What's really wrong with the Habitats Regulations?

And how to fix them

We have made it too damn hard to build critical new infrastructure in Britain.

To build a new high speed rail link between London and Manchester Birmingham means building a £120m ‘bat tunnel’. To build a nuclear plant requires an 80,000 page environmental statement, over 160 post-consent permits, and in some cases, a ‘fish disco’. To build a new road tunnel to alleviate the ultra-congested Dartford Crossing (and improve the connections between two of our busiest ports) required a £300m 360,000 page planning application.

And Heathrow estimates winning planning permission to build a third runway will cost them £800m (and that’s before a single spade goes into the ground.) They think it will cost that even after the Government’s major Planning and Infrastructure Bill passes.

What is striking is that Britain has a Government that understands that all of this is broken and, in broad terms, what needs to be done to fix it.

The core idea in the Planning and Infrastructure Bill is that the way Britain tries to protect nature