George Eustice: I was going to come on to that. You have been pretty clear, all of you, there is an issue around resources. Do you think they have sufficient powers to deliver also? You have just used this wonderful word "influence". Is it one of these benign things-a sort of stakeholder, perhaps-that floats around and says what ought to go on? But do they have the clout to get things done?

Tony Bradford: Specifically, LEPs?

George Eustice: This is the Local Nature Partnerships.

Tony Bradford: It is a very early stage for Local Nature Partnerships and equally for LEPs because I think that depends on how they develop. I think this issue of gravitas and influencing the agenda around Local Enterprise Partnerships is going to be a big ask for the Local Nature Partnerships. We have certainly discussed some of the issues around the LNPs not being hijacked by groups that might be considered to be less well supported by or that may raise concerns with the LEPs, or may not engage with the LEPs-

Q163 George Eustice: Would it be fair to say that the kinds of tension around the Local Nature Partnerships being the same as you have with the Local Enterprise Partnerships? On the one hand, are they just the stakeholder in the council-

Tony Bradford: I think there is concern that it is seen as such. You have talked, to some degree, around delivery on the ground as well, and I think local government have quite a good reputation of delivering on the ground, but there are challenges and Lawton talks very clearly about wildlife sites and networks of wildlife sites. Hertfordshire is a good example. There are 1,900 wildlife sites in Hertfordshire and a large majority of those are in private ownership. Influencing engagement is a key route to enable improved conservation management.

Dr Ellis: I will very quickly answer that. The concern that we have is it is interesting in the secondary legislation and the Localism Bill on planning that LEPs, although they are not a body corporate and have no planning powers, are referenced in secondary legislation as something that local authorities need to take account of as they are preparing their plans. From memory, I am fairly confident that Local Nature Partnerships are not and I think that one of the biggest tasks, whether they are or whether they are not, for those partnerships is to have that kind of weight in a very difficult planning environment because the core purpose of planning in the NPPF is defined by the presumption in favour of sustainable development. But it also has three very powerful paragraphs about economic viability. Certainly from our experience, those partnerships are going to have to carry significant weight. There is certainly a case for them having some enhanced status if they are going to have a powerful voice in local planning.

Q164 George Eustice: Just finally, I wanted to pick up on what Mr Gardiner was saying earlier about perhaps linking it to the burden that this places on local authorities and the extra work. I am just keen to probe the kind of view, perception, attitude, if you like, among local authorities towards this. Do they embrace it as a really positive thing that they really want to do and they think it is fantastic? I get the sense that it is a bit like something else in the in-tray that they do if they have to, "We’ve got a job to do; well, get on with it," but there is not a huge amount of enthusiasm for taking on this work. Would that be fair?

Councillor Parsons: No, I think that is unfair. In my own local authority it is taken really seriously. So speaking from my own perspective, country parks, the national forest, getting schools in the country parks, links with health, as local authorities now are becoming responsible for public health-all those things are incredibly important, so I do not think it seems-

Q165 George Eustice: Sorry to interrupt. I can understand that point, but specifically on getting the accountants in to try and put a value on every decision you might make in terms of this wildlife has all the ingredients of something that could end up as one of those box-ticking exercises where it is another risk assessment that has to be done, but does not mean very much. Whereas what you have just described is a very tangible real thing-proper woodland, children visiting it. Is there a feeling that this could end up being a paper trail rather than a genuine exercise?

Councillor Parsons: I do hope not. I think Mr Gardiner put his finger on this. I think some councillors, not all, are just waking up to this stuff, if the truth were known, and I think are very interested in this. Actually, I think I would rather have local authorities in the key role in this rather than LEPs. I love dearly the members of my LEP board, but the thought of putting them in charge of Local Nature Partnerships does not immediately ring true to me. The ability of people to get to their local councillor and get their view and pursue these things in the democratic way is the way I would rather go.

Q166 George Eustice: That includes doing the paperwork and trying to-

Councillor Parsons: No, I hate paperwork. If we can get rid of all this paperwork I would be an enormously happy chap.

Q167 Chair: Dr Ellis, you say that you mourned the loss of regional spatial strategies; I think you might be on your own there. You talk about the benefit of coastal erosion and working together with local authorities. Surely now working in catchment areas is the way forward, working together with the system that the local authorities’ upper tiers are meant to be putting in place. Is that not a much more local and direct way of interesting parties?

Dr Ellis: I think if you could be confident that those mechanisms, and this is genuinely I think an open question, we see how these develop, but if we were going to face environmental management on functional sub-regions based on catchments in the way that the Environment Agency breaks up the country on their regional basis-

Q168 Chair: If you could stop using expressions like "sub-regions" because-maybe I am the only one-I do not understand what you mean. If you are talking about the county council, I know what you mean, or a unitary.

Dr Ellis: My apologies.

Chair: If we could talk plain English that would help.

Dr Ellis: I will do my best, my apologies. County councils do represent what we mean, I suppose, by greater local and sub-regional, but the issue around the kind of function of catchment areas is the environment agencies are saying how it creates those boundaries. But my core concern is that if those associations of local authorities function properly with significant weight and power then they can uphold important issues. But there is not a clear sign from what might be described as a mosaic of organisations evolving that we will necessarily get the outcome that we need on some of those very larger-scale issues. So, you are talking about an Environment Agency area that stretches for them from the Humber down to the Thames and covers the whole of the Anglia part of England. At that scale we are talking about major flood risk, major change to the natural environment.

The question I have is, do we have, through this process, the mechanisms to ensure sufficient progress on that scale? It is not that in some ways we want to get back to any kind of centralised planning; it is just that these processes in the natural environment play out at a big spatial scale.

