Nutrient neutrality announcement: explanatory paper
On 29 August, the government announced steps to unblock housebuilding to deliver homes for local communities while protecting and improving the environment.
Applies to England
Summary
On 29 August, the government announced, as part of the Long Term Plan for Housing, steps to unblock housebuilding to deliver homes for local communities while protecting and improving the environment. This paper explains in greater detail what the problem is that needs to be addressed, the ways in which it is impacting local communities, and how the government intends to solve this issue in a way that both allows housebuilding to proceed and accelerates work to restore sensitive Habitats Sites.
What is the nutrient neutrality problem?
In some English bodies of water there is currently an excess of nutrients, mainly nitrates and phosphates. This long-standing problem causes excessive growth of algae in the water; a process known as eutrophication, which can disrupt healthy ecosystems and impact wildlife. The government is wholly committed to recovering the condition of protected sites that are in a poor condition as a result of excess nutrients, reflecting our duties to protect and improve these precious Habitats Sites which have been further bolstered by our legal targets under the Environment Act framework.
The sources of these excess nutrients are site specific but predominantly originate from wastewater and agricultural run-off (fertilisers and animal waste) – with a very small contribution made by housing. Despite this, in 27 water catchments spanning 62 local authority areas across England, new homes have been hindered by ‘nutrient neutrality’. This results from a ruling made by the Court of Justice of the European Union (CJEU) on the interpretation of the Habitats Directive in the ‘Dutch Nitrogen Case’ (1). As a consequence, Natural England has been required to advise that planning decision-makers and plan-makers, including local planning authorities, must require developers to demonstrate upfront that they have mitigated any additional nutrients they would produce, in order for plans and projects to be given the go ahead. This has placed an unavoidably burdensome process around the offsetting of small quantities of nitrates and phosphates from the wastewater arising from new developments, while achieving little to improve water quality.
Nutrient neutrality advice affects any plan or project which would result in additional overnight accommodation in one of these catchments. This means it is holding up all types of housing – from estates to self builds to the renovation of high street shops into homes– and deterring individuals and developers from seeking permissions. In some cases, homes already have planning permission and have been caught at discharge of conditions stage. It is also undermining efforts to put in place local plans that allow local authorities to properly control development in their areas. While developers of all sizes are affected, the impact on smaller developers has been particularly acute, as the inability to progress a particular site can threaten the viability of the whole business.
Based on the average annual housing delivery in the catchment areas covered by nutrient neutrality between 2015/16 and 2017/18, which is the most recent three-year period unaffected by COVID-19 and prior to nutrient neutrality guidance taking effect, the government estimates that around 16,500 homes per year are currently affected by nutrient neutrality rules, which amounts to over 100,000 homes by the end of the decade.
What is already happening to address the nutrient problem and why is further intervention needed from the government?
The government is already legislating, through the Levelling Up and Regeneration Bill, to require the upgrade of wastewater treatment works in designated catchments by 1 April 2030. We estimate that this will lead to significant improvements – around a 69% reduction in phosphorus loads and around a 57% reduction in nitrogen loads in total from wastewater treatment works, although this will vary between individual catchments. These upgrades will benefit existing homes, not just new homes, providing an effective approach to reducing wastewater nutrient pollution. This action will reduce a significant source of nutrient pollution to Habitats Sites, and builds on the wider measures outlined in the Plan for Water to transform and integrate our water system through more investment, tighter regulation, and more effective enforcement.
In addition, developers, environmental organisations, local authorities and Natural England have begun to invest in mitigations (such as new wetlands that can intercept nitrates and phosphates) so that as and where these are operational, new housing can be consented in the relevant area. In a small number of areas of the country, including the Solent and Tees Valley, these schemes are now operational and have allowed planning consent for some housing to resume.
It is however clear from listening to the concerns of local communities, local authorities and housebuilders that while a positive development, mitigation schemes are moving too slowly, with no guarantee that demand can be met imminently. The existing approach also does not take account of the fact that new homes will not contribute any additional nutrient outflow until they are not just built but occupied.
The current situation – and the lack of certainty for local people, developers, and people working in the construction industry – is undermining growth, jobs and the prospects of much needed housing for communities in many areas of the country. It is also not tackling the underlying sources of nutrient pollution, which is needed to move from mitigation to restoration of our protected sites.
What further action has the government put forward to solve the nutrient problem?
