As anticipated in our previous briefing, the Government has added to the BNG guidance on DEFRA’s website.  There is no discernible pattern to what has been uploaded, with the additional guidance covering different aspects of the new regime for different stake-holders and seemingly being published on a piecemeal basis as and when it is ready.

At the time of writing the latest guidance comprises the following:

Sell biodiversity units as a land manager (published May 2023)

Aimed at landowners looking to provide land as offsite BNG for third party development, this guidance advises land managers to take the following steps in order to sell biodiversity units:

1. Find out what habitat the local area needs;
2. Calculate how many biodiversity units are/will be onsite using the biodiversity metric;
3. Secure land by a legal agreement – a minimum 30 year commitment is required via either a section 106 agreement or a conservation covenant (as to the latter please see this briefing);
4. Price the units and how they will be paid (which can be lump sum, staged payments or by results);
5. Register land as a BNG site from November 2023.

What you can count towards a development’s BNG (published May 2023)

This short piece of guidance usefully confirms that habitat within a development can count towards BNG even if it is required to comply with another statutory obligation/policy (e.g. environmental impact assessment), to provide river basin management plan mitigation/enhancement, or to provide mitigation/compensation for protected species/sites (e.g. nutrient mitigation). 

Conversely, the guidance confirms that habitat creation/enhancements do not count where they are already required as part of restocking conditions relating to a tree felling licence or a restocking notice, marine licensing, or remediation under environmental damage regulations.

Conservation covenants: criteria for being a responsible body (published July 2023)

DEFRA has now published the criteria that it will use to decide whether an organisation can become (and remains as) a responsible body for the purposes of being able to enter into conservation covenants with landowners.  These are:

• eligibility
• financial security
• operational capacity and capability
• ongoing suitability

At the same time as publishing this guidance, DEFRA has invited applications from organisations to be designated responsible bodies.  The application process involves the completion of an application form with supporting information, with DEFRA aiming to determine applications within 12 weeks of receipt of a correctly completed form.  If successful, the organisation’s contact details and main areas of expertise will be added to the list of designated responsible bodies and, going forward, it will be able to enter into conservation covenants with landowners.

Statutory biodiversity credit prices (published August 2023)

This is another short piece of guidance providing indicative prices for statutory biodiversity credits, the last resort option for developers unable to provide onsite or offsite BNG.  It sets out indicative prices per credit (which include all costs apart from VAT) for different habitat types.  The guidance indicates that confirmed prices will be published when biodiversity net gain becomes mandatory.
 
By all accounts the indicative credit prices are high, which the guidance itself acknowledges: “Statutory biodiversity credit prices are not guideline prices for biodiversity units sold in the off-site private market. Credit prices are set high to ensure they do not compete with the development of the private market”.  

The underlying logic appears to be that statutory biodiversity credit prices should be expensive in order to ensure that they remain the last resort option for developers in accordance with the Government’s stated intentions.  The danger, of course, is that these high prices inadvertently pull prices in the biodiversity units market upwards, notwithstanding the Government's advice that the credit prices should not be guideline prices for biodiversity units.  Additionally, there is an underlying assumption here that there will be a fully functioning biodiversity units market that developers can access from day one.  This may not necessarily be the case in all parts of England, meaning that some developers may have no choice but to purchase statutory biodiversity credits in order to satisfy the mandatory BNG requirement, which in turn may have adverse viability implications for their schemes.

Combining environmental payments: BNG and nutrient mitigation (published August 2023)

Aimed at land managers, this guidance explains how biodiversity units and nutrient credits can be combined and sold alongside other environmental payments.

In summary the guidance confirms that landowners can sell biodiversity units and nutrient credits from the same piece of land by stacking them and that units and credits can be sold to the same developer or different developers, provided that the eligibility criteria for each market is met.

As well as publishing the above guidance, DEFRA announced in July that over £9 million of additional funding is to be made available "to help local authorities recruit additional ecologists and specialists" ahead of mandatory BNG coming into force.  This adds to the £6 million fund announced in February.

At the same time DEFRA has provided advice via its Land Use Blog on 10 actions that local authorities can take to prepare ahead of November.  Given that details of the new regime are still emerging and the suggested actions are of a fairly generic nature (e.g. number 2 is "Get to know the Biodiversity metric and guidance", number 7 is "Make sure the whole organisation knows about BNG" and number 8 is "Find relevant local expertise"), the usefulness of this advice may be limited in practice.

Whilst all of the above represents some progress towards the implementation of BNG, it is evident from the Government’s Consultation Response in February that there is still much more for the Government to do ahead of mandatory BNG coming into effect.

As well as outstanding guidance on various aspects of the new regime, it is notable that no secondary legislation has yet been advanced, even though the February consultation response identified a number of areas where regulations will clearly be required, such as to define development that is to be exempt from BNG.    However, DEFRA has recently confirmed via its Land Use blog that statutory instruments are being drafted to cover the following matters:

• BNG Exemptions;
• Irreplaceable habitat to be subject to bespoke compensation;
• The BNG register;
• The planning process; and
• commencement regulations.

Clearly all of this is critical to the implementation of BNG and the relevant regulations must be put in place beforehand.  DEFRA's indication that "further information" will be provided on these matters "ahead of BNG becoming mandatory" is therefore something of an understatement.

Overall, much less has happened in the last 6 months on the road to mandatory BNG than one might have expected – certainly less than we anticipated given the extensive list of actions set out in the Government’s Consultation Response.  However, the prediction in our last blog that we can expect the “BNG guidance currently on DEFRA's website to be rapidly added to in the coming months, as well as a number of further consultations to be undertaken at pace” applies even more so now, particularly as the Government appears set on introducing the new regime for major town and country planning applications in November.

Of course, even if the Government does get everything in place by November, there is a real danger that the stakeholders who will be living the BNG regime in practice will have too little time to get to grips with whatever guidance and regulations are brought forward.  In that regard, one could question the wisdom of leading BNG's introduction with major town and country developments.  Are these really the best planning applications for "developers, landowners and local planning authorities… to familiarise themselves with the requirements and learn lessons from early practitioners" as per the explanation in DEFRA's recent Land Use blog?    

Certainly current time-scales leave little room for error in the implementation of BNG and there is the potential for teething issues, particularly around the biodiversity units market and statutory credits system, which are both key components of the new regime (being the fall-back options where the BNG requirement cannot be met onsite).  It may be that the regulations that are coming forward will include appropriate transitional arrangements to allow for such issues.  However, with BNG's introduction in respect to small sites already pushed back to April 2024, there is already a natural fall-back date if the Government did wish to delay, or further phase, BNG's introduction beyond November.  Having said that, if the regulations implementing BNG reflect DEFRA's indication that mandatory BNG will only apply to new applications for planning permission made after November 2023 and will not apply to section 73 applications relating to permission granted or submitted before this date, this may take some of the "edge" of BNG's initial introduction.  Conceivably there could also be a rush of new planning applications ahead of the November implementation date by developers wishing to avoid the mandatory regime (although of course they would still be caught by any local policy requirements).

Should the first phase of mandatory BNG be introduced in England in November as planned – and all current indications from the Government are that it will be, notwithstanding the Government's own lengthy 'to do' list - the conclusion of our last blog seems even more pertinent now: "the onus will be on all stakeholders to make the mandatory BNG regime work when it takes effect later this year.  In this regard, ecological and legal advice will be more important than ever for applicants to navigate their way through the new regulatory framework".