The duty to co-operate certainly is a measure that may drive some change in planning, but it is not, in my view, the kind of effective measure that will drive sufficient change. It does not ensure that local authorities will work together on this agenda. If LEPs do not have necessarily the focus or the interest and if the nature partnerships themselves have a problem in how they aggregate together, what is the solution to that bigger spatial scale? At the moment I cannot see it from what is proposed on the table.

Q169 Dan Rogerson: Good afternoon, gentlemen. We talked a little bit about the National Planning Policy Framework. What do you think needs to be in that to ensure the aims of the White Paper can be delivered?

Dr Ellis: Three things: firstly, there needs to be a clear cross-reference with the agenda, which is not there at the moment. There are many very positive things in the Natural Environment White Paper and it will be very helpful to see them cross-referenced in the National Planning Policy Framework, so I think a clear understanding, and that reflected powerfully in the NPPF as important. But secondly, I think that the NPPF takes us in a very new direction for planning and it is an uncertain one with lots of potential implications. The presumption in favour of sustainable development, in essence, is still quite a confused idea in the NPPF. One of the definitions, for example, in the first 10 pages is it is normal to say yes to all forms of development. That set against important agendas round the natural environment raise obvious tensions and conflict, so there needs to be much clearer definition about what we are trying to achieve with the presumption in favour of sustainable development.

As I mentioned earlier, the critical one is a clear definition of what "sustainable development" means based on the 2005 strategy. The one thing I think is important-it does not look like it is important, but it is absolutely critical-is the three paragraphs in the NPPF about viability. If we have said that this is an agenda that might struggle financially and for priority, the three paragraphs that say local authorities shouldn’t require anything that compromises the viability of a willing developer and a willing landowner potentially have the prospect of weakening local governments and negotiating abilities at a local level because that viability test also means that the whole of the local plan now has to be tested for its financial viability. The whole of the plan policy has to be tested as well as individual policies like CIL.

There are great benefits of that in some ways, but that does need to be balanced by the long-term benefits, which nature conservation generally and the natural environment and ecosystem services bring. But the NPPF as a whole also of course, just finally, takes out tremendous amounts of detail and everyone in the whole universe, apart from me, is in favour of reducing the amount of planning guidance. Of course there is a strong case for reducing the amount of planning guidance, but I honestly believe you would need more than three pages on biodiversity in the natural environment in a national document, bearing in mind that all of the Planning Policy Statement (PPS) existing guidance will be swept away. So there is a good deal of work, I think, that needs to be done, and I hope it takes place in the final version of the NPPF.

Q170 Dan Rogerson: Thank you, that is helpful. Is there anything you would like to say?

Councillor Parsons: We have been arguing that there are the three strands to sustainable development: economic, environmental and social. At the moment, there is quite a weighting on economic, for obvious reasons. I think that you have to consider the relative weighting. We are saying in the NPPF that we want to see substantial weightings on environmental and on social issues. That is the first thing I would say. The second thing I would say is I do not want national government bossing us around. The less that is in, in a sense, the NPPF the better because it means we can help you, ladies and gentlemen, nationally to tell you what is important in our areas and perhaps get a bit of diversity there. One set of clothes does not fit all, does it? Let us reflect our differences in this as well by not being over-prescriptive.

Q171 Dan Rogerson: That is fine, but would you say therefore that the approach to developing partnerships is a helpful one in setting what those priorities are locally to assist local authorities-not take the lead in doing it, but in setting those priorities?

Councillor Parsons: Yes, I would say that that would be helpful and of course local authorities have not got to be bossy in their own areas, which is quite important.

Q172 Dan Rogerson: Just briefly, a couple of things on some specifics. In some of the written evidence we have had, there has been a bit of concern about just what some things may mean and there needs to be a bit more detail. I wanted to ask, perhaps Dr Ellis first of all, about the lack of guidance that seems to be on the relevant maps with the areas that are designated on what should be buffer zones, what should be core areas, what should be corridors. Do you have an understanding of what those are, what those concepts mean?

Dr Ellis: No, not at the moment, and I think there is certainly need for more guidance. The issue on buffer zones has been a long-standing one, certainly in planning policy, but there is a great need for clarity around that.

Q173 Dan Rogerson: You think there needs to be more guidance, and the White Paper as it is at the moment does not include enough information on those?

Dr Ellis: I think it gets back to the core issue of does the White Paper, looking at its delivery mechanisms-and plainly spatial planning is an important delivery mechanism-provide enough clarity and is that then feeding into the NPPF in a way that is useful on the ground? The point about that is that it is okay to be brief, if that is effective, but if you are brief and uncertain all that happens is you just run into hundreds of appeals or legal cases on the ground, which cause a great deal more cost to business and to communities.

Q174 Dan Rogerson: Is there any more understanding you have in local government terms about what those concepts might mean-those designations-or are you still looking?

Councillor Parsons: I think the answer is probably no, but I am more than happy to enter into a dialogue with what they might mean. I do take your point about endless appeals and so on, and endless court cases to try and define them. I mean I hope that we do not have to do that. That might be unrealistic, but nevertheless that is where I stand. I think there is a balance between being too prescriptive and being not prescriptive enough. So general stuff from Government-specific stuff locally-is where I am.

Q175 Dan Rogerson: Yes, but in terms of these designations presumably the Department must have an idea as to what they are talking about when they put it in the White Paper, so it would be helpful to you to know a little bit more about what their intention is?

Councillor Parsons: Clearly, yes.

Q176 Neil Parish: You talk about flexibility, I want to talk about biodiversity offsetting now. In LGA’s written notes it supports a voluntary offsetting but provides little detail on how it envisages operating on local authorities’ views on any potential drawback. What I want to ask you is, is there a danger that biodiversity offsetting will compromise ability to protect specific species and habitats, and how do you see all this working on a local basis? I can understand you wanting it on a local basis, but how do you see it working?

