Transparency data

6 October 2022: Accounting Officers Assessment for Nature for Climate Fund

Updated 29 November 2024

An accounting officer (AO) assessment for the Nature for Climate Fund Programme was conducted alongside the development of a Programme Business Case (PBC) in April 2022.

The Permanent Secretary (Tamara Finkelstein) has been satisfied that the programme meets the 4 accounting officer standards of regularity, propriety, value for money and feasibility expected by Parliament and the public for use of public resources based on the assessment provided.

Defra applies a discrete fifth test of affordability (which is embedded within the propriety test) because of its critical importance. The AO assessment was approved on 6 October 2022 and HM Treasury approval of the PBC was granted on the 28 June 2022.

It is normal practice for accounting officers to scrutinise significant policy proposals or plans to start or vary major projects, and then assess whether they measure up to the standards set out in Managing Public Money. From April 2017, the government has committed to make a summary of the key points from these assessments available to Parliament when an accounting officer has agreed an assessment of projects within the Government’s Major Projects Portfolio.

1. Background and context

Trees and peatlands will play a vital role in achieving carbon targets. Currently they are by far the simplest and most cost-effective way of capturing and storing carbon. Investment in woodland creation, expansion and management and peatland restoration can also deliver wider social, environmental and economic benefits.

The Committee on Climate Change (CCC) has recommended significant increases in tree planting, woodland creation and management, and peatland restoration in the United Kingdom (UK). Their advice informed a Government UK-wide manifesto commitment to increase tree planting and woodland creation across the UK to 30,000 hectares per year by 2025 and to increase funding for peat restoration enabling 35,000 hectares of restoration in England by 2025. Action plans for trees and peat were launched in May 2021 to ensure that these commitments can be delivered in support of Net Zero whilst securing maximum benefits for citizens and the environment.

In response to the challenges and opportunities outlined above, the government announced the £640 million Nature for Climate Fund (NCF) in the Spring 2020 Budget to increase tree planting and peat restoration in England over this Parliament. In its Net Zero Strategy, published October 2021, the government announced it would boost the NCF with a further £124 million of new money, ensuring a total spend of more than £750 million on woodland creation and peatland restoration by 2025.

The Nature for Climate Fund (NCF) programme has been developed with the following objectives:

• put tree planting and peatland restoration and management in England on the trajectory required for the UK to meet HM Government’s target of Net Zero greenhouse gas emissions by 2050
• contribute to the Nature Recovery Network
• restore or create priority new habitat
• deliver other benefits in support of the 25 Year Environment Plan objectives
• improve people’s access to nature for the benefit of their physical and mental health
• improve the future financial sustainability of woodland creation and peatland restoration by supporting the development of green finance and markets
• position the UK as a global leader on Nature Based Solutions to climate change, maximizing ecosystem services from tree and peat activity
• put in place the enablers of future woodland creation

2. Assessment against the Accounting Officer tests

2.1 Regularity

A proposal must be supported by clear legal powers.

The government has legal powers to plant trees through a variety of delivery partners, so legislative change is not required to deliver the Nature for Climate Fund (NCF) programme. The legal powers being used to deliver the NCF programme are outlined below:

Grants made by the Forestry Commission will be made in accordance with the grant-giving powers of the Forestry Commission as are outlined in section 41 of the Forestry Act 1967 (restated in the Forestry Act 1979).

The Secretary of State has powers under section 39 of the Forestry Act to lease land for woodland creation which would then be put at the disposal of Forestry England.

Under the Forestry Act 1967, the Forestry Commissioners are charged with the general duty of promoting the interests of forestry and the development of afforestation. Forestry England will be acting on behalf of the Forestry Commissioners in afforesting leased land.

For tree planting outside of woodlands, there is a provision under section 78 of the Natural Environment and Rural Communities (NERC) Act 2006 for the Secretary of State to enter into an agreement with a designated body, authorising that body to perform a Defra function.

Section 98 of the Natural Environment and Rural Communities (NERC) Act 2006 gives the Secretary of State the power to give or arrange for the giving of financial assistance in respect of expenditure incurred or to be incurred in any matter related to or connected with Defra. This power allows Defra to enter into grant agreements with delivery partners to plant trees.

The delivery body for the Peatlands Capital Grant Scheme is Natural England, which under Section 6 of the Natural Environment and Rural Communities (NERC) Act 2006 has the power to give financial assistance, including in the form of grants, to further its general purpose.

Overall assessment

Met.

2.2 Propriety

The use of public funds needs to be proper as well as regular. Therefore, it needs to comply with the standards set out in Managing Public Money which includes obtaining the necessary internal and, if necessary, external HM Treasury approvals.

