How green can be my development?
John Pugh-Smith looks at the steps needed to address the delivery of biodiversity net gain against the backdrop of the Government’s call for a surge in housebuilding.
The 1941 film, How Green Was My Valley, based on the novel with the same title, tells the story of a mining family facing upheaval with the arrival of the 20th century. Perhaps, cheekily, I now ask a similar rhetorical question with the arrival of a New Year and the overhaul of the planning system under a Labour Government seeking many more built houses and biodiversity net gain (BNG): how green can be my development?
Background context[1]
It will be recalled that it was the Environment Act 2021 which formally set out the BNG requirement for non NSIP developments and inserted the statutory framework now found in by Schedule 7A of the Town and Country Planning Act 1990. Then, in November 2021 DEFRA publicly committed to launch statutory BNG within two years; though it took until February 2024 (for major developments) and April 2024 (for small developments) for this statutory BNG to come into force. During the intervening period, DEFRA had published its Environment Improvement Plan (January 2023) to halt the decline in biodiversity and achieve thriving plants and wildlife and had highlighted that implementing statutory BNG would be one of the ways the Government would “make further progress” against achieving this “apex goal”.
With the implementation of statutory BNG on 12 February 2024, England became the first country in the world to make BNG a legal requirement. DEFRA announced that all major housing developments in England would be required to deliver at least a 10 per cent benefit for nature. However, by May 2024 the National Audit Office (NAO), in its report ‘Implementing statutory biodiversity net gain’, had already concluded that DEFRA had launched BNG without sufficient infrastructure in place to ensure long-term success. The report remarks:
“Although it considered that the arrangements it had in place at launch were sufficient, it has a long way to go before it can be confident that damage to biodiversity through development will not be understated and that the benefits of biodiversity enhancements will actually be delivered. For its market-led approach to work, Defra needs the market to scale up to meet demand, and for statutory biodiversity credits to deliver biodiversity when the market fails to do so.
Local authorities manage many aspects of statutory BNG through the planning process, including ensuring compliance and enforcement. For now, there is doubt about whether local authorities will be able to discharge these duties effectively. In addition, it is not clear whether Defra will have sufficiently granular monitoring data to assess policy performance. Without these, Defra will not have assurance that its statutory BNG policy is delivering biodiversity outcomes and value for money for taxpayers. “
On facilitating local delivery, the NAO recommended that DEFRA should:
- ensure local authorities have sufficient and timely funding certainty to allow longer-term planning;
- use monitoring information on the biodiversity units market to identify any differential regional impacts of the policy, such as local authorities less engaged with the policy, and target support to them; and
- be proactive in co-ordinating opportunities for best practice to be shared and adopted quickly, particularly among local authorities
However, there was no reflection of the NAO’s findings in the wording of the subsequent update of the related DEFRA Guidance, Biodiversity net gain: what local planning authorities should do” (published November, 28, 2024). Indeed, there was only a minor change to the wording of the section ‘Working with developers who wish to buy statutory biodiversity credits’; and while the updater for its (hyperlinked) related guidance ‘Enter a legal agreement for biodiversity net gain’ (October 4, 2024) advised that there was now an added clarification, that “enhancement works” can include stopping normal maintenance works as well as, or instead of, positive actions to enhance habitat, that was hardly a radical shift of the type envisaged by the NAO either.
The replacement NPPF
So, given the “serious plan” pledges of the Labour Party’s Manifesto (June 2024) to build 300,000 homes a year, and to deliver for nature and meet Environment Act targets one would have expected some reference in their replacement National Planning Policy Framework (NPPF), finally published on December 12, 2024. However, after carrying out both a quick word search of “biodiversity” as well as a comparison exercise between the previous NPPF (December 2023) and its successor I still could not find any specific references.
The Working Paper
Nonetheless, could any hints about how the future administration of BNG would then be achieved in the subsequent joint MHCLG and DEFRA publication, officially published on December 15, 2024, with the snappy title: ‘Planning Reform Working Paper: Development and Nature Recovery’. The short answer was “no”. Unusually, the publication date happened not only to be a Sunday but also the same date as a joint article appeared, exclusively, in the Sunday Times, under the names of the relevant ministers, Steve Reed and Angela Rayner, with the headline: “The Tories pitted housing against nature. Labour will help both” They wrote: “Our bill will require developers to pay into a nature restoration fund that will pay for large-scale environmental improvements to nature, water and air quality. This approach will restore nature, habitats and species across entire communities”. Noble objectives, and, with regional concerns such as nitrate neutrality, a sensible approach, but, what about mandatory BNG? Here, paragraph 27 of the Working Paper read as follows:
“These proposals are not expected to have any substantive impact on the implementation of mandatory Biodiversity Net Gain (BNG), which is a widely applicable planning obligation in England. BNG incentivises nature positive choices on development sites, with a developing private marketplace for off-site biodiversity units which the government continues to fully support. This means that where a developer engages with the Nature Restoration Fund to address a specific environmental impact, the biodiversity gain requirement will continue to apply. This ensures developments are incentivised to reduce their biodiversity impact on site and secure future residents’ and / or local people’s access to nature. As we continue to develop this model, we will seek to identify opportunities to support the ongoing roll out and implementation of BNG.”
