The development of land inevitably impacts upon nature and the UK’s biodiversity has been in decline since the 1970s.
The government believes that its biodiversity net gain (“BNG”) initiative - which came into effect on 12 February 2024 pursuant to Schedule 14 of the Environment Act 2021 - will leave the natural environment in a measurably better state than it was before a development took place.
Enhancing biodiversity through the planning system is not a new idea. Planning authorities have been imposing biodiversity requirements on new developments under local plans and the National Planning Policy Framework (“NPPF”) for many years. With the advent of BNG, however, developers must now measure a site’s biodiversity pre- and post-development and demonstrate not only how they will replace habitat and biodiversity lost by the development, but also how they will create a minimum increase of 10%.
BNG is likely to affect over 100,000 planning applications every year and is going to have a significant impact on new developments.
From 12 February 2024, new planning applications for major developments will be subject to a pre-commencement planning condition requiring a minimum 10% improvement in biodiversity and maintenance of it for at least 30 years.
It will apply to small sites from April 2024, and to nationally significant infrastructure projects from November 2025.
Once planning permission has been granted, developers must submit a biodiversity gain plan(“BGP”) to the local planning authority setting out the potential lost habitat in ‘biodiversity units’.
Using the biodiversity metric tool, developers must compare the habitat found on a site before and after development. The metric assesses different types of habitat and converts features of habitat distinctiveness, condition, extent and strategic importance into biodiversity units.
Developers are expected to employ professional ecologists to use the tool, gather, input and assess the data.
The Draft Planning Practice Guidance on BNG encourages developers to consider BNG when preparing their applications rather than waiting until planning permission has been granted, to avoid delays and/or a development having to be completely redesigned.
In practice, most developers will be building BNG into their proposals long before they reach this point, possibly at site selection and certainly at the design stage.
In the case of phased developments, developers must submit an overall BGP for approval as part of their application for outline planning permission before any development can begin, and then submit successive BGPs for each phase before development of those phases can begin.
A biodiversity gain hierarchy is hard-wired into the new framework.
For on-site habitats with a medium, high or very high distinctiveness (a score of four or more according to the biodiversity metric), developers should avoid adverse effects from the development and, if they cannot be avoided, mitigate those effects.
Developers should compensate adverse effects in priority order by:
The biodiversity metric incentivises habitat delivery on or close to development sites through a ‘spatial risk multiplier’ which increases the cost of biodiversity credits the further away the off-site land is from the development site.
BNG is additional to, and does not replace or reduce, existing protections for protected sites, habitats or species. River, hedgerow and area habitats are considered independently and the loss of one type of habitat cannot be replaced by another.
Gains can be delivered on-site, off-site (on land owned by the developer or through the purchase of biodiversity units) or through the purchase of statutory credits.
The government expects developers to aim to meet their BNG requirements on-site in the first instance, by creating new habitats or enhancing existing habitats within the ‘red line’ of the development.
Larger developers have been factoring BNG into their business plans for a while, buying sites with a wider margin than necessary for a proposed development, so they can provide BNG onsite (which is often likely to be the cheapest option) or where this is not possible, purchasing or leasing neighbouring land to provide their own off-site BNG.
For the purposes of BNG, ‘off-site’ means all land outside of the on-site boundary, regardless of ownership.
Where developers cannot provide on-site gains, or do not own neighbouring land, they can buy biodiversity units directly from a landowner, habitat bank operator or trading platform, or through a broker.
The price of biodiversity units consists of a premium payable for the land on which the BNG delivery will take place and a price for carrying out and then maintaining the biodiversity enhancement works for the next 30 years.
Where developers are unable to find units within their own planning authorities – which may be the case in more densely populated areas - they will need to purchase biodiversity units beyond that authority’s boundary, at a higher cost.
A biodiversity unit map finder provides a service linking landowners and land managers selling biodiversity units to potential buyers.
BNG off-sites must be registered on the national biodiversity gains site register which serves the dual purpose of demonstrating the provision and location of off-site BNG and preventing ‘double counting’, which would occur if the same units were assigned to multiple developments.
The statutory biodiversity credit scheme is intended to be a last resort solution for developers who can’t find other solutions.
The scheme allows the UK government, through Natural England, to sell biodiversity credits to developers if the required BNG cannot be achieved on-site or through the off-site market.
Developers utilising this option must buy two statutory credits for every one unit that would otherwise be needed, so statutory credits will likely cost at least twice as much as a commercially available biodiversity unit. The government has set prices for statutory credits at an intentionally high level - ranging from £42,000 to £650,000 based on habitat type and distinctiveness - to encourage developers to find on-site biodiversity solutions and to support the development of an off-site habitat market.