Councillor Parsons: Speaking personally, I think I just about understand the question.

Q177 Neil Parish: That is where you put a road through somewhere and then provide habitat in another area.

Councillor Parsons: Clearly, if you destroy habitat you probably destroy the ecosystem that it relies on, so, as I understand it, you provide it somewhere else; you perhaps start a new ecosystem there. I am not an expert on that. Tony, you are.

Tony Bradford: I think the issue around habitats comes down to that in-depth ecological understanding of their significance. We take an example from a conversation that I had quite recently with some local people around a small woodland where they were, in effect, opposing some proposed ecological improvements in the woodland and their key focus was on the trees and an understanding, which perhaps I can understand, that the woodland is purely about the trees, yet the ecological activity that we were proposing was intended to recruit new trees for generations, which will be beyond their lifetime, and also to enable some of the ground flora, which would otherwise exist in the woodlands but is completely shaded out, to recruit new seed and continue again in a sustainable way.

Habitat loss, at a very simple level the habitats can be replaced. You can plant a new woodland over here, having taken out a woodland there. But there is a lot of evidence that shows that woodlands are more than trees. The Government has a great policy of planting across the country, new woodlands, but they are woodlands of trees as opposed to a woodland habitat, which includes small creepy things that I could not give you the name for that live within the dead material, wet soggy things that hang off the trees, the trees themselves, bluebells and everything else that goes into a woodland. I think the challenge around ecosystem services, if it is around mitigation, is being able to enable a like-for-like replacement.

Q178 Neil Parish: The idea of biodiversity offsetting is finding land and habitat that is similar somewhere else and is able to create that habitat, then surely at a local level there would be some benefit for dealing with it from there, rather than trying to find it from here in London or wherever.

Councillor Parsons: Absolutely. You have no hope in doing it from London so you need us guys to go round in our wellingtons and show you where. I am happy with that.

Q179 Ms Ritchie: Just to pursue the issue of regulatory impediments and Habitats Regulations, and if I could ask Dr Ellis, are there currently any regulatory impediments to implementing or offsetting, for example, the operation of the Habitats Regulations?

Dr Ellis: It depends how offsetting was implemented, but that does provide a level of protection and we pursued a traditional way with regulation of identifying species, of identifying habitats, and trying to protect them at a European level and at a national level as well. My understanding, though, was that those existing designations were not in any way to be undermined by the introduction of offsetting. Those designations would remain, and I think that is a very important part of my understanding because if that was not the case then I think attitude to offsetting becomes very different. In other words, if it is not about being able to undermine existing designations or existing species protected by those designations, it is about being able to provide in some forms of development-which are not horrendous, if you like, of themselves-potential benefit to biodiversity and the natural environment.

So I would not see them as impediments. You could say, of course, depending how you pursue it, the planning and planning regulations potential impediment to it because essentially it would have to be enshrined very clearly, would it not, in planning decision-making in a way that, again, I do not fully understand yet. For example, our attitude would be to a new development that comes before the local authority area where normally we would have said no, but as a result of an offsetting scheme we are now going to say yes, because of the creation of habitat elsewhere. Quite how that is enshrined fully in planning still, I think, needs considerable thought, as does, I think also, the local political nature of planning, because I would like to suggest that certainly many communities would find the creation of habitat in Leicestershire for a loss in London not a great incentive to support a planning application. That is very important in relation to the way that housing gets delivered. There is a big debate in planning about people’s attitudes to development and how those attitudes might evolve and change as a result of seeing benefit from saying yes to development.

All those things need to be put in place, but I think that there is at heart quite an interesting profound conflict between traditional regulation and the attempt, which has been very successful from national parks onwards, to identify and protect through designation, through a planning framework and a valuation mechanism, which is essentially about saying, "Well, we will create various funds of market mechanism or offsetting mechanism," and I think we need to be very careful in proceeding to ensure those two things will work in parallel together.

Q180 Barry Gardiner: Greater public engagement is one of the goals of the White Paper. How are you going to approach that? How are you going to ensure that that comes about? Councillor Parsons, you talked about Department of Health. Looking at it a little bit more closely, there are all sorts of other problems, aren’t there? You know probably better than I at a local level just how difficult it is for schools who want to do things like take kids out to ponds, to pass the health and safety checks that they need to do that. How is this all going to play out in practice? How are you going to, as a local authority, facilitate this?

Councillor Parsons: Greater public engagement is a must, so how do you go about it? In my own county, getting people into country parks is not difficult. In fact, there are a large number of people who want to be engaged in all this sort of stuff. Getting schools in is not difficult. I had not thought about health and safety and ponds and all that stuff.

Q181 Barry Gardiner: I will just stop you there, because I agree that there is a section of the public who are keen-you do not have to persuade, they have their walking boots on every weekend and they are out there with their kids-but the White Paper talks about greater participation, and that is about how we reach out to those people who think that the idea of going out for a walk on a Sunday afternoon is about as likely for them and their family as flying. It is those people that the White Paper is asking you to get at, is it not?

Councillor Parsons: I do take your point, but if your neighbour is going out and taking their kids and having a good go in a country park, they will talk to their neighbour over coffee, so that is one mechanism. Putting it in our superb local newspaper, published by Leicestershire County Council-

Barry Gardiner: Shameless.

Councillor Parsons: And completely self-sustaining, I am pretty sure, is another way of doing it. Things like volunteer warden schemes and getting kids to volunteer in their schools. We have had some success with that. I mean you might not like that, but that is what I have to offer you. That sort of mechanism is what we have been doing.

