This article sets out how the new mandatory Biodiversity Net Gain (BNG) requirements are to function, but also the missed opportunities that remain present in the legislation. Three points will be made: that the 10% BNG minimum is poor, that the scheme allows for the undoing of increased biodiversity and that there is potential for developers to bypass the hierarchy.

What does this mean for biodiversity in Engaldn and Wales?

The BNG rules for planning developments are unprecedented in the jurisdiction of England and Wales. They mark the first time that a consistent legal requirement for developments will come into force regarding the improvement of habitats.

Prior to the BNG rules, s.40 Natural Environment and Rural Communities Act 2006 was amended in 2023. It is acknowledged that this amendment placed additional duties on Local Authorities to enhance biodiversity, rather than simply preserve land. However, inspectors for planning appeals were not holding the s.40 requirements to a high standard. This was particularly so where local development plan policies did not require a minimum percentage of biodiversity enhancement.

In comparison, BNG legislation sets a minimum 10% BNG for developments throughout all local authorities across the country. Additionally, the 10% enhancement is not simply the rejuvenation of the habitats that were lost because of the development, but is in addition to the rejuvenation of these habitats. Notably, local authorities can exceed the 10% BNG if evidence supports this cause. The legislation is therefore a milestone for the regeneration of biodiversity across England and Wales.

Further, these regulations are much-needed. As of September 2023, only 14% of the United Kingdom’s habitats for wildlife were found in a good ecological state. Natural England described the mandatory BNG as ‘key’ in what is a ‘significant step in setting out clear targets and direction in environmental legislation for nature recovery’.

But what will these new requirements mean for developers? And will the scheme be as effective as the government hopes?

What must developers now do before building work can commence?

For sites that require satisfying the BNG legislation, planning permission will be granted on the condition that the developer adheres to a biodiversity gain plan (which is to be created by the developer). The developer must generate a pre-development biodiversity score of the land, and a prospective post-development score. The prospective post-development score must predict a 10% increase in biodiversity, despite building works being erected on the land. 

The plan must be approved by the local planning authority (LPA) before the development can commence. It is not necessary to attach the plan to the application for planning permission itself, the biodiversity gain plan can be submitted afterwards, or even after permission has been granted.

If the developer flaunts compliance with their own gain plan, remedies for breach of planning conditions can be sought by local planning authorities. This is regardless of whether there was an express condition about BNG in the planning permission.

The rules also require developers to maintain the prospective BNG levels of their site for at least 30 years. These obligations are bound to the land itself, which means if the land is sold, the 30-year obligation remains with the land. Actions for breach of the 30-year obligation can also be brought by the LPA.

 What exactly is Biodiversity Net Gain (BNG)?

The BNG law has been several years in the making. Key elements of the scheme are laid out in Schedule 7A of the Town and Country Planning Act 1990 (as inserted by Schedule 14 of the Environment Act 2021). However, the real detail on how the BNG requirements will work is found in the secondary legislation. Government guidance has also been rolled out.

The aim behind the legislation is to achieve a minimum 10% improvement of habitats, ideally on the land in question. Government guidance describes BNG as something that: ‘makes sure [the] development has a measurably positive impact (‘net gain’) on biodiversity, compared to what was there before development.’

Therefore, if the building of a site destroys habitats on the land, the developer must recreate these habitats (or at least habitats of the same quality), and subsequently generate an additional 10% BNG as a minimum.

Measuring BNG: the statutory biodiversity metric

Biodiversity will be measured in standardised biodiversity ‘units’. The value of the units depends on aspects such as location, quality and size. Units can be generated by either creating new habitats or enhancing current habitats.

Biodiversity units will be calculated by the statutory biodiversity metric tool. Developers must use this metric for their biodiversity gain plan to be approved. The metric will convert the biodiversity units into an overall ‘score’. It will provide a pre-development score and a prospective post-development score. It will also calculate the number of units that must be gained to: a) replace the units that will be lost, and b) achieve the additional 10% BNG.

Achieving BNG

Developers can achieve 10% BNG in three ways: on-site BNG, off-site BNG or by purchasing statutory credits. These three options make up the ‘biodiversity gain hierarchy’ (which is set out in Article 30A of the Development Management Procedure Order, and details of which can be found in this guidance).

More value is given to on-site BNG. For the same amount of biodiversity enhancement, greater ‘units’ will be given to those on-site. Additionally, the further away the development site is to the BNG site, the lower it will score on the metric. For example, a BNG site 100 miles away from the development would produce a lower score on the metric than a BNG site 10 miles away from the development. The algorithm that calculates the score depending on distance is called the ‘spatial risk multiplier’. 

As a result, purchasing off-site BNG land will be significantly more expensive than developing BNG on-site. Not only would developers have to purchase the BNG units from other land, but more BNG will need to be purchased to make up for the distance between the development site and the BNG site.

The Hierarchy

It is noteworthy that it is possible to combine the first and second option if required.

1. Onsite BNG: It is preferable for developers to improve the biodiversity of the site itself. Government guidance on how to achieve this is here.

• Responsibilities for monitoring onsite BNG should be set out in a legal agreement.

