Have we solved the bat tunnel problem?

And everything else you wanted to know about the new Planning and Infrastructure Bill

Sir Keir Starmer’s Government was elected on a mandate to ‘back the builders, not the blockers.’ Recent events drive home that there can be no room for complacency for this agenda. If Britain is to be able to defend itself (and Europe) against Russian aggression then we need a stronger economy to pay for it. When our core economic weakness is a planning system that prevents us from building the homes, roads, railways, and power stations we need then, put simply, fixing our planning system is a national security issue. We need to, as Chris Curtis MP put it, ‘Build for Victory’.

Getting Britain building isn’t as simple as passing a new law and many of our biggest problems can be tackled without primary legislation. Setting more ambitious housing targets, overruling NIMBY councils who block data centres and film studios, and approving clean energy projects like solar farms are all things the Government can (and have) done without putting a bill before Parliament.

In fact, they could go even further with existing powers. For example, Angela Rayner could double the size of Cambridge using a little-known tool already at her disposal. She could even mass permit six-storey housing near transport across all of Britain’s most unaffordable cities using a brand new power created by the last Government.

Yet, there are still some huge problems that we can’t tackle unless we change the law. Take the ‘bat-shed crazy’ £121m bat tunnel that HS2 was forced to build. It is tempting to believe that with more able people in charge of HS2 and Natural England that this state of affairs could have been avoided. But, HS2’s bat tunnel was the result of following inflexible rules derived from the EU’s 2017 Habitats Regulations. In a thread on X, Labour MP Dan Tomlinson uncovered Natural England’s advice:

It is easy to attack Natural England (and some criticism is deserved), but their task is merely to ensure developments comply with environmental legislation passed by politicians. Legislation that in many cases was passed with resounding majorities. If we want to stop the bat tunnels, the fish discos, and the theme parks killed by rare jumping spiders then there’s no use player-hatin’. We need to change the rules of the game.

The Planning and Infrastructure Bill published yesterday does exactly that. It changes the law on planning in three key ways.

1. It changes the way we protect nature moving from an inefficient site-by-site approach to a new model of strategic compensation.

2. It limits (but doesn’t remove) the opportunity to challenge major infrastructure planning decisions in the courts.

3. It removes the power of political planning committees to refuse permission when a scheme has been signed off by planning officers (in most cases).

The Bill, it should be noted, does a lot more. For example, it makes it possible for the National Grid to offer substantial electricity bill discounts to households living near newly-built pylons. It also creates a funding model to make viable the Long-Duration Energy Storage (LDES) we need to deal with long periods without wind or sun. (Fun fact: More than 15 times more VC money was invested in Blockchain in 2021 than was invested in LDES between 2001 and 2021.)

Why do we need to change our system of nature protection?

Britain’s system of nature protection is the worst of both worlds. It makes building infrastructure and housing slower and more expensive than it ought to be. And it does a crap job of protecting nature: many of our key biodiversity indicators are flashing red.

The EU-derived status quo requires a bespoke assessment of each and every development’s impact on protected species (e.g. Great Crested Newts and Bechstein Bats) and sites (e.g. National Landscapes and Sites of Special Scientific Interest). Development can only proceed if this highly precautionary assessment either rules out an adverse impact on species or sites, or if three conditions are met: (1) there is an ‘imperative reason of overriding public interest’, (2) there is no alternative and (3) the impact can be mitigated through compensation.

The current system operates on a project-by-project basis. Instead of doing an assessment for the impact of housing development (in general) on river pollution in a county, every single development must have its own environmental impact assessment and habitats regulations assessment. And outside of some special cases, developers must plan mitigations on a case-by-case basis.

This is a problem for two big reasons.

First, it delays development. Gathering the evidence is expensive and time-consuming. Certain studies can only take place at certain times of the year and some studies can take multiple years. And the final result can be tens of thousands of pages long. Britain Remade recently discovered that North Somerset Council’s 80,000-page planning application to reopen three miles of railway between Bristol and Portishead contained over 1,000 pages on bats alone.

The process of actually agreeing what to do with all that information can take even longer. To mitigate their impact on protected fish, EDF initially proposed including an “acoustic fish deterrent” that would play loud sounds to deter fish from entering the intake pipe. Yet, it was later discovered implementing this fish disco solution would potentially risk the lives of commercial divers due to the need for regular maintenance in murky water. EDF then fought this requirement for years and argued that local wildlife would be better protected by flooding some nearby farmland to create a saltmarsh. But, the dispute dragged on for so long that in the meantime ‘acoustic fish deterrent’ technology advanced to the point that a new system could be installed without the need to be reliant on commercial divers.