Q182 Barry Gardiner: It is thin gruel though, is it not, Councillor Parsons, for the aspirations that the White Paper has. I agree with you and I understand the problem. I think you have to try and do all of these sorts of thing, but there is just a sense that our ammunitions here-our tools for the job-are somewhat thin.

Councillor Parsons: We said that a bit, but this has given me new fire in my belly, and I think it will for other people.

Q183 Barry Gardiner: Mr Bradford, how is the fire in your belly, and what are you going to do about it in Hertfordshire, and throughout the LGA?

Tony Bradford: I employ 13 people to do this very thing. We have-

Barry Gardiner: I thought you had 14; 14 includes you, yes?

Tony Bradford: That is right.

Q184 Barry Gardiner: I thought you had had another cut there since we started.

Tony Bradford: I will check my BlackBerry. In Hertfordshire we have a programme that we call Friends of Groups and it touches very much at the heart of your question about health and safety and the concerns over that. These groups are people who take an interest in their green space or their woodlands, or, as I was traipsing around this morning, in Hertfordshire’s own national nature reserve. They were initially established by a countryside management service, which has been working in Hertfordshire since 1975 and has running through it, like the word "Brighton" through a stick of rock, the word "volunteering". Yet the more groups we establish the more staff I need to manage them. The way we have squared that circle is simply to provide those groups with the skills that my staff have, who provide them with free training in leading volunteer activities. We provide them with a suite of risk assessments that describe in very practical terms how they ensure that their volunteers do not bash into each other with pieces of equipment that would otherwise damage them.

We meet them once or twice a year to ensure that their work programmes fit with the management plans that are on the site. With those circumstances squared away-first aider on site; again, simple training-they are able to work independently of my officers and that supervision, and take an active role in the conservation management of Hertfordshire’s wildlife science. It works, it squares the risk assessments, it squares away with our insurers who, I am sure you are aware, are notoriously scrupulous around these sorts of thing.

That is one aspect of the involvement in Hertfordshire. Similarly, we run a programme called Health Walks, which has 140 simply-trained leaders-a programme that your own Natural England, and before it Countryside Agency, champions.

Chair: Dr Ellis, do you want to add anything?

Dr Ellis: I have a very quick positive example and a challenge, which is that the Localism Act contains a whole new neighbourhood planning framework, and that is designed to engage good communities. But it is interesting, I think, in terms of the challenge for that, that there has not been an active debate about what it might mean for this agenda. I do think at that scale communities need resources and they need guidance and enabling resources, and I would be very keen to see that emerge in the sector. But the drawback to it is this: CLG’s estimated costs for neighbourhood planning are between £16,000 and £60,000 each neighbourhood plan. The money has to be found partly from a grant, but that is only £20,000 local government. Local government has to find the other money and communities have to find a substantial amount of that. If we are not careful, some of those mechanisms might prove to be used very actively by those with a social financial capital, and certainly already there is some evidence from the frontrunners, not so much by communities we want to engage.

Chair: Councillor Parsons, Dr Ellis, Mr Bradford, thank you very much indeed for participating. We apologise for starting late and running over, but we are very grateful for your contribution. Thank you very much.

Examination of Witness

Witness: Professor David Hill, Chairman, the Environment Bank Ltd, gave evidence.

Q185 Chair: Professor Hill, may I welcome you most warmly and thank you very much indeed for joining us and participating in our inquiry on the Natural Environment White Paper? Just for the record, if you could give your name and position.

Professor Hill: I am David Hill, and I am Chairman of the Environment Bank. Should I mention I am Deputy Chairman, Natural England, but I am not saying anything that is Natural England today?

Q186 Chair: I think we are aware in our paperwork; that is very helpful indeed. You are the co-founder of the Environment Bank.

Professor Hill: I am.

Q187 Chair: Would you just like to speak briefly about its history and when you set it up?

Professor Hill: Yes, very much. I had been working for about 25 years in planning and development control as an ecologist and designing section 106 agreements to mitigate for development-related impacts and realised that, if I may coin a phrase, they are almost a waste of time and money. I went to a conference, and spoke, in about 2005 and I asked 400 ecologists in the audience if they could all put their hands up to tell me if they could take me to a section 106 mitigation site that had worked well, and no one put their hands up. So in 2007 I decided that I would bring the idea of mitigation banking into the UK, bearing in mind in the States it has been operating for about 20 to 25 years as a fully functioning business.

In the early stages, from 2007 up to 2009, I did quite a lot of work as to how it might be structured and talked to Defra people in particular, and then had a bit of a breakthrough, I think in 2009, where the Shadow Secretary of State, as he was then, had looked into a scheme called biodiversity offsets in Australia called biobanking and so I contacted him and said we could tell you a little bit about this. Went down, came back two weeks later, gave a presentation to shadow Cabinet and from that point onwards the momentum started to be generated.

I would not say we take much credit for it, but the fact that now biodiversity offsetting is in the White Paper is, in our view, a good initiative and there are lots of good parts to the NEWP, but others are not quite so good.

Q188 Chair: Would you say you broadly support the White Paper sustainable development approach?

Professor Hill: Very much so, yes.

Q189 Chair: Do you believe that it has the balance right in the sense of scope for payment of ecosystem services, particularly when you look at SUDS, flood alleviation schemes, coastal erosion schemes we have just heard about-that there is sufficient incentive and farmers and landowners are sufficiently aware of the business case?

