An overview of statutory biodiversity credits, covering what these are, how they differ from biodiversity units, the mitigation hierarchy, and the appropriate circumstances for purchasing credits.
Overview of statutory biodiversity credits
Statutory Biodiversity Credits are not to be confused with Biodiversity Units (BUs), which are normally obtained through habitat banks. Statutory Credits are a ‘last resort’ option for applicants or developers who are unable to secure/deliver the required 10% uplift on-site and cannot obtain off-site BNG units via a habitat bank. Statutory credits are sold by the government to prevent development from stalling, and the income is reinvested in nature projects. Income generated by the government from credit sales are planned to be spent in line with requirements set under the Environment Act 2021.
The policy intention is that over time, the private market will generate a supply of units of all habitat types which are readily available across the country and available to purchase in small increments. This should eventually lead to less reliance on statutory credits. Defra will continue to evaluate statutory credit prices to ensure that the price is set correctly to not undercut the off-site biodiversity units market and to continue to incentivise the following of the mitigation hierarchy.
Important considerations for local planning authorities
If statutory credits are collectively identified as the solution for a particular development, all parties involved, especially the relevant planning authority, must be made aware of this. In an ideal scenario, the credit sale/agreement process can take up to 2 weeks after the decision notice is received. However, decisions on non-major applications may take up to 8 weeks, and for major applications, this may take up to 13 weeks.
Local planning authorities (LPAs) are encouraged to have early conversations with developers and applicants to discuss the purchase of statutory credits as part of their plan to deliver the mandatory 10% within their proposals. These conversations can also share knowledge of the existing market locally, identify ways of working with banking providers and can also help identify any unseen barriers to progressing applications. Defra has suggested using platforms such as Gaia or Future Homes Hub to understand the unit marketplace in greater detail. Both platforms provide a visual database of units available on the market.
When an LPA confirms that a developer can use statutory credits, the LPA should confirm by email so that the developer can start the statutory credit purchase process following conditional planning approval. It is the responsibility of the LPA to advise applicants that they can purchase statutory credits only after they fulfil their non-BNG pre-commencement planning conditions.
A valid decision notice from the LPA is required by the developer LPAs to send to Natural England as soon as they apply to purchase statutory credits. Natural England will not process a purchase without a valid decision notice from the LPA.
LPAs should advise the applicant to use the unit shortfall summary tab to support them in purchasing the correct number of credits. The local authority may need to advise applicants that they cannot purchase statutory credits if bespoke compensation is required.
LPAs do not need to report on habitat creation or enhancement supported by the statutory biodiversity credit revenue. There would not be any significant gain achieved through purchasing statutory credits and responsibility for spending credit income on habitat enhancement, and the monitoring of this will be the responsibility of the government. Defra is required to report annually to parliament on statutory credits purchased and what the income has been spent on.
Relevant information
In September 2024, Defra and Natural England colleagues provided an overview to the PAS BNG Forum for LPAs on BNG statutory credits: what they are, how they differ from units, and what LPAs should be doing to ensure the BNG hierarchy is properly considered and credits are being purchased correctly. You can view a recording of the session and access the slide pack below.
If you require and accessible version of this document please contact [email protected]
If you have a query related to a specific credits application (i.e. you have made an application and need to submit your decision notice from the LPA, or update contact details for a credits purchase), you can get in touch with Natural England via: [email protected]
For anything else relating to Statutory Biodiversity Credits, you can get in touch via: [email protected]
Developers/applicants can use the estimator tool available here to help identify the estimated cost of the statutory biodiversity credits required to deliver mandatory BNG for proposals. The information required to calculate the estimated cost should be derived from the statutory biodiversity metric’s unit shortfall summary. Potential credit requirements for proposals should be discussed with the relevant LPA.
It is possible that a developer, on looking at statutory credit prices, decides that it would make more sense for them to mitigate onsite or look to purchase locally available units. Defra expects this to be more common in the early days as stakeholders are adapting to the BNG system. If they have already received permission, then this should be dealt with on a case-by-case basis.