So, I began speculating: has BNG consciously excluded from the Working Paper because its implications are too complicated or too much of a visible constraint to the outworkings of the current Starmer/Rayner narrative? Is it also significant that a “working paper”, unlike a “white paper”, is not the subject of formal consultation?
Current practical considerations
Accordingly, probably for the foreseeable future, I anticipate that the outworking of BNG will follow current practices, though hopefully there could be improvements as the development industry and the other stakeholders become more familiar with the mechanics of achievement, perhaps even better resourced over time.
By way of example, while the desire is that BNG is provided onsite, the absence of sufficient onsite opportunities, offsite provision will continue to be required; for in many cases, BNG requires a combination of onsite and offsite habitat creation and enhancement to meet the objectives set out in the 2021 Act and must be managed and monitored for a minimum of 30 years. Indeed, where there is an over-demand by LPAs for on-site provision situations can lead, particularly with small developers, to the necessary use of habitat banks; though incentivising off-site solutions arguably contradicts the biodiversity gain hierarchy that requires BNG to be delivered onsite as a priority. Nonetheless, as with the SANG land acquisition solution from the early 2000s, the establishment and use of more registered habitat banks could release more housing development and, thereby, the thrust of the Working Paper could be facilitated.
Nonetheless, there remain the logistical difficulties of LPAs: (a) having insufficient resources, (not just officers but also ecological and legal advisers) to monitor/take enforcement action for BNG (secured via a Section 106 agreement and a planning condition) for over 30 years, and (b) the administrative willingness to do so. Indeed, with Labour’s further devolution proposals (English Devolution White Paper published December 16, 2024) that reluctance to take on this long-term responsibility could become that much greater, certainly in the short to medium term.
While, as a last resort alternative, statutory biodiversity credits are available if on-site and off-site options are not possible, these statutory credits are available to buy only once planning permission has been granted and other options have been exhausted. They are also intentionally expensive.
Finally, it needs to be remembered that where BNG requirements are secured by a Section 106 agreement rather than a condition the hard-edge provisions of Section 106A will apply i.e. that there is no ability to modify for the first five years save with the express agreement of the local planning authority or such consent is Wednesbury unreasonably withheld. Even then, established case law confirms that modification or discharge can only occur if the obligation no longer serves a useful purpose, which seems inapplicable here with a 30-year time horizon.
Some concluding thoughts
Accordingly, it is the view of this author that delays in the actual commencement of development will still lead to the type of housing supply stalemate in 2025/26 that the NPPF and the Working Paper optimistically are seeking to overcome unless further steps are taken to swiftly address the actual delivery of BNG as part of new housing developments.
As well as the foregoing suggestions, perhaps, incentivisation for LPAs to “sign and deliver” Section 106s could be through a BNG performance equivalent of the housing delivery grant; though that cost would inevitably fall back on the private sector to underwrite. Equally, Central Government could require an equivalent of an annual housing monitoring report and penalize under-performing LPAs from meeting their set BNG targets.
Another practical way could be for the circles of negotiation might be squared would be through the greater deployment of dispute resolution procedures. Variously, this could be via neutrally chaired meetings, neutral evaluation, mediation and expert determination alone or in combination. These steps could be enshrined within protocols, practice guidance, heads of terms, section 106 and/or management agreements and conservation covenants.
However, experience has shown that they will require not only Government endorsement and active support (particularly by MHCLG/DEFRA officers in dialogue with their LPA/NE counterparts) but also a firmer approach being taken by the Planning Inspectorate, the Judiciary, and, neutral determiners against unreasonable behaviour or unmeritorious litigation by rejecting such applications and making costs awards, where applicable and appropriate.
Only in these ways can, I suggest, the ability to deliver BNG be truly progressed and built developments can be made truly greener.
John Pugh-Smith is a barrister at 39 Essex Chambers and associate member at East Anglian Chambers. He is a recognised specialist in the field of planning law with related disciplines acting for both the private and public sectors. He is also an experienced mediator, arbitrator and dispute ‘neutral’. He is on the panel of the RICS President’s appointments for non-rent review references, a committee member of the Bar Council’s Alternative Dispute Resolution Panel and an advisor to the All Party Parliamentary Group on ADR. He has been and remains extensively involved in various initiatives to use ADR to resolve a range of public sector issues, especially for the development industry and regulatory bodies.
[1] A fuller footnoted version of this article, including a helpful summary of recent BNG developments, will be found on the 39 Essex Chambers website via this link: https://www.39essex.com/information-hub to the latest Planning, Environment and Property Newsletter for 2025
