Last year, the Government ran a consultation on biodiversity net gain (BNG) implementation, which ended in April 2022, and the entire development industry has eagerly awaited the publication of the Government's response ever since. New BNG Guidance was published yesterday (21 February 2023) and whilst it does not respond to every question which has emerged since the consultation ended, the guidance is thoughtful and makes clear that further details of the scheme will be shared in the coming weeks and months. Whilst some may be disappointed that not every issue has been addressed, it is abundantly clear that the Government has listened carefully to all stakeholders and is determined to launch a robust BNG scheme.

In this briefing, we set out below the essential points from the latest BNG Guidance.

Background

The framework for BNG was set out in the Environment Act 2021 and will require developers to provide a minimum 10% increase in biodiversity compared to the pre-construction condition of the development site.

Will all development be subject to BNG?

The Guidance makes clear that not all development will be required to deliver BNG. Development schemes that impact only a small habitat (25 square metres, or five metres for linear features such as hedgerows) will be exempt; as will householder applications and biodiversity gain sites (such as the habitat land banks). Exemptions for small-scale self-build and custom housebuilding will also be made.

Change of use schemes will be subject to BNG, although sites covered in 'existing sealed surfaces' (e.g. tarmac or existing buildings) will have a zero baseline score - and 10% of zero is still zero. Whilst BNG will not be required, planning authorities and a developer's stakeholders may still require biodiversity improvements to be made.

Nationally Strategic Infrastructure Projects (NSIPs) will be expected to provide BNG, but permitted development will not.

When do the BNG rules start?

The Guidance confirms that BNG will apply from November 2023 as we expected. However, small sites will have a reprieve until April 2024. For these purposes the extension applies to:

  • residential schemes of up to nine dwellings on sites of up to one hectare; or if dwelling numbers are not known, sites of up to half a hectare; and
  • non-residential schemes, where floorspace to be created will be less than 1,000 square metres, or where the site area is less than one hectare.

The BNG requirement will apply to NSIPs from November 2025, giving infrastructure promoters sufficient time to plan BNG into their projects.

Phased developments and BNG delivery programmes

For phased schemes or outline planning permissions, additional BNG information will need to be provided to local planning authorities setting out how biodiversity gain will be achieved across the whole development site (i.e. across all phases). Prior to the commencement of each phase of the development, a new biodiversity gain plan (BGP) will be required. It is clear that the preference, or expectation, will be that BNG works will be required for each phase - there will be no inflexible 'front-loading' requirements requiring the bulk of biodiversity works in early phases, but local planning authorities will be given discretion in this respect. We expect that for some schemes, there will be robust discussions with planners regarding BNG delivery programmes.

The Government is clearly undecided as to when BNG works should be provided, and whether a requirement to deliver gains within 12 months of the development commencing, or at least before occupation, is too inflexible. Further guidance is promised, but it appears as though there will be something like a rebuttable presumption in this respect - in other words, delivery within 12 months will be the starting point, but developers will be able to present a case as to why that is not practicable on a site-by-site basis.

S73 permissions

It has been a concern that future planning permission variations (s73 permissions) granted after November 2023 would impose BNG requirements, notwithstanding that the original scheme planning permission had no such requirement. The Guidance confirms ("subject to further engagement") that Government intends to apply BNG conditions to s73 permissions, only where the original scheme planning permission was subject to a BNG requirement. This is a pragmatic approach and will be welcomed by developers.

Irreplaceable habitat

"Irreplaceable habitat", the definition of which is currently unknown but will be contained in future Regulations, will be taken out of the scope of the 10% measurable net gain requirement. Separate information requirements will be imposed to enable local planning authorities to determine the planning application. The 10% gain requirement will be replaced with a requirement for "appropriate compensation relative to the baseline habitat type".

Where will the BNG be provided?

It has long been expected that BNG obligations can be satisfied by providing works on-site, offsite (either on land controlled by the developer, a third party, or as part of a large habitat bank site), or by acquiring credits issued by the Secretary of State, who will use the proceeds to deliver the gains themselves.

In the press release to yesterday's guidance, it was noted that "improvements on-site will be encouraged, but in circumstances where they are not possible, developers will be able to pay for improvements on other sites elsewhere". The Guidance itself states that "Government will continue to incentivise a preference for on-site gains over off-site gains". As things stand, developers will likely still face difficult discussions with local planning authorities who wish to see BNG delivered onsite and who are resistant to offsite solutions, notwithstanding a clear framework for flexible solutions to the BNG requirement. Without further guidance, there will surely be debate with planning officers as to whether onsite delivery is "possible".

What role will markets play?

The Government is clearly encouraging a market for biodiversity units – the Secretary of State credit scheme will be collapsed when the unit market is well-established, and the price of credits will be "intentionally uncompetitive" and set six months in advance to enable forward planning.

It is widely expected (indeed already happening) that Local Authorities will establish their own habitat banks, in order to see units to developers. Guidance warns that local authorities "cannot direct buyers towards their land in preference over other suppliers to the market unless there are clear ecological justifications for doing so". That is likely to be a topic we return to in future briefings.

Developers who provide more than 10% biodiversity onsite will be able to sell the excess units to the market. The 'excess gains' rules will disappoint some, who hoped to encourage developers to over-comply on their sites.

The Guidance confirms that there will be no time limit on how long biodiversity units can be banked for before they are allocated to development sites. This will be good news to the habitat bank market, as is the confirmation that only once sold to a developer will the relevant parcel of land within the habitat bank need to be legally secured and registered.

Who will run the BNG register?

Natural England will manage the Biodiversity Gain Site Register, which will only apply to offsite banks, not onsite works. Onsite gains will be recorded in data held by the local planning authority, but the Government is alive to the utility of having all site information in one central place. We think there may be further developments in this respect based on initial adverse reaction to this proposal.

Stacking - can BNG sites be used for other schemes?

There are a number of schemes providing environmental benefits in relation to land management. The Guidance confirms that sites can be used for BNG works and nutrient neutrality measures, but not carbon credits. We expect 'stacked' sites to be popular.

What's going to happen next?

There will be a steady stream of guidance over the Spring, covering issues such as securing biodiversity gain sites, management of sites, monitoring and reporting. BNG Regulations will be published at some point in the year - hopefully for consultation. A new Biodiversity Metric 4.0 is expected to be made available later in 2023, which will be the final version before the scheme goes live in November.

For further information in relation to the issues raised in this briefing, or to discuss the Biodiversity Net Gain scheme and how it may affect you, please contact sustainability partner, Ben Stansfield.