The developer should go through the mitigation hierarchy, looking first to mitigate or offset on-site. If that is not possible, developers should provide the LPA with evidence that they have approached 3 local or national suppliers, habitat banks or trading websites and that insufficient off-site options are available (see Small Sites below for credit purchases where less than 0.25 biodiversity units are required).
There is no requirement to look for biodiversity units locally; however, it will likely be cheaper for the developer to purchase units locally, so there will be an incentive to do this. Once credits have been purchased, the developer has discharged their BNG duty.
Officers should refer to the unit shortfall summary tab to identify any highlighted rows in red. The purpose of this tab is to outline or suggest whether statutory credits will be used to mitigate the impact of the development.
It is at this point that informal conversations are encouraged to navigate how the developer/applicant will secure the necessary credits to meet the mandatory gain. This stage of the process is also ideal for the LA to highlight the mitigation hierarchy and to ensure all parties involved within the application process are aware of an impending purchase of statutory credits, especially the LPA.
The unit shortfall tab on the main statutory metric applies the spatial risk multiplier and shows the correct number of credits needed with no further calculations required. That's why it’s important to cross-check the credits purchase receipt against the unit shortfall tab, not the headline results tab, which shows the data before the spatial risk multiplier is applied.
When using the Small Sites Metric, this calculation would have to be done manually. The SSM, as it is designed to be a simpler, more basic metric, does not have the ‘unit shortfall tab’ of the main metric, which shows how many credits by Tier are needed. You can use the SSM to calculate the number of statutory credits required if all credit purchases are within the same tier.
This should cover most applications using the small sites metric. Defra will work on creating further guidance on this. The minimum number of statutory credits which can be purchased for a single development is 0.01.
Credits are linked to specific planning applications and are non-transferable and non-refundable as set out in the terms and conditions of sale. Defra expects developers to read the terms and conditions ahead of purchasing credits. There are no refunds if the developer buys more credits than are needed for an application, and they are not transferable between developments. Planning references are included on the receipt provided by Natural England.
If either on-site habitat units are not delivered over time and/or the loss of habitat during construction is greater than the developer said at the planning stage. Natural England would allow a developer to purchase more credits retrospectively.
Even for small developments, statutory biodiversity credits should still be treated as a last resort. Defra encourage all developers to follow the mitigation hierarchy and look first to mitigate on-site or purchase off-site units, ideally locally. Defra does expect the supply of units to increase and for it to become easier for developers to purchase fractions of units. The metric financially incentivises the following of the mitigation hierarchy, and Defra does not expect this to change.
If the developer requires less than 0.25 Biodiversity Units (either area or linear habitats), then they can buy statutory credits without having to evidence that they have approached at least 3 suppliers to look for off-site units. However, units may still be a better option for the developer financially. Defra encourages even the smallest site to follow the mitigation hierarchy and look first to mitigate impacts or offset onsite. These cases will also have the option to purchase off-site units on the private market before requiring statutory credits.
There are no refunds available for credit purchases, unless planning permission is revoked by the LPA. LPAs are advised to direct applicants/developers to Natural England’s (NE) credit services team or to the credit enquiries mailbox. It is important to note that in most cases, a refund is highly unlikely and that developers must be clear regarding credit purchases from the outset.
Developers cannot buy statutory credits until a decision notice is made available. Natural England will not sell credits until a decision notice is provided by the LPA. Credits are non-refundable, so developers should ensure that there is a confirmed need for credits and that the correct number of credits has been purchased. It is in the developer’s interest that they notify the LPA. The terms and conditions of the credit purchases state that the mitigation hierarchy must be satisfied and that purchases are non-refundable. Terms and conditions of credit sales can be found here.
DISCLAIMER:The PAS team updates these pages regularly to reflect current guidance on biodiversity net gain as best we can. Our goal is to provide accurate, timely information to support local planning authorities. If you are from a local authority and have any questions about the content or need further information, please contact us at [email protected]. This page was last updated on 02/10/25.