Out-Law Analysis 5 min. read
05 Sep 2023, 3:08 pm
Housebuilders in England can expect the UK government to have to make concessions on its plans to prevent ‘nutrient neutrality’ rules from stalling development.
The government last week tabled an amendment to the Levelling Up and Regeneration Bill (LURB) that it said would address “defective EU laws” regarding nutrient neutrality, which is widely acknowledged are blocking some housing developments – even for schemes that have been granted planning permission. The amendment, if passed, would mean local planning authorities would have to assume no adverse impacts from urban wastewater when making decisions – removing the need for nutrient neutrality to be demonstrated.
There has been a backlash to the proposals from environmental groups, however, and the plans are likely to come in for significant scrutiny in the House of Lords as the LURB passes through the next stages of the parliamentary process.
A compromise may need to be found that satisfies peers and enables the legislation to pass. It is likely that this will place a greater emphasis on mitigation of environmental impacts, but developers will be looking for improvements to be made to the existing mitigation scheme as the way it works currently is also having an impact on development.
A ruling by the Court of Justice of the EU (CJEU) in 2019 in the so-called ‘Dutch nitrogen’ case has stalled the development of new homes – the latest estimates from the Home Builders Federation suggest 145,000 homes have been delayed across 74 local authorities.
It is perhaps more likely concessions will have to be made. This could, for example, be to allow discharges of conditions and reserved matters approvals for existing permissions granted before a set date.
Nitrogen and phosphate nutrients from housing development wastewater have the potential to adversely affect protected watercourses. Following the case law established pre-Brexit by the CJEU, Natural England published nutrient neutrality advice that effectively blocked new homes from being granted at the outline application, detailed application, reserved matters application, and discharge of planning condition stages of the planning process. Under the guidance, appropriate assessments are required to be undertaken to assess the environmental effects and where damage to the protected watercourse cannot be ruled out, then mitigation to eliminate the impact is required before a planning permission can be granted, so that no overall increase in nutrient pollution occurs. This is where the term ‘nutrient neutrality’ is derived from.
Earlier this year, in the case of CG Fry & Sons Ltd v SSLuHC, the High Court in London ruled that nutrient neutrality needs to be evidenced by an appropriate assessment before planning conditions are discharged. That decision, however, has been challenged and is awaiting a hearing in the Supreme Court.
Mitigation opportunities are not straightforward. The greatest shift will come from wastewater treatment plants being improved to reduce nutrients passing through the plants into the watercourses. However, this takes time and has resulted in the government proposing changes to the LURB to require such plants to be upgraded by 1 April 2030.
The other significant source of improvement in nutrient pollution will come from improvements in farming practices and land management. The homebuilding industry is tasked with identifying nature-based solutions, and the primary solution to-date has been to buy up tracts of farming land and retire that land from farming, thereby providing a mitigation to cancel out any additional nutrient pollution from the development on the site. This measure comes with its own challenges, however, as it involves the removal of productive agricultural land and undermines the UK food system’s resilience, which has come into particular focus following the food supply shortages arising from the Russia-Ukraine war.
In July 2022, Natural England introduced the Nutrient Mitigation Scheme where developers can purchase nutrient credits as a form of mitigation. However, only one mitigation area is currently operational, designed to mitigate the impact on the Teesmouth and Cleveland Coast Special Protection Area and Ramsar site. That mitigation regime was launched on 31 March 2023 at a credit cost of £1,825 each. However, not all available credits were launched at once – rather, they were made available in tranches of 400 credits, with applications having to be submitted in four-week blocks in April, July and October 2023, and January 2024, with decisions made within the following four weeks on each occasion. The benefits of this first mitigation scheme in respect of stalled development in that area have still to be fully realised, as a result.
The amendment, if passed in its current form, would wipe out the impact of the Dutch nitrogen case in respect of the housing development and planning process in England. Local authorities would not need to take account of appropriate assessments nor of Natural England representations on applications.
There has been uproar from environmental groups and the Office for Environmental Protection has written with warnings that the Bill as amended would reduce the environmental protections provided by current law.
Whether the amendments survive debate in the Lords in their current form is questionable. It is perhaps more likely concessions will have to be made. This could, for example, be to allow discharges of conditions and reserved matters approvals for existing permissions granted before a set date. This would have a more modest environmental impact.
The LURB is to pass through three further report stages – on 4,6 and 13 September – and a third reading in the House of Lords, before it will be passed back to the House of Commons, which will consider any amendments. There is potential for parliamentary ‘ping-pong’ – where the draft legislation passes between both Houses until such time as consensus is reached on its provisions. Only when consensus is reached will the Bill be able to receive Royal Assent and therefore become law.
November 2023 is said to be the target for Royal Assent, but these recent contentious changes threaten that timetable. Even after the LURB is on the statute books, its provisions still need to be enacted – the earliest any surviving amendments pertaining to nutrient neutrality might apply would be November or December 2023. Given the party conference season is imminent, it seems likely that the LURB will still be subject of debate well beyond November.
In its announcement, the government also revealed additional funding for the Nutrient Mitigation Scheme, as well as for farming interventions. It also indicated that it will hold discussions with industry with a view to ensuring large developers make an “appropriate and fair contribution” to the Nutrient Mitigation Scheme.
The Nutrient Mitigation Scheme works in a tried and tested fashion – much like SANG (suitable alternative natural greenspace). Developers will be comfortable paying for mitigation – so long as it is available when needed. If the Scheme could be rolled out quickly and more widely this could unblock the development of new homes and satisfy environmental protections. A combination of the Scheme and a watered-down LURB amendment could work to balance environmental versus social concerns, whilst mid- to long-term farming and wastewater treatment improvements are awaited.
The new announcement does not address other restrictions that are preventing an estimated 20,000 homes from proceeding due to water neutrality, based on a report by local authorities in the West Sussex, and a further 19,400 homes blocked due to the recreational impact zone around the Chilterns Beechwoods. Those issues will also need to be grappled with by the government.