Rachel Reeves is preparing to strip back environmental protections in an effort to boost the economy by speeding up infrastructure projects.
The chancellor is considering reforms that would make it far harder for concerns about nature to stop development, which she insists is crucial to restoring growth and improving living standards.
The Treasury has begun preparing for another planning reform bill and is thinking about tearing up key parts of European environmental rules that developers say are making it harder to build key projects.
Labour ministers have repeatedly insisted that their current planning overhaul will not come at the expense of nature, promising a “win-win” system where developers will pay to offset environmental damage.
But Reeves is understood to believe that the government must go significantly further, after expressing frustration that the interests of “bats and newts” are being allowed to stymie critical infrastructure.
She has tasked officials with looking at much more contentious reforms, which are likely to provoke a furious backlash from environmentalists and cause unease for some Labour MPs.
A smaller, UK-only list of protected species is being planned, which would place less weight on wildlife — including types of newt — that is rare elsewhere in Europe but more common in Britain.
Visualisation of a specially-built tunnel to protect bats as part of the HS2 railway project
HS2
Developers would also no longer have to prove that projects would have no impact on protected natural sites, under plans that would abolish the “precautionary principle” enshrined in European rules. Instead, a new test would look at risks and benefits of potential projects.
Further curbs to judicial review are also being considered by Reeves to stop key projects being delayed by legal challenges from environmentalists.
No decisions have been made, but work is underway and Treasury sources acknowledged there was a growing belief that the government needed to go further, as Reeves says she wants to make boosting Britain’s sluggish productivity the centrepiece of her autumn budget. She argued this week that building more infrastructure such as roads and railways were crucial to this aim.
A Planning and Infrastructure Bill currently going through parliament attempts to encourage development through a “nature restoration fund” through which developers will be allowed to press ahead with projects by setting up schemes elsewhere to offset their environmental impact.
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But the plan has been criticised by environmental groups while also attracting scepticism from some developers, who fear it will not work in practice and do little to speed up building.
Lord Hunt of Kings Heath, who stood down as energy minister in May, is urging his former colleagues to go further to achieve Labour’s promise of 150 major infrastructure projects.
“While I think the planning bill will work for housing, I don’t think it is sufficiently focused on the major infrastructure projects, so it is encouraging that the Treasury is going to have another look at whether we’ve really got this right,” he said.
“The government has to face up to the tensions in the Habitat Regulations which are making it hard to build essential infrastructure and the reality is that at some point someone needs to make a hard decision and say ‘on some things, you just have to press ahead’.”
The rules, which incorporate the EU Habitats Directive into British law, ban killing of hundreds of species, including types of bats, news, voles, snails, spiders, insects and woodlice. Developers must prove there is no risk to protected sites and species before being allowed to go ahead with projects, under rules which critics say impose an “impossibly high standard” on vital projects.
Reeves is increasingly sympathetic to such criticism, after repeatedly hitting out at “ridiculous” environmental protections. She said last month that she cared “more about the young family getting on the housing ladder than I do about protecting some snails”, after a speech in January in which she said developers should be able to “focus on getting things built, and stop worrying about bats and newts”.
Sir Keir Starmer has also expressed frustration with the ability of campaigners to delay projects through legal challenges, and is already introducing rules which limit judicial review to override the “whims of nimbys”.
Campaign groups and residents, who currently have three opportunities to apply for judicial review, which will be reduced to two, or one in cases deemed by a judge “totally without merit”.
Reeves is now considering allowing only one opportunity to bring any challenge. Some Labour MPs and peers want her to go further by using dedicated acts of parliament to prevent any legal challenge to specific named projects.
The plans are at an early stage and are likely to cause tension with ministers in other departments who have pledged to protect the environment.
Paul Miner, of the countryside charity CPRE, said targeting habitats regulations would “take us backwards rather than forwards on nature recovery”, adding: “We urge the government to drop the worn-out ‘builders versus blockers’ narrative which wrongly frames climate and nature as being in conflict with economic growth.”
Becky Pullinger, of the Wildlife Trusts, said maintaining environmental standards was “essential if we are to achieve targets to protect and restore the natural world which is suffering huge declines, saying Reeves should abandon “the myth that deregulation will lead to economic growth”.
But Robbie Owen, head of infrastructure planning at Pinsent Masons, said: “Ministers are finally realising that their rhetoric about reform doesn’t match up up the reality of their bill. We have been saying to ministers and officials all year that the bill needs to go further and it seems that message has finally been heard.”