On 27 July 2023 the government published further information necessary for developers to deliver the mandatory 10% biodiversity net gain (BNG) requirement when it’s expected to come into force later this year for town and country planning development (with the exception of small sites which is due to come into effect in Spring 2024). What more do we now know and what are developers still waiting for?
Delivering off-site BNG – responsible bodies and biodiversity gain sites register
Developers who cannot deliver the requisite BNG on-site, or do not hold other land on which to deliver BNG off-site, will need to look to the biodiversity gain sites register to fulfil their BNG obligations – only if a developer cannot provide on- or off-site BNG, or purchase BNG units from the market, will statutory credits be available.
Conservation covenants are a new form of agreement which can secure delivery of BNG on biodiversity gain sites. These are private, voluntary legal agreements which bind current and future landowners to positive and restrictive conservation-related actions for a minimum of 30 years. The agreements are enforceable by “responsible bodies”. Whilst conservation covenants came into effect in England in September 2022, we’ve been waiting for guidance to confirm which organisations can apply to be a responsible body. These criteria were finally published on 27 July 2023, alongside the application form which provides more information on what is required.
Criteria for responsible bodies
There are four criteria that must be met for a body to become, and remain, a responsible body:
- The organisation must be eligible. Eligible bodies include:
- local authorities;
- public bodies or charities, some of whose main purposes or functions relate to conservation; or
- other bodies, some of whose activities relate to conservation.
The body’s main activities and the people delivering them must be UK based.
- The organisation must have financial security. They must have:
- a UK bank account;
- financial security, which must be evidenced by the annual report, current credit ratings or recent bank statements; and
- evidence of adequate fiscal and administrative control.
The government will take into account previous awards of government funding, grants, financial reporting history and evidence of financial difficulties.
- The organisation must be able to demonstrate operational capacity and capability to both manage and enforce the provisions of the particular conservation covenant. Defra will check this through evidence including the organisation’s technical expertise, workforce, track record, and structures and governance (such as risk management, compliance and dispute resolution).
- Finally, the organisation must be capable of ongoing suitability – a director (or equivalent) must confirm that the organisation understands its role and responsibilities and will notify Defra in the event of a change in circumstances which might impact its ability to deliver any conservation covenants it has entered into.
We’re told that “Defra will aim to inform [applicants for responsible body status] of the outcome of [the] designation request within 12 weeks of receiving a correctly completed application form and all supporting evidence”, and that the biodiversity gain sites register will also not launch until November 2023 (see here).
Organisations hoping to register as responsible bodies will therefore need to be quick off the mark in making their applications so that they may enter into conservation covenants with landowners. And landowners are going to have be equally quick to contract with responsible bodies so that they can register sites and start trading biodiversity units from them.
In reality, it is going to take some time for the necessary registrations to occur and agreements to be entered into and for this market to establish. One may question why all of this is only being clarified and the register established so close to the date of implementation of the mandatory BNG requirement, when how BNG will work has been known since November 2021 and establishing this in advance would have surely been the proper way to manage implementation and avoid the statutory credits needing to be reverted to. The government has not used the transitional period wisely and this will undoubtedly cause hardship to developers who are forced to follow the statutory credit route to commence development which is caught by the mandatory requirement.
Last resort – statutory credits
Assuming the new system does go live in November 2023, which is still understood to be the intention, some developers may have no choice but to rely on statutory credits pending the gain sites register and units market getting up and running. In anticipation, on 27 July 2023 the government also published guide prices for the new credits. These prices are indicative only, intended to help developers plan ahead – the final confirmed prices will only be available when the mandatory BNG requirement goes live, which is when the credit sales service itself will open for business. This is also when the “statutory” version of the biodiversity metric will be made available (see here), replacing the current version (version 4.0). An addition to the biodiversity metric will then be available to help developers calculate how many statutory credits they need to fulfil their obligation. What we know now is that two credits must be purchased for each biodiversity unit being compensated for. Prices per credit are set out in tiers which reflect the cost and value of different habitats according to their distinctiveness and type, ranging from £42,000 to £650,000 per credit.
What are we still waiting for?
Neither drafts of the BNG regulations implementing the relevant provisions of the Environment Act 2021, including much of the detail for how BNG will work for phased developments, nor the accompanying guidance have been published to date. Both have been long promised in the months ahead of the go-live date during the transition period. There is now very little of the transition period remaining. It is therefore highly likely that, despite promises and expectations to the contrary, very little notice is provided between the BNG regulations and guidance being published and the BNG requirement coming into force, should it come into force in November 2023 as previously announced.
Time will tell, and developers should be as prepared as they can be.