1st Report – The role of natural capital in the UK's green economy

The government states an impact assessment for the Planning and Infrastructure Bill was published on 6 May 2025 and explains how Biodiversity Net Gain and the Nature Restoration Fund are complementary, and how the Bill supports investment in nature markets. It further commits to considering the NRF's relationship and impact on nature markets through ongoing monitoring and evaluation.

The government describes existing guidance (Green Book, ENCA, Environmental Principles Policy Guidance) and established processes to assess climate and environmental impacts in fiscal decisions, particularly for Spending Review 2025, as mechanisms for integrating natural capital into policy and financial decision-making.

The government provides an assessment by detailing how the natural capital approach is incorporated through the Green Book Supplementary Guidance, Environmental Principles Policy Guidance, and the Environmental Improvement Plan, which includes mechanisms for assessing progress and ensuring environmental considerations in policy decisions. It highlights the ongoing revision of the EIP to further emphasize natural capital protection.

The government confirms it established processes for Spending Review 2025 to assess climate and environmental impacts of fiscal decisions, requiring departments to provide relevant information for spending bids. It further highlights that the Spending Review committed over £2.7 billion annually from 2026–27 to 2028–29 for sustainable farming and nature recovery.

The government agrees more private investment is needed for nature recovery, outlining a strategy for multifunctional land use and confirming over £2.7 billion in annual investment for farming and nature recovery, with ELMS funding increasing to £2 billion by 2028/29.

The government agrees to support farmers and land managers to deliver ecosystem improvements alongside food production, detailing an investment of over £2.7 billion annually in farming and nature recovery, including significant increases for Environmental Land Management Schemes, to provide income streams for environmental delivery and sustainable food production.

The government confirmed its 30by30 vision and criteria, stating it is developing more detailed guidance on interpretation and application, alongside an action plan and assessment/reporting processes, all to be published later in 2025.

The government outlined ongoing BNG consultations, including efforts to simplify the small sites metric and increase access to the off-site market for SME developers, aiming to make BNG delivery easier and ensure local biodiversity benefits.

The government confirms it continues to monitor BNG, has launched consultations to improve its operation, and will keep monitoring and evaluation requirements under regular review, publishing reports periodically.

The government unequivocally states its continued support for BNG policy. They confirm that BNG will be introduced for Nationally Significant Infrastructure Projects (NSIPs) from May 2026 and that a consultation is underway to determine its application, directly addressing the recommendation to use NSIPs to drive BNG support. They also highlight consultations to improve BNG for minor and brownfield developments.

The government agrees that biodiversity is location-specific and that markets must reflect this, highlighting the BNG scheme, development of domestic standards, rejection of international biodiversity offsetting, and exploring regulatory oversight through the VCNM consultation.

The government highlights existing initiatives and market growth, stating that Environment Act Targets are already set to improve natural capital and interim targets are in the Environmental Improvement Plan, implying these address the committee's call for targets and criteria.

The government agrees on the need for market integrity and outlines existing actions like BNG metrics and BSI Nature Investment Standards. It also commits to exploring options to strengthen regulatory oversight, market rules, assurance frameworks, and financial resilience through the VCNM consultation.

The government commits to publishing the Land Use Framework and its response to the VCNM consultation later this year, and a decision on the UK Green Taxonomy soon. It notes existing guidance and ongoing consultation for stacking and bundling rules, and supports aligning with international standards like ISSB.

The government states its continued support for the BNG policy, demonstrating this commitment by outlining two recently launched consultations on applying BNG to NSIPs (due May 2026) and improving BNG for minor and brownfield developments.