Further delays are caused by the requirement that mitigations are in place before development can proceed. It isn’t possible for a project to proceed if there’s a short-term dip in a protected species’ population even if ecologists are confident the long-term impact will be overwhelmingly positive.

Second, it is bad value for money. There is no magic money tree. Costs imposed on developers are ultimately passed onto the general public. In the case of HS2, a £121m bat tunnel comes directly from the public purse. In the case of energy or housing projects, the added costs fall on bill payers and renters. It is in our interest then to ensure that each and every mitigation actually delivers good outcomes for nature.

Yet, they often do not. By restricting mitigations to project-specific impacts, the pool of things developers can spend their money to protect and enhance nature on is unnecessarily limited. Few conservationists would seriously argue that a £121m bat tunnel is the most cost-effective way to protect Bechstein’s Bats, yet the status quo effectively ruled out the most efficient ways of helping bats across Britain.

HS2 is a special case as a mega-project, but most developers have nowhere near the £80bn budget of HS2 ltd. The result is that even more effective solutions are ruled out. Not because they wouldn’t solve the problem at hand, but because they take place at a scale that no individual developer can achieve. Take newts for example, it is better to create one large habitat for newts in an area rather than protecting lots of little ponds. Why? In short, large habitats create more genetically diverse populations that are less vulnerable to sudden population collapse.

What will the Bill change?

The Planning and Infrastructure bill is a deliberate move away from ineffcient project-by-project assessments and mitigations and towards a more effective strategic approach to conservation.

Under the Strategic Model, developers would no longer carry out lengthy assessments for every project they bring. Instead, they would rely on strategic environmental assessments which take place over a much larger area and cover multiple projects.

If a project would have a negative impact on nature, for example, a new housing development leading to more sewage being discharged into a river, developers would get a choice. Either continue as normal and design your own mitigations, or pay into a new Nature Restoration Fund that funds mitigations at strategic level. The latter option, for instance, would allow developer funds to be pooled together to fund larger (and presumably better) mitigations. When payments into the Nature Restoration Fund are made, the Government will disapply the Habitats Regulations.

There’s a catch however. The Nature Restoration Fund will only be an option in cases where a delivery body, for example Natural England, has put in place a Environmental Delivery Plan (EDP). For example, an EDP for river pollution (what’s known as ‘nutrient neutrality’) might involve a Nature Restoration Fund paying to upgrade sewage treatment facilities and subsidise farmers looking to build new slurry stores. In effect, developers can opt-out of the extremely bureaucratic (and expensive) status quo if, and only if, there’s a Government-approved plan in place.

Will this make it easier to build homes, roads, and power plants?

In theory, yes. The issue is whether they can put sufficient delivery plans in place, and whether these work for all (or even most) species. When an EDP is in place, developers will be able to avoid the complicated, expensive and slow status quo. So long as the Nature Restoration Fund’s contributions set in the EDPs are not excessive, this will make development a lot easier.

The big risk is that Natural England (or any other delivery body the Government picks) fails to put enough delivery plans in place, or even finds that putting EDPs in place for certain species is extremely difficult in practice.

The Government’s reforms are evolutionary, rather than revolutionary. The Habitats Regulations still sit underneath the new system and every EDP will have to show not only a general environmental improvement but an improvement to each and every environmental feature covered. As the bill is currently worded it would not be possible, for example, for a railway project to use a Bats EDP to discharge the requirement to build a bat shed if the specific species of bat they impact isn’t covered in the EDP.

One improvement might be to allow a degree of fungibility between species. If your railway project threatens a colony of Bechstein’s bats and it turns out it is extremely difficult to create an EDP for that specific species, it should still be possible to contribute to an EDP that saves other vulnerable bat species. If you’re a bat lover, wouldn’t you prefer to save 500 Grey long-eared bats and 500 Greater Mouse-eared Bats than 300 Bechstein’s Bats?

In terms of delivery, my understanding is that the Government plans to priortise the biggest ticket issues (e.g. nutrient neutrality blocking 100,000 homes from being built). Full coverage may never be possible, but with adequate funding it should be possible to cover all of the big ticket items in three to four years. Looking at the Portishead line’s planning application, it is clear that the Habitats Regs follow a extreme version of the pareto distribution: 5% of threatened species appear to cause around 90% of the issues.