The programme continues to follow the expected assurance processes for expenditure of this nature and value as outlined in Defra’s Integrated Assurance and Approvals Strategy. The Programme Business Case was approved by Defra’s Investment Committee in March 2021 and an updated version was approved in April 2022. HM Treasury approved the Programme Business Case in October 2021 and an updated version was approved in June 2022.

All costs (actual and estimated) were determined with input from delivery partners and reviewed by senior officials across legal, commercial, analysis and finance. HM Treasury officials have been engaged in the development of proposals and continue to work closely with Defra on the implementation approach.

The programme entered the Government Major Projects Portfolio (GMPP) in April 2021. There are robust governance and controls established for expenditure with regular internal reviews. External assurance has been provided by Infrastructure and Projects Authority Reviews in September and December 2020, August 2021, and June 2022.

Overall assessment

Met.

2.3 Value for money

The proposal must be good value for money for the exchequer as a whole and not just the department and where possible a full evaluation should be undertaken.

From an economic perspective, trees and restored peatlands are public goods. Public goods are typically underprovided by free market mechanisms, and therefore there is clear economic rationale for government intervention.

Trees and restored peatlands provide a number of benefits for society. These include carbon sequestration and abatement, which contribute to achieving carbon targets. The Committee on Climate Change (CCC) has recommended significant increases in tree planting, woodland creation and management, and peatland restoration in the UK.

Tree planting and peatland restoration are some of the simplest and most cost-effective ways of capturing and storing carbon. In addition, trees and restored peatlands can deliver cleaner air, biodiversity benefits, and increased public access to green space.

A number of options for delivering the objectives of the Nature for Climate Fund were considered in the Programme Business Case (PBC) (including a ‘do-nothing’ option) and assessed against critical success factors. Value for money was assessed by identifying, quantifying and monetising the costs and benefits and accounting for non-monetised impacts. Sensitivity analysis was also conducted to account for uncertainty in the economic appraisal.

The decision was taken to introduce a portfolio of grant funding, capital investment and pump-priming activity to deliver significant carbon sequestration and abatement benefits, alongside maximising other benefits. This option is expected to provide the best value for money for the government, by maximising natural capital benefits such as biodiversity, alongside delivering major carbon savings.

Overall assessment

Met.

2.4 Feasibility

The Nature for Climate Fund (NCF) is currently in its second year of delivery. In the first year of programme delivery, there was a 10% increase of new planting of woodland in England and an additional 400 hectare per annum of trees planted outside woodland.

The NCF Peatland Grant Scheme delivered over 5,000 hectare per annum of restoration across years 1 and 2 of the programme. The Discovery Grants have brought over 50,000 hectare per year of peatland into scope for future restoration grant rounds.

The tree planting and peatland restoration trajectory is showing an upward trend through the remaining years of the programme, but there are several key enablers required to stay on the planned delivery trajectory over that period, and these are not certain.

The trajectory also steepens as time passes. These key enablers include landowner demand for the schemes put forward through the NCF, and the ability of the wider sector to respond to that demand.

The NCF has adopted a portfolio of different initiatives to meet the objectives identified in the business case. Ongoing monitoring will be carried out throughout the lifecycle of the programme to evaluate performance.

Performance is being tracked against a number of different objectives – not just hectares of trees in the ground and peatland restored, but also the wider environmental, social and economic benefits derived from these activities. The programme also has a vital transformative function, laying the foundations for much longer-term woodland creation and peatland restoration required to contribute to statutory Net Zero and nature recovery targets.

Delivery objectives are challenging with a further uptick in hectares required through the remaining years of the programme to meet objectives, above and beyond what has been delivered to date. Overall, the objectives are considered challenging but feasible assuming the programme key enablers are met.

The programme has worked closely with:

• the Infrastructure and Projects Authority (IPA) as independent assurers
• the Cabinet Office as advisers on the design of grants
• the HM Treasury to support the strong links necessary to ensure success

Overall assessment

Met.

2.5 Affordability

Funding for the Nature for Climate Fund was provided through the Spending Reviews in 2020 and 2021. The Programme Business Case was approved by Defra’s Investment Committee in March 2021 and an updated version was approved in April 2022. HM Treasury approved the Programme Business Case in October 2021 and an updated version was approved in June 2022.

Overall assessment

Met.

3. Conclusion

As the accounting officer for Defra, I considered this assessment of the Nature for Climate Fund Programme and approved it on 6 October 2022.

I have prepared this summary to set out the key points which informed my decision, and in line with IPA guidance the PBC will be reviewed at least annually, and a revised accounting officer assessment will be undertaken should there be any material changes. If any of these factors change materially during the lifetime of this project, I undertake to prepare a revised summary, setting out my assessment of them.

This summary will be published on GOV.UK. Copies will be deposited in the library of the House of Commons and sent to the Comptroller and Auditor General and Treasury Officer of Accounts.

Tamara Finkelstein, Permanent Secretary, Defra

27 October 2022