Biodiversity Net Gain and Compulsory Purchase

Michael Dempsey considers government CPO guidance in the context of the mandatory Biodiversity Net Gain (BNG) regime, and the practical implications for schemes contemplating the compulsory acquisition of land for onsite BNG.

Despite the implementation earlier this year of mandatory BNG for most town and country planning applications in England, an area of continuing uncertainty has been whether compulsory purchase powers are available for BNG delivery.  The Government has now provided some clarity on the issue with the publication of its new CPO Guidance in October. 

Introduction

Our last blog on Biodiversity Net Gain (BNG) considered the implementation of mandatory BNG – the requirement for new development to deliver at least a 10% net gain on a development's site's pre-development biodiversity value - for major town and country planning applications in England. On 2 April 2024, small development applications in England became subject to the new regime in what was effectively Phase 2 of its implementation.  

Whilst mandatory BNG has yet to be implemented for certain other forms of consent under the Town and Country Planning Act 1990 (e.g. local development orders) and, more generally, for Nationally Significant Infrastructure Projects (NSIPs) authorised by Development Consent Order (DCO) under the Planning Act 2008, most new planning applications in England have now been subject to the statutory BNG regime for more than 6 months. The ambitious nature of the new regime means that it has inevitably required time to bed down.

Based on Natural England's own blog reviewing the first 6 months of mandatory BNG, it is clear (and unsurprising) that this bedding-down process is ongoing. For example, Natural England report that, as at the end of August 2024, a total of only 11 sites have been registered as biodiversity gain sites. (The statutory biodiversity gain sites register administered by Natural England records where offsite BNG sites are and so is a measure of how the fledging biodiversity units market is developing; this is critical for sites where onsite BNG provision is not possible in order for the new regime to function as envisaged, i.e. without undue reliance on statutory credits). Whilst Natural England make the point that planning applications are being submitted at a slower rate in 2024 than in previous years, it is fair to say that the mandatory BNG is off to a slow start and that there continue to be a number of uncertainties around certain aspects of the new regime.

The uncertainty relating to compulsory purchase powers

One particular uncertainty has been the availability of compulsory purchase powers for the delivery of mandatory BNG. This is because the statutory BNG regime allows for the 10% biodiversity gain objective to be met in a number of ways set out in a hierarchy – specifically by either providing one or a combination of onsite BNG, offsite BNG or statutory credits.

This inherent flexibility means that statutory BNG does not necessarily need to be provided onsite, leading to doubts as to whether or not land can actually be compulsorily acquired for this purpose. After all, how can the relevant tests for a compulsory purchase order (CPO) ever be met in order to authorise the compulsory acquisition of land for BNG delivery if the BNG regime itself provides for an alternative means to deliver any requisite BNG (i.e. via biodiversity units or credits)?

The new CPO Guidance

Whilst the plethora of BNG specific guidance that accompanied the implementation of mandatory BNG is silent on the subject of CPOs, the Government's latest CPO Guidance [1] now contains explicit advice on using CPO powers for BNG.

A new section 13 has been inserted into the CPO Guidance covering the use of CPOs for the purpose of facilitating BNG. It confirms the Government's view that CPO powers are available in principle for the delivery of BNG. In this regard, the guidance essentially points back to the general principles for making a CPO, particularly the need for a compelling case in the public interest and the use of compulsory purchase powers as a last resort.  

In other words, the case for compulsorily acquiring land for BNG purposes needs to be justified in exactly the same way as any other land being included in the CPO.

What this means for schemes contemplating the compulsory acquisition of land for onsite BNG

The Government's advice in the CPO Guidance that compulsory purchase powers are available in principle for the delivery of BNG is, of course, welcome. It is also unsurprising in view of the Government's 2023 response to its 2022 consultation on the implementation of mandatory BNG (the subject of our blog here), which gave an early indication that the Government envisaged compulsory purchase powers being available to deliver BNG.

Given that the Government's advice in section 13 of the CPO Guidance simply points back to the general tests for making a CPO, this still leaves the question of how these tests can be met for BNG delivery given that the statutory framework allows for alternatives other than onsite BNG. In other words, the advice in section 13 does not directly answer the concern outlined above, which of course is what gives rise to the doubts around the use of CPO powers for BNG delivery.

However, the answer here perhaps lies within the mandatory BNG regime itself and a potential clue to the Government's overall thought process on the issue is provided in its 2023 consultation response.  Here the Government rejected the possibility of new legislative provisions for compulsory acquisition (which could have put the question around the availability of such powers for BNG land beyond doubt) but indicated that it would "consider providing guidance or reference in biodiversity gain statements that outlines the reasonable alternatives developers should explore to deliver net gain before they consider the compulsory acquisition of land".

Whilst this specific guidance has yet to materialise, framing this as a question around reasonable alternatives points to the need to consider BNG delivery as part of the scheme alternatives underpinning the CPO. A key aspect in this regard is the Biodiversity Gain Hierarchy embedded into the mandatory BNG regime. Under the Biodiversity Gain Hierarchy there is a preference for onsite BNG, with the purchase of statutory credits as a last resort.

Accordingly, whilst the BNG regime itself provides for alternative ways to deliver any requisite BNG, the Biodiversity Gain Hierarchy means that these alternatives are not equal to each other, with the use of statutory credits in particular discouraged both in policy terms and by their prohibitively expensive pricing. In the absence of landowner agreement, if the only way to achieve a preferred outcome under the Biodiversity Gain Hierarchy is via a CPO then it follows that this is the justification for the inclusion of land in the CPO for BNG delivery. The compelling case in the public interest for the acquisition of the relevant land would ultimately be tied into that for the wider CPO scheme triggering the BNG requirement, whilst the need to take reasonable steps to engage with the affected landowners prior to making any CPO (so that the CPO can be considered as a measure of last resort) would be exactly the same as for any other land required for the scheme.

Concluding thoughts on the practical implications

In our view, from a practical perspective this firmly puts the onus on the work on scheme alternatives underpinning the CPO scheme to explicitly cover BNG delivery, i.e. to work through the different options to meet the mandatory BNG requirement (onsite, offsite and statutory credits) and to explain/justify the BNG land incorporated within the scheme (and in turn the CPO).  Any subsequent objection to the CPO by an affected landowner on the basis that there are alternatives built into the statutory BNG regime that means that their land should not be compulsorily acquired should then become akin to any other objection based on scheme design and option selection.

At this early stage in the life of the mandatory BNG regime, the use of CPO powers in this way of course has yet to be tested. However, at least one recent DCO decision has shown the Government's willingness to authorise the inclusion of compulsory acquisition powers in a DCO for the provision of non-statutory BNG land (the mandatory BNG regime having yet to be implemented for NSIPs as noted above). Whilst we will ultimately have to wait and see what happens in practice as schemes subject to statutory BNG advance through the planning and CPO processes, for the time being the Government's latest CPO Guidance has at least confirmed the principle of using CPO powers for BNG delivery.

Michael Dempsey is a Legal Director at Addleshaw Goddard.

[1] Guidance on the Compulsory Purchase Process published by Ministry of Housing, Communities & Local Government, October 2024