A report published by the National Audit Office has raised concerns about the long-term effectiveness of the government’s new biodiversity net gain (BNG) policy, which launched in February.
The NAO found the Department for Environment, Food and Rural Affairs (Defra) launched the biodiversity scheme, which requires developers to improve habitats they harm by a net 10%, without having all the elements in place to ensure its long-term success.
The government provided either £26,807 or £43,4674 to each local authority to help them prepare in each of the two years proceeding launch. However, Defra acknowledged mixed readiness among local authorities at launch.
The NAO said there were risks to local authorities carrying out effective compliance and enforcement for statutory BNG.
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 warned Natural England and Defra also lack all of the relevant information they need to effectively evaluate the regime and determine whether it’s 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 will step in as a provider of last resort, with the money raised ring-fenced for government mandated improvements to UK biodiversity. Presently, Defra does not have a legally compliant mechanism to spend income from statutory credit sales to enhance biodiversity.
The NAO recommended that government establishes a mechanism for spending income from the sales of statutory biodiversity credits. It also recommended local authorities should have sufficient and timely funding certainty to allow for longer-term planning regarding their role in locally agreeing and enforcing the scheme.
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.”
Responding to the NAO’s findings, Brian Berry, chief executive of the Federation of Master Builders, said: “The NAO’s criticism of the Department for Environment, Food and Rural Affairs, 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.”
A spokesperson for Environment Bank added: “Just 12 weeks into the new legislation, the National Audit Office has released a report on biodiversity net gain. Environment Bank has been working for the last four years to prepare for the new regulations and to ensure that a reliable supply of high-quality biodiversity units are ready for the market opening.
“As of today, Environment Bank has a national network of over 1,758 hectares of land in development for habitat creation – equating to thousands of biodiversity units – which are already being sold to meet the needs of resi, commercial and utility developers in England. This is sufficient to meet national market demand for at least the next 18 months, with a further 3,000 hectares in progress. Environment Bank’s habitat banks are placing thousands of hectares of low-grade land into nature recovery, accelerating an uplift in biodiversity, rebuilding vital ecosystem services, and providing a valuable income stream to landowners and farmers.
“Working collaboratively with local planning authorities to create s106 agreements effectively, each habitat bank delivers on local nature recovery strategies whilst providing robust funding through legal agreements for BNG compliance and monitoring and accurate reporting on the policy’s effectiveness. Environment Bank is seeing a vibrant market emerge that provides the requirements for both developers and nature.”
