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Mandating net gains: A step towards environmental sustainability

On Sunday (2 December) the Government launched a consultation entitled “Net Gain”. It proposes the introduction of a mandate for developers to deliver a “biodiversity net gain” when building new housing or commercial developments.

With the Government’s future somewhat uncertain, we are astutely aware that this and other forthcoming policy ideas might not necessarily reach implementation. Nevertheless, we have assessed the approach set out in the consultation documents and considered the potential implications.

The Net Gain Consultation Proposals are available here.

A first step

In February the Government launched “A Green Future” – its 25 year plan to improve the environment. It sets out an ambition to “…leave our environment in a better state than we found it…”. It forms part of the Government’s strategy for upholding environmental standards as we leave the European Union.

The “Net Gain” consultation sets out how this ambition might be realised. It proposes a requirement for new housing and commercial developments to deliver a measurable 10% enhancement in the biodiversity value of a site.

Importantly, the Government sets out that this is just the “first step” in its ambition to embed the wider principle of environmental net gain into the planning system. The consultation document sets out that other areas of “net gain” are also being considered, including in respect of water quality, air quality and flood risk. This could have significant implications for new development proposals.

How will it work?

The requirement to deliver a net gain in biodiversity value would operate alongside existing planning policy (set out in the NPPF) and be tested through the planning application process. With the exception of some “small and brownfield sites”, such as those on a Brownfield Register, it will apply to all development sites.

The consultation proposes the following general approach:

 

  • The biodiversity of a site both before and after the development is assessed using the DEFRA “biodiversity metric” calculator. The pre-development baseline assessment may take into account recent or historic environmental information about the land, to mitigate the risk that landowners might seek to degrade habitat value (i.e. by removing trees/hedgerows) in order to secure a more favourable outcome.
  • A 10% net gain in biodiversity should be achieved as a minimum. This “margin” is proposed to provide certainty that a net gain will be achieved mindful of the risk that, for example, compensation habitats do not reach their target state.
  • A hierarchy of mitigation is applied. Where the 10% net gain is not achieved or impacts on high quality habitats cannot be avoided, there will be a sequential approach to mitigation, including through:
    • On-site habitat creation, such as green corridors or tree planting.
    • Off-site habitat creation and enhancement, for example on land provided by habitat banks, land-owners or brokers as part of a flexible “market”.
    • Payment of a tariff which would be used to facilitate “greater strategic environmental gains”. This would be used as a last resort and would only be allowed in clearly defined circumstances.The consultation sets out that a tariff might be set between £9,000 and £15,000 per biodiversity “unit”.
  • The use of “conservation covenants” which secure a legally-binding obligation to manage the conservation value of land for a fixed period. The consultation asks for views about the length of this fixed period (i.e. less 25 years, 25-30 years, more than 25-30 years, or permanently).

The consultation highlights that new legislation is likely to be required to enforce this approach.

What’s next?

The deadline for representations is 10 February 2019. The Government will then consider how best to proceed and, if necessary, will prepare the required legislation.

The consultation recognises that the development industry will need time to become familiar with the DEFRA biodiversity metric, and for local authorities to increase their resource to manage the new approach. It suggests staggered transitional arrangements, including a “notice period” of at least a year from the passage of any new legislation.

Comment

The consultation is an extension of the expectation in the NPPF that planning policies and decisions will secure net gains in biodiversity value. Whilst many housebuilders and developers already follow this principle, it will be new to many others. Its introduction as a mandatory requirement will make it a prerequisite for securing planning permission. This will require new developments to include new or enhanced habitats as standard. This will create greener and more attractive schemes in some cases. However, it could also add substantial cost, especially where developers have no option but to proceed via the proposed tariff. The implications for development viability could be significant, particularly for smaller developments and in authorities where there are already big ‘planning gain’ requirements.

The requirement to secure a minimum 10% net gain could be difficult to achieve on very large developments, where the site is more ecologically sensitive, or where the loss of higher value habitats is unavoidable. It is likely to significantly increase the demand for habitat banks and biodiversity offsetting. Indeed, stimulating the growth of this market is a key objective of the Government’s consultation.

Importantly, this is presented as just the first step in a move towards a requirement for developments to secure a mandatory “net gain” against a range of environmental factors, including biodiversity, water quality, flood risk and air quality. Under the current approach, adverse environmental impacts do not necessarily pose an obstacle to securing planning permission in principle, as long as those impacts are “significantly and demonstrably” outweighed by other social and/or economic benefits (e.g. housing need, job growth, etc). The consultation signals a move towards the need for developments to improve the natural environment as an absolute prerequisite. This would reduce the reliance which can be placed on the ‘balancing exercise’, resulting in a significant and fundamental shift in how planning applications are determined.

For further information on this subject please contact Nick Graham or Colin Morrison.

6 December 2018

 

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