The Nature Restoration Levy (NRL) is on its way: the Nature Restoration Levy Regulations 2026 are in force and first draft Environmental Delivery Plan (EDP), including charging schedule, is out for consultation.
Much of the NRL regime is reassuringly similar to the Community Infrastructure Levy and lawyers will be preparing to crank the handle on Levy advice when the first charging schedule comes into effect in Norfolk.
There are some real differences, though, and pricing will be a real test of whether discretionary NRL represents a compelling alternative to self-mitigating development.
Like CIL…?
Unlike CIL, the NRL is (for now…) intended in most cases to be an optional alternative to mitigating project-specific impacts. Where developers obtain a NRL (Levy) quote, they do so without commitment (both in terms of NRL liability or reservation of the capacity for environmental improvements in the relevant EDP that such NRL would pay for).
Once Natural England accepts a request to use the Levy, though, that capacity is reserved and the charging schedule in force at that point is used to calculate the Levy. Subsequent increases in the NRL charging schedule apply to future requests, not retrospectively to an accepted commitment.
Liability should be assumed after permission is granted and before commencement. If nobody assumes it, Natural England must impose liability on the owners when development begins. Either way, the Levy – or the first instalment – must be paid before development starts.
The regime therefore involves steps familiar from CIL:
- assumption and transfer of liability;
- provisional Levy quotations;
- indexation;
- instalments;
- changes to development;
- recovery as a debt;
- fallback liability of owners of material interests; and
- warning and stop notices where development proceeds without payment.
There are plenty of practical issues to work through if the optional Levy is to be an attractive proposition, including Price, Phasing and Process.
Right Price? Viability and Optionality
Right-pricing land to reflect some of the external (infrastructure) costs of development without interminable project-specific viability debates. In areas where the CIL charge is low, that has been very successful. In areas that were allowed to set mammoth CIL rates and then allowed to leave them there, despite the consequences, it has been a failure.
Cost is the central rate-setting input to NRL Charging Schedules[1]. Natural England may set a reduced rate where other actual or expected funding is available but Ministers have been consistently clear that the model is one of full cost recovery.
The Parliamentary scrutiny of the parent legislation ensured that viability is meant to be in the mix[2]. An oddity of the Regulations in that context is that they specify costs, administration and other funding issues for Natural England to take into account, but not any development viability matters. Unlike CIL, there is no “appropriate balance”, explicit requirement to model cumulative policy burdens and no independent examination of the rate.
This has not gone unremarked: the House of Lords approved the draft Regulations on 3 September only after agreeing Lord Roborough’s regret amendment (by 41 votes to 29). The amendment recorded the House’s regret that the Regulations did not require Natural England to take development viability into consideration, including competing requirements for affordable housing, education, health and infrastructure contributions.
Choice Matters
The policy response is that the majority of EDPs are expected to be voluntary. If an EDP is not viable, competitive or attractive, the developer can continue to use the existing route to discharge the relevant environmental obligation. A voluntary EDP is therefore intended to have a market comparator as an essential check on unviability.
In deciding whether this will create an effective market, the comparison is not just Levy vs. £nutrient credit / ha of mitigation land. That is because the current offsetting market involves a substantial number of steps (each with direct and indirect/ time costs), including:
- project-specific technical assessment and ecological advice;
- on-site mitigation or third-party credits;
- legal agreements, monitoring and long-term management; and
- Natural England and LPA clearance.
A Levy which is ‘worse’ in purely cash terms may still therefore be commercially attractive if it removes enough of the assessment, delay and risk for the environmental impact it covers.
Equally, a ‘cheap’ Levy may be unattractive if there is still a load of project-specific mitigation or offsetting work to be done (that is not covered by the EDP/ Levy).
Price also only tells part of the story. The more important question may be what committing to the Levy actually removes from the project-level consent process – and what it leaves behind. I will look at the potential boundaries of that in the next article.
That creates a tension between the breadth of an EDP and the amount that can realistically be recovered from development. The wider the impacts it is dealing with (and conservation package needed to secure the outcomes), the larger the cost base that either the Levy or other funding has to carry. That may create a practical pressure to keep individual EDPs focused.
