Biodiversity Net Gain in England ; An Introduction (Part 3)

In this final article, we look at some of the prospective practical implications of the Biodiversity Net Gain regime

Biodiversity Credits

Biodiversity Credits can also be used to achieve a Biodiversity Gain objective, but buying statutory credits may well be a “last resort” for developers who are unable to use onsite or offsite units/credits to deliver the required Biodiversity Net Gain (“BNG”).

Under the Environment Act 2021, the Secretary of State has power to make arrangements for Biodiversity Credits to be bought and sold in connection with development, so that developments can meet the Biodiversity Gain objective. The credits will be equivalent to a specified gain in biodiversity value, which will be eligible for inclusion in a Biodiversity Gain plan. Developers have to use the statutory biodiversity metric calculation tool to calculate the number of statutory credits they need.  A likely advantage of using the credit system is the certainty of their availability.

DEFRA has published guidance on the prices for statutory biodiversity credits. Prices will be reviewed every six months from 12 February 2024. The guidance states that pricing will be reviewed to ensure it is set high enough not to compete with the private offsite market, as well as being a feasible option for a developer to use as a last resort.

The Government’s guidance on statutory biodiversity credits also explains that developers must buy statutory credits using the credit sales service. There is no minimum or maximum purchase for statutory credits. Payments received for the credits can be used to fund biodiversity enhancements, including to purchase land to do so. The Secretary of State must publish a report every year setting out the total payments received and how they have been used.

Before the LPA approves a developer’s use of statutory credits, the developer must provide the LPA with evidence that it has:

• considered additional onsite BNG, and can demonstrate why this is not possible.
• approached three local or national suppliers, habitat banks or trading websites and can provide evidence that no offsite options are available in England.

DEFRA has also published guidance on how to estimate the cost of, and how to buy, statutory biodiversity credits.

Selling Biodiversity Units as a land manager:

Land managers, including landowners, farmers, local authorities, habitat bank operators and land agents/advisors, can sell offsite biodiversity units in a number of ways, such as to a developer, in partnership with a local authority, through a habitat bank operator, through a broker or on a trading platform.

To do this, the land manager must have each of:

• land in England,
• (if not the landowner), consent to register land and
• a legal agreement for the land to be registered.

Biodiversity units cannot be sold if the land manager is already required to create or enhance habitat for restocking trees, environmental impact assessment compensation or marine licensing.

The land manager must first take a number of preparatory steps, such as finding out what habitats the local area needs, calculating the number of biodiversity units on the site, “securing” the land by means of a section 106 Planning Obligation Agreement, and pricing the units.

The Government has published guidance on how to sell biodiversity units as a land manager, and this sets out the steps necessary to enable the sale of offsite biodiversity units to developers.

An advantage for a developer buying biodiversity units from a landowner or intermediary is that there is no obligation on the developer to create or maintain the habitat; this will be the responsibility of the land owner or manager. However, developers must check that the scheme will be acceptable to Natural England, and that the units will be registered to Natural England, to ensure that they will be valid.

Combining environmental payments: BNG and

nutrient neutrality

Biodiversity units or nutrient credits, or both, can be sold in connection with a piece of land by landowners, long-term leaseholders, tenant farmers and businesses or organisations that carry out habitat creation or enhancements.

Nutrient mitigation/neutrality makes sure that a new development does not add to nutrient loads in water bodies where protected sites (or habitats sites) are in ‘unfavourable condition’ as a result of the polluting effects of excessive nutrients. Nutrient credits can be created by reducing or capturing nutrients that would otherwise end up in protected water bodies.

The Government has published guidance on how land managers can combine biodiversity units and nutrient credits, and sell them alongside other environmental payments.

BNG as a material consideration in planning application decisions: The Government’s Planning Policy Guidance (PPG) on BNG explains how BNG is applied through the planning process.

The PPG states that it is generally inappropriate for decision-makers, when determining a planning application for a development subject to BNG, to refuse an application on the grounds that the biodiversity gain objective will not be met.

However, BNG will often be a material consideration in decision-making, and decision-makers may need to consider more broadly whether the biodiversity gain requirement is capable of being met. The PPG sets out examples of matters for consideration, such as whether the type and location of any significant onsite habitat enhancements proposed for onsite gains are appropriate, taking into account other policies to support biodiversity.

In a recently decided case, one of the grounds of challenge related to the way in which the Planning Inspector had dealt with BNG benefits. The cases raise some interesting issues for both non-mandatory and mandatory BNG applications:

• There is no legal principle that, where a development makes provision for something which is required by a policy or by legislation, it cannot be regarded as a benefit at all. Where a development is required to provide a measure to overcome, mitigate, or compensate for, a harm caused by that project, ordinarily that measure could not rationally be described as a benefit.

Therefore, and for example, where a development would result in a loss of biodiversity, the provision of additional biodiversity on the same site or on other land nearby in order to completely offset that loss, so that in overall terms there is no net reduction in biodiversity attributable to the development, is not a benefit.

