Is the Government announcement on Nutrient Neutrality a good thing?

1 September 2023

Question 1: Has Gove bought certainty in allowing housing development to take place by introducing the late amendment to the Levelling Up and Regeneration Bill and (Question 2) is it going to damage the environment by doing so?

On the face of it there is an argument to suggest the Government has put a red line through the Habitat Directive (Council Directive 92/43/EEC) and section 2(1) of the European Union (Withdrawal) Act 2018 and the Dutch Nitrogen case and that this will result in more phosphate and nitrogen pollution. However, is this actually the case? 

The amendment published today simply provides that local planning authorities must assume that any planning consent does not have any effect on the pollution discharge from the relevant sewage works.  The wording is:

s.85A (2)      When making the relevant decision, the competent authority must assume that nutrients in urban waste water from the potential development, whether alone or in combination with other factors, will not adversely affect the relevant site.

S.85A (4)      The assumption in paragraph (2) must be made even if a finding (however described) to the contrary is made— (a) in the conclusions of an appropriate assessment, carried out in accordance with regulation 63(1) or 65(2) and despite paragraph (3)(a), (b) in representations made by the appropriate nature conservation body, in accordance with regulation 63(3), or …

In other words, the local planning authority is not allowed to take potential pollution into account when determining a planning application and therefore the logical conclusion is that there will necessarily be more pollution which will damage the environment.  So, the answer to the Question 2 is currently yes.

The answer to Question 1 is unclear, but in my view the proposed changes have probably bought about more uncertainty, as there is an almost certain likelihood that the courts will be asked to intervene: maybe an action by the EU for breach of the UK's obligations under its withdrawal treaty?  

Court action poses the question: what if the courts determine that the statutory basis for the planning consents was unlawful?  Will the planning consents have to be reconsidered and determined subject to the provisions of the Habitat Directive?  If this occurs who retrospectively bears the cost of compliance with the nutrient neutrality requirements – is it the local authority, the development company or the house owner?  

The result of the announcement is that there is now probably more uncertainty than there was last week.  Next week might be different as the Government makes more announcements, but I am not holding my breath. 

The sums of money involved in the nutrient neutrality market are very significant.  Especially when compared to the sums of money the Government has said it will invest, which are a mere drop in the ocean and do not get anywhere near the sums the private sector was prepared to spend to implement schemes that would have delivered nutrient neutrality.  So instead of getting the private sector to pay the burden is now to be shouldered by the tax-payer.  How much is the taxpayer prepared to spend to offset development company profits is a question that will be hotly debated.

The argument that by making the amendment they are releasing 100,000 new homes to be built is facile. The costs to the development companies is significant, but they have factored the costs into the development and the price they paid for the land.  The cost of nutrient neutrality has already effectively been borne by the landowner who sells the land to the development company.  The development companies have just received a massive boost in profits because they have already factored the cost of nutrient neutrality into their developments.  The immediate very substantial increase in their share prices following the announcement reflects this.  

We fear that all the Government has done is increase uncertainty in the market and delay the building of houses.  Even if they are built every solicitor acting for the purchaser is going to have to advise their clients that the new built house they want to buy might become subject to an obligation to meet nutrient neutrality requirements once the courts have determined the (un)lawfulness of what is being proposed.  Will such house be mortgageable and who is going to buy a house under these circumstances?  

As per my article on the Renters Reform Bill, there are always unintended consequences if things are not properly thought through.

These are just my initial personal thoughts. No doubt better informed commentary will follow from many more learned commentators as the Government makes more announcements and the consequences become better understood.  But for now, more uncertainty prevails - so the answer to the first question is no.​​​​​

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