The government is therefore bringing forward a package that will both unlock housing development and at the same time better protect and restore our natural environment. Having considered the underlying causes of nutrient build up in the affected catchments, hearing from local councils and the development industry, and by working closely with Natural England, the government’s plan involves:
- a targeted and specific change to the law so that there is absolute clarity housing development can proceed, which will sit alongside the existing provisions in the Levelling Up and Regeneration Bill on upgrades to wastewater treatment works; and
- a wider environmental package, which will complement the wastewater treatment works upgrades in addressing the root causes of nutrient flows, including by increasing investment in nutrient reduction projects
Targeted legislative action
The amendments we have laid to the Levelling Up and Regeneration Bill make targeted and specific changes to the Habitats Regulations so that consideration of nutrient loads in urban wastewater is no longer required for planning decision making and plan-making in areas currently affected by nutrient neutrality. This means that, where development is linked to a wastewater treatment works or an alternative wastewater treatment system managed under the environmental permitting regime (such as septic tanks), local authorities will be able to grant planning permission – with more robust action to tackle nutrient pollution now rightly taken outside the planning system through the other measures we are putting in place.
Agricultural and industrial development will continue to be dealt with by separate permitting and regulatory processes. Water companies must also continue to take account of predicted growth in housing development alongside meeting permit limits.
This legislative change is the best way to ensure certainty for local authorities, communities and developers. The government considered a number of non-legislative options, including issuing guidance or placing greater emphasis on the ‘Imperative Reasons of Overriding Public Interest’ (IROPI) derogation. Such options would have continued to require lengthy case-by-case considerations by local authorities, and risked different interpretations by different actors in the system – when the government was conscious that any intervention to address the nutrient neutrality problem needed to remove uncertainty, not add to it. The government therefore settled on an approach that will provide clarity for local authorities and developers, ensuring homes can be built, and which at the same time provides a clear path to restoring protected sites.
As part of these new amendments, there is a power to address consequential changes that may be needed to other parts of the statute book in order to maintain the functioning of the system. The government intends to use this power sparingly, and only to avoid unforeseen or unintended consequences or contradictions that may arise given the complexity of this area of law. This power is subject to a sunset clause and Regulations made under it must be approved by a vote of both Houses of Parliament.
These new amendments sit alongside the existing provisions in the Levelling Up and Regeneration Bill which will place obligations on water companies to upgrade wastewater treatment works in designated catchments by 1 April 2030. These provisions alone will outweigh the nutrients expected from new housing developments by putting in place wider upgrades for the long term. These upgrades will benefit existing homes, not just new homes, providing an effective approach to reducing existing wastewater nutrient pollution, not just forestalling the possible future pollution from development. We have also amended these provisions in light of points raised by parliamentarians to allow for more catchment-based and nature-based approaches.
Wider environmental package
Alongside this legislative action, the government is introducing a series of measures – many of which are supported by additional investment – to tackle the underlying sources of nutrient pollution, restore nature, and leave our environment in a better state than we found it. These measures are focused on improving the condition of the affected Habitats Sites.
We are significantly expanding investment in and evolving the Nutrient Mitigation Scheme run by Natural England, doubling investment to £280 million to ensure it is sufficient to offset the very small amount of additional nutrient discharge attributable to up to 100,000 homes between now and 2030. Natural England will work with local authorities, the private sector and others to tackle nutrient pollution and work towards the long-term health and recovery of protected sites. The government is clear that developers should continue to play their part in tackling nutrient pollution, which is why we are working with the Home Builders Federation to structure appropriate and fair contributions – which we both agree are needed.
We are accelerating work to recover habitat sites in the catchments most impacted by nutrient pollution by developing and implementing Protected Site Strategies (PSSs). Introduced in the Environment Act 2021, PSSs will tackle the greatest challenges facing protected sites and find creative, nature-based solutions to solve them. They will be based on local evidence and consultation to build understanding around, agree, and then implement measures to restore sites.
We are taking action on agricultural nutrient pollution in partnership with farmers. Investment and innovation in nutrient management represents a win-win for food security, productivity, and profitability as we build a more circular economy for nutrients and keep more valuable inputs on farm. The government has set and remains committed to meeting Environment Act target to reduce nitrogen, phosphorus and sediment pollution from agriculture into the water environment by at least 40% by 2038. We have set an interim target of a 10% reduction by 31 January 2028, with a more stretching 15% target in catchments containing protected sites in unfavourable condition due to nutrient pollution.
