Environment Act 2021 - An update on biodiversity net gain

With less than six months to go until the new biodiversity net gain (BNG) provisions of the Environment Act 2021 (the Act) requirements go live, this article summarises the latest position on those changes to the planning regime and considers what those obligations mean for landowners, developers, and promoters. 

We previously considered the BNG changes (as they were then) and the Government consultation in our Environment Act Guide here.

What is the current position?

Since 1 January 2023, public authorities have been under a duty to not only conserve biodiversity, but also enhance it. Many authorities, such as Salford, Dartmoor and Bassetlaw to name a few, already require a 10% gain whilst others have gone one step further – for example Guildford requires a 20% gain. Therefore, do take care to check the current local policy applicable to your application site.

National policy states that planning decisions should contribute to and enhance the environment by providing net gains (paragraph 174(d) of the National Planning Policy Framework). However, there is currently no national, mandatory requirement for development sites to provide a BNG - that will soon change.

When does BNG become mandatory?

In November 2023, BNG requirements will become mandatory for most developments, but they will not become mandatory for “small sites” (which means, for residential purposes, sites with less than 10 dwellings on an area of less than one hectare, or where the number of dwellings to be provided is not known, a site area of less than 0.5 hectares) until April 2024. This staggered approach will hopefully lessen the burden on local authorities.  Secondary legislation is also expected to inform other exceptions, for example for self-build and custom-build housing.

The following measures will become mandatory, courtesy of the Act:

• the provision of a minimum 10% gain in biodiversity;
• the imposition of a pre-commencement condition requiring the submission and approval of a biodiversity gain plan; and
• if works are required to improve the biodiversity rating, the maintenance of the resulting habitat for at least 30 years.

How will BNG be calculated?

Natural England have produced a biodiversity metric (the current version is the Biodiversity Metric 4.0) which assigns values to individual habitat types based on their distinctiveness, condition and spatial location. By comparing the pre-development baseline and post-development scenario, the metric can therefore assess how a development will impact the biodiversity value of a site.

A developer would need to employ a competent person to conduct a survey of the development land and complete the metric. The data will then be provided to the authority as part of the developer’s biodiversity gain plan.

A simpler “Small Sites Metric” has been designed for small sites but this cannot be used in certain scenarios, for example where offsite interventions are required.

BNG can be delivered in a number of ways, either on-site (for example with the new development incorporating improved habitats) or off-site (such as by entering into a s.106 agreement or conservation covenant to provide a habitat on another area of land or by purchasing biodiversity units from parties providing such sites). The Act also enables the creation of a system of statutory biodiversity credits which will be invested in habitat creation (intended to be a last resort and to be priced accordingly).  

In essence the metric is a spatial risk multiplier. It penalises BNG provision beyond a defined area in an attempt to encourage on-site delivery of BNG. It is likely that the metric will continue to be adapted to, for example, better quantify the multiplying risk factors that can impact a site’s biodiversity value.

What will a biodiversity gain plan include?

Those developments subject to BNG will need to submit and receive approval from the local planning authority of a biodiversity gain plan prior to commencing development (per Schedule 14 of the Act).

The biodiversity gain plan must include:

• information on the steps taken/to be taken to minimise the adverse effect of the development on the biodiversity of the on-site habitat or any other habitat;
• the pre-development and post-development biodiversity values of the on-site habitat;
• any registered off-site biodiversity gain allocated to the development; and
• any biodiversity credits purchased for the development.

It is envisaged that this information will first be included in a “BNG Statement” submitted with the planning application, before being incorporated into the biodiversity gain plan. Secondary legislation is expected to inform this, though the Government has not yet published any.

When consulting last year on its BNG proposals, the Government produced a draft biodiversity gain plan template (see Annex B of Consultation on Biodiversity Net Gain Regulations and Implementation January 2022). It would be advisable for developers to employ a qualified person to prepare the BNG Statement and the biodiversity gain plan, given these documents rely heavily on the metric (which relies on technical data).

The Secretary of State may publish regulations detailing other information that a biodiversity gain plan must include, however in the interim it is likely to be an evolving process as all parties get to grips with the new regime.

How will long term management work?

The Act introduces “conservation covenants” which are voluntary but legally binding agreements that will run with the land (like s.106 agreements). The intention is that they will be a mechanism to secure long-term maintenance of sites for conservation purposes, for example by ensuring that any off-site habitat that is delivering a BNG for a development site is managed for a certain length of time.

