Planning and Infrastructure Bill - Nature Restoration Fund and Compulsory Purchase

The Planning and Infrastructure Bill proposes changes designed to unlock development that will be of relevance to those interested in the evolution of markets for ‘nature-based solutions,’ and new compulsory purchase legislation related to land required for the delivery of environmental objectives.

This is a complex area, and one which is likely to see continued evolution. Here we set out the facts and provide commentary on what this could mean for landowners, developers, and nature markets.

What does the Bill propose?

The Bill introduces a new approach to managing the impact and maximising the contribution of development – from housing and infrastructure to environmental recovery. It will see a shift from a requirement for developers to secure site-specific mitigations, to a system offering the option of payments into a centralised fund designed to address the environmental impacts of development and secure an environmental uplift.

A new ‘Nature Restoration Fund’ is proposed into which developers will pay, as well as ‘Environmental Delivery Plans’ or EDPs, which will set out how damage to protected species or features of protected sites, likely to be caused by development, may be mitigated and paid for by the Nature Restoration Fund.

Natural England will administer the fund. The organisation will play a key role in creating and implementing EDPs aimed at mitigating the impacts of development and delivering improved environmental outcomes.

The Bill includes provisions for Natural England to:

• Create a Nature Restoration Fund to meet environmental obligations relating to protected sites and species.
• Acquire and manage land for the purposes of addressing and responding to the impact that development will have on protected sites and species to carry out ‘conservation measures.’
• Delegate its powers to another party to act on its behalf.
• Compulsorily acquire land, or new rights over land.

Nature Restoration Fund

Where Natural England feels there is a case to take strategic action to address the impact development has on protected sites or species, and crucially, where it can demonstrate how these actions will go further than the current approach (site by site assessment and mitigation), and support nature recovery, they can establish an EDP.

Where an EDP is in place, the developer will pay a defined financial levy to the Nature Restoration Fund to fund the implantation of the plan.

Where the developer pays this levy, they will no longer be required to undertake their own assessments or deliver project specific interventions for issues addressed by the EDP.

Assembling the land required to deliver environmental outcomes

Natural England will be empowered to engage directly in the delivery of EDPs, in partnership with or by contracting relevant third parties.

New legislation will enable Natural England to acquire land, or new rights over land (for example a lease or management agreement) where the Secretary of State agrees such an approach is necessary to assemble the area of land needed for individual EDPs.

Natural England are to be given compulsory purchase powers, where it can demonstrate the actions in the plan address the impacts of the specific development, and will go further than the current approach (site by site assessment and mitigation) to support nature recovery.

Compulsory purchase requires the acquiring authority to pay a fair market value. This is assessed at current use value, rather than any valuation taking account of any potential future use for the land.

Comment

A material shift in approach to delivering nature recovery

This is a material shift in the approach to delivering nature recovery in England, placing the State as the problem solver, rather than the principle that the private market will create a solution.

The potential for developers to deal with protected sites and species as another ‘abnormal’ cost via a Natural England levy, taking time and (expensive) effort out of the planning process is attractive in terms of removing some of the blockers to development under the current system.

In theory, this approach should deliver greater ‘bang for the buck’ for nature by concentrating resources on strategic interventions so, in principle, the prospect of strategically designed and situated nature restoration sites is attractive.

The ‘monetisation’ of actions to mitigate impacts of development to create a fund to enable the delivery of strategic nature restoration measures are also welcome principles. Concerns have been raised however by ecology professionals that this ‘offshoring’ approach may not be a viable means of mitigating site-specific impacts on protected species – such as bats, owls, voles, and otters, so we may expect more debate on this.

Mandatory biodiversity net gain

A further consideration is that as currently presented, the Bill does not propose to replace the approach to delivering mandatory biodiversity net gain, or BNG, on all developments, the majority of which is currently being delivered by onsite solutions, and where that isn’t possible by purchasing ‘credits’ for biodiversity gain delivered by landowners elsewhere.

It would seem logical that consideration is given to including, or subsuming, BNG into the Nature Restoration Fund approach, in line with the principle of centralising decision-making and resources to optimise nature recovery. This would be at odds with the current ‘sequential’ approach and the philosophy that gain should be delivered close to the community affected by the development.

As it stands, when the Bill went to its second reading on 31st March, BNG was not proposed to be included, but there seems to be a growing view in some quarters that it could, and should, be integrated with this new approach.

What does this mean for landowners?

A key question arising is what all this means for landowners, as those holding much of the asset base required to deliver the Government’s nature restoration obligations. Affected landowners may either be trading in, or looking to enter nature markets, or may find themselves obligated to manage land in a pre-determined way should it fall under the remit of an EDP.

Whilst the possibility of compulsory purchase, or the obligation on landowners to partner with Natural England to deliver specific ‘outcomes’ from land is unwelcomed by some in principle (in particular given the proposal to exclude ‘hope value’ in such transactions), the degree to which this will be necessary, and the scale and location of land we could be talking about, is a matter for debate.

With the proposed introduction of a Land Use Framework designed to work alongside planning policy to inform strategic decisions about land use and enable greater collaboration between farmers, landowners and policy makers there are many moving parts that make predictions as to the extent to which such powers may be used pre-emptive. As it stands, however, there is no direct causal link between the creation of an EDP and the compulsory purchase of land.

What we do not yet know is how landowners would be remunerated for entering partnership arrangements to deliver the required outcomes, and this – the rates or basis upon which payments would be calculated and contractual arrangements, will be a key factor influencing nature markets in the coming years.

Capacity for success

The degree to which the proposals will succeed in maximising nature restoration outcomes, as in so much related to new policy and legislation, will be dependent on Natural England’s (and their chosen partners) capacity and capability to deliver. Not only will Natural England need to produce EDPs but the organisation will also need to be able to identify and acquire the necessary rights over land (perhaps at scale), establish the rates and means of paying landowners for the delivery of the required outcomes, and design and implement impactful nature-based solutions.

There will no doubt be a role for environmental non-governmental organisations, and – we hope, for private sector habitat banks and land managers. Time will tell.

Further reading

• For more information about how the Bill relates to development and nature recovery, please read A Guide to the Planning and Infrastructure Bill here.
• The CLA has a useful explainer piece available on their website here.

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