Another aspect of the bill that may cause headaches is that only impacts covered by the EDP are exempt from Habs Regs. It is possible for instance that a housebuilder may be able to pay into the Nature Restoration Fund for nutrient impacts on a river, but still have to carry out a Habs Regs assessment (and fund mitigations) for recreational impacts. This might save some cash, but it wouldn’t meaningfully reduce planning delays.

There are real world precedents to show that when implemented a strategic approach can cut costs, speed things up and better protect nature. For example, District Licensing for Newts dramatically reduced the newt-related paperwork burden for housing developers.

Yet there are also precedents that suggest putting delivery plans together is fraught with difficulty. The Offshore Wind Environmental Improvement Package was announced in 2022 and was designed to avoid predictable habitats issues (e.g. the impact on Kittiwakes) from stalling development. It is very much the precursor to the strategic approach the Government has chosen to apply much more broadly. Yet, the scheme is still under development

Is the bat tunnel problem solved?

It depends. Until there is an EDP in place for every single species and every single protected site, there will be a risk that the existing system will throw up absurdities like bat tunnels and fish discos. The real danger is that developing EDPs will be harder than expected for some types of species where impacts in location A can’t be offset by mitigations in location B.

Major infrastructure projects are particularly at risk of encountering exactly these issues. For example, HS2’s impact on Bechstein’s Bats alone was enough to threaten their favourable conservation status at a protected site. This isn’t the same as offshore wind farms and housing developments where multiple projects all have a potentially large negative impact on a specific habitat issue.

So, how can we fully solve the bat tunnel problem?

Strategic compensation is the right solution, but it only works if there’s a delivery plan in place. While the aim must be to get delivery plans in place for as many issues as possible, there needs to be a backup option for the cases where delivery plans haven’t been agreed and following the status quo will lead to perverse outcomes.

That’s why Britain Remade thinks there ought to be an additional power for the Secretary of State to authorise new significant development (by disapplying the Habitats Regulations) even in cases where there is not sufficient evidence (e.g. absence of an EDP) that a strategic approach will allow favourable conservation status to be maintained in return for best efforts strategic compensation through the Nature Restoration Fund.

In effect, for a major infrastructure project, the Secretary of State would be able to step in and disapply the Habitats Regulations if they are convinced that following them would require extremely poor value for money mitigations such as bat tunnels and fish discos.

This isn’t an ideal situation – it’d be better to have delivery plans in place, but if Natural England or whoever is put in charge of coming up with them is dragging their feet – then it is the only way the Government can fully deliver on their rhetoric on £121m bat tunnels.

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That’s the nature side covered, but there’s more in the bill. First, there’s action to restrict the ability of NIMBYs and eco-zealots to delay infrastructure projects with frivolous lawsuits. Second, and more controversially, the power of elected councillors to block planning applications will be removed in most cases.

Will this mean fewer infrastructure projects are delayed by legal challenges?

Not necessarily, but the delays should be shorter.

National Highways, the government body tasked with building new major roads, reckons that when a major road scheme is hit by a legal challenge it costs the taxpayer between £60m to £120m. Why is the cost so high? First, there’s the cost of paying the specialist lawyers to fight the challenge. Second, there’s the problem of inflation. Construction inflation has tended to run high. And in high inflation periods (e.g. the gas price spike), a year’s delay can push up total project costs by around 10%.

As far as I know, this isn’t counting the other big costs from legal challenges. The risk of losing a case embeds caution throughout the planning process. Every requirement from consultation to environmental assessment is gold plated to ensure a legal challenge cannot lead to planning permission being overturned. On top of that, legal challenges make it harder for developers to timetable construction. Britain is unique in that our largest construction businesses are much smaller than their European counterparts. France’s largest construction company, Vinci, had a revenue six times larger than Balfour Beatty, Britain’s largest builder. One reason is that the inability to know exactly when a project will start forces builders to rely heavily on more expensive subcontracting lest they end up with thousands of staff and millions of pounds of equipment sitting idle.

What the bill changes is the number of opportunities someone gets to take a major infrastructure project to court. Under the status quo, you get three tries. First, you submit your case to the High Court in written form. The judge then looks at it and decides whether or not it’s worth accepting for judicial review. If the judge says no, you get a second chance at an oral hearing - again at the High Court. If the judge still says no, you get a third bite of the cherry at the Court of Appeal. Even unsuccessful legal challenges can add well over a year on to a planning timeframe.

