Hartlepool Borough Council needs to build 400 homes a year to match demand. Since the introduction of biodiversity net gain (BNG) in England, developers must create or enhance habitats to compensate for harm caused by new schemes. They must deliver at least 10% better-quality BNG, measured by the extent, significance, quality and type of habitat.

The council has joined up with off-site BNG provider Environment Bank to create a habitat bank at Hart. This will offer biodiversity units for developers to purchase and meet the mandatory requirements. With housing schemes well under way in the area, developers such as Bellway, Miller Homes and Keepmoat now have immediate access to local biodiversity units.

Under the partnership, the provider will fund, establish and monitor Hartlepool’s bank of habitat-enriching projects. In the next 30 years, the site will feature wildflower meadows, native hedgerows, mixed scrubland and new ponds. These aim to support a variety of species, such as lapwings, skylarks, great crested newts, brown hares and pollinating butterflies.

“Ensuring a ready supply of local off-site biodiversity units is crucial for unlocking development in Hartlepool,” says the council’s principal estates surveyor, Philip Timmins. “Partnering with Environment Bank allows us to meet our housing growth targets while delivering significant environmental benefits – without adding administrative burdens to the council.”

But how has BNG fared elsewhere? What are the main challenges in delivering the policy? And what should happen next?

The challenges

BNG came into force for large developments in February 2024 and for small sites a couple of months later. Under the Environment Act 2021, planning authorities must publish their first biodiversity reports by 26 March 2026. These reports will feature a wide range of qualitative and quantitative data on the BNG impacts of development.

Three studies suggest that the policy is struggling to bed in, however. Home Builders Federation research reveals that 98% of small and medium-sized (SME) developers find BNG a challenge. Some 94% report delays in processing planning applications since the policy became a legal requirement.

Nine out of 10 SMEs blame the delays on “insufficient BNG expertise or resources within local authorities”. The study also reveals that 85% of developers with small sites believe the costs of BNG are not proportionate to the size of their projects.

SMEs with smaller sites are often unable to accommodate the requirement within their schemes and rely on purchasing off-site biodiversity units like those at Hartlepool. However, the federation warns, there are still not enough suitable credits available. This is hitting costs and “posing a substantial threat to the viability of smaller housebuilding sites”.

"The abuse of the exemptions policy is holding back progress in meeting nature restoration targets"

Planning authorities are also resorting to external consultants to meet the BNG requirement, with each council spending an average of £23,000 a year on fees, the federation found. This chomps up most of government BNG funding for local authorities before factoring in the costs of hiring staff or providing training.

Freedom of Information requests as part of the study reveal that nearly 40% of authorities lack access to in-house ecological experts. A quarter of councils have seen ecologists leave their roles in the past year, while one in three have not expanded their ecology teams since BNG was introduced.

“The home-building industry has embraced BNG and is committed to increasing housing supply and protecting and enhancing our natural environment,” says the federation’s CEO, Neil Jefferson. “However, if we are to increase supply alongside these new requirements it is vital to address emerging barriers to implementation, such as the insufficient resourcing of local authorities, shortage of ecologists and inadequate guidance.”

Behind schedule

A second study suggests that Defra overstated BNG’s potential. It had estimated that 5,428 hectares of habitat would be generated through the policy each year. But FOI requests to local authorities by Wildlife and Countryside Link discovered that just 680 hectares of off-site land have been set aside for nature recovery, a shortfall of 86%. This rises to 1,220 hectares when including ecology companies – but still a shortfall of 78%.

Only 93 hectares of on-site BNG were recorded. Wildlife and Countryside Link says the combined 773 hectares have “dramatically missed” the government’s BNG delivery expectations, achieving just half the minimum amount of annual habitat creation expected.

An additional 786 hectares have been proposed by local authorities as potential off-site habitat banks, but have yet to be approved. Only four authorities in England have so far implemented more ambitious 20% BNG requirements, while 30 have upcoming policies that, if adopted, will require more than the mandatory 10%.

“BNG is full of potential, but it’s also full of holes,” says Wildlife and Countryside Link chief executive Richard Benwell. “Holes in ambition, which remains limited to offsetting harm to habitats; holes in implementation, with huge numbers of planning applications falling through the gaps; and holes in enforcement, with no way to check that many of the promised gains for nature ever happen.”

Revisiting exemptions

A third study points to a less obvious problem. Data from technology specialist TerraQuest shows that more than 75% of non-householder planning applications in England have claimed an exemption from BNG since the policy’s introduction. The three most common reasons cited for exemption are de minimis or does not impact a priority habitat, self-build and custom development, and retrospective planning permission. De minimis claims made up 76% of total non-householder exemptions in August-December 2024.

“BNG is a world-leading policy and the government has the ability to go a step further in safeguarding England’s biodiversity for future generations by revisiting the exemptions regime,” says Oliver Lewis, chief executive of biodiversity tech start-up Joe’s Blooms. “The abuse of the exemptions policy, especially de minimis, is holding back progress in meeting nature restoration targets."

BNG has had a rocky start but it is too early to bury it, says IEMA policy and engagement lead on biodiversity and natural capital Lesley Wilson. She calls on Defra or Natural England to carry out research into the policy to see “what works and what doesn’t work”.

Developers, landowners, planners and council ecology teams all need time to learn the ropes. “A year is not long enough to judge whether something that is very new is going to work,” she adds.

Huw Morris is a freelance journalist.