Statutory biodiversity credits

Overview 

Guidance on statutory biodiversity credits may be relevant to you if you are a: 

• developer 
• local planning authority (LPA) 

Buying statutory credits means that as well as, or instead of, creating and enhancing biodiversity on or off a development site, developers can make a financial contribution which counts towards their mandatory 10% BNG.  This contribution will be used to fund biodiversity enhancements across England.  

Buying statutory credits is a last resort option for developers who are unable to use on-site or off-site units to deliver biodiversity net gain (BNG).  

Developers buy statutory credits using the credit sales service. There is no minimum or maximum purchase for statutory credits. 

Before developers buy statutory credits, they can estimate how much they will cost. 

When developers use the statutory biodiversity metric tool, it will tell them if they need to make bespoke BNG compensation, if they are building on some types of habitat. Developers cannot buy statutory biodiversity credits if they are required to make bespoke compensation. LPAs will advise developers on bespoke compensation where appropriate. 

Ways to achieve BNG: on-site units, off-site units and statutory biodiversity credits  

Through site selection and layout, developers should avoid or reduce any impact on biodiversity. They must deliver 10% BNG, as measured by the statutory biodiversity metric.  

There are 3 ways a developer can achieve 10% BNG.  

1. Enhance and restore biodiversity on-site (within the red line boundary of a development site).  

2. If developers can only achieve part of their BNG on-site, they can deliver through a mixture of on-site and off-site. Developers can either make off-site biodiversity gains on their own land outside the development site, or buy off-site biodiversity units on the market.   

3. If developers cannot achieve on-site or off-site biodiversity net gain, they must buy statutory biodiversity credits. This must be a last resort.  

Developers can combine all 3 options, but must follow the steps in order. This order of steps is called the biodiversity gain hierarchy. 

Statutory biodiversity credits are different from off-site biodiversity units sold in the off-site private market. Statutory credits are a last resort way of acquiring biodiversity units needed to achieve BNG. If developers buy statutory credits, this is because it is not possible to restore habitats on-site or by buying off-site units. Developers can buy statutory credits to add to on-site and off-site biodiversity units, to meet their total BNG. Statutory credits can also fulfil a developer’s entire BNG if both on and off-site options are not possible. Developers wanting to buy statutory credits must prove why they cannot meet BNG using on-site and off-site options. 

When to buy statutory biodiversity credits: the process to follow 

1. After the developer has been granted planning permission and followed the biodiversity gain hierarchy, they should explore options. To do this they should use statutory biodiversity metric tool, to find out the type and number of any statutory biodiversity credits needed. 

2. As soon as the developer identifies a need for statutory credits, they should discuss any need for statutory credits within their overall strategy with their LPA.  

3. The developer must prove to the LPA that they need to buy statutory credits.  

4. If, through discussions, the LPA is satisfied that the developer meets the criteria for statutory credits, they should confirm this.  

5. Once the developer is satisfied they can discharge (fulfil) all other pre-commencement planning conditions, they can buy statutory credits. The purchase should happen as late as possible in the planning process. 

6. Due diligence checks will be carried out and then the invoice will be sent to the developer. Once the developer pays, they will receive a combined proof of purchase and VAT receipt. The developer needs to provide this proof of purchase with their biodiversity gain plan.  They must also submit to the LPA a biodiversity metric calculation that shows how they will meet their mandatory BNG. 

How to find out the type and number of statutory biodiversity credits needed 

Developers must use the statutory biodiversity metric calculation tool to prove the accurate calculation of the number of statutory credits they need.      The number of statutory credits for a specific development depends on the number of biodiversity units a development will need to meet its 10% BNG. Once you have completed your statutory biodiversity metric calculation (on-site before and after development, and off-site before and after development), the statutory biodiversity metric calculation tool will automatically calculate the remaining units needed to fulfil your BNG requirement.    

The tool’s ‘unit shortfall summary’ tab shows you how many statutory credits of each tier you need to purchase and how this ‘unit shortfall’ was calculated. There is also detailed guidance in the statutory biodiversity metric tool’s user guide. 