We are investing £200 million in grants for improved slurry storage infrastructure and equipment. The next rounds of Slurry Infrastructure grants will open in Autumn 2023 and 2024, and Farming Equipment and Technology (FETF) in early 2024. This is £166 million of further investment into slurry infrastructure and equipment building on our successful existing offer in the Farming and Countryside Programme. In total this investment is expected to:
- deliver 1,400 storage projects by 2028;
- support 40% of farms to reach higher storage standards (6+ months covered storage), with improvements targeted near protected sites with water and air pollution risks from agriculture; and
- enable 75% of farms to spread slurry with precision equipment, reducing air and water pollution
We are committing a further £25 million to a new nutrient management theme within the Farming Innovation Programme, to help farmers manage plant and soil nutrients. This includes aiming to reduce pollution while increasing efficient nutrient retention (e.g., through investment to improve fertiliser products). This will increase resilience, reduce input costs and improve productivity. The effective use of waste has the potential to create new revenue streams.
We will consult this year on modernising our fertiliser product standards to support increased use of organic and recycled nutrients.
We will start introducing payment premiums into our environmental land management schemes in 2024. This will accelerate take up of certain high priority options, including those that provide benefits for water quality.
We will continue to conduct at least 4,000 risk-based inspections on farms each year - making sure that slurry and other pollutants are being handled in a way that minimises pollution of the water environment. The government is committed to minimising burdens on farmers who do the right thing while tackling poor performance where it occurs.
These important measures take forward, and build on our world leading Environmental Improvement Plan, our contributing toward delivery of our legally binding Environment Act targets, and the Plan for Water.
Conclusion
Taken together, the new legislative amendments, the wastewater treatment upgrades, and the wider environmental package will mean much needed housing can be built and the root cause of the nutrient problem can be tackled – resulting in positive outcomes for communities and for the environment.
Across the board, this government is strengthening protections for the environment. We remain fully committed to our legally binding Environment Act targets, our ambitious Environmental Improvement Plan, and our Plan for Water. The measures set out in the Plan will deliver the biggest investment programme in water company history to tackle unacceptable levels of pollution, as well as stronger regulation and tougher enforcement to bring about the improvements people rightly expect to see. Meanwhile, new homes will be the greenest ever thanks to requirements under our world leading Environment Act which will ensure they support nature’s recovery – meaning new habitats and green spaces must be created when building new housing, helping deliver our commitment to halting the decline of species by 2030.
Common questions
When will these changes come into force?
Subject to parliamentary approval, the government’s objective is to implement these changes as soon as possible after the Bill receives Royal Assent to enable development of new homes to start on site. We expect this to be in early 2024.
Will local authorities understand what they need to do? Does this provide certainty?
The government’s approach will remove the need for nutrient neutrality advice, in turn providing certainty for local authorities, communities and developers.
The Chief Planner has already written to local planning authorities to set out the new approach and further guidance will be provided before the commencement of the legislation, subject to it securing Royal Assent.
Is the government backtracking on its commitments to protect the environment?
No. The changes we are making through this package will not lead to regression in environmental outcomes and will in fact improve the condition of the affected Habitats Sites.
The obligation to upgrade wastewater treatment works will secure major investment from water companies and outweigh the nutrients expected from new housing developments by putting in place wider upgrades for the long term – and these upgrades will benefit existing homes, not just new homes, providing an effective approach to reducing existing wastewater nutrient pollution, not just forestalling the possible future pollution from development. We have also amended these provisions in light of points raised by parliamentarians to allow for more catchment-based and nature-based approaches.
The significant expansion of the Nutrient Mitigation Scheme run by Natural England, enabled by a doubling of investment to £280 million, is sufficient to offset the very small amount of additional nutrient discharge attributable to up to 100,000 homes between now and 2030.
The government has set legally binding targets under the Environment Act 2021 to reduce nitrogen, phosphorus, and sediment from agriculture entering the water environment by 40% by 2038, with an interim target of 10% by 31 January 2028, and 15% in catchments containing protected sites in unfavourable condition due to nutrient pollution by 31 January 2028.
How will the new offsetting programme work? How quickly will it be operational?
Natural England, DEFRA, and DLUHC will work with local authorities and third parties to deliver strategic interventions which can reduce excess nutrients and support the recovery of protected sites. Both nature-based improvements to legacy infrastructure and innovative technologies may be deployed, based on local needs and securing best value for money.
This will build on current mitigation schemes where they are in place, and engage with the future pipeline of potential schemes, across the public, private and conservation sectors. Our ambition is to move as quickly as possible to ensure real world environmental benefits are secured alongside new housing delivery. This means establishing a strategic approach for catchments that offsets the limited nutrients outflow from new housing at the same time as starting to restore Habitats Sites which are in a poor condition due to excess nutrients. Natural England’s and local stakeholders’ expertise will be hugely valuable in targeting interventions to the right places, thereby maximising benefits for water quality, people, and nature.