In a review commissioned by the last Government, top planning lawyer (and occasional podcaster) Lord Banner KC proposed scrapping the initial ‘papers’ stage and limiting the opportunity to take JR applications to the Court of Appeal when an oral hearing is unsuccessful. The Government has accepted this request, which should cut the length of delays by a third to a half, and included it in the Planning and Infrastructure Bill.

NIMBYs and activists could still use JR to delay projects, but the delays will be measured in months not years.

Could they go further on legal challenges?

The Government’s proposal limits the damage any JR attempt can do, but it doesn’t tackle the moral hazard problem.

In almost every area of common law, there’s a principle that if you are sued by an individual and successfully win your case, then you shouldn’t be on the hook for the legal fees you spent on fighting it. There’s an exception however. Nearly three decades ago, Britain signed up to the Aarhus Treaty which guaranteed a ‘right to access environmental justice’.

This sounds harmless, but it has been operationalised in Britain (under Theresa May’s government in 2017) as a cap on the legal costs a developer can claim back from a litigant when their lawsuit is unsuccessful. Individual costs are capped at £5,000, while organisations (e.g. the CPRE) have a slightly higher cost cap of £10,000. There is the potential to raise the caps on a case-by-case basis. For example, in one case a judge raised the cap for ClientEarth - a well-funded repeat litigant on climate issues. But, use of this power is rare.

The combination of the Aarhus cost caps with crowdfunding websites like CrowdJustice has meant that it has become dramatically cheaper to mount legal challenges. Even when lawsuits are unsuccessful they can have a chilling effect on similar projects, National Highways is effectively forced to price in delays. At the margin, it means some otherwise good viable projects don’t get funded.

Recently, a number of politicians from Labour and the Conservatives have begun questioning whether cost caps are actually a good idea. One option the Government could take would be to direct judges to raise the caps when they deal with repeat litigants (e.g. Transport Action Network or Dr Andrew Boswell – both of whom have taken multiple infrastructure schemes to court unsuccessfully). A more radical option would be to scrap the caps altogether and treat environmental lawsuits like any other.

Removing the power of elected councillors to block applications sounds undemocratic, is it?

Not really. As it stands, democratically elected councillors engage in the planning process at two points. First, they develop a local plan (in line with national policy) that identifies the sites where they want to see development targeted. This will also set out the types of development they do (and don’t) want to see. Second, a subset of councillors – the planning committee – vote on individual applications after receiving recommendations from the council’s unelected planning officers. The Planning and Infrastructure Bill proposes to get rid of that second step in most cases.

Under the new system, elected officials would still get to have their say on what types of development can and can’t go ahead when they set their local plan. It’s just they can’t then turn around and tell a local plan compliant proposal that they’ve changed their mind. It’s not eliminating democracy, it’s shifting it from elected officials using their discretion on a case-by-case basis to elected officials setting (and sticking to) rules.

In fact, most of our democratic decision making is closer to the latter than the former. Our elected government sets the Bank of England’s mandate, but it doesn’t tell it to cut or raise rates each month. Parliament sets the minimum and maximum sentences for judges to apply to various crimes, it doesn’t then vote on individual sentences even if there are cases where punishments clearly don’t fit the crime.

Why is this necessary?

Imagine you are a small housebuilder employing 5-10 people. You’ve gone into debt to acquire land singled out for development in a local plan, you’ve accumulated more debt to pay planning consultants and lawyers, and you’ve spent the best part of a year designing a scheme in strict compliance with the local plan. You put in your planning application and the planning officers agree your application is sound. There’s just one more step: the planning committee. You come up against a councillor facing a close re-election fight. A few local residents object. The planning committee votes it down.

You’re left with two choices. Take the case to the Planning Inspectorate (note: this isn’t cheap or quick) or take the L. If you were a big developer, this is an inconvenience, but you can at least hedge your bets by having multiple applications and projects on the table. But as a small developer, this could be fatal for you. Debts could go unpaid, workers may lose their job at short notice. This risk is one reason why the share of homes built by small builders has gradually fallen. Less competition means higher prices and slower build out rates.

Removing the power of planning committees to rewrite the rules in stoppage time (in most cases) would eliminate that risk and should be welcomed.

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The Planning and Infrastructure bill is a very long piece of legislation. In fact, it may be one of the longest bills the Government introduces this Parliament. I’ve picked out three measures which I think may not be perfect, but would be big improvements over the status quo. There is clearly more to cover on consultation, on changes to the Transport and Works Act, on new powers for Development Corporations and on making it easier to update National Policy Statements. In the coming days and weeks, I suspect I’ll uncover more good (or at the very least, interesting) ideas in the bill. Watch this space.