Biodiversity Net Gain (BNG) becomes mandatory

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.

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, barrister Estelle DeHorn KC of Cornerstone Barristers argues that 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.

As such, the legislation is a milestone for the regeneration of biodiversity across England and Wales and is a much-needed scheme. As of September 2023, only 14% of the United Kingdom’s habitats for wildlife were found in a good ecological state. Additionally, an average of 19% of UK species have declined since 1970. 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?

Who mandatory BNG concerns

Those who need to be familiar with the mandatory BNG are:

• developers of: 

  • major developments,  

  • small sites from April 2024,    

  • nationally significant infrastructure projects from late November 2025;   

• land managers wanting to sell in the BNG market; 

• local planning authorities (LPAs). 

When is BNG a requirement?

Mandatory BNG for planning developments will come into force in early 2024 (since publishing this article, BNG became mandatory on 12 February 2024). For smaller developments, mandatory BNG comes into force in April 2024. Smaller developments are defined as: one to nine residential dwellings inclusive on a site having an area of under one hectare – or where the number of residential dwellings is unknown, an area of less than 0.5 hectares – and non-residential floor space under 1,000 square metres OR anon-residential site area that is under one hectare. 

For Nationally Significant Infrastructure Projects, the laws are set to come into force in 2025.

Notably, some developments are exempt from BNG regulations, which are listed on the government website here.

Where can I find the legislation and guidance?

Mandatory BNG has been several years in the making. The key elements of BNG are laid out in Schedule 7A of the Town and Country Planning Act 1990 (as inserted by Schedule 14 of the Environment Act 2021).

This primary legislation provides the BNG framework. It sets out:

• The 10% BNG mandatory minimum,

• That the prospective BNG is to be secured for at least 30 years, and

• That BNG can be delivered onsite, offsite or through statutory credits.

However, the real detail on how the BNG requirements will work is found in secondary legislation. This was only recently published in November and December 2023. Draft and finalised versions of government guidance were also rolled out over these months. (Guidance on steps for developers can be found here. Guidance for land managers can be found here. Guidance for LPAs can be found here.)

The secondary legislation (some of which is in draft form):

Regarding embedding BNG into the planning application process

• The Biodiversity Gain (Town and Country Planning) (Modifications and Amendments) (England) Regulations 2024

Regarding the Register of biodiversity gain sites

• The Biodiversity Gain Site Register Regulations 2024

• The Biodiversity Gain Site Register (Financial Penalties and Fees) Regulations 2023

Regarding which developments are exempt from BNG requirements

• The Biodiversity Gain Requirements (Exemptions) Regulations 2024

Regarding irreplaceable habitats

• The Biodiversity Gain Requirements (Irreplaceable Habitat) Regulations 2024

Regarding consequential amendments to the Town and Country Planning Act 1990

• The Biodiversity Gain (Town and Country Planning) (Consequential Amendments) Regulations 2023

What does mandatory BNG mean to developers?

BNG will soon be a requisite of planning permission. Permission will be granted on the condition that the developer adheres to a biodiversity gain plan (created by the developer). The gain plan does not need to be attached to the application for planning permission. However the plan must be approved by the LPA before the development can commence.

If the developer flaunts compliance with their own gain plan, remedies for breach of planning conditions can be sought by LPAs. 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 is Biodiversity Net Gain (BNG)?

The National Planning Policy Framework (NPPF) describes BNG as ‘an approach to development that leaves the natural environment in a measurably better state than it was beforehand’.

Additionally, 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, the aim behind the legislation is to achieve a 10% improvement of habitats on the land in question. To achieve this, the developer must generate both 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. These prospective biodiversity levels must then be maintained for 30 years.

How will biodiversity be measured for these purposes?

For the purposes of BNG, biodiversity will be measured in standardised biodiversity 'units'. These biodiversity units are found in habitats, and their score depends on features of the habitat such as location, quality and size.

Units are divided into 3 kinds: area units, hedgerow units and watercourse units. They can be generated by either creating new habitats or enhancing current habitats. Said units can also be destroyed by development, which means they will need to be replaced once the development is complete.

Biodiversity units will be calculated by the statutory biodiversity metric tool. Developers must use this metric to have their plan 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.

Government guidance on the biodiversity metric can be found here.

What is the ‘relevant date’ for measuring biodiversity levels pre-development?

Schedule 14 of the Environment Act 2021 sets out that biodiversity levels pre-development must be measured on the ‘relevant date’. Barrister Josef Cannon of Cornerstone Barristers believes that in the majority of cases this will be the date of the application for planning permission.

Achieving BNG

Developers must deliver a minimum of 10% biodiversity net gain (biodiversity improvement). Developers can achieve this in three hierarchical ways: onsite improvement, offsite improvement, or by purchasing statutory credits. Onsite improvement is preferred and is at the top of the hierarchy. This preference is reflected in the scheme in two ways: a) the cost of achieving offsite 10% BNG and b) the score that the improved land is given. It is also worthy of note that it is possible to combine the first and second options if required.

Explaining the Hierarchy

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

As a result, purchasing offsite BNG units will be significantly more expensive than developing BNG onsite. This is because, not only would developers have to purchase the BNG units from other land, but more BNG units will need to be purchased to make up for the distance between the development site and the BNG site.

The Hierarchy

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.

