Biodiversity Net Gain Regulations – Government consultation
The principle of Biodiversity Net Gain (BNG) as a statutory requirement for development is being brought into force in England by the Environment Act 2021. When fully enacted, it will require most development to deliver a 10% increase in “biodiversity units” as assessed using Natural England’s Biodiversity Metric.
“Development” means development requiring planning consent under the Town and Country Planning Act 1990 (TCPA 1990) and Nationally Significant Infrastructure Projects (NSIPs). That will include marine development up to the low water mark.
The new statutory requirements are likely to come into force in late 2023 for development under the TCPA 1990 and by 2025 at the latest for NSIPs. The Government is now consulting on the regulations which will include much of the detail of how this requirement will work in practice. The closing date for responses is 5th April 2022 and consultation documents can be found at https://consult.defra.gov.uk/defra-net-gain-consultation-team/consultation-on-biodiversity-net-gain-regulations/
With 55 detailed questions, the consultation seeks views on a wide range of matters and it is clear that there is much still to learn about how the BNG market is intended to work in practice. Some of the more interesting points raised are summarised below and the Government’s response to this consultation will be awaited with interest by landowners, developers and advisers alike.
Note that this is only a consultation and detail could change when the final Regulations and Guidance are published by the Government.
Irreplaceable habitats – it is proposed that habitats which have a very high biodiversity value and are difficult to create should be considered “irreplaceable” and be subject to bespoke arrangements.
Exemptions and small sites – proposals are made for exemptions and simplification for development which is small scale (fewer than 10 residential units) or unlikely to have a significant impact on biodiversity, such as householder applications, those for a change of use and for the creation of a BNG site.
Outline and phased development – developers will have to submit a strategy explaining how BNG requirements will be met across the whole development and how they might be delivered in phases. BNG delivery should be front-loaded to mitigate against risk of later phases not proceeding.
Procedure – Core BNG information will need to be submitted with the planning application and the full BNG plan can be submitted at any time before commencement of the development. It is proposed that there will be templates for BNG plans, model planning conditions, model planning obligations and template conservation covenants.
Off-site habitat banks
Off-site habitat banks will be permitted where a developer is unable to deliver BNG on-site. Delivery of BNG will be secured via conservation covenants or s.106 planning obligations.
Habitat creation or enhancement on off-site locations is likely to have to be commenced within 12 months of the discharge of the pre-commencement BNG condition, but delays in enhancement will be reflected in the metric calculation, so there will be an incentive for work to be done sooner. Habitat banks, where the enhancement is done before the development takes place, are to be encouraged.
The statutory minimum period for off-site BNG sites is 30 years, but developers and landowners are to be “encouraged and enabled” through policy and guidance to agree longer terms, or for sites to be secured in perpetuity.
The 30 year period can be reviewed by the Government and it will consider increasing the minimum term. Any increase would not take place within the first three years and would not apply retrospectively to pre-existing agreements.
Planning authorities will be able to establish their own habitat banks or act as brokers, but will be expected to manage any potential conflicts of interest and will not be able to direct purchasers to buy from their own sites in preference to any other.
Where developers are able to create more BNG units on-site than they require for their own development, it is proposed that they will be able to sell the excess as off-site units for another development. The land which supports the excess units must be clearly identified.
Taxation – The consultation states:
“We are aware that farmers want to understand how committing land for habitat creation or enhancement will affect their eligibility for Agricultural Property Relief and Business Property Relief. Work is underway to provide clear guidance on this.”
That guidance is much needed, because as things currently stand, some landowners will be concerned that any change in land use away from active farming could risk their eligibility for Inheritance Tax reliefs including APR and BPR.
The biodiversity gain site register
There will be a publicly available register of off-site gains. On-site gains will not have to be included.
It is proposed that applications to the register should be determined within 28 days. There will be an appeal provision.
The register will include details of the site location, the people or bodies responsible for the site, Biodiversity Metric calculations and Habitat Management and Monitoring Plans, among other information.
There will be a fee for applications which is intended to cover the cost of administering the register.
