What’s next for biodiversity net gain?
by Shoosmiths LLP
Sustained biodiversity loss since the industrial revolution has resulted in Britain being one of the most nature-depleted countries in the world.
One response to this enduring problem are proposals to use the planning system to mandate biodiversity net gain (BNG) through the development management process.
The aim of the requirements is to secure a minimum 10 per cent biodiversity net gain from new developments, with effect from November 2023. A consultation on how this will be achieved in practice took place at the beginning of 2022 and the government has now published its response.
The response is accompanied by updated national guidance on BNG.
Challenge for local planning authorities
Given the crucial role that they will play in securing and policing the delivery of BNG, it is perhaps unsurprising that local planning authorities (LPAs) were the largest single group to provide consultation responses.
The new system will simply not work unless LPAs have the skills and resourcing to take on this new responsibility and the response offers the prospect of additional funding to assist with the roll out of BNG. As they will be on the front line when it comes to enforcing the delivery of BNG, the response acknowledges a particular need for additional training and capacity in planning enforcement services.
Delayed starts and exemptions
The additional burden on LPAs that will result from the introduction of BNG is also cited as a reason to delay its introduction on ‘small sites’ until April 2024.
Small sites include residential developments of fewer than 10 homes on a site smaller than one hectare, or where the number of dwellings provided is not known, with a site less than 0.5 hectares. Non-residential sites with less than 1,000 square metres of proposed floor space or sites that are smaller than one hectare also fall within the small sites definition.
Nationally Significant Infrastructure Projects (NSIPs) will also avoid the default date of November 2023 to be subject to BNG. In this case, a start date of November 2025 is proposed, with the promise of a consultation draft biodiversity gain statement for NSIPs later this year.
In line with the consultation proposals, brownfield sites, change of use applications and applications for temporary permission will not be exempt from BNG.
Exemptions will, however, be extended to small scale self-build and custom-build housing sites, householder applications, biodiversity gain sites and development impacting habitats of an area below a ‘de minimis’ threshold of 25 square metres, or five metres for linear habitats such as hedgerows.
Smaller sites may not entirely escape the need to address BNG. The response indicates that “exempt development outside the scope of mandatory net gain still provides opportunity for biodiversity enhancements that could be secured through planning policy,” and that DEFRA will work with DLUHC “to develop planning policy for minor development… to seek to secure proportionate on-site biodiversity enhancements where possible”.
For very different reasons, BNG will not apply to development on ‘irreplaceable habitats’. These are currently defined in the NPPF as including habitats which would be “…technically very difficult (or take a very significant time) to restore, recreate or replace once destroyed, taking into account their age, uniqueness, species diversity or rarity.”
The response reports strong support from consultees on proposals to ‘carve out’ irreplaceable habitats from mainstream quantitative BNG requirements and apply a different regime based on ‘bespoke compensation agreements’. The response acknowledges the need to fine-tune the NPPF definition of irreplaceable habitat, which will be dealt with through secondary legislation.
Respondents to the consultation questioned the practicality of securing on-site biodiversity gains within 12 months of commencement or before occupation when it comes to particular categories of sites including phased developments.
The response has indicated that these observations will be taken into account in drafting additional guidance that will “influence planning authorities’ application of conditions, planning obligations and conservation covenants rather than to be enforced as an inflexible rule itself.”
When it comes to phased development, the approach will be to require additional information indicating how BNG delivery will be phased. Planning conditions will require the submission and approval of a BNG plan prior to the commencement of each phase.
In response to concerns about possible ‘front-loading’ of BNG requirements, the response offers the prospect of “an efficient, user-friendly process for phased development,” that will be articulated through secondary legislation and accompanying guidance.
Whilst this is a policy approach rather than a legislative requirement, BNG is predicated on a spatial hierarchy of habitat delivery with a preference for onsite or local enhancements. This is echoed in the response that confirms that the general approach will be to “continue to incentivise a preference for on-site gains over off-site gains”.
Local off-site provision in ‘strategically significant locations’ will also be incentivised through the operation of the biodiversity metric.
The response also offers some encouragement when it comes to securing BNG gain sites beyond the 30-year minimum period. The aspiration is that “very few biodiversity gain sites are taken out of conservation management entirely at the end of their agreements”.
A commitment is given to considering how to incentivise retention of biodiversity gains once the gain sites’ legal agreements expire. These could include tax incentives; securing longer term management through investment bonds or other financial instruments and allowing the sale of new biodiversity units for new enhancements after the initial 30-year legal agreement ends.
Natural England will be made responsible for establishing and maintaining the BNG register.
The core purpose of the biodiversity gain site register is to “record allocations of off-site biodiversity gains to developments and make this information publicly available”. However, the register is not intended to act as a “marketplace platform for buying or selling units”.
Statutory biodiversity credits and sale of excess units
Natural England will have another important role to play when it comes to the implementation of BNG.
The public body will be given the responsibility for selling statutory biodiversity credits on behalf of the secretary of state, with an ‘indicative credit price’ due to be published six months in advance of BNG becoming mandatory. This price will be reviewed every six months and will be set to be “intentionally uncompetitive with the market.” To avoid uncertainty, price changes will be indicated “well in advance to allow developers to plan ahead”.
In another nod to the hierarchy of habitat delivery, further policy guidance will be issued to ensure that accessing the credit scheme will be a ‘last resort’ measure.
Developers will be allowed to sell any excess biodiversity units as off-site gains for another development, provided that this excess gain is registered and that there is genuine additionality for the excess units sold. The response acknowledges that this has the potential to impose an artificial ceiling on the gains achieved so will be kept under review.
Habitat banking offers the prospect of multiple developments securing BNG through a single site.
As the consultation document highlights, habitat banking “can help to smooth out supply and demand by completing the necessary works to establish the habitat in advance and ‘banking’ the resulting units, so they are available for sale when needed by developers”.
Given the need for flexibility in securing habitat banking, the response concludes that there should be no mandated time limit on how long biodiversity units can be banked before they are allocated to a development.
The revised guidance refers to stacking as “when multiple credits or units from different nature markets are sold separately from the same activity on a piece of land”.
The guidance confirms that it is possible to sell biodiversity units and nutrient credits from the same piece of land by stacking them and that units and credits can be sold to the same developer or different developers, provided the eligibility criteria for each market are met.
National v local
LPAs have been gearing up for BNG for some time, with local plan policies already requiring the delivery of BNG. This offers the potential of future conflict between approaches to securing BNG at local and national level.
In the event that BNG features in national development management policies then the new statutory test set out in the Levelling Up and Regeneration Bill will mean that any conflict with local plan policies will be resolved in favour of national policy.
Whilst the response provides a helpful steer on the overall direction of travel when it comes to BNG, there is a good deal of detail needed and a lot to be firmed up ahead of the November 2023 deadline.
Secondary legislation and guidance are set to be introduced on fundamental issues including what is an irreplaceable habitat and just how LPAs should be applying BNG to phased development. On a practical level, a template Biodiversity Net Gain Plan is still awaited. In the meantime, both developers and LPAs will have to do their best to gear up for BNG – in whatever form it finally takes.