Notes on statutory credit terms in the statutory biodiversity metric tool 

Tiers 

Statutory credits are priced in tiers. Different habitats are grouped in tiers to reflect the cost and value of different habitats.  

Tiers ‘A1’ to ‘A5’ refer to area habitats, tier ‘H’ refers to hedgerow, and ‘W’ to watercourse habitats. The ‘habitat deficit summary’ tab in the metric tool automatically sorts your habitat deficit into the right pricing tiers.     

The spatial risk multiplier 

If you buy statutory biodiversity credits, a ‘spatial risk multiplier’ (SRM) will apply, which means you must buy 2 statutory credits for every 1 biodiversity unit you need to compensate for. The statutory biodiversity metric will automatically calculate this multiplication for you, in the ‘unit shortfall’ tab. 

The SRM applies to statutory credits to ensure they do not compete with the development of the off-site market and remain a last resort. 

There is more information about the SRM in the statutory biodiversity metric tool’s user guide.  

What information developers need from the metric to estimate the total cost of statutory credits or buy statutory credits 

Developers will need the information from the habitat deficit summary in the metric tool to work out the number of statutory credits they need and from which tier.   

To estimate the total cost of the statutory credits they will need, or to buy credits, developers will need to enter the number of area (A1 to A5), hedgerow (H) and watercourse (W) credits from the metric tool’s ‘unit shortfall’ column (column D), to 2 decimal places, for example 3.87.    

How to prove statutory credits are needed

Before the LPA approves a developer’s use of statutory credits, the developer will need to show the LPA both of the following pieces of evidence.   

1. The developer has considered additional on-site BNG and can provide reasoning showing why this is not possible.  

2. The developer has approached 3 local or national suppliers, habitat banks or trading websites and can show evidence that no off-site options are available in England. Evidence would include, for example, correspondence, emails, or a PDF download showing a marketplace search. 

Evidence for small numbers of statutory credits   

If a developer needs less than 0.25 biodiversity units (area or linear), they can buy statutory credits without following step 2 above (showing evidence that no off-site options are available).  They still need to follow step 1 (showing evidence that on-site BNG is not possible). 

Statutory biodiversity credit prices 

There is a price list.  

Prices will be reviewed every 6 months after BNG becomes mandatory. We will announce any planned price changes in the price list guidance, giving at least 10 weeks’ notice. 

Phased planning applications  

Statutory biodiversity credits can be purchased as a last resort to meet the BNG requirement for a phased development.  The proposed use of credits must be included in the biodiversity gain plan, which must be submitted before any development starts.  Developers should include confirmation of any credit purchases in the phased biodiversity gain plan for each phase.  Guidance on phased biodiversity gain plans will be available soon. 

Transfers 

Statutory biodiversity credits are linked to the planning reference number and biodiversity gain plan they are purchased for. They are non-transferable to other planning permissions or gain plans.   

If a developer sells land with a planning permission and approved biodiversity gain plan and they have purchased statutory credits for it, the new owner may be able to benefit from the statutory credits, if they wish to proceed with the planning permission.  

Who sells statutory credits and how the funds will be used 

Natural England is selling statutory credits on behalf of the Department for Environment, Food and Rural Affairs (DEFRA).   

Funds from the sale of statutory credits will be invested in habitat creation or enhancement, as set out in the Environment Act. You will be able to see how credit investment is spent in annual reports from the Secretary of State for DEFRA, which we will publish on GOV.UK when available. 

Buying statutory biodiversity credits: further guidance for developers 

Developers buy statutory biodiversity credits using a credit sales service, available when BNG becomes mandatory. 

Before you buy statutory credits, you can use another service if you want to estimate how much statutory credits will cost. This will also be available when BNG becomes mandatory. 

Before using these services, you will need to use the statutory biodiversity metric to understand how many biodiversity units and credits you need.  

Statutory biodiversity credits: further guidance for LPAs 

There is additional guidance for LPAs.

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