‘Scaremongering’: Anger as documents reveal top UK developers’ warning of net gain market paralysis

EXCLUSIVE: Documents obtained by ENDS have revealed how some of the country’s biggest housebuilders are warning DEFRA of market paralysis when biodiversity net gain rules become law in 2023, in a bid to see more flexibility for the industry.

New Detached Homes. Source - GettyImages, Richard Newstead

The requirement for developers to deliver a 10% biodiversity net gain on most new developments is set to become law in 2023. It is written into the Environment Act, and is a cornerstone of how the government intends to meet some of its more ambitious nature recovery goals - including the target to halt the decline of species by 2030. 

Earlier this year DEFRA consulted on its Biodiversity Net Gain Regulations (BNG) and Implementation proposals, which outlined draft plans for how developers and local planning authorities will have to carry out the nature-friendly building reforms. 

Through Freedom of Information requests, ENDS has obtained the responses to that consultation from some of the UK’s biggest housing developers, including Persimmon, Bellway, Taylor Wimpey, and Barratt. The documents reveal how some - though not all - of the billion pound companies are seeking significant changes to how the government will expect them to deliver BNG.

Some firms can be seen pressing upon DEFRA that they are set to be “held to ransom” when the policy becomes law next November, and that the national housing crisis will be worsened as a result of it. The proposed solutions to the impending crisis they describe range from a more relaxed approach on where biodiversity gains can be found, cheaper access to government green ‘credits’, and broader exemptions to the policy.

READ THE FULL STORY: How some of the UK’s top developers are seeking to weaken biodiversity net gain reforms  

As DEFRA’s policy stands, developers will have to follow a ‘sequential order’ when planning how to meet the BNG requirement, where they must show how they have first tried to avoid environmental damage, before then seeking to deliver BNG through onsite mitigation, followed by offsite, and only then through the purchase of statutory credits. 

This order is supported by many green groups and local authorities, who emphasise the importance of keeping biodiversity gains on or as close as possible to development sites, because of the social importance of access to green space. 

However, a push back against this hierarchy, and strong advocacy for the government to provide cheaper statutory credits, is one of the strongest themes to emerge from the consultation responses, with a majority of the firms - which have all turned in billions of pounds worth of revenue in the last year - seeking greater flexibility in how they meet the 10% BNG requirement.

“We would…strongly advocate for the removal of the sequential approach to delivering BNG enhancements,” Bellway says in its submission to DEFRA. Instead, it writes that it would like for “all solutions to be considered and acceptable in the first instance” in order to “remove issues over the ability of identified housing sites to deliver the number of homes required, through the retention of developable land, and avoid further compounding the national housing crisis”. 

Later in its response, Bellway says that there must be “maximum flexibility” in the procuring and delivery of offsite credits “in order to avoid a cliff edge scenario in late 2023 and avoid situations like nitrate and phosphate neutrality which caused market paralysis in parts of the country”. 

Taylor Wimpey can also be seen urging DEFRA to take a more flexible approach to how much BNG must be found on development sites.

“The BNG metric that is currently under review is heavily weighted towards mitigation in close proximity to the development site. We recommend that this is reviewed to ensure that policy and guidance encourages off-site contributions towards the enhancement of identified priority habitats and strategic nature recovery strategies.” 

Barratt does not express a strong view on the matter, and across its response, is largely supportive of DEFRA’s proposals. 

READ THE FULL STORY: How some of the top UK developers are seeking to weaken biodiversity net gain plans

On the part of Persimmon, the developer states in its response that it is “fully committed” to delivering BNG and that it has made commitments in its Group Sustainability Report “to proactively prepare for the introduction” of the policy. A spokesperson also told ENDS that a number of its sites are “already delivering to - or even above - the intended standard”.

However, the FOI documents also show Persimmon emphasising to DEFRA that it does not think local planning authorities should be encouraged to go beyond the statutory 10% BNG. “Going beyond 10% should be purely optional for developers on particular sites,” it writes.

Elsewhere in its response, the developer stresses that not all BNG can be delivered onsite, saying that there is a “strong consensus in the development industry that delivering all BNG onsite will be very difficult or produce unfavourable viability outcomes for many sites”. 

In this context, Persimmon says that it is “particularly interested in how biodiversity units can be delivered offsite,” and that although in an “ideal world” BNG would be introduced in a more systematic way alongside local development plans, this cannot be the case because of the way BNG is being brought in as a stand-alone legal requirement.

“As a result, we support flexibility in how much gain can go offsite, where it can be located and who can deliver this. Such an approach will be critical in generating significant supply, particularly in the early years of mandatory BNG where inevitably there will be a shortfall of units as the land market adjusts and the planning system catches up.”

The framing of the BNG proposals as a threat to the delivery of much-needed new housing has not impressed many that ENDS has spoken to, with Sophus Zu Ermgassen, an ecological economist at Oxford University sceptical that the incoming policy will cause paralysis - even if it may initially prove more expensive than the developers would like. 

There is a “strong policial incentive to make building happen”, he said, adding that the image painted by the developers does not match with what he has seen in his research. He said based on the councils he had sampled, which have adopted BNG policies early, the vast majority of BNG units or mitigation is happening onsite within well-planned developments - even if the reality of how these ‘gains’ are to be monitored leaves something to be desired

Zu Ermgassen continued: “The point of [BNG] is to internalise the cost of harming nature into the development process. And if those costs are high, it’s because you're causing a lot of damage”.

Richard Benwell, chief executive of the green group coalition Wildlife and Countryside Link, added that talk of market paralysis sounded like “irresponsible scaremongering”. 

“Net gain has been in the National Planning Policy Framework for a number of years. Those companies which have taken it seriously have a good handle on how it can be delivered. 

“The idea that it could somehow setback housing development when developers are sitting on consent for a million homes, and just haven't been rolling out the build-out, is playing into the government’s worries about house numbers, for strategic gain.” 

READ THE FULL STORY: How some of the top UK developers are seeking to weaken biodiversity net gain plans

A spokesperson for Bellway Homes said that the company was committed to delivering BNG and that its strategy from July 2023 onwards is for every new planning application submitted to deliver no net loss plus at least a 10% gain in biodiversity. They added that the concerns it had raised in its response “relate to the lack of any detailed secondary legislation or guidance from DEFRA, and the lack of resource within many local authorities that will likely lead to considerable delays in the planning process”.

“Although BNG has been around as a concept for a long time, we are still lacking the critical guidance and infrastructure needed to integrate it into the planning system.”

A Persimmon spokesperson said: “As we make clear in our submission, we support BNG and a number of our sites are already delivering to – or even above – the intended standard. 

“Our consultation response sought to inform the debate around how the government establishes a new regulatory framework that meets its different objectives while guarding against inappropriate or unintended consequences. Any misrepresentation of contributions made in that spirit would be disappointing.” 

Taylor Wimpey said that it “fully supports the principle of BNG to ensure sites have more habitats at the point of completion than they had before building commenced”.  

“We recognise that on-site mitigation can help build sustainable communities, create a better place to live and add value to developments - which is why we embedded BNG into our Environment Strategy, have issued internal guidance and implemented processes well in advance of the statutory deadline.” 

“We remain closely engaged with DEFRA to develop a workable solution focused on maintaining biodiversity for the long term.” 

DEFRA has said that its consultation response, secondary legislation, an updated biodiversity metric, and new guidance will all be issued “in due course”.

READ THE FULL STORY WITH MORE ANALYSIS: How some of the top UK developers are seeking to weaken biodiversity net gain plans