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Watchdog spots flaws in biodiversity net gain enforcement

17 May A government requirement for developers to deliver biodiversity net gain on their build projects in England is open to abuse and not being run well, according to the National Audit Office.

The National Audit Office (NAO) has warned the Department for Environment, Food & Rural Affairs (Defra) that it needs to get a handle on the new biodiversity net gain rules.

Statutory biodiversity net gain (BNG) was legislated for as part of Defra’s 2021 Environment Act. The new rules – which apply only to England – require development to have a measurably positive impact on biodiversity compared to what was there before.Developers must improve the habitats they harm by a net 10%, ideally on-site. When on-site gains are not enough to meet the 10% requirement, off-site gains can be created by the developer elsewhere or purchased through a new private market for biodiversity units – otherwise known as offsetting.

BNG is being implemented in three stages, with major developments in scope from February 2024; small developments from April 2024; and nationally significant developments from November 2025.

The government provided either £26,807 or £43,467 to each local authority (depending on how many planning applications they get) to help them prepare in each of the two years proceeding launch. Local authorities had discretion to spend the money: be it on systems or staffing. However, Defra acknowledged mixed readiness among local authorities at launch.

There are risks to local authorities carrying out effective compliance and enforcement for statutory BNG, the NAO says. Local authorities have discretion in how they enforce planning regulations.

Defra did not give local authorities any additional money specifically to monitor or enforce on-site gains. However, it expects local authorities to generate income from BNG legal agreements, which can fund monitoring and enforcement work.  

Defra is still developing its governance arrangements for BNG and intends to make Natural England responsible for important elements of the policy. But in developing these new arrangements, Defra does not intend to provide central monitoring of how well on-and off-site biodiversity gains are being enforced by local authorities.

The NAO report,  Implementing statutory biodiversity net gain, says that Natural England and Defra also lack all the relevant information they need to effectively evaluate the regime and determine whether it is a success.

Defra is relying on a private sector market for biodiversity units emerging but does not know how rapidly it can scale up or satisfy demand. Where private markets fail to provide enough off-site credits, Defra has promised to step in as a provider of last resort, with the money raised ring-fenced for government mandated improvements to UK biodiversity. But Defra does not yet have a legally compliant mechanism to spend income from statutory credit sales to enhance biodiversity.

The NAO recommends that government establishes a mechanism for spending income from the sales of statutory biodiversity credits. It also says that local authorities should have funding certainty to allow for longer-term planning regarding their role in agreeing and enforcing the scheme in their area.

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Gareth Davies, head of the NAO said: “The statutory biodiversity net gain scheme is the first national scheme of its kind to build requirements for enhancing biodiversity into planning approval. However, it was launched with risks to the long-term effectiveness of the policy.

“These include uncertainty about whether the fledgling market for biodiversity units scales up to satisfy developers’ demand, risks to enforcement and gaps in its information.

“Defra must address these issues, including by plugging gaps in its information so that it can effectively evaluate the scheme’s success.”

Told you so, says FMB

The Federation of Master Builders (FMB) said that the NAO’s criticisms endorsed the fears expressed by small builders ahead of the policy’s introduction.

FMB chief executive Brian Berry said: “The NAO’s criticism of the Department for Environment, Food & Rural Affairs (DEFRA), for having failed to put all necessary elements in place ahead of launch of the BNG scheme echoes the concerns that were raised by small house-builders at the time. SME housebuilders were broadly supportive of the aims of a BNG scheme but they have been warning for some time that excessive regulation and additional costs to firms preparing for the changes, coupled with local authorities being significantly underprepared, will make it near impossible for smaller firms to manage. The NAO report has confirmed their fears. We will now need to see a substantial re-think from Defra, including increased funding for local authorities, if the government wants to see a long-term environmental benefit.”

Brian Berry concluded: “Defra’s acknowledgment that there had been mixed readiness among local authorities at the launch is a positive first step. Local authorities have been tasked with enforcing planning regulations at their own discretion, and Defra has said that it does not intend to provide central monitoring. The lack of involvement Defra has in the biodiversity credit market is also extremely worrying, especially as smaller builders are more likely to need to offset biodiversity offsite. Unless these issues are addressed, BNG will create substantial barriers to small house-builders.”

And so does the CIOB

The Chartered Institute of Building was similarly unsurprised. Its head of environmental sustainability, Amanda Williams, said: “The NAO Report sadly comes as no great surprise as the concerns in it were raised by stakeholders, including us at CIOB, prior to the implementation of the policy. We continue to be supportive of biodiversity net gain in principle, but the introduction of a complex requirement like this requires clear timelines, with adequate funding and support, but these have been lacking throughout.

“The low level of confidence held by local authorities, planners, and the construction industry about their respective roles in delivering biodiversity net gain is understandable given the limited government investment in ensuring the success of the scheme.  Key to success is the right investment for preparation and monitoring and enforcing on-site gains.  The skills shortage in the industry is a long-standing issue and increasing the supply of competent experts to factor biodiversity net gain into project plans, deliver it and monitor success must be a priority.”

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