• Who is responsible for monitoring onsite BNG must be set out in a legal agreement. Government guidance on this agreement can be found here. Solicitors Horne & Mubsahir of Penningtons Manches Cooper LLP advise developers to consider whether a third party should manage the 30-year maintenance obligation. However, they highlight that the developer would still be liable for a breach of this obligation if a third party is appointed.

2.     Offsite BNG / ‘habitat banks’: If onsite improvement is not possible, or would not reach 10% BNG by itself, the developer has an ‘offsite’ option. The developer can either use their own land (which is not on site) to generate new habitats or purchase BNG units on private land. The offsite 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 offsite BNG is here.

• If this route is pursued, the offsite biodiversity gains must be recorded on the ‘Biodiversity Gain Site Register’ as being allocated to the development. It must be recorded before the LPA can approve the developer's biodiversity gain plan and the development can commence. The Register is a public register which is intended to act as a method of keeping managers of offsite BNG accountable.

• 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 offsite 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 offsite BNG schemes.

• It is still unclear how this scheme would work in practice.

• Importantly, there is no guarantee that LPAs would agree to this option.

Proposing a BNG plan to your LPA: the biodiversity gain plan

After the granting of permission, developers must set out in a ‘biodiversity gain plan’ how they will achieve a biodiversity net gain, and how they will maintain this over a 30-year period. Permission will be granted on the condition that a satisfactory biodiversity gain plan is produced.  However, the gain plan is not required to be submitted with the planning permission application. Importantly, works on the site cannot commence until the plan is approved by the LPA. Horne and Mubashir therefore recommend that the gain plan is included in the planning application to avoid issues down the line.

The biodiversity gain plan contents

Whether permission has been granted is irrelevant if the developer’s biodiversity gain plan is not approved. If it is rejected the site development cannot commence. Developers would have to decipher if offsite options are even possible and if the LPA would accept them.

The government guidance sets out a template for the gain plan which can be found here.

Notably, the gain plan must do the following:

• explain how the plan has adhered to 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);

• explain the developer’s intended way of achieving BNG, setting out pre-development and post-development plans;

• provide their completed metric tool calculations;

• contain a habitat management and monitoring plan, which should explain how BNG will be monitored and maintained for at least 30 years;

• set out a compensation plan if the development impacts ‘irreplaceable habitats’;

• if buying off-site units, provide the biodiversity net gain register reference numbers;

• if purchasing statutory biodiversity credits, the proof of purchase.

Irreplaceable land

Some habitats are considered irreplaceable, owing to them being so unique and valuable that their recreation would not be possible or easily achieved. If these habitats are interfered with, specific compensation to the LPA would be owed. However, these irreplaceable habitats can still be used for offsite gains.

For those interested in deciphering what land might be considered irreplaceable, the government has produced a preliminary list. Updates to the list are anticipated in the second half of 2024.

Missed opportunities with mandatory BNG rules?

The mandatory BNG legal requirement is a large step forward for regenerating biodiversity. However, there has been a missed opportunity for greater biodiversity by the mandatory minimum being set at 10%. 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.

However, local authorities do have the capacity to set a mandatory minimum that is above 10% within their constituency. DeHorn KC of Cornerstone noted in September 2023 that 14 local authorities were looking to do so. However, the viability of a higher minimum percentage must be justified by evidence. A 20% BNG minimum was approved for Guilford Borough Council. This will commence when mandatory BNG comes into force. The higher rate was recommended by Surrey Nature Partnership, and the policy was tested via assessments.

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.

It is acknowledged that Hampton, Dutch, Goode and Reeves of Ashurst report that in certain development sites, 10% onsite gains is proving difficult to achieve. They cite riverside developments as an example. However, this conundrum only arises where certain 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 acknowledged 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. A higher mandatory minimum 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 offsite ‘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 offsite 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 offsite BNG units that are considerably over what is needed to achieve 10% BNG. In such scenarios, 10% offsite BNG is essentially being swapped for 10% onsite 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 both insufficient and troublesome. As Cannon highlighted, because the hierarchy is incentive-based, a developer might inform their LPA that they are unable to deliver onsite gains because they have no space left after erecting as many houses as possible on the site.

Therefore, as it stands, developers would be able to buy their way out of the need to create onsite BNG. The concept of buying your way out of a moral responsibility 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.

What opportunities can mandatory BNG create?

First and foremost, the idea of habitat banks essentially introduces a new product to the market. This will not only boost the economy but could assist in the levelling up of the North-South divide. This is because we may find that land outside of the South East of England may finally increase in value. However, as solicitor Turner of Aaron & Partners points out, opportunities for land owners will not be without effort and expense. Engagement with ecologists will be required, alongside agreeing on a management and monitoring plan with the local authority, registering the land and pricing the units.

Secondly, DEFRA guidance sets out that BNG sites will be able to stack environment benefits, (although carbon credits are excluded. This means that one piece of land can be used to satisfy multiple schemes, such as BNG, nutrient neutrality and environmental land management schemes. Again, this could result in greater financial value for certain pieces of land across the country.

Thirdly, new job opportunities will emerge as local authorities and land managers begin to seek guidance and advice from experts on how to measure and maintain BNG.

In sum, despite room for improvement, the mandatory BNG legislation is a massive step forward for both biodiversity and, hopefully, the UK economy.