Biodiversity net gain or licence compensation for habitat

Biodiversity net gain and protected species licence compensation get confused because they both end with an ecologist promising to create habitat. They are different obligations, owed to different bodies, tested in different ways, and a scheme can satisfy one while failing the other completely.

Net gain is a planning obligation, measured by a metric, secured by the local planning authority for 30 years. Licence compensation is a condition of a licence granted by Natural England, tested against the derogation provisions in the Conservation of Habitats and Species Regulations 2017. Neither absorbs the other.

What each regime requires and why

Mandatory biodiversity net gain came in under Schedule 7A to the Town and Country Planning Act 1990, inserted by the Environment Act 2021: from 12 February 2024 for major development and from 2 April 2024 for small sites. Most planning permissions now carry a deemed pre-commencement condition requiring a biodiversity gain plan to be approved before development starts. That plan has to show at least a 10 per cent gain against the pre-development baseline.

A species licence is a different animal. Where development would disturb, injure or kill a European protected species, or damage or destroy a breeding site or resting place, the works need a licence from Natural England. The licence is granted only where the three derogation tests are met: the purpose falls within the permitted categories, there is no satisfactory alternative, and the action will not be detrimental to maintaining favourable conservation status.

The obligations therefore have different triggers. Net gain applies to almost every development whether or not a protected species is present. A licence applies only where a specific offence would otherwise be committed, however small the scheme.

The statutory metric and what it measures

The metric converts habitats into units using area, distinctiveness, condition and strategic significance, with multipliers for how far away the compensation sits, how long it takes to reach target condition and how hard that habitat is to create. Hedgerows and watercourses are counted in their own units and cannot be traded against area habitats.

Trading rules stop a scheme replacing a distinctive habitat with an easier one. A species rich grassland lost on site has to be replaced with the same habitat type or something of higher distinctiveness, not with amenity grassland at a larger area. The gain hierarchy runs on site first, then off site, then statutory biodiversity credits as a last resort.

The metric is a habitat tool. It does not measure species presence, and a site supporting a maternity roost or a strong newt population can produce an unremarkable baseline score. That disconnect is exactly why the two regimes cannot be collapsed into one. The wider mechanics of habitat units as the currency of net gain matter here, because the unit arithmetic is what the local authority checks.

Compensation required by a species licence

Licence compensation is designed around the species, not around units. For bats that usually means replacement roosting provision of equivalent or better quality, in the right position, with the right thermal characteristics, available before the original roost is lost. For great crested newts it means a receptor site with ponds and terrestrial habitat, or participation in a district level licensing scheme where one operates.

The evidence base is survey data: preliminary roost assessment and emergence surveys for bats in the appropriate season, eDNA and population class assessment for newts, and so on. Seasonal constraints drive the programme, and a survey done outside the window will not support a licence application.

Surveys and any mitigation licence require a suitably licensed ecologist under the Wildlife and Countryside Act 1981 and the 2017 Regulations. A biodiversity net gain assessment likewise expects the statutory metric to be completed by a competent person under the Environment Act 2021 regime. An AI-assisted draft is a starting point for that professional and is not a substitute for the survey, the licence application or the professional judgement behind either.

Whether the same habitat can count twice

This is the question that generates the most argument, and the honest answer is that it depends on what the habitat is doing.

The additionality principle behind the net gain regime means enhancement that a developer is already legally required to deliver should not also be claimed as biodiversity gain. Habitat created purely to satisfy a licence obligation sits awkwardly against that principle, and off-site land registered on the biodiversity gain site register has to deliver enhancement that is additional in its own right.

At the same time, the metric measures what is on the ground. A receptor site that turns arable into grassland and ponds does change habitat units, and pretending otherwise produces a nonsense baseline.

The practical approach is to be explicit. Map the areas, say which obligation each area discharges, and where an area serves both purposes, say so and explain the reasoning rather than leaving the reviewer to work it out. Defra guidance and local authority practice on this boundary are still developing, so check the current position rather than relying on how a scheme was handled two years ago. The same care applies where a site sits in a nutrient neutrality catchment alongside its net gain obligation.

Securing each through condition or obligation

Net gain is secured through the biodiversity gain condition and then through a section 106 agreement or a conservation covenant, with a habitat management and monitoring plan running for 30 years. Off-site gains are recorded on the biodiversity gain site register, and the allocation to a specific development is recorded there too.

Licence compensation is secured by the licence itself, which carries its own method statement and conditions, and usually also by a planning condition requiring the approved ecological method statement to be implemented. That belt and braces approach exists because the planning authority cannot enforce the licence and Natural England does not enforce planning conditions.

Sequencing matters at determination. The authority has a duty to have regard to the requirements of the Habitats Regulations, which means it should consider whether the derogation tests are likely to be met before granting permission rather than leaving the question to the licensing stage. An application with no survey data invites a refusal on that ground alone, and the point is closely related to how habitats regulations assessment differs from environmental impact assessment.

Monitoring periods for each

Thirty years for net gain, with monitoring reports at intervals set in the management plan and submitted to the authority. That is a long liability and it needs an identified party, a funding mechanism and a management body that will still exist.

Licence monitoring is usually much shorter and is set by the licence, commonly a few years after the works, focused on whether the replacement provision is being used by the species. Different timescale, different question, different recipient.

Do not merge the two into one document assuming one report satisfies both. Reviewers read them separately because the licensing officer and the planning officer are different people with different statutory duties.

Common errors a reviewer spots

Condition assessments asserted without the criteria being worked through. Surveys carried out outside the seasonal window and presented as if timing did not matter. Hedgerow units omitted entirely. Trading rules breached by replacing distinctive habitat with something easier at greater area. Licence compensation presented as net gain with no explanation of additionality. Monitoring periods confused between the two regimes. And baselines taken after site clearance rather than before, which is the one that causes the most trouble.

For a project team working out what the ecology evidence base looks like overall, the report types by category give a reasonable starting frame. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.

This is general guidance, not legal advice. Check the position with your local planning authority, Natural England and a suitably licensed ecologist before relying on it.