Additionality
The principle of additionality means that the benefits delivered through the credit scheme would not have arisen without the purchase of credits to fund the work. The consultation proposes that the following principles will apply to the assessment of additionality for BNG:
On-site measures delivered to comply with statutory or planning requirements such as green infrastructure, sustainable drainage and nutrient mitigation may be counted towards the biodiversity gain where such gain can be proven.
Measures designed for protected species mitigation or compensation may also count, but at least 10% of the gain must be for other measures.
Actions and measures within River Basin Management Plans may count towards biodiversity gain.
Measures to protect or compensate for statutory protected sites may count for biodiversity, but must be agreed with the decision-maker responsible for the protected site.
Stacking
The consultation paper states that the Government is minded to allow land managers to stack payments for several different ecosystem services on land used for BNG credits, provided that the outcomes are compatible, distinct, additional and that there is no element of double funding. This welcome policy means that land used for creating BNG credits might also support carbon credits, for example, or payments for improving water quality. It might also enable BNG sites to be included in agri-environment schemes. The policy is to be reviewed after three years.
Statutory BNG credits
The Environment Act requires the UK Government to be able to sell BNG credits to developers as a last resort, in order to prevent unreasonable delays in the planning system where the development site cannot provide enough BNG units on-site and there are none available off-site in the locality. With this in mind, Natural England began a pilot scheme in 2020 to develop 9 projects in England to test the approach. However, the clear preference is for the private sector to provide a functioning market in BNG credits and so Defra is keen to ensure that its statutory scheme does not undermine the fledgling private market. It will attempt to do so by setting an “uncompetitive” set price which will enable developers to purchase credits quickly but which it expects the private market to undercut. The details of the proposed credit price review, which will determine how the price is set, are not set out in the consultation document.
Reporting, evaluation and monitoring
At a project level, planning authorities will need to set “specific and proportionate” requirements for monitoring individual BNG projects as part of planning conditions. It is suggested that a monitoring report might be required at years 2, 5, 10, 20 and 30 and the consultation document notes the need for “considerable scope for discretion and expert opinion” when monitoring arrangements are agreed. Natural England is to ensure that data collection is standardised as far as possible and it is also assessing whether accreditation or earned recognition schemes could help to focus enforcement and scrutiny.
Monitoring and evaluation will also happen at a policy level to inform the evolution of the BNG policy. The Government plans to collect information at a national level from local planning authorities (which will have to publish a Biodiversity Report every 5 years), the Biodiversity Gain Site Register and the statutory credits scheme. It will also work on standardising reporting and the collation of habitat survey data.
For Nationally Significant Infrastructure Projects (NSIPs):
NSIPs are the largest types of infrastructure schemes, such as major road and rail schemes, large scale energy projects (gas pipelines, power stations, new pylon lines) and major water infrastructure. These projects have their own consenting scheme and will usually be required to include environmental mitigation already. The new requirements will impose a statutory 10% BNG requirement on these infrastructure schemes – which could mean more land take.
It is proposed that a biodiversity gain statement for NSIPs will be published as a standalone policy document, setting out the BNG requirement for all types of NSIP and the stage of project design at which it will apply.
BNG will apply to NSIPs from November 2025 to allow longer for the impact to be built into the design stage for proposed schemes.
Where an NSIP developer has other landholdings, they may be able to deliver BNG through enhancement of that land through a light-touch registration process.
For larger developments, particularly NSIPs, the developer will often include areas for environmental mitigation within the envelope of the scheme. This would mean that the biodiversity gain would be calculated over a larger area and may make it more difficult to reach the target. The consultation asks for views on whether NSIP developers should be able to exclude such areas from the development boundary and treat them as off-site enhancements, so that the net gain calculation is over the actual area used for the infrastructure development only.
Should the minimum term for NSIP BNG agreements be 30 years, as it is for other development, or longer?
Should NSIP providers be able to use compulsory purchase powers to acquire land for BNG delivery?
The closing date for responses to the consultation is 5th April 2022 and Government will then analyse the responses and publish its conclusions, probably alongside the new BNG Regulations and Guidance.
18th March 2022