Be slow to make a settlement in vile surroundings (3)
I believe the answer is:
'be slow' is the definition.
(to lag is to be slow)
I don't understand the rest of the clue.
Can you help me to learn more?
(Other definitions for lag that I've seen before include "Dawdle" , "Insulate (pipes)" , "An old one is a convict" , "Old convict - dally - insulate" , "habitual criminal?" .)