Government warned of risks to success of scheme to boost nature in developments

A new scheme which requires developers to boost nature has been launched without having all the elements in place to deliver it, the National Audit Office has warned.

The “biodiversity net gain” scheme requires developers to finance the creation of habitat that not only replaces what has been lost to development, but boosts habitat overall by 10%.

Under the programme, which applies to England and started to come into force in February, the gains for nature should ideally be on site.

Hazel dormouse
Conservationists say the scheme could – if done well – help threatened wildlife such as dormice (Peter Byrne/PA)

If that is not possible, they can be delivered off-site by the developer, or purchased through a new private market for “credits” to pay for work elsewhere.

The Environment Department (Defra) estimates the first-of-its-kind national policy would deliver £1.4 billion in annual social benefits to people, and would deliver a measurable improvement to habitat, which would make a small contribution to reversing declines in nature in England.

Conservation groups have said the measures – if done well – could help declining nature from hazel dormice to meadows, reduce flooding and increase access to green spaces, but have raised concerns about its delivery.

Now the National Audit Office (NAO) has released a report warning there are risks to the long-term effectiveness of the policy.

The spending watchdog warned that Defra was relying on a private sector market for biodiversity credits or “units” emerging, so developers could purchase them to meet their obligations to deliver nature improvements.

But the department did not know how rapidly the market could scale up or if it could satisfy demand, with just two sites offering a total of 35 hectares (86 acres) of habitat gain on the official register by May.

If there are not enough credits of the right type or quantity available on the private market, Defra’s solution is for developers to buy statutory credits from government body Natural England.

But the NAO warned the Government did not yet have a mechanism for spending the income from these sales for boosting wildlife.

The report also found varying levels of readiness among local authorities – which could receive either £26,807 or £43,467 each in funding from Defra to help them prepare – for the policy.

It warned there were risks associated with ensuring compliance with and enforcing the policy, with doubt over whether local authorities would be able to carry this out effectively.

It added councils had not received additional funding for compliance and enforcement.

The Government is also still developing its approach to monitoring and evaluating how well the policy works, with key information currently missing, such as gains for nature that are being delivered on-site, the report said.

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.”

The report concludes that Defra launched the policy before having all the elements in place to ensure it is a success in the long term.

It “has a long way to go” before it can be confident that damage to nature from developments would not be understated and the benefits to enhancing biodiversity would actually be delivered, the report said.

Becky Pullinger from The Wildlife Trusts, said: “Following so much delay and uncertainty, the implementation of biodiversity net gain (BNG) finally got the ball rolling for both nature’s recovery and home building.

“However, many factors underpin the success of the scheme, such as the ecological expertise of local authorities, and the percentage requirement of the scheme itself.”

She urged the Government to support councils and housebuilders to go beyond the 10% gain, which she said would “barely ensure no net loss of nature”.

Richard Benwell, chief executive of Wildlife and Countryside Link, called for Defra to ensure that biodiversity gains were actually delivered and maintained, warning “cash-strapped” local authorities could not be expected to police the programme properly without additional support.

He added: “With public funds in short supply, and a £5.6 billion boost in annual spending needed for nature, it’s essential that Government acts decisively to drive private investment.

“That means expanding legal duties on polluters to pay, and supporting Local Authorities with extra ecological advice and expertise to ensure that investments really do make a difference for wildlife.”

Catherine Spitzer, chief executive of Environment Bank – a BNG provider, said: “Whilst the BNG regulations are only just beginning to bed-in, the private sector is already brining forward high quality BNG units for developers.”

She added it was “very clear that a strong, vibrant market is starting to take shape”.

Darren Rodwell, environment spokesperson for the Local Government Association, said: “Biodiversity net gain has fantastic potential for local communities and the environment.

“It is important that councils are properly funded and that the Government quickly put in place measures to ensure the land is available for BNG off-site, for instance by allowing BNG on council-owned land in the short term.”