Cornerstone Planning

How can local authorities deliver BNG on land they own?

Local authorities cannot avoid the mandatory biodiversity net gain (“BNG”) regime which applies to the majority of new developments. Whilst there has been much focus on the additional burden this will create for local planning authorities, there are multiple opportunities too. Chrisa Tsompani and Stephanie Hall look at the ways in which authorities can work with the new requirements to deliver BNG on land in their ownership.

Introduction

For planning applications for major developments submitted after 12 February 2024 and for applications on small sites made after 2 April 2024, all new planning permissions (with limited exceptions) will be subject to a deemed condition prohibiting the development commencing before a biodiversity gain plan has been approved by the local planning authority. The plan must show that the biodiversity value of the site after the completion of the development will exceed the pre-development value by at least 10%. This can be achieved in four ways:

  1. Onsite, delivered by the developer within the red line of the planning application site;
  2. Offsite, delivered by the developer on other land within its ownership;
  3. Offsite, by purchasing registered offsite biodiversity units from a third party landowner; or
  4. As a last resort, purchasing statutory credits from the Government.

Opportunities for local authorities

The introduction of mandatory BNG has been perceived in some quarters as a burden for local planning authorities, from the additional requirements in validating and determining planning applications through to the subsequent onerous monitoring and enforcement of the approved measures for over thirty years. However, many authorities are seizing the opportunity to provide registered offsite biodiversity units on their own land for sale to developers. There are a number of benefits to local authorities in using their land in this way:

  1. To ensure that BNG enhancements are retained in the area;
  2. To reduce the shortfall in offsite units and offer developers more choice;
  3. To use plots of land that may not be suitable for any other purposes and generate income;
  4. To create green space in urban areas; and
  5. To support the Local Nature Recovery Strategy prepared to comply with the duties under the Natural Environment and Rural Communities Act 2006 (“NERCA”) to conserve and enhance biodiversity.

Whilst this seems an attractive option for local authorities, careful consideration must be given to how the units are secured and delivered.

Impediments to delivery

First, the land must be environmentally suitable to deliver biodiversity units. This will require the input of an ecologist, and consideration must be given as to whether the authority has sufficient resource in-house or whether an external consultant is required.

Secondly, land which is to be registered for biodiversity units must be available as such for at least 30 years.  Therefore, it is not suitable as a “meanwhile” use on a piece of land pending redevelopment in the short to medium term.

Thirdly, it is necessary to consider whether the land in question is encumbered by any restrictive covenants, easements or any other legal restrictions which would frustrate the ability to deliver biodiversity units.

Securing the land on the BNG register

Once appropriate land is identified, the biodiversity units must be secured via a section 106 agreement or a conservation covenant and entered onto the BNG register which is managed by DEFRA. Both section 106 agreements and conservation covenants are local land charges and run with the land to bind successors in title. This ensures that the land is managed and maintained in such a way to deliver the biodiversity units for a minimum of 30 years. This poses a number of issues for local authorities looking to deliver biodiversity units on land which they own.

S106 agreement

At present, the majority of section 106 agreements are entered into between the local planning authority and the landowner/developer, in connection with the grant of a planning permission to make a development acceptable in planning terms. However, it is less widely known that a section 106 agreement may be entered into at any time to regulate use of the land. It is likely that there will be significant increase in such standalone agreements to secure offsite biodiversity units. 

As it is widely known, the authority (as local planning authority) cannot enter into a section 106 agreement with itself (as landowner). There are four options for local authorities who find themselves in this position:

  1. Two tier authorities – in those parts of the county where there is a borough/district council and a county council, authority A (as landowner) may enter into a section 106 agreement with authority B (as enforcing body) to secure land owned by authority A for biodiversity units. Two tier authorities may have experience of similar arrangements on other matters.
  2. Delegate section 106 powers to another local authority – section 101(1)(b) of the Local Government Act 1972 enables a local authority to arrange for the discharge of any of its functions by any other local authority. This is a useful tool for a unitary authority who wishes to offer land within its ownership for biodiversity units. The landowning authority would enter into a section 106 agreement as the covenanting party, with the other local authority acting as the local planning authority, taking on the role of monitoring and enforcing the section 106 agreement. Consideration must be given to the constitutional requirements for both the local authority looking to delegate its functions in this way, and the local authority accepting the delegation. 
  3. Create a Special Purpose Vehicle (SPV) and enter into a transfer / lease of the land to the SPV which could then enter into a section 106 agreement with the local planning authority. Some authorities such as Plymouth City Council have already gone down this route. This will require the necessary legal framework to establish the SPV plus a series of agreements to regulate the use of the land and sale of credits. As such, this could become resource-intensive for the local authority, who may wish to consider joining forces with a neighbouring authority to create an SPV to share cost and resources.
  4. Lease the land to a trusted third party with the tenant entering into a section 106 agreement to be responsible for delivering the BNG land. The local authority would need to monitor and enforce the delivery of the measures in its role as local planning authority and/or landlord. This option depends on the local authority selecting an appropriate third party who has the requisite standing to deliver and maintain the works for the thirty-year period.

In all cases, it will also be necessary for the landowner to undertake the administrative process of registering the land as biodiversity units with DEFRA.

Conservation covenant

Alternatively, the local authority (as landowner) could look to enter into a conservation covenant with a responsible body (“RB”). The covenant must be entered into for the public good and have a conservation purpose. As of 10 April 2024, there are only five designated RBs, one of which being Natural England who have indicated that they will not be entering into conservation covenants. Some of the RBs appear to operate in discrete areas of the country only. Therefore, this option is limited, for now, and most authorities will continue to rely on section 106 agreements in the short term.

Local authorities being designated as RBs

As an alternative some local authorities may wish to become an RB themselves. As of the date of writing there are currently two local authority RBs registered. It will be interesting to see whether others look to follow their lead. There may be a role for a local authority to become an RB in a reciprocal arrangement with a neighbouring local authority, whereby local authority A becomes an RB to enter into conservation covenants with local authority B as landowner of the biodiversity units, and vice versa. However, in light of the delegation powers in the Local Government Act 1972 (as referred to above), the fact that local authorities have more extended enforcement powers under the section 106 regime and that this is a relatively untried and untested process, the usefulness of this option remains to be seen.

Concluding thoughts

The BNG regime has been introduced to address the continuous decline in the abundance of wildlife in the UK since the 1970s. Local authorities now have an enhanced duty under NERCA to promote biodiversity and must consider the actions they can take to further the general biodiversity objective. 

As such, mandatory BNG presents a unique opportunity for local authorities to deliver biodiversity enhancements on land in their ownership. By doing so the authorities not only comply with their duties under NERCA, but they also address a number of other significant matters within their agendas, such as climate emergency, air quality, green infrastructure, place-making, flood resilience, mental health and wellbeing. Delivering BNG on local authorities’ land is therefore important not only for environmental purposes, but for strategic and political ones too.

Chrisa Tsompani and Stephanie Hall are Partners at Davitt Jones Bould.