It is simply the development ‘consuming its own smoke’. But BNG refers to an improvement in biodiversity, which goes beyond offsetting the adverse impacts of a development scheme and increases biodiversity, which is not caused by the proposed development.

BNG can therefore be a benefit of a proposed scheme, depending on its nature and purpose, including whether it would help to meet a need which is, or is not, related to the proposed development.

It follows that, where a development would provide BNG of more than 10%, a decision-maker is not entitled to say that only that part of the BNG which exceeds 10% can qualify as a benefit in deciding whether to grant planning permission.

• However, the statutory requirement for BNG of 10% can be used as a simple benchmark for comparing the BNG to be provided for a proposed development, subject to difficulties in meaningful comparisons between schemes and the limitations of using percentages.
• Where substantially more than the mandatory minimum 10% BNG is offered, it may be necessary for a decision-maker to consider the Community Infrastructure Levy Regulations 2010. Plan-makers are entitled to seek a higher percentage than the 10% minimum where such a policy is justified and evidenced.

Compulsory purchase to facilitate BNG : It may be necessary for an acquiring authority to compulsorily acquire land for BNG purposes, either together with other land required for the scheme, or alone, for example where the land available for biodiversity enhancement within the development site is limited or unsuitable for meaningful gains.

The Government’s Compulsory purchase process guidance provides advice on compulsory purchase orders which include land for the purposes of facilitating BNG.

Biodiversity Gain in Nationally Significant Infrastructure Projects (NSIPs): The Environment Act 2021 deals with biodiversity gain in relation to development consent for NSIPs and requires biodiversity gain to be taken into account in planning decisions relating to development consent for NSIPs.

A consultation on Biodiversity Net Gain Regulations and implementation, published in 2022, stated that it was the Government’s intention that BNG for NSIPs will be introduced by no later than November 2025, to allow NSIP developers more time to prepare. However, the Government will encourage NSIPs to adopt BNG earlier on a voluntary basis wherever possible.

Where a National Policy Statement (NPS) contains a “biodiversity gain statement” in relation to the development consent order (DCO), the Secretary of State may not grant the application, unless satisfied that the “biodiversity gain objective” contained in the statement is met.

Where there is no NPS covering the DCO, the Secretary of State may issue a biodiversity gain statement in relation to that description of development, subject to prior consultation.

A biodiversity gain statement is defined as ‘a statement of government policy…that must set out a biodiversity gain objective for any description of development to which (the Act) applies’ which ‘may specify how development of any description may or must meet the biodiversity gain objective’.

A biodiversity gain objective is defined as ‘an objective that the biodiversity value attributable to development to which a biodiversity gain statement relates exceeds the pre-development biodiversity value of the onsite habitat by…at least 10 per cent’. The Secretary of State may legislate to change this percentage.

The biodiversity gain statement may specify:

• how the biodiversity value of any habitat or habitat enhancement is to be calculated
• what the pre-development biodiversity value of onsite habitat consists of and the date by reference to which it is calculated, and
• what the biodiversity value attributable to any development consists of, which may include the post-development biodiversity value of the onsite habitat, the biodiversity value of any offsite biodiversity gain allocated to the development (which may be registered offsite biodiversity gain), and the biodiversity value of any biodiversity credits purchased for the development

Any increase in biodiversity value of onsite or offsite habitat is to be taken into account only if this is maintained for a period specified in the statement, and is secured in a way specified in the statement (e.g. through conservation covenants or requirements imposed by a DCO).

A biodiversity gain statement must also specify the evidence that the persons making a DCO application must produce to demonstrate how the biodiversity gain objective is met.

Enforcement of BNG requirements:  This will be through usual applicable planning enforcement process.

For example, an LPA faced with a breach of the mandatory BNG condition, where development was commenced without a biodiversity gain plan having been submitted to and approved by the LPA, could take any applicable planning enforcement action for breach of planning control. Similarly, breaches of other BNG conditions, for example relating to monitoring and reporting arrangements, can equally be subject to planning enforcement.

Breaches of covenants relating to BNG in section 106 agreements or conservation covenants, for example where there has been non-compliance with requirements relating to maintenance over the required 30-year period, will be enforceable through injunction, and/or a claim for damages or breach of contract.

Certain actions by a landowner/developer on a site may also constitute a breach of other legislation. For example, actions which impact habitats of protected species may be enforced through, e.g. the Wildlife and Countryside Act 1981 and/or the Conservation of Habitats and Species Regulations 2017.

