At the end of last week, the UK Government published the final regulations and draft Planning Practice Guidance needed to commence mandatory biodiversity net gain (BNG) rules in England at the start of next year (January 2024).

In doing so, the Government has published what it hopes are the final pieces of the BNG jigsaw that has been a key focus for many developers, in both the real estate and energy sectors, since the framework was introduced two years ago by the Environment Act 2021.

In this update, we review the latest announcements, as well as some of the guidance published over the summer.

What is BNG? The 30-second refresher…

BNG is the Government's flagship nature restoration policy, which will require most developments in England to secure a 10% improvement in biodiversity. It will require a baseline calculation of a site's (pre-development) biodiversity using the statutory biodiversity metric tool, and a Biodiversity Gain Plan, setting out how the 10% net gain will be delivered, which will have to be approved prior to development works commencing.

Unless a development is exempt, BNG must be delivered in accordance with the biodiversity gain hierarchy, which requires delivery: onsite (i.e. within the redline boundary of the development site); offsite – whether on a developer's own land, or by buying units from third parties who undertake biodiversity improvements themselves; or by purchasing statutory credits from Government (see further information below). It is likely that discussions between developers and Local Planning Authorities regarding the application of the biodiversity gain hierarchy will lead to delays in determining planning applications.

The delivery and subsequent management and maintenance of BNG works must be secured by planning condition or, more likely, by statutory agreement (a Section 106 Agreement or a Conservation Covenant) for at least 30 years.

The planning application process

The draft Planning Practice Guidance (PPG) published by the Government emphasises the need to consider BNG during the preparation of an application for planning permission – rather than leaving it to once planning permission has been granted. This will reflect good practice – not least given the emphasis on securing onsite biodiversity gains.

The PPG reaffirms expectations that BNG will not apply to scheme variations (Section 73 applications) if the original planning permission was not itself subject to BNG. It also describes the exemptions to BNG, as set out in draft Regulations – the most relevant being where there are only minor impacts to existing biodiversity (impacts on non-priority habitat of 25m2 or less, or less than 5m linear habitat).

The PPG also sets out the information that will need to be submitted as part of applications for planning permission – failure to include these will mean that the application cannot be validated by the local planning authority. The required information includes:

  • a statement as to whether the applicant believes that planning permission, if granted, would be subject to BNG;
  • the pre-development biodiversity value of the onsite habitat (as at the date of the planning application), including the completed biodiversity metric – where the applicant wishes to use an earlier baseline date, the applicant will need to include the proposed earlier date and the reasons for proposing that date;
  • a statement confirming whether the biodiversity value of the onsite habitat is lower because of site degradation activities (in which case, the baseline value will be set prior to the carrying on of the relevant activities);
  • a description of any irreplaceable habitat on the development site; and
  • a plan showing the onsite habitat existing on the date of the application.

The local planning authority will not have any BNG statutory consultees, but we might expect that officers will rely heavily on internal support from ecological specialists. Guidance published from time to time by Natural England will likely be followed closely.

A standard form template Biodiversity Gain Plan is available, which must be completed and approved prior to the commencement of the relevant development. The Government's guidance indicates that the plan will be refused or approved within eight weeks of submission – an appeals process will apply for refusals or delayed determination. For phased developments, an Overall Biodiversity Gain Plan will need to be approved, as well as Phase Biodiversity Gain Plans for each phase.

Irreplaceable habitats

BNG will not apply to developments that impact "irreplaceable habitats" i.e. blanket bogs; lowland fens; limestone pavements; coastal sand dunes; ancient woodland (areas which have been continuously wooded since at least 1600); ancient and veteran trees; and saltmarsh scrubs. Further guidance may follow from Natural England.

Statutory biodiversity credit prices

The statutory biodiversity credit scheme is intended to be a last resort solution for developers – akin to "in case of emergency, break glass" if no onsite biodiversity solution can be found, or no biodiversity units are purchased on the open market. In its response to last year's BNG public consultation, the Government pledged to set prices for statutory credits at an intentionally uncompetitive price, with the aim of encouraging the commercial market to step forward with solutions.

Is that the price? I'll take two

In the summer, the Government announced that the cheapest statutory credit (for all types of low distinctiveness habitats) will be £42,000 each. Statutory credits for medium distinctiveness habitats range from £42,000 to £125,000 each; for high distinctiveness habitats they range from £42,000 to £650,000; and for linear habitats (hedgerows, rivers and streams), the statutory credit prices range from £44,000 to £230,000 (in all cases, exclusive of VAT).

To compound the cost of statutory credits, the Biodiversity Metric (the tool used to evaluate biodiversity values) includes a 'spatial risk multiplier', which will mean that two statutory credits are required for every one biodiversity unit that is required to be compensated for. This means that the statutory credits will likely be well in excess of twice the price of a commercially available biodiversity unit, and will surely therefore have a dual purpose of encouraging developers to find onsite biodiversity solutions, and support the development of the offsite habitat market, bringing private capital into the UK's nature restoration.

The statutory biodiversity credits will be available for sale from Natural England using a dedicated sales service, and the funds received will be applied towards habitat delivery in England.

Conservation covenants and responsible bodies

The principal mechanisms for securing BNG (other than having a planning condition, which will likely only be used for the smallest of onsite BNG solutions) are Section 106 Obligations and Conservation Covenants. As with current Section 106 Obligations, the relevant local planning authority will enforce against non-performance of any obligations entered into by landowners/developers.

Conservation Covenants will perform a similar function to Section 106 Obligations, but will be given by landowners/developers in favour of "responsible bodies". The Department for Environment Food and Rural Affairs (DEFRA) has four criteria for becoming (and remaining) a responsible body, as follows:

Eligibility

Responsible bodies will need to have an operating base, and staff, in the UK. They will need to be local authorities, or a public body, charity, or other body, in each case, where at least some of its main purposes, functions or activities relate to conservation.

Financial security

DEFRA will need to ensure that prospective responsible bodies have a UK bank account, have a secure financial situation; and adequate internal fiscal and administrative control for long-term financial viability. It is likely that DEFRA will undertake various checks relating to administrative filing history, solvency, and (where relevant) use of public grants etc.

Operational capacity and capability

DEFRA will be keen to assess whether prospective responsible bodies have the capacity and capability to manage and enforce covenants relating to the management and maintenance of biodiverse habitats. That will include: wanting to check expertise; a competent workforce; contingency planning skills; an ability to monitor and enforce and to resolve disputes; clear structures and good governance; and a track record for environmental responsibility.

Ongoing suitability

Designation as a responsible body will be a one-off event, but once designated a responsible body will need to continue to meet the qualification criteria. Material changes in circumstances will need to be notified to DEFRA and may result in a body no longer being a responsible body – in which case DEFRA would either step into its shoes for the purposes of existing conservation covenants, or another responsible body would take over.

What will happen next?

It is a relief that the draft Regulations laid before Parliament and the PPG do not contain any obvious changes from previously stated policy. Although there were frustrations in some quarters with the delayed commencement of BNG (from November 2023 to January 2024), it is clear that the additional time has been spent ensuring that the legislation does what it is intended to, and that the accompanying PPG is comprehensive – there were no unexpected surprises in the materials published.

In all likelihood, there will be minor changes to the BNG regime during 2024 as the new processes bed-down. BNG will bring significant changes to the consenting of new developments and projects – it has potential to cause delays and frustrations but it also has potential for significant improvements in biodiversity, and time spent engaging early with planning officers (and other market participants) will surely prove beneficial.

To discuss any of the points raised here on BNG, or any other planning and biodiversity-related matters, please contact Ben Stansfield.