Background to the report

Environmental regulation aims to protect the environment and nature from pollution and harm, safeguard natural resources and contribute to the health and wellbeing of citizens. Environmental harm can be caused when, for example, by-products of industrial and agricultural processes enter the atmosphere or waterways. Habitats and biodiversity can be harmed by those processes, or by new developments such as housing and infrastructure.

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Effective and efficient regulation minimises these harms while keeping costs of compliance for regulated businesses proportionate. This requires regulators to target their work on sectors, businesses or regional areas where the greatest risks of harm lie.

Defra’s two largest environmental regulators, the Environment Agency (EA) and Natural England (NE), monitor and enforce compliance with regulations that contribute to environmental protection and improvement.

They do this by, for example, issuing permits to carry out certain activities and monitoring these, providing advice, consent or assent for proposed activities that may affect protected sites, and inspecting sites and businesses to ensure compliance with regulations. Both regulators also have responsibilities other than regulation, including maintaining flood defences (EA) and nature restoration (NE).

Scope of the report

This report examines the extent to which the Environment Agency and Natural England (‘the regulators’) are well placed to maximise the benefits to the environment of how they regulate, while ensuring costs to business are proportionate. Our study focuses on how Defra and the regulators carry out their regulatory duties in practice and sets out recommendations for them to consider as they embark on a period of potentially significant reform. The report covers:

  • the regulators’ current ability to target their work efficiently and effectively
  • the extent to which Defra and the regulators are taking a strategic, joined-up approach
  • what Defra and the regulators are doing to improve how they regulate

Conclusion

Recent reviews have highlighted challenges for environmental regulation in both supporting the government’s environmental goals and enabling economic growth. The ability of the Environment Agency and Natural England to regulate in a consistent and well-targeted way has been constrained by limitations in their systems and how they collect and use data, and challenges addressing skills shortages, allocation of limited resources and a culture of risk aversion.

They have also faced limitations of the regulatory and legislative framework they operate within, and Defra has not done enough to support a strategic, joined-up approach rather than reacting to short-term, high‑profile issues.

In the past two years, the regulators have increased their focus on improving how they regulate, and the government’s response to recent major reviews has added impetus for reform. Defra and the regulators have made a good start, but the scale of change required is substantial and comes with risks and challenges.

Success will depend on taking a focused and integrated approach to the changes needed, proper consideration of the skills and capacity required, and speeding up progress with replacing outdated IT systems and embracing digital technologies. There are also opportunities to improve value for money in the short term, particularly in how the regulators use information and intelligence to target limited resources on the areas where there is greatest risk to the environment and nature and taking a more flexible approach to supporting compliance.

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Publication details

Press release

View press release (9 Jan 2026)

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