Biodiversity net gain scheme faces threats, warns NAO

The National Audit Office (NAO) has warned that the Department for Environment, Food and Rural Affairs (Defra) new biodiversity net gain (BNG) scheme was launched without all the elements required to make it a long-term success.

In a new report published today, the NAO warns that Defra needs to manage a range of risks from the policy, which was launched in February and aims to ensure developers in England work to protect or improve diversity on development land.

Statutory biodiversity net gain was legislated for as part of Defra’s 2021 Environment Act. It applies new rules in England which mean that development must have a measurably positive impact (‘net gain’) on biodiversity compared to previously, improving the habitats by a net 10%.

These improvement goals ideally need to be met on-site but when that is not achievable then developers can create off-site gains elsewhere or purchase them through a new private market for biodiversity units.

The three-stage approach of BNG saw major developments in scope from February 2024, small developments from April 2024 and nationally significant developments from November 2025.

Preparation costs and the launch of the scheme have worried stakeholders, according to the report.

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Although local authorities received funding to help prepare them for BNG two years ahead of its launch Defra has acknowledged that some weren’t ready.

The NAO report says there are various risks to local authorities carrying out effective compliance and enforcement for statutory BNG. These include the fact that Defra doesn’t intend to centrally monitor how on-and off-site biodiversity gains are being enforced by local authorities.

It also says that Natural England and Defra lack the relevant information to evaluate the success of the scheme and that Defra is relying on a private sector market for biodiversity units emerging without knowing how quickly it can scale up or satisfy demand.

As part of its recommendations, the NAO suggests that the government establish a mechanism for spending income from the sales of statutory biodiversity credits and that local authorities need adequate and timely funding certainty that will enable longer-term planning in how they will enforce the scheme.

Gareth Davies, head of 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.”

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