Professor Hill: No, I do not think they are. There might be opportunity to come on to how one might look at the financial incentivisation. I think that throughout the White Paper, and for obvious reasons, there is still running through it a large element around treating the environment as a charitable exercise. Our business model is around the fact that that has failed and it will not continue. That does not mean to say the NGO sector has not done a fantastic job; it is just they cannot do it on their own. So our interest is around trying to find business approaches where people take the natural environment as an investment vehicle, and that is where the difficulty arises, but I think there are some lights at the end of the tunnel, because if we carry on just seeing it as a charitable exercise it will not go very far and I do have a few criticisms-there are some parts of it that are very disjointed and not thought through within the paper itself. Then when you take into account other Departments, there is greater fragmentation and lack of joined-up thinking as well.

Q190 Chair: Can I pursue this-that the Environment Bank acts as an honest broker so you provide the necessary infrastructure to facilitate markets for offsetting impact to ecosystem services? In your written evidence you support this greater focus on business enterprise, going beyond the public and charitable sector. Do you believe that the White Paper goes far enough? How would you like to see the potential in business being harnessed?

Professor Hill: If you imagine the full functioning of biodiversity offsetting, for example, is around-there are three parts to this thing. There are conservation credits for biodiversity offsetting, there are payments for ecosystem services and then there is effectively something we are calling eco-credits, which is around getting people to invest in ecosystem services that have nothing necessarily to do with direct impacts on those. In a way if you are setting up a credit-based mechanism there is no real point unless you have a market that you can trade them in, and if you want a market to trade them in, then it is a much better approach to have some sort of soft regulatory framework. If it is voluntary, which is where we are at the moment-and this was a criticism that we did levy at Defra officials-then basically on the one hand the local authorities can volunteer the idea of offsetting in that area and the developer can voluntarily use it. We have done some legal work on a conditions precedent where the local authority would be required to use offsetting, and all local authorities could do it. It does not create any more work for them, and having-sorry, are you okay?

Q191 Chair: I was just saying if it is in the public domain it would be interesting to show it to the Committee.

Professor Hill: Yes, we can send you a paper on it. If you wanted to create a market where you can trade it is much better that it is potentially done through a regulatory framework, and we have done quite a lot of consultation with developers, bearing in mind we do a lot of work with developers, or in a previous life I did, and their line on this is that if everyone is doing it that is fine because it creates a level playing field. If it is voluntary then basically you have a disjointed approach, which is regionally very disparate. I can give you real examples about this where one set of local authorities decide it is too difficult-they do not really want to get engaged with it-and another that wants to embrace it. If you are a housing developer in one part and a housing developer in another part, it is creating an unlevel playing field. If I can just make one more point about this: if it is done through some form of self-regulatory framework in the planning system, it would be very simple to introduce. It gives a guarantee to the developer and it is not necessarily seen as an additional cost to the development scheme, which I think worries Department for Communities and Local Government (DCLG), because we think that the payment for things like biodiversity offsetting would come through an impact on residual land value, so as and when developers know this is happening they can factor it in to the price they pay for the land-it comes from the uplift in value generated by the planning consent.

If you imagine-if I might for just one more minute-arable farmland as it stands without planning permission, let us say it is worth £5,000 to £6,000 an acre, in old money; with development for housing, it may be £500,000, £600,000 or more an acre depending on where it is, and I took the point of Councillor Parsons around regeneration areas not freeing up that level of finance, but none the less that uplift value is substantial and the developer will come along and factor in the costs of potentially some CIL, but some section 106 deducts and its conservation credit payment and the actual value that the land is worth is X, so it is really the landowner that takes a hit. But in an uplift of whatever it is-100 times-we think that is reasonable. But it is very difficult to do it if you are talking in a voluntary way. If you did it in a regulatory way it would be much easier to implement.

Chair: Thank you. I am sure we will pursue that.

Q192 Neil Parish: Some organisations have said there is a lack of funding within the White Paper. Do you consider the lack of funding streams to establish projects as a key stumbling block to the business sector delivering the White Paper objectives or how can we enhance that?

Professor Hill: I do think there is. The ambitions in the White Paper are excellent and there are some good hooks in there. In my view, it cannot be delivered because there are not the funds available and it will not anyway be delivered through the public sector because there never will be the funds available, so if you talk to John Lawton’s "Making Space for Nature"-£1.2 billion, we have heard that figure. We are already falling short on delivering the UK biodiversity action plan by about £900 million a year.

It is just not going to happen, so that is why a step-change is needed. In order to do that, one needs, I think, definitely to find a means of finding an investment way forward so that people invest into the natural environment. So basically you take the argument of Pavan Sukhdev’s The Economics of Ecosystems and Biodiversity (TEEB) report, making nature economically visible is what we have to be doing and we have some ideas. There is starting to be some interest from a whole range of sectors from investment sectors, trusts, through corporates-not social responsibility, but just corporate responsibility where they might pay for the impact they have that they cannot mitigate themselves within their own business supply chain. We think there is some mileage in that.

If I give you one very small example, the biodiversity conservation community almost splits into two. On the one hand there are people who talk about new financial mechanisms. On the other there is the NGO, the third sector, looking at getting sponsorships and those sorts of payment. On this side I had someone who came to me and said they had a fund of £300 million. They wanted to invest in a UK-based environmental project that was underpinned financially, but they could not find anything where the asset was properly accredited. So a soft regulatory framework-a range of accreditation mechanisms-would stimulate the market and I think that is where we would get the funding from.

Q193 Neil Parish: My next question is along similar lines, in a way. Has the private sector been convinced by the argument for ecosystem service payments, particularly in an era of austerity?

Professor Hill: The quick answer to that, I suppose, is in the short term it is going to be difficult. We heard from the three previous panellists that it is going to be difficult, but most corporates are looking now at the next five to eight years. To give you an example, Unilever are very keen on how corporate investments for these sorts of thing can give them an advantage when we do come out of this pretty awful austere condition.