Could the existing mitigation market unlock the housing?
As explained above, in some areas of the country, developers, environmental organisations, local authorities and Natural England have begun to invest in mitigations (such as new wetlands that can intercept nitrates and phosphates) so that new housing can be approved in the areas where mitigation schemes exist.
It is however clear from listening to the concerns of local communities, local authorities and housebuilders that while a positive development, mitigation schemes are moving too slowly, with no guarantee that demand can be met imminently. The existing approach also does not take account of the fact that new homes will not contribute any additional nutrient outflow until they are not just built but occupied.
Various organisations have sought to estimate the forward pipeline of mitigation schemes. Given the developing nature of the market, such estimates carry significant uncertainty and risk of under delivery, with no guarantee that demand can be met soon enough to unlock much needed homes.
What are Protected Site Strategies?
The government’s plans will accelerate work to recover habitat sites in the catchments most impacted by nutrient pollution and with the most acute housing pressures. Protected Site Strategies have a statutory basis in the Environment Act 2021. That Act empowers Natural England to prepare and publish a plan to improve the conservation and management of a protected site and manage the impact on it from other activities.
These site-specific plans will be based on local evidence and consultation to build understanding around, agree, and then implement measures to restore important habitats. Each strategy is designed to be iterative and to implement measures to restore important habitats.
These strategies form part of the overall environmental package that will lead to an improvement in environmental outcomes.
Is this a weakening of the government’s commitment to green finance?
The government remains committed to nature markets and private investment in ecosystems services, to support our ambitious goals for nature’s recovery. Our target remains to raise £500 million per year in private finance for nature’s recovery by 2027, rising to over £1 billion by 2030. We are:
- scaling up markets for carbon sequestration, biodiversity, flood management and water quality - aided by the new British Standards Institution’s (BSI) UK Nature Investment Standards Programme launched in March;
- accelerating investment into nature – for example, through the Big Nature Impact Fund, in which Defra is investing £30 million seed capital to raise private capital to invest in a portfolio of projects across England; and
- building capacity and capability on the ground to develop investible projects and enable farmers and land managers to access nature markets.
Is this undermining farmers’ work to improve biodiversity and reduce nutrient pollution?
No, the government will continue to work closely in partnership with farmers through public grants, private finance, better regulation, and expert advice to improve the environment alongside food production.
We are necessarily changing our approach to nutrient offsetting for the marginal impact of new development in 14% of England’s land area. Our legal targets and the strength of our commitment for nature recovery are unchanged. Farmers remain critical to the delivery of our objectives for biodiversity, water quality, and wider environmental improvement.
What is the basis for the government’s figures?
Number of houses affected: Based on the average annual housing delivery in the catchment areas covered by nutrient neutrality between 2015/16 and 2017/18, which is the most recent three-year period unaffected by COVID-19 and prior to nutrient neutrality guidance taking effect, the government estimates that around 16,500 homes per year are currently affected by nutrient neutrality rules, which amounts to over 100,000 homes by the end of the decade.
Areas affected: 27 catchments covering 62 local authorities are affected by Natural England’s guidance, which accounts for approximately 14% of England’s land area.
Impact of wastewater treatment works upgrades: The government estimates that the upgrade of wastewater treatment works in designated catchments by 1 April 2030 will lead to around a 69% reduction in phosphorus loads and around a 57% reduction in nitrogen loads in total from wastewater treatment works, although this will vary between individual catchments and may differ where water companies are able to make use of alternative catchment-based approaches. These figures have been generated by modelling the expected decrease in the concentration of nitrogen and phosphorus in treated wastewater following the upgrade of relevant treatment plants (those serving a population equivalent over 2,000) to the nutrient pollution standards set out on the face of the Bill (0.25 mg P/L and 10 mg N/L), relative to the concentration of nitrogen and phosphorus currently discharged by those treatment plants. The government is committed to publishing a full impact assessment for the costs and benefits of the final wastewater treatment work upgrades, which will be mandated by the Levelling Up and Regeneration Bill.
Footnotes
(1) The Dutch Case: Joined Cases C-293/17 and C-294/17 Coöperatie Mobilisation for the Environment UA and Others v College van gedeputeerde staten van Limburg and Others. CURIA - List of results (europa.eu)