Conservation covenants are to be entered into by a landowner and a “responsible body”. However, local planning authorities are not automatically deemed responsible bodies (see Part 7 of the Act) so it’s likely some may defer to the tried and tested use of s.106 agreements in the first instance. This is even more likely when one considers the high administrative burden the management of these new biodiversity requirements places on local authorities.

The Government has committed to providing funding for local authorities, and obligations in s.106 agreements can be used to recoup monitoring costs. However, authorities face a financial as well as a skills hurdle – they must ensure they not only have the financial resources but also the people with the relevant expertise to apply the metric and monitor long-term compliance. It may be that some authorities outsource their enforcement responsibilities to ease their burden.

Overarching strategies to maximise land value / development potential

BNG presents an opportunity for landholders with biodiverse-rich sites. Developers who cannot provide a sufficient BNG on-site will need to turn to off-site solutions – such as by purchasing biodiversity units from off-site biodiversity schemes (secured via s.106 agreements or conservation covenants). The market analysis accompanying last year’s consultation on BNG estimated that the biodiversity unit market would be worth between £135 million and £274 million. Such biodiversity units are not to be confused with the statutory credits to be sold by the Government.

The Government wants to secure “additionality” (defined in the Treasury’s Green Book as where there is “‘a real increase in social value that would not have occurred in the absence of the intervention being appraised”) and it has confirmed it intends implementing the following five proposals which have been subject to consultation: 

• any measure delivered as part of a development and within a development site boundary may be counted towards BNG provided that the biodiversity metric recognises the uplift in biodiversity value. This includes on-site measures delivered to comply with a statutory obligation or policy (such as green infrastructure, sustainable drainage, or nutrient mitigation);
• mitigation and compensation measures for protected species may be counted towards a BNG calculation but should not make up all of a development’s BNG. At least 10% of the gain should be delivered through separate activities which are not required to mitigate and compensate for protected species impacts. This principle will also apply to mitigation measures proposed to address off-site impacts on protected sites (for example, Suitable Alternative Natural Greenspaces (SANG), habitat creation to reduce nutrient pollution, or a line of trees to prevent light pollution into a protected site);
• adequate mitigation and compensation measures for any on-site and indirect impacts on statutory protected sites must be agreed with the decision maker. Once agreed these measures should be included in biodiversity metric calculations along with any loss of protected habitats caused by the development;
• River Basin Management Plans set statutory objectives for the water environment, including ecological status objectives for waterbodies, as required by the Water Framework Directive Regulations 2017. Actions and measures within River Basin Management Plans can be used to achieve BNG; and
• organisations that are subject to the Natural Environment and Rural Communities Act 2006 duty on public authorities, which is being strengthened through the Act, may generate and sell biodiversity units

It is not currently proposed that development on statutory sites designated for nature conservation be exempt; further guidance on circumstances in which statutory protected sites can be enhanced for BNG is awaited and expected to be kept under review through policy evaluation. The current Natural England position is that BNG cannot be delivered on the designated features of protected sites, however it could be technically possible to deliver biodiversity gains within the “fabric” of a designated site.

The current Natural England position reflects the above proposals, confirming that it is also possible to use sites delivering SANG or great crested newts (GCN) habitat to deliver BNG. However, there must be habitat provision/enhancement beyond the minimum District Level Licensing for GCN to achieve the necessary biodiversity gain.

Off-site landowners may be able to “stack” multiple sets of units/credits for different markets in relation to the same activity on one piece of land and sell them off separately. Biodiversity units can be sold off to the same or different developers. Government guidance confirms that biodiversity units and nutrient credits can be stacked, and that biodiversity units and nutrient credits can be stacked with carbon credits if you further enhance the habitat and the carbon value is not impacted.

However, it will be important, for transparency, to show that the different markets are separately accounted for. Any activity beyond the original legal agreement should also be carefully recorded i.e. via confirmation that the original habitat creation/ enhancements have been completed and a new legal agreement to cover the remaining time on the initial agreement together with another minimum 30 years for the new habitat creation/enhancements.

Therefore, there is an opportunity for landowners if a new habitat can help deliver multiple sets of benefits. However, landowners must properly account for the benefits, and take care to comply with each set of legal obligations.

The Government is likely to advise further on “stacking” in the future, but those landowners keen to get ahead of the market should take care to carefully account and register for the various markets they are involved with.

What does BNG mean for you?

We highlight below the key issues to be thinking about depending on your role: