The independent review of Defra’s regulatory landscape led by economist Dan Corry is calling for reform on how regulators operate, with increased focus on place-based outcomes, greater focus from Defra on facilitating infrastructure projects in the right locations and potential reform of the Habitats Regulations and how they are applied.

Dan Corry was appointed to lead Defra’s internal regulatory review in October 2024 to examine whether Defra’s regulatory landscape - regulators and regulations - is fit for purpose in driving both economic growth and nature recovery.

Introducing his review, Dan Corry said:

“The current system of environmental regulation was set up in good faith, but time and factors like resource constraints, legal findings, case law, EU exit, climate change, and ministerial merry-go-rounds under the last government mean it is not now working as anyone would want.

“The system is also now inefficient and difficult for customers to navigate. It needs to work in a fundamentally different way, to become a system focused on delivering positive outcomes for nature and the environment and to be an aid not an impediment to sustainable growth.”

Dan Corry continued:

“While holding back at this stage from major institutional change in terms of the boundaries of the regulators, these recommendations - when implemented, and in combination - would create a very different dynamic and set of behaviours by all actors which I believe would lead to better outcomes all round.”

Defra needs to find way to more clearly set the outcomes it wants regulators to achieve

According to Corry, a new approach to the regulatory system is needed and Defra needs to find a way to more clearly set the outcomes it wants regulators to achieve. Defra then needs to “let them get on with delivering these outcomes, using ‘constrained discretion’ and flexibility, within the law”. In addition, emphasis should be placed on achieving outcomes at scale, ideally using fit-for-purpose regulations.

The Corry Review sets out five strategic themes, supported by 29 recommendations it says will have a system level impact, “transforming the regulatory landscape and the culture of those operating within it”. Key recommendations include:

Introduce and publish a refreshed set of outcomes for regulators, linked to the Environmental Improvement Plan, with a clear accountability framework involving measurable outcomes that are monitored regularly by the department and reported on to Ministers and the public.

Publish new Strategic Policy Statements for all regulators, starting with the Environment Agency (EA) and Natural England (NE), with the aim of restating the Government’s priorities and mandating regulators to use constrained discretion to deliver the desired outcomes, taking account of the place-based dynamics, within the law. These statements should be consistent across all regulators to avoid the current situation where different instructions create confusion and inefficiency. Regulators have indicated that the current lack of uniformity in guidance is counterproductive.

Establish a Defra Infrastructure Board to accelerate the delivery of significant projects by providing early and strategic perspectives on priorities and outcomes. This should include a rolling, forward-looking pipeline of Nationally Significant Infrastructure Projects and other wider complex projects where relevant; in-depth lessons learned from previous projects; working closely with developers to understand specific barriers; use of Imperative Reasons of Overriding Public Interest (IROPI) where needed to justify projects; and a transfer of legal risk from regulators to the department.

In the long term, the Government should improve and strengthen the outdated Regulators’ Code, to clarify the role of regulators in considering the costs of compliance and proportionality for those being regulated.

Consolidate the statutory duties, principles and codes of Defra regulators to a core set, reflecting the Government’s priorities and helping to provide discretion, e.g. a duty to deliver on/consider climate change/net zero. This will address the increase in regulator-specific and regulator-generic legal obligations and resulting ‘regulatory overload’ which has emerged over time, resulting in confusion for those who are regulated whilst also weakening accountability.

Support better cooperation between regulators and appoint a lead regulator for all major projects in which multiple regulators have an interest. Some changes to regulatory structures or regulations would be necessary to grant a lead regulator authority to make decisions on behalf of other regulators. In the meantime, Defra should promote more information sharing and clearer processes for major projects. This should be agreed by regulators at the outset of projects, with emphasis on projects which represent significant private sector investment and/or have a high degree of complexity.

Ensure regulators are devoting the right balance of time and resourcing to driving outcomes including growth. Defra should review this as part of the Spending Review settlement and ensure that operating models (a) are maximised to attract private sector investment; (b) allow regulators to recover the full cost of services, removing barriers which exist at present; (c) consider what new approaches are needed, especially in the EA to avoid staff being pulled away from essential regulatory functions to deal with emergencies.

Review the funding streams connected to place-based delivery, for example biodiversity net gain, to ensure they can be used as flexibly as possible to help local authorities and regulators deliver the Government’s Environmental Improvement Plan and Local Nature Recovery Strategy ambitions.

Set up a programme of experiments or sandboxes where regulators identify projects where they will waive regulations and measure the results. Project scope will need to identify any barriers.

The review has concluded that while Defra needs to deliver on both nature recovery and on economic growth, ensuring that neither are in conflict in the medium and long term, it is not currently effectively delivering on either.

“Risk averse decision-making heavily influenced by a long-entrenched precautionary principle to protect the current landscape” is inhibiting growth and missing the opportunity to deliver place-based nature renewal at scale, the review says.

Water Framework Directive Regulations among candidates for early reform

The Review is also suggesting a rolling programme of reform for specific regulations, being clear what can be done rapidly, where the quickest wins are and what will take longer. Early priorities for reform include:

• Water Environment (Water Framework Directive) (England and Wales) Regulations 2017
• Conservation of Habitats and Species Regulations 2017
• Reduction and Prevention of Agricultural Diffuse Pollution Regulations 2018
• Environmental Permitting Regulations 2016.

Click here to access the Corry Review in full online