"eftec’s research shows that by removing only the very smallest sites from the system while closing loopholes for larger developments, the Government could make sure Biodiversity Net Gain works for nature as it was intended, as well as benefiting the genuinely small-scale developments that don’t pose a threat to nature"
- Richard Benwell - Wildlife and Countryside Link
Proposed changes to Biodiversity Net Gain (BNG) rules could significantly undermine efforts to restore nature and damage the developing biodiversity credit market, according to new research.
Analysis shows that if all small development sites are removed from the scope of BNG, as suggested in a recent Government consultation, 97% of approved planning applications could avoid biodiversity responsibilities, up from 86% in the scheme’s first year.
The findings, published in the report BNG in Small Developments, reveal the scale of exemptions currently being claimed and raise concerns about the long-term viability of the biodiversity unit market. Under the current system, developers may self-declare their impact on nature, and widespread misuse of this option has become apparent.
The study, conducted by economics consultancy eftec and commissioned by The Lifescape Project and Wildlife and Countryside Link, indicates that relaxing rules further would allow developers to avoid approximately £250 million annually in biodiversity compensation. This is a rise from the £180 million currently lost due to exemptions and weak enforcement.
Out of 80,400 approved applications in the first year, 69,500, equating to 86%, claimed exemptions from BNG requirements. If the Government removes BNG obligations for all small sites under 1 hectare, the number is expected to grow to 76,800 out of 79,300 applications annually, or 97%.
This shift would leave over 215,500 hectares of land, roughly the size of the Yorkshire Dales or Snowdonia, open to development without any compensation for biodiversity loss. Environmental groups warn this could critically weaken a policy that was designed to ensure developers contribute to nature recovery.
“Biodiversity Net Gain is a hugely important principle: industries that harm nature should contribute to its recovery," explained Richard Benwell, chief executive of Wildlife and Countryside Link. "The proposal to drastically widen the number of exempt small sites from the system would be a return to the bad old days of damaging development and torpedo confidence in private investment in nature recovery,"
"eftec’s research shows that by removing only the very smallest sites from the system while closing loopholes for larger developments, the Government could make sure Biodiversity Net Gain works for nature as it was intended, as well as benefiting the genuinely small-scale developments that don’t pose a threat to nature.”
An alternative approach, proposed in the report, recommends exempting only sites smaller than 0.1 hectares, which aligns with the Government’s own definition of "very small sites." At the same time, it suggests closing loopholes that currently allow larger sites to sidestep requirements. This would reduce administrative burdens for more than 50,000 of the smallest developments annually while strengthening overall compliance.
“As a Responsible Body, we are fully invested in ensuring that the BNG market functions properly, and we see it as a key tool to drive more funds into nature restoration." comments Adam Eagle, chief executive of The Lifescape Project. "We have had concerns for some time about poor implementation and issues with policy design. However, the proposed changes won’t fix this."
He adds, "Exempting all small sites from BNG rules will let thousands of builders demolish nature without paying for the damage, and we will all foot the repair bill, while wildlife pays the price with silence. The Government’s proposals are reckless for nature and for taxpayers and are bad for business too, as they will bulldoze an emerging and innovative biodiversity credit market.”
Small development sites account for the majority of planning activity in England: 95% of all applications are for sites under 1 hectare, 88% under 0.5 hectares, and 77% under 0.2 hectares. With such a large portion of development potentially outside the scope of BNG, the risk to the UK's legally binding target to halt species decline by 2030 is considerable.
The Environment Act and international commitments to protect 30% of land and sea for nature rely heavily on initiatives like BNG. Environmental groups highlight that BNG is currently the second-largest funding stream for nature restoration, behind payments for environmentally sustainable farming. The proposed exemptions would severely weaken this funding mechanism.
The Secretary of State, Steve Reed, emphasised in June that private investment will be essential to meeting environmental restoration targets. Yet, the report warns that the current proposals could deter investment by halving the size of the biodiversity unit market.
Under Government proposals, developers would be required to pay for only 6,504 biodiversity units. In contrast, the alternative recommendation, removing only the smallest sites and tightening regulation, would generate 13,364 units. This would more than double the amount of land contributing to BNG outcomes, adding 20,552 hectares to the scheme.
This balanced solution, the report argues, would protect a greater portion of green space, ensure that high-risk developments are held accountable, and create a more stable market for biodiversity units. It would also reduce administrative burdens for small-scale developers and help maintain investor confidence in nature recovery efforts.