The government has published a list of irreplaceable habitats which represent England’s most valuable habitats, those supporting rare or endangered species that form a part of critical ecosystems.
BNG does not apply to irreplaceable habitats. The legislation recognises that a ‘net gain’ cannot be achieved when there are adverse effects on such habitats, because their ecological value is so high and the habitat so unique.
There is little in the way of guidance as to which habitats will constitute “irreplaceable habitats”. Paragraph 186(c) of the NPPF states that:
“development resulting in the loss or deterioration of irreplaceable habitats (such as ancient woodland and ancient or veteran trees) should be refused, unless there are wholly exceptional reasons and a suitable compensation strategy exists”.
These habitats will require ‘bespoke compensation’, to be agreed with the local planning authority, in addition to the 10% BNG requirement on the remainder of the site. Off-site biodiversity units and statutory biodiversity credits cannot be used to compensate for the loss of irreplaceable habitat.
A recent Defra blog stated that any planning authority approving a BGP for an irreplaceable habitat:
“will need to be satisfied that as a minimum, the compensation plan meets requirements in relevant policy and guidance and delivers appropriate compensation which should aim to reflect the same type of habitat that was lost.”
In practice, however, apart from ancient and veteran trees other habitats on the list of irreplaceable habitats are highly unlikely to form part of a development that would require a BNG survey in the first place. For example, coastal sand dunes, saltmarshes, limestone pavements, lowland fen and blanket bog are not high on developers’ choice of sites. At the same time, the list does not include habitats that are not easy to recreate, such as ancient hedgerows, rivers, lakes and ponds, or priority grasslands such as floodplain meadows.
Guidance may emerge following a proposed public consultation later this year which may result in a wider range of irreplaceable habitats being included in the list.
BNG must be secured for at least 30 years by:
Significant on-site gains can be secured either through a section 106 agreement or a planning condition but off-site gains can only be secured through the former.
A conservation covenant is a private voluntary legal agreement which establishes that land will be used for a conservation purpose, made between a responsible body and a landowner. However, as yet the only designated responsible body is Natural England which has stated that it will not be entering into BNG conservation covenants at the present time. Other bodies may be added in due course.
Applications submitted before 12 February 2024 are exempt, as are any new applications submitted under section 73 of the Town and Country Planning Act 1990 to vary an existing planning permission granted before commencement.
A list of other exemptions can be found in BNG: exempt developments. Some of these have attracted criticism, for instance, permitted development and self-build and custom builds consisting or no more than 9 dwellings on an area no larger than 0.5 hectares.
There are anti-avoidance provisions designed to prevent the pre-development BNG value of a site being artificially lowered through activities such as site clearance which reduce the biodiversity on a site.
Planning authorities can take account of any habitat degradation since 30 January 2020, using aerial imagery or data sets to assess the earlier habitat state to calculate the baseline figure. However, detailed data may not be available in every case. Natural England and Defra intend to produce guidance on how this will work and which data sources may assist in demonstrating the former value of any degraded or destroyed habitats.
BNG provides obvious business opportunities for farmers and estates and some landowners have been establishing ‘habitat banks’ in recent years. Investors pay landowners to increase the biodiversity value of their land and the uplift is then sold as units to developers who need off-site BNG.
Low-grade agricultural land may be ideal for some types of habitat, although there are risks associated with tying up land for 30 years in an emerging market. There may be farm tax implications and an impact on the ability to receive funding for other types of agri-environment schemes.
The government has published guidance for land managers, a term which includes local authorities and developers using their own land - steps for land managers.
The delayed implementation of BNG has given developers much-needed time to prepare for the challenges and changes of the new regime. Discharging BNG planning conditions will add time and require additional resources (for both an applicant and the local planning authority) to development projects.
There are no BNG statutory consultees so planning officers are expected to rely on internal ecological specialists. According to a report produced by the Association of Local Government Ecologists and the Association of Directors of Environment, Economy, Planning and Transport, only 1 in 20 councils currently have the in-house ecological expertise necessary to scrutinise BNG assessments.
Furthermore, there are no registration, reporting or monitoring requirements for on-site BNG and the £10.6m central government funding allocated to support recruitment of ecologists by planning authorities nationally will be stretched thin. The British Property Federation recently called for a new long-term approach to resourcing the planning system to ensure that local authorities have the capacity and capability to deliver BNG effectively.
Howes Percival’s development and planning teams are able to assist developers, promoters and landowners on any enquiries relating to BNG requirements. To contact a member of the team, please click here.
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