Guidance on mandatory BNG

Government guidance: As well as the PPG, the Government has published a collection of guidance documents on BNG, which include:

• what biodiversity net gain is—Understanding biodiversity net gain: guidance on what biodiversity net gain is and how it affects land managers, developers, and local planning authorities
• land manager guidance—Meet your BNG requirements: steps to take for land managers, sell biodiversity units as a land manager, and combining environmental payments:
• developer guidance—Meet biodiversity net gain requirements: steps for developers, Making on-site biodiversity gains as a developer, Make off-site biodiversity gains as a developer,

The Planning Advisory Service has also published a set of resources to support local authorities moving towards the introduction of BNG, including:

• a BNG Readiness Checklist for Local Authorities
• a template BNG condition wording
• a template section 106 agreement securing biodiversity gains as part of a wider habitat bank
• a template section 106 agreement for onsite BNG
• a template section 106 agreement for offsite BNG

Policy based BNG:  There is currently no national mandatory BNG requirement stemming from national planning policy. The NPPF, which is a material consideration in planning decisions, provides that LPAs should ‘encourage’ net gain. It may be the case that local plans require developments to increase biodiversity.

Current national planning policy in England, contained in the NPPF, requires:

• plans to be informed by a sustainability appraisal that demonstrates how the plan has addressed relevant economic, social and environmental objectives, including opportunities for net gains
• plans to identify and pursue opportunities for securing measurable net gains for biodiversity
• planning policies and decisions to contribute to and enhance the natural and local environment by, among other things, minimising impacts on and providing net gains for biodiversity, and

LPAs, when determining planning applications, to encourage opportunities to incorporate biodiversity improvements in and around developments, especially where this can secure measurable net gains for biodiversity.

PPG : The PPG on the natural environment expands on the policies in the NPPF on Net Gain.

The PPG defines ‘Net Gain’ as ‘an approach to development that leaves the natural environment in a measurably better state than it was beforehand’.

It explains that Net Gain is an umbrella term for wider environmental net gain which:

• delivers measurable improvements for biodiversity by creating or enhancing habitats in association with development, to be achieved onsite, offsite or through a combination of onsite and offsite measures, and
• is aimed at reducing pressure on and achieving overall improvements in natural capital, ecosystem services and the benefits they deliver (with metrics to measure and monitor aspects of wider environmental net gain being under development).

In terms of how it can be achieved, the PPG advises that:

• planning conditions or obligations (including unilateral undertakings) can, in appropriate circumstances, be used to require that a planning permission provides for works that will measurably increase biodiversity. Such work could, for example, involve creating new habitats, enhancing existing habitats, providing green roofs, green walls, street trees or sustainable drainage systems.
• benefits can be achieved entirely onsite or by using offsite gains where necessary. Offsite measures can sometimes be secured from ‘habitat banks’, which comprise areas of enhanced or created habitats which generate biodiversity unit ‘credits’, and
• care needs to be taken to ensure that any benefits promised will lead to genuine and demonstrable gains for biodiversity. Discussions with local wildlife organisations can help to identify appropriate solutions, and tools such as the DEFRA biodiversity metric can be used to assess whether a outcome is expected to be achieved. It cautions that LPAs need to make sure that any evidence and rationale supplied by applicants are supported by the appropriate scientific expertise and local wildlife knowledge.

To ensure Net Gain is of lasting value, the PPG advises that new or improved habitat needs to be located where it can best contribute to local, national and international biodiversity restoration, and that providing it close to where people live can improve access to nature and bring health and wellbeing benefits. It also recommends establishing a detailed management plan to ensure appropriate management of the habitat in the long term, and to arrange for regular but proportionate monitoring on how the habitat creation or enhancement is progressing, indicating any remedial action necessary.

The government proposes to carry out a further consultation before any implementation takes place.

Proposed NPPF Reform: In December 2022, the Ministry of Housing, Communities and Local Government published a consultation titled ‘Levelling-up and Regeneration Bill: reforms to national planning policy’, together with a draft of an amended version of the NPPF.

The consultation, which closed in March 2023, sought views on the Government’s proposed approach to updating to the NPPF.

It sets out two key proposals in relation to Biodiversity:

• Ensuring that BNG delivers — in response to concerns about the risk of the system being “played” by developers or landowners, for example by clearing sites before applying for planning permission in order to lower the baseline from which gain is assessed, the Government plans to work with DEFRA to review the current degradation provisions for BNG, to reduce the risk of habitat clearances prior to the submission of planning applications, and before the creation of offsite biodiversity enhancements
• Embracing wider opportunities to support biodiversity — the consultation seeks views on how policy and associated national design guidance can be strengthened to promote small-scale changes that can enhance biodiversity and support wildlife recovery. There are plans to consider how policy and design guidance can fully support habitats and routes for wildlife, and halt the threat to wildlife created by the use of artificial grass by developers in new developments (while noting the importance of some uses of artificial grass such as on sports pitches)

These proposals were not included in the latest revision of the NPPF published in December 2023. It is expected that the Government will bring these forward at a later date.

(This article is not intended to be comprehensive or to provide specific legal advice. It should not be relied upon in the absence of specific advice given in relation to particular circumstances.)

For further information, please contact: Natalie Linehan, Andrew Williamson or David Thorp