Biodiversity Net Gain Regulations and Implementation

CLA Senior Land Use Adviser Harry Greenfield examines the risks and opportunities around Defra’s biodiversity net gain policy

There is still much detail that needs to be worked through on the biodiversity net gain policy, despite the potential income opportunities for land management, the CLA has concluded in response to a Defra consultation about it.

Mandatory biodiversity net gain (BNG) was introduced by the Environment Act in November 2021. This marked the start of a two-year implementation phase, with BNG expected to become mandatory for new development in England in November 2023.

The new policy will require, as a condition of planning permission, that any new development

demonstrate a net gain of a minimum of 10% of the biodiversity value of the site, measured

using Defra’s Biodiversity Metric. This will apply to development that requires permission under the Town and Country Planning Act as well as to Nationally Significant Infrastructure Projects.

The Environment Act (2021) sets out the framework for BNG, but details on the policy and its implementation still need to be confirmed. The CLA sits on Defra’s BNG Implementation Advisory Group, which has been discussing details about how the policy will be implemented for some time.

Defra is now consulting on these details, with a view to producing secondary legislation and guidance between now and 2023. You can view the consultation here.

The CLA welcomes the introduction of BNG, which we expect will be an opportunity for our members, but our response highlighted several areas where further clarification or guidance is needed, or where we disagree with Defra’s proposals.

Planning authority capacity

Planning authorities have seen dramatic cuts to their budgets since 2008 with the results easily seen by anyone who comes into contact with the planning system. Decisions on applications from a system creaking at the seams can be painfully slow. The need to implement BNG, and the additional ecological and technical expertise, will be another burden. We are pleased to see that the government is providing some additional funding to assist with BNG delivery but this needs to be substantial enough to make up for historic capacity reductions.

Even if some planning authorities are able to deliver all the requirements of BNG swiftly and effectively, the risk of an unequal playing field with large geographic disparities in the delivery of net gain is high. Central government support, funding and guidance is needed to mitigate this risk and avoid even slower planning decisions and a system incapable of delivering good outcomes for either nature or development.

Additional burdens on small-scale rural development

The government’s agricultural transition plan and the productivity gap between the rural and urban economy (see CLA’s Rural Powerhouse Campaign) both point towards the vital importance of diversification as a strategy for many farming businesses. Small-scale rural development will also contribute towards a socially and economically thriving countryside. Such development already faces high burdens in terms of the cost of planning applications and the overall economic viability. We are concerned that the additional burden of complying with mandatory biodiversity net gain will prevent some necessary development.

We have called on the government to review its BNG proposals to minimise this burden, including by exempting rural exception sites that deliver small numbers of affordable rural housing from BNG requirements.

Compulsory acquisition of land for Nationally Significant Infrastructure Projects

The CLA strongly opposes Defra’s proposals to allow compulsory acquisition of land for biodiversity net gain for Nationally Significant Infrastructure Projects (NSIPs). The government’s overall aim with biodiversity net gain is to set up a market-based approach, with developers entering private contracts with land managers to deliver biodiversity units. This approach should apply to NSIPs too, rather than allowing compulsory purchase to be used.

While it may appear easier to use compulsory acquisition to achieve their obligations, allowing commercial developers to do so at the expense of curtailing private property rights is not a price worth paying.

Protected sites and additionality

The CLA is very concerned that Defra is proposing to apply a strict interpretation of the additionality principle to the use of biodiversity net gain to fund management of protected sites such as Sites of Special Scientific Interest (SSSIs). England’s protected site network is failing to deliver nature recovery and this is in part due to a lack of funding for site management. Government is prepared to invest public money, through agri-enviroment schemes, in SSSI management but in order to achieve the necessary step change to deliver on national targets other funding sources are needed.

We believe biodiversity net gain funding should be used to fund management of protected sites, and to restrict it would be a missed opportunity.

Tax issues for biodiversity net gain

Finally, we know from CLA members that uncertainty about taxation, capital, revenue and VAT is a very real blocker in their ability to cost, plan for and ultimately sign up to biodiversity net gain contracts. The CLA believes that land in dedicated environmental schemes should be deemed as agriculture for the purposes of Agricultural Property Relief from inheritance tax. Similarly, environmental land should be deemed as a trade for the purposes of Business Property Relief and Capital Gains Tax.

You can read the full CLA consultation response here
The CLA Guidance Note on Biodiversity Net Gain is available here

Key contact:

Harry Greenfield
Harry Greenfield Senior Land Use Policy Adviser