2. Off-site BNG / ‘habitat banks’: If on-site improvement is not possible, or would not reach 10% BNG by itself, the developer has an ‘off-site’ option. The developer can either use their own land (which is not the development site) to generate new habitats or purchase BNG units on private land. The off-site BNG need not be attached to the site itself. However, the closer the land is to the site, the higher the biodiversity score it will achieve on the metric. Government guidance on how to achieve off-site BNG is here.

• If this route is pursued, the off-site biodiversity gains must be recorded on the ‘Biodiversity Gain Site Register’ as being allocated to the development. They must be recorded before the LPA can approve the biodiversity gain plan.
• It is possible for local authorities to purchase land to transform it into ‘habitat banks’. However, LPAs are not able to prefer their own BNG sites over privately owned BNG sites when developers are purchasing off-site gains.

3. Statutory credits: If the above two options are not possible, the third option is for developers to purchase statutory biodiversity credits from the government. The revenue will be used by the government to invest in habitat creation in England.

• The prices of statutory biodiversity credits are purposefully high as a disincentive and to prevent competition with local off-site BNG schemes.
• It remains unclear how this aspect of the scheme will work in practice.
• Importantly, there is no guarantee that LPAs would agree to this option.

A missed opportunity?

The mandatory BNG legal requirement is a large step forward for regenerating biodiversity. However, a 10% BNG mandatory minimum is meagre. Scientist Cleland E reported that once a minimum level of biodiversity regeneration is achieved, an increase in biodiversity from that point onwards becomes easier. In that vein, a minimum of 10% BNG is a low bar. The scheme had (and still has, if the 10% minimum was increased) vastly greater potential.

It is acknowledged that local authorities can set a mandatory minimum that is above 10% within their constituency, but this must be justified by evidence. A 20% BNG minimum was approved for Guilford Borough Council. The higher rate was recommended by Surrey Nature Partnership, and the policy was tested via assessments. However, whilst devolution is necessary to reflect areas that already have relatively high pre-development biodiversity levels, given the decreased difficulties with achieving BNG above 10% once the initial 10% has been secured, it is hard not to argue that 10% across the country is too low.

Further, it is noted that Ashurst has reported difficulties in satisfying 10% on-site gains in certain sites. They cite riverside developments as an example. However, this conundrum only arises when land already has very high biodiversity levels pre-development. In such scenarios, a minimum BNG that is over 10% would cause difficulties for developers who are seeking to develop land that is already high in biodiversity levels. However, such circumstances are few and far between. Further, developers of such sites are not without options. As such, prioritising potential business ventures for the minority over greater climate change achievements is disappointing.
Additionally, increasing the mandatory minimum would create a longer project for land managers and developers. Achieving BNG requires contractors and expert advice. If the mandatory minimum were higher, the time it would take to achieve it would increase. As a result, contractors and experts would be employed for longer. It is noteworthy that BNG legislation requires BNG levels to be maintained for 30 years after its creation. However, the maintenance of BNG requires a different skillset to the creation of it. For example, the creation of BNG will require manual labour and frequent meetings with specialists. In comparison, the maintenance of BNG would only require occasional check-ins with experts. Accordingly, a longer creation period would generate an increased demand for workforce. This would create more jobs and would therefore boost the economy to a greater degree than what the current BNG scheme offers.

The undoing of BNG

Secondly, the sale of BNG credits within off-site ‘habitat banks’ to developers reduces the good that has been achieved in these habitat banks. It is acknowledged that the Biodiversity Gain Hierarchy means that the further away the off-site BNG is to the development site, the less BNG units it will be worth. However, this means that where a development site is close to the BNG site, the developer need not purchase off-site BNG units that are considerably over what is needed to achieve 10% BNG. In such scenarios, 10% off-site BNG is essentially being swapped for 10% on-site BNG. This creates a loophole in the Hierarchy. It means that BNG habitat banks can be ‘used up’ by local developers. Therefore, the scheme is allowing for the undoing of good that has been achieved.

Insufficient incentive-based hierarchy

Thirdly, it is arguable that the incentive-based hierarchy is insufficient and troublesome. Because the hierarchy is incentive-based, a developer might inform their LPA that they are unable to deliver on-site gains because they have no space left after erecting as many houses as possible on the site. This means that developers would be able to buy their way out of the need to create on-site BNG. The concept of buying your way out of a legal obligation is in and of itself troublesome. In addition, this will not guard against certain areas of the country becoming BNG hubs and other parts becoming increasingly built-up with higher levels of pollution.

In sum, despite room for improvement, the mandatory BNG legal requirement should be celebrated. This is a large accomplishment within the process of regenerating biodiversity in the UK.

Imogen Smalley is currently working as a data protection paralegal for the London Borough of Lambeth Council. She was called to Bar of England and Wales in November 2023.

This is an abridged version of a blog post originally published on The Planned Consumer, Imogen’s blog, which can be read here.

[1] For smaller developments, mandatory BNG comes into force in April 2024, and for Nationally Significant Infrastructure Projects the law will become mandatory in 2025. Some developments are exempt from the BNG regulations.