Mandatory EDPs
Market principles are not going to balance things out where an EDP is mandatory. Although this should probably end up being the longer term route for some things, the risks to impeding development are higher and it is currently set up as a totally exceptional case[3]. Where it is ultimately pursued, there will be a significant emphasis on transparency in relation to viability assumptions.
Phasing Matters
CIL phasing took some time to bed in after the 2014 introduction of phased liability (and the 2019 changes which improved treatment of amended permissions and phase ‘credits’). The regime remains complicated but workable for large schemes, where integrated properly with the planning permission and conditions.
The NRL Regulations tread a different path: Natural England may allow instalments and liability can be transferred, but the September developer guidance says liability is assumed for the whole “relevant development”. If more than one person assumes liability, they are generally jointly and severally liable. The Regulations do not automatically turn each planning phase into a separate Levy development in the way CIL does.
On a large, phased outline permission with different parcel developers, changing development mixes and reserved matters coming forward sequentially, that could be a bit of a headache. Developers therefore need to consider Levy strategy alongside the planning and land disposal structures, including:
- what the “relevant development” in the Levy request will be;
- whether one commitment is intended to cover the whole outline scheme (or whether later phases can be dealt with separately);
- how any instalment plan aligns with actual build-out and land disposals;
- what happens if reserved matters or later amendments change the development details used to calculate the Levy;
- how liability is transferred when phases are sold; and
- whether the cashflow profile is financeable.
The issue is therefore not necessarily the Day 1 mega-liability (whole scheme liability) risk that has been noted when the Regulations were published. It is more that there are choices to be made as part of a strategy (up front, not tactical/ stage by stage) – in particular how relevant development is defined (and how policy-makers can assist with practical attractiveness of the regime through amendments to the guidance in this sense).
No Independent Examination
A CIL charging schedule is tested through consultation and independent examination. Crocodile tears can be wept over the fact that there is no equivalent for the NRL charging schedule: the CIL examination regime is deliberately (and sensibly) lopsided – where a relatively low rate was being promoted with a prospect of being reviewed down the line, it was fair enough. The lack of requirement for regular review and the, in places, bloated CIL rates that were allowed to result have produced such poor outcomes in places that Government has now consulted on exceptional, time-limited borough CIL relief for qualifying development in London.
There is no separate statutory duty to consult developers as a class. Natural England must, however, publish every draft EDP – including its charging schedule – for public consultation for at least 28 working days. Developers are therefore within that process, and the first Norfolk consultation expressly seeks their views.
The EDP consultation is consequently the main formal opportunity for potential users, buyers, investors and developers to influence the shape of the EDP and Levy before it goes to the Secretary of State, and the obvious stage at which to test economic realism and cumulative burdens.
What Should Developers Be Asking?
Key issues for each draft stage EDP are therefore:
- What development typologies and values have been assumed?
- What other planning obligations and policy costs have been allowed for?
- Is affordable housing reflected?
- What exactly does the Levy commitment remove from the project-specific consent route – and what remains?
- How have other funding sources been treated?
- What payment profile is available for large, phased schemes?
- How resilient is the rate to changing markets and construction costs?
- If the EDP is mandatory, what evidence shows that the rate is compatible with viable delivery?
Another levy should not be a problem, where it allows a predictable environmental charge that is easier to price and manage than uncertain project-specific assessment and mitigation.
Policy-makers have the challenge that the number on the charging schedule is only part of the price in practice for an effective regime that will both draw in Levy receipts and allow forward funding of the environmental outcomes that are targeted to take place off the back of stable revenues. The other part is the certainty it buys and how simply it can be made to operate in practice without being just another heartache.
[1] Under regulation 23 Natural England must have regard to the actual and expected costs of delivering, managing, maintaining and monitoring the conservation measures, together with the relevant costs of preparing, administering and operating the EDP and collecting the Levy.
[2] The Levy Regulations were required (under s73 of the Planning and Infrastructure Act 2025) to meet the aim of ensuring that environmental costs can be funded by developers in a way that does not make development economically unviable. Section 75 contemplates Natural England having regard, to the extent and in the manner specified by the Regulations, to development viability matters specified in those Regulations.
[3] Ministerial statements in the House of Lords have confirmed that the very limited circumstances would include, for example, where Natural England has worked directly with a developer on a bespoke EDP for that project (and described the necessity test for mandatory EDP status as a “high legal bar”)
