Biodiversity Net Gain Update - February 2023
On 21st February 2023 the Government published its long-awaited response to the 2022 consultation on the implementation of Biodiversity Net Gain (BNG) in England (see our Blog post of 18/3/22).
The key announcements are:
Stacking of BNG and nutrient credits will be permitted on the same land
BNG and nutrient credits can also be delivered on land used for agri-environment schemes provided that additional habitat enhancement has been done and there is no double funding
The sale of BNG units will be subject to VAT
A de minimis exemption will apply where less than 25 m sq of habitat is affected (or 5m of linear habitat)
No changes are proposed to compulsory purchase rules
Additional funding of £16 million is available to help LPAs prepare for and implement BNG
The main points made in the consultation response are summarised below.
1. Exemptions
There are to be exemptions from the requirement to deliver 10% BNG for:
development impacting habitat of an area below a ‘de minimis’ threshold of 25 m sq, or 5m for linear habitats such as hedgerows
householder applications
biodiversity gain sites
small scale self-build and custom house building
Permitted development is already exempt from the BNG requirement under the Environment Act 2021 (Sch 14, para 17).
There will be NO specific exemptions for:
previously developed land
change of use applications (though the de minimis exemption will apply in many cases)
temporary applications (though the metric makes allowances for short term habitat loss)
developments which would be permitted development if they were not in protected areas (AONBs, National Parks, Conservation Areas)
development on statutory sites designated for nature conservation
2. Irreplaceable habitat
“Irreplaceable habitat” will be defined in secondary legislation and a list of habitat types considered to be “irreplaceable” will be published
Irreplaceable habitat will not be able to be compensated for through BNG – site specific arrangements will have to be made
3. Small sites
The small sites metric will be introduced from April 2024
It will apply to residential development of up to 9 dwellings on sites less than 1ha, or sites of less than 0.5ha if the number of dwellings is not known
It will apply to other development where the floor space to be created is less than 1,000 sq m or where the site is less than 1ha
4. Nationally Significant Infrastructure Projects
BNG requirements for NSIPs will come into effect in November 2025 as proposed
There will be no exemptions for NSIPs (other than the specific arrangements requirement for irreplaceable habitats)
There will be no “lighter touch” approach to off-site mitigation for NSIPs – the mitigation hierarchy favouring on-site or proximate BNG will apply
No changes are proposed to the use of compulsory acquisition – the response document says:
“We recognise the concerns raised by some respondents on the negative impact of compulsory acquisition on landowners, and their preference for compulsory acquisition to be used as a last resort for BNG delivery. We are not intending to make any new provisions for compulsory acquisition. We will, however, consider providing guidance or reference in biodiversity gain statements that outlines the reasonable alternatives developers should explore to deliver net gain before they consider compulsory acquisition of land.”
5. On-site vs off-site gains
While acknowledging the need for strategic biodiversity improvements, “Government will continue to incentivise a preference for on-site gains over off-site gains”. This implies that habitat banks will be less attractive than on-site mitigation.
6. After the 30 year term
Government “hopes” that very few sites would be taken out of conservation management after the 30 year minimum term for BNG use has expired and suggests that a new baseline could be assessed and further habitat improvement made to create new BNG units in some cases.
It will consider other incentives to encourage landowners to maintain habitats, including tax incentives, securing longer term management through investment bonds or other financial instruments and allowing sale of new biodiversity units for new enhancements after the initial 30-year legal agreement ends.
7. Taxation
“Work is underway to provide guidance on the tax implications for habitat creation or enhancement. Biodiversity units will be subject to VAT when they are sold.”
8. Stacking
Land managers will be able to sell both BNG and nutrient credits from the same nature-based intervention (but note the different timescales – BNG sites are for 30 years while nutrient credits may run from 80 – 125 years)
BNG and nutrient credits can be created on land which is used for voluntary carbon credits provided that additional habitat enhancement work has been done, over and above that required under the carbon scheme. Baselines must distinguish between the different schemes.
BNG and nutrient credits can be created on land which is already within an agri-environment scheme provided that additional habitat enhancement work has been done. Work which is funded by an agri-environment scheme cannot be used to create BNG or nutrient credits.
More detailed guidance is available at https://www.gov.uk/guidance/combining-environmental-payments-biodiversity-net-gain-bng-and-nutrient-mitigation
9. Statutory credits scheme
Natural England will publish an indicative price for statutory credits 6 months before the scheme becomes mandatory. The price is intended to uncompetitive with the private market and will be reviewed at 6 monthly intervals.
The statutory credits scheme is intended to be a scheme of last resort and it will be phased out when the BNG market has matured.
10. Funding for LPAs
Local planning authorities are to receive a further £16.71 million to help them prepare for the introduction of BNG, in addition to the £4.18 million announced in January 2022.
More detailed guidance will follow in due course and a new webpage has been set up for BNG guidance: https://www.gov.uk/government/collections/biodiversity-net-gain
22nd February 2023