Net Gain: the regime comes into focus

With publication of the Government’s response to its consultation on regulations and implementation, the shape of the biodiversity net gain regime is becoming clear, writes Roy Pinnock.

The Government’s summary and response to the Biodiversity Net Gain regulations and implementation consultation (which ran from January to March 2022) sets out the shape of the regime to come for mandatory provision and trading of BNG.

Various regulations and guidance will follow but the headline points are:

1. Timing: Mandatory BNG under Schedule 7A TCPA 1990 will begin in November 2023 (but the transition period for small sites has been extended to April 2024). Exemptions will also apply to small Self-Build/Custom Build.
2. Phased schemes: a phased BNG gain plan will be required at submission (with resubmission at each phase commencement). Details will follow in regulations.
3. S73 permissions: mandatory gains will only apply if the parent permission was granted after the November 2023 date.
4. On-Site Gains can be sold on by developers where an excess is (A) registered, (B) genuinely additional to the legal and the wider LPA requirement, (C) identified clearly in the original development’s Biodiversity Gain Plan. Efforts required to mitigate or compensate for protected species impacts do not count.
5. There will not be any Domesday Book of centrally registered on-site gains on the biodiversity gain site register (just Offsite Gain sites, which will also need to register their Habitat Management and Monitoring Plans).
6. Offsite Gains: landowners/managers will be able to create or enhance habitat to sell biodiversity units, if they (A) meet the requirements of the policy (including additionality and register eligibility requirements) and (B) demonstrate no ‘significant adverse’ impacts on priority habitats. The response is clear that:

• • Land banking for offsite units will be encouraged: Habitat created or enhanced after 30 January 2020 will be eligible for registration and sale of the associated biodiversity gains, provided it meets the other criteria of the biodiversity gain site register. Careful record keeping of works carried out will be needed to take advantage of the ‘advanced creation’ function within the metric.
  • Biodiversity units will be subject to VAT when they are sold (and guidance will detail the need for funds to be “held securely so that outcomes are secure in the long-term” and tax treatments).
  • Access to nature near developments for communities will remain a priority (and policy will incentivise a preference for on-site gains over off-site gains). If BNG is about ecosystem services and restoration of biodiversity within functional ecosystems, rather than recreational or amenity use, there may be conflicts in what is proposed. Watch this space.
  • Guidance will be used to define appropriate off-site biodiversity gains for particular forms of development. It remains to be seen whether the market for offsite units will mature until this is clear.
  • Gain sites will only need to be secured for 30 years and it is not clear what happens at the end of this period.  

7. Credits: Natural England will sell statutory biodiversity credits through a digital platform, but will aim to minimise their use, sell them only as a last resort and phase them out once the biodiversity unit market has matured. An indicative (deliberately uncompetitive) credit price will be published by May 2023.
8. Stacking and Bundling: the scope to combine (‘stack’) BNG payments with other payments for environment services from the same parcel of land (e.g. nutrient mitigation) is recognised but will be the subject of guidance.  The response is clear that stacking will only be allowed for BNG and nutrient credits from a given nature-based intervention (not other ecosystem services, such as carbon offsetting).

Nothing is said, yet, on the challenges of stacking (or the alternative of bundling such benefits) but there is tacit recognition in the fact that the guidance will initially run (in effect as a pilot) until only March 2025.

Guidance promised

• When a developer will be able to access the credit scheme to ensure that they remain a last resort.
• How local planning authorities should apply existing BNG policy, in both the NPPF and policies contained in local plans, to set out expected interactions once the mandatory net gain requirement comes into force in November 2023. Expect NPPF changes on local plan requirements above 10%.
• Development within statutory designated sites for nature conservation.
• Phasing of gain.
• Minerals development.
• S.73 permissions – what constitutes a change requiring an updated biodiversity gain plan.
• CPO: reasonable alternatives developers should explore to deliver net gain before they consider compulsory acquisition of land.
• Timescales for delivery of BNG: application of conditions, planning obligations and conservation covenants rather than to be enforced as an inflexible rule itself.
• Issues LPAs and responsible bodies should take into consideration when creating legal agreements to secure biodiversity gains.
• Circumstances in which statutory protected sites can be enhanced for BNG and will keep this position under review through policy evaluation.
• How BNG and nutrient mitigation can be stacked and how they can be combined with other schemes. This first phase of guidance will run until March 2025.
• Approach to ‘Stacking’ (which as above will be limited).
• Template Habitat Management and Maintenance Plans.

Roy Pinnock is a partner in the Planning and Public Law team at Dentons. This article first appeared on the firm's Planning Law Blog.