A lot of the corporates are not talking about the doom and gloom now. They are looking at where they are going to be in three to five years’ time, and we think there will be the investment money available.

Q194 Neil Parish: How should the White Paper look at the regulation and also use the limited amount of financial incentives that might be there to sort of pump-prime the business sector? That is what I am very interested in.

Professor Hill: There are three things immediately I think one should do. One is of course the Government set up the Ecosystem Markets Task Force, which is looking at this. I sit on that. They are looking at new models and methods of bringing investment into the sector. The second is definitely some form of soft-regulatory mechanism around biodiversity offsetting. We did some calculations on DCLG figures of development and reckoned that it could yield between £600 million and £1.2 billion a year through that mechanism. We have done a variety of studies looking at how we would factor those in.

The third area is maybe to look at something to do with Common Agricultural Policy (CAP) and where do we spend CAP money, and it is a bit of a thing that I have at the moment around CAP where I think we could use single farm payment in a much more structured and better way. Of course it is pretty topical, but also there are lots of vested interests in single farm payments and it is going to be not that easy. But the figures are very simple. If you look at the contribution to GDP of farming using 70% of the land, it is £3 billion, £2.6 billion of which we give in single farm payment. Could we be much more structured in that? Could you, for example, bias that to some of the better areas of conservation-the better soils where you can do some good investment work there? Could you then underwrite an environmental bond that would then suck in other investments? So there are all sorts of things that one might want to look at.

Chair: We will come on to CAP.

Q195 Neil Parish: Just a final point: what is your assessment of the levels of investment that the private sector might be expected to make in environmental improvements and in the White Paper’s approach? Good scenario, bad scenario?

Professor Hill: Bad scenario is that we will muddle on with Local Nature Partnerships, LEPs, very localism driven, lots of interest about building-it is probably going to be controversial-little unjoined-up empires in little locations, and there will be no investments. The finance sector is just not interested in that.

With the right mechanisms in place, and it is not rocket science, one could set this up quite well, definitely in development-related areas in the order of £1 billion a year. If you imagine that globally biodiversity markets at the moment are worth £5 billion to £10 billion and they are predicted to go to around £40 billion to £50 billion by 2020. That is already happening. Some of that is voluntary, some of it is under a regulated framework, but sustainable investments at the moment are worth around $5 trillion, so there is a lot of money there that people are looking for models. The problem may be in that Government and the conservation sector do not talk to these big business areas. They do not do it and I think that the dialogue-hopefully, the Ecosystem Markets Task Force is a new idea that might start to generate interest. They are big sums of money, I think, that are available.

Q196 Barry Gardiner: You very comprehensively set out the problems you see in a voluntary approach, but given your proposal for a company balance sheet taking on board the costs of offsets, how would you see that developing? Would it be mandatory reporting of that for those companies or would it be part of the company’s social and environmental reporting on a voluntary basis?

Professor Hill: I think that if one had a mandatory requirement to describe the investment that that corporate is making into the natural environment, because it has an impact on the natural environment, its whole supply chain has an impact. There are economies that are looking at individual corporates and measuring that so that people can then be offered eco credits potentially. I think you do need some form of mandatory reporting, but if it is good, and it is good news, the corporates will want to do it to get to be seen to be done there already. TEEB for Business gives some good tools around how one might achieve that. I do not carry that information in my head, but there are tools that we have that we could start to get corporates using.

So the answer is, in the short term it will be voluntary and they will do it for commercial reasons. They are not doing it for philanthropic reasons. They are doing it purely for commercial reasons. The second is that you could expand the value of that out by a mandatory approach to how they describe things on the balance sheet in their annual accounts.

Q197 Barry Gardiner: Just to flesh out, when you are referring to TEEB for Business you mean the TEEB analysis that was prepared specifically for business?

Professor Hill: Absolutely.

Q198 Barry Gardiner: Aren’t you in a dangerous position because you are the groundbreaker? As the offset bank you are setting this up, but you are saying you cannot just have this as a voluntary thing. So what happens if Government comes along and says we have to have this done under a mandatory framework and as a company you might just get pushed to one side here? From a commercial point of view, all your insistence upon mandatory frameworks and getting this as a proper market structure-the feature of proper market structure is that they do not necessarily just rely on one person who sets himself up as the certification board. It is that there is a market set up by a regulatory authority, that there is Government backing for it and so on. How do you see that playing out?

Professor Hill: Good question. I think in the initial period we want to set the infrastructure up to show that we can register lots and lots of sites that can receive funding. On the conservation credit side, who I think we see being accredited would be the likes of brokers, like ourselves. Bearing in mind we have not done any transactions yet, we have to flag that up at the outset. All we have been working on is the intellectual infrastructure and the nuts and bolts of the exchange.

So Government’s role will be twofold. One, it will be to set the accreditation standards and the other will be to verify the metrics, so that everyone is using the same information so that if you have a site evaluated in Northumberland the metrics apply across the different parts of England. I think that that is where the likes of Natural England, for example, but it may be centralised Defra, could run that accreditation mechanism. They do not need to run the brokerage and that is what we are doing. So we run that brokerage and if someone comes along with a better brokerage system that is cheaper to operate, market forces say that we will move out, but hopefully we will be clever enough to look at our transaction costs to make sure we stay in there.

Q199 Ms Ritchie: It is the links to planning and planning reform. What do you think the planning framework needs to include to ensure biodiversity offsetting and to ensure that that can be established effectively?

Professor Hill: To start with the NPPF does need to embrace the use of biodiversity offsetting, and I think that had it not been just seen as a voluntary thing, if it was seen as a regulatory mechanism, in some shape or form it would-if it was basically such that local authorities were going to be required to use biodiversity offsetting in their toolbox, that would work and NPPF should have referred to that.

I did do a consultation with a colleague of mine that had been involved in writing NPPF, and he had not been sighted on anything to do with not only the Natural Environment White Paper, but the biodiversity offsetting element particularly, and when we explained it to him and how it would operate in our view, he thought it was a fantastic idea.

Again, a couple of paragraphs referring in NPPF to the use of biodiversity offsetting would be a good move, I think.

Q200 George Eustice: I will touch on CAP in a minute, but first of all, just on more basic principles. In the last evidence session we heard Dr Ellis talk about the three tools in the toolbox that people have to deal with biodiversity: there is straightforward regulation, and then designation of national parks, and then finally the market mechanisms, which are obviously a key component. I wondered if you could explain the relative importance of each of those in terms of protecting our biodiversity. Does it decline as you go down, and also have we reached the limits of what can be achieved by regulation? Is that why you think we need this or is it because regulation is difficult to do that everyone ducks it and switches to talking about markets instead?

Professor Hill: We think the reason why offsetting was not put in as a regulation was because the bad "R" word at the moment is not a trendy word to use. But there is good regulation and bad regulation. We think you can set off a pretty good regulatory framework for this.

If you look at the success that we have had in biodiversity conservation, there is a direct correlation-very strong correlation-in terms of favourable condition between the European Natura 2000 sites, which are protected, so they are Sites of Special Scientific Interest (SSSIs) and they have the additional Special Protection Area (SPA) and Special Areas of Conservation (SAC) designation. Very rarely have they been impacted, to be quite honest, so the regulatory mechanism through the Habitats Regulations, which implements the habitats directly, has been a real success in my view.

Below that, yes, there is then designation of sites such as national parks, which is a bit different, but then you have, obviously, SSSIs that do not meet your European value, and then below that you have county wildlife sites, and then local nature reserves. As you go down that hierarchy we have been much less good at protecting those. In fact, indeed, with biodiversity offsetting there may be some instances where county wildlife sites have become degraded in some shape or form-a big development that is required for socio-economic reasons comes forward, which is perfectly the place to use offsetting.

Q201 George Eustice: But it is the failure of the regulation then? It is a failure to regulate clearly and say this is a nature reserve.

Professor Hill: It is a failure in that being a local nature reserve does not protect it in the same way as if it is an SSSI, which does not protect an SSSI in the same way that it does if it is a Natura 2000 site. The European directive is the biggest hitter because if the Government breaks the rules on that, it can be infracted, and that is a pretty damaging consequence.

I would say one thing where offsetting could be potentially used in the Habitats Directive and that is in cases such as ports or other infrastructure projects where there is some either direct or indirect potential impact upon a Natura 2000 site, where the development is deemed to be of imperative reasons of overriding public interest (IROPI). So you go through the whole assessment process for your big development scheme and if you then see that we desperately do need this for overriding reasons, you then go down to say, "Well, there are no alternatives therefore we have to compensate," and the way you could deliver your compensatory habitat could be through offsetting. So if you are a port operator, for example, rather than you having to buy a tract of land that is near to your port, you might be able to buy credits and leave that to a market delivery mechanism, which could, in my view, deliver a lot more than the ports have managed to deliver in the way that they have compensated for IROPI development. But that is probably the only area. I would not want to see offsetting used to give you a way into developing Natura 2000 sites.

Q202 George Eustice: I will be honest: I care deeply about biodiversity and I am just a bit sceptical about some of these market mechanisms that they can end up, I think, being a very complicated paper trail, but perhaps sometimes, even though I am a Conservative and against regulation, clear regulation that achieves something and is-so what I am just keen is, have we reached a limit in that regulation or could we, in your hierarchy of designation, in that some of them work less well than others, strengthen the regulation on some of those and achieve much more than you might be able to achieve with this market?

Professor Hill: If you could come up with a mechanism that says that this county wildlife site is completely sacrosanct, that would achieve that, but I just do not see that happening within the planning regime. I just do not foresee it happening. What is always levied at offsetting, and I think we have probably won the argument now, is that it could be seen as a licence to trash. You say, "Well, we can go and build on this SSSI because we can just buy credits and off we go, we can get on with it." That will not happen and that is why the key job of the local planning authorities is to do the planning control in exactly the same way as they do it now, but rather than say this development can go ahead and we can capture impacts through a section 106 fund, you do it through a credit mechanism. Then you enable that credit fund to buy-you would not buy land, but you have a management agreement with landowners and farmers or conservation bodies, and we think that is a much better way of doing it. The simple fact is that-

Q203 George Eustice: But it is still about mitigation, is it not? So they could still trash valuable wildlife?

Professor Hill: They wouldn’t, because the beauty of it is that when you put the metrics around that it becomes quite expensive to do it and so it would disincentivise development in good areas. Anyway, the local authority would say, "This is beyond the pale; we cannot accept a development on these lowland calcareous grasslands because there is only 5% left of it in the county," wherever it might be. So that is how it would be presented.

Q204 George Eustice: Moving on then to the CAP, which you touched on quite a bit earlier. You talked about CAP bonds, or agricultural bonds, that you can get. How feasible do you think it is to get that in the current round of negotiations on greening the CAP? We had the Secretary of State in last week, who in evidence said on a separate review that there is an openness to flexibility within the way that you have to do the greening in Pillar 1. Do you think this is a realistic prospect given we have 27 countries you have to get agreement with?

Professor Hill: That is the 27-country agreement issue and I am not as up on the European negotiations as many, but it just seems to me that if you could construct some financial thing around that £2.6 billion, which is the Pillar 1 value, that goes into agriculture that could-that is a phenomenal amount of money that we should be able to-

Q205 George Eustice: What would it look like? So a single farm payment goes and is replaced by what? Fill in the blank.

Professor Hill: Replaced by more targeted-almost like Higher Level Stewardship (HLS), but on a bigger scale where you are unable to pay more money per hectare than certainly the Entry Level Stewardship (ELS), because I do think the ELS is too broad in my personal view. But with £2.6 billion one ought to be able to construct some good targets. It would mean that some farmland areas would be intensified in terms of their agricultural component, but the funds would be used to underwrite some form of investment ability in those bigger swathes of areas, particularly at a catchment-sensitive level. I think that a catchment scale is the area to do it at.

Q206 George Eustice: So you mean very productive fertile land can still be just farmed quite intensively, but the less-

Professor Hill: I do think that needs to be-because I think we have a real tension in agri-environment payments in that a lot of farmers do not really want to be doing it, certainly in the Fens and those sorts of area. Whereas you could construct a mechanism that was much more realistic to achieving it, where the soils are not grade 1 agricultural land maybe it gives you more scope to do biodiversity because you will always deliver better biodiversity where you have low soil fertility. I think you could do something with CAP, but it is a big ask, I know.

Q207 Dan Rogerson: The purpose of the whole thing is to reflect the true cost of activity or development. Do you think the proposals as they stand in the White Paper allow that to be captured-to be reflected in the final outcome? Do you think they go far enough?

Professor Hill: I think if you take at face value the Lawton review with NEWP and the National Ecosystem Assessment and TEEB, everything is pointing towards better valuing of nature. As it stands at the moment, NEWP I do not think can deliver that because you have to embrace the value of nature, not just within one Government Department; it has to be across Government, and that is where I think we have to do a lot more.

Q208 Dan Rogerson: On that, do you think Defra are doing enough to get the other departments to wake up to that?

Professor Hill: I think they are doing a huge amount.

Q209 Dan Rogerson: That is very tactful of you.

Professor Hill: I hope they are doing a huge amount, which is different from they are. To be honest I am not party to exactly what they are doing across Government, but all I can say is that there is lots of pressure through DCLG, lots of pressure from Treasury, lots of pressure from Cabinet Office and, to be candid about it, those three Departments know a lot less and just do not get it yet around the natural environment.

Q210 Dan Rogerson: There is a big job for Defra to do.

Professor Hill: It is a big job for Defra, and it should not be just Defra’s role. Pavan Sukhdev said he was asked by many people, "What is the value of nature?" The answer is it is infinite because it is the bedrock of everything we are about. If you cannot invest in the bedrock of your business, the only way is down, and how do we get that message through to the people that control the Treasury?

Q211 Dan Rogerson: Do you think in trying to capture some of these things there is a threshold issue in that-quite small developments, so the sorts of constituencies that some of us represent, you are talking about exception sites and so on for housing development, which already will have a chunk of that value captured for the affordable housing scheme or for any other public goods and social sustainability that we were hearing about earlier on. Then when you add on top of that now increasingly more assessments that have to be done, such as bat surveys and all these kinds of thing, it starts to become quite-the margin that makes it attractive to do and the risk that is involved if some of these costs are upfront and there is a risk of the project not coming off, do you think we are getting to saturation point for some of these smaller schemes?

Professor Hill: Some of the smaller schemes there would be a slightly different way of doing it. If it is a very small potential residual impact, then you can have something called a payment in lieu system, so a payment of fee in lieu. Basically they make a contribution into a fund, which can be aggregated, so rather than you selling 56 credits to Mr Barrett for a 600-acre housing scheme, you would enable them to buy three or four credits and that goes into a pot and lots of little ones come together and then you can invest that fund. That is the beauty of this. You can’t do that through a section 106 because, as far as I understand it, the planning and delivery have to be linked to that specific fund.

Q212 Dan Rogerson: But there is no minimum level. You think that, however small, they should still make some contribution?

Professor Hill: We were thinking that probably in the area of half a hectare is certainly-you are not going to capture a great deal from that.

You did make the point about-coming back on protected species, personally there is a weight of interest around looking at how we deal with some of the annex 4 species of the Habitats Directive, for example great-crested newts. It is the one that is totally on its own and gives us all sorts of difficulties in the way that we deliver newt conservation. We have been thinking, well, you could do offsetting in relation to that, for example. And bats might be another one in certain areas, but only certain species.

Q213 Dan Rogerson: I do not know if you have been looking at much of the process towards designating the Nature Improvement Areas, and that is going down now. It is 15 I think they are going down to-

Professor Hill: They are down to 15 and they are going down to 12.

Q214 Dan Rogerson: Bearing in mind what we have said about Departments like Treasury and so on, do you think they have had enough input and involvement in that process to ensure that they are then engaged with delivering it later on?

Professor Hill: No. It is entirely Defra and it is still too small a scale and fragmented even though-what it has done is it has basically been a pilot to generate lots of interest and it has done that. The problem is it has generated lots of expectation and unless you have the financial backing, which will not come from the public sector, then I do not-

Q215 Dan Rogerson: There could be more Government engagement in that designation process?

Professor Hill: Absolutely.

Q216 Chair: We are very grateful, Professor Hill. There is one last question we would like to put to you in writing, if we may. I am just going to say that the witnesses last week were very positive, both from the National Farmers’ Union (NFU) and the Country Land and Business Association (CLA), particularly looking at projects like the Green Food Project, so we are very grateful, building on the back of that, to hear your evidence today. Thank you very much.

Professor Hill: Thank you. Thank you for the opportunity.

Chair: We stand adjourned.

Prepared 14th July 2012