The National Audit Office (NAO) is warning of serious weaknesses which are currently limiting the Department for Environment, Food, and Rural Affairs’ ability to make evidence-based decisions about where to deploy its resources, and to understand wider impacts of its regulatory approach.

The warning comes in a new report published by the independent public spending watchdog for Parliament assessing the Department for Environment, Food, and Rural Affairs (Defra) approach to using regulation effectively to achieve environmental outcomes, including waste management.

The NAO’s report, Regulating to achieve environmental outcomes, examines whether Defra and the associated arm’s-length bodies involved in regulating for environmental outcomes are using regulation effectively to achieve environmental objectives.

Defra has lead responsibility in government for all environmental policy areas except net zero. In 2018, Defra published a 25 Year Environmental Plan to position the UK as a global environmental leader, setting 10 overarching goals including clean air, water and wildlife.

Defra put the targets to deliver its 2018 25 Year Environment Plan on a statutory footing in 2023 and, in 2021, set up the Office of Environmental Protection with a duty to monitor progress.

The Environmental Improvement Plan, published in January 2023, sets out the changes Defra is seeking to meet its targets, and the importance of both existing and planned regulatory interventions for regulation and regulatory reform.

“According to its own data, Defra is not on course to achieve its 2018 environmental goals"

However, the NAO says that “according to its own data, Defra is not on course to achieve its 2018 environmental goals. It is too soon to judge performance against the targets it has just announced.”

In 2023 the department set binding statutory targets in four priority areas:

• air quality;
• water;
• biodiversity;
• and waste reduction.

Work is still underway to set outcome reporting for each of the statutory targets. Defra published its water strategy in April 2023.

The NAO says that Defra’s work to understand how its current regulation supports its overall environmental objectives is still at an early stage. It also highlights that key bodies with regulatory functions are “falling behind on aspects of their existing work” and the resource requirements for the activity set out in the Environmental Improvement Plan are still being estimated.

However, while Defra has started to strengthen its governance arrangements and develop a strategy for evaluation, it does not have the information it needs on the effectiveness of regulation, and it has a backlog of 63 regulatory Post-Implementation Reviews as of March 2023, the report says.

According to the NAO, this backlog is limiting Defra’s insight into how well regulation is working or the burden on business. In addition, the department also has limited data on the effectiveness of its regulation to inform decisions about future activities and where to prioritise resources.

“These gaps limit its ability both to make evidence-based decisions about where to deploy its resources, and to understand wider impacts of its regulatory approach. These are serious weaknesses, and Defra must take swift and effective action and build on its recent work to address them in order to get the best value from its limited resources and give itself the best chance of achieving its objectives,” the NAO says.

The report finds that further progress towards ambitious targets aimed at improving England’s natural environment are being put at risk by weaknesses in Defra’s oversight of regulation – for example:

• Defra is still at an early stage in understanding how existing regulations affect its plans.
• There are more than 30 bodies involved in regulating for environmental outcomes
• As of 2020 only 16% of waters in England were deemed as being in good ecological status; the Water Framework Directive is working to a target of 75% by 2027.

Environment Agency and Natural England have key roles – and both face workforce challenges

The NAO says that the Environment Agency (EA) and Natural England have key roles and are two of around 30 bodies involved in regulating for environmental outcomes, pointing out that both organisations face workforce challenges.

According to the NAO, the existing workforce issues that have affected their ability to deliver their current workload and will need further resources in the future to support the EIP - but it is not yet clear how much.

In February 2023 the EA had vacancies of around 600 full-time equivalent posts (FTE), 5% of its planned staffing. Natural England has reduced its vacancy gap from over 250 in September 2022 to one in February 2023 but recognises that it has a significant risk around capability, the report says.

They are also facing demand to increase activity in some areas, such as monitoring and inspections to respond to failures on water quality. The report’s case studies identify areas where they and Defra are falling behind with their work, for example backlogs in permit applications or delays in developing plans to administer new waste regulations.

On water quality, the report notes that as of 2020 only 16% of water bodies in England were deemed as being in good ecological status; the Water Framework Directive is working to a target of 75% by 2027.

The NAO report sets out a series of recommendations that DEFRA should take on board to improve environmental outcomes, including:

By December 2023

Defra should:

• complete its changes to governance of the environmental targets, and set out its plan to review their effectiveness. This plan should include a timetable for the review.
• clarify what performance information it will expect from arm’s-length bodies to be able to assess their effectiveness. As new sponsorship arrangements between Defra and its arm’s-length bodies become more established, Defra should work with regulators to ensure that it has what it needs for oversight of their performance and to manage any issues.

By December 2024

Defra should:

• set out a detailed operational plan for how it will achieve the goals of the Environmental Improvement Plan, including the role of regulation alongside other policy interventions
• set out its understanding of where regulation is currently being used to deliver environmental goals and how it operates. The plans should include the skills, capacity and capabilities Defra and arm’s-length bodies will require. They should also provide clarity to stakeholders on expected changes to regulation and the timelines for any plans.
• have a better administrative handle on its Post-Implementation Reviews. This includes clearing the current backlog as well as carrying out those that fall due in that period..
• enhance mechanisms for sharing evaluation findings and good practice across the Defra group.
• identify ways to ‘future-proof’ regulations, and possible opportunities to put this into practice.

Commenting on the report’s findings, Gareth Davies, the Comptroller and Auditor General and an Officer of the House of Commons who leads the NAO, said:

“If the government is to achieve its ambitious environmental goals, Defra will have to be much clearer on the detailed changes to regulation required as part of its overall approach.”

Click here to download the report ‘Regulating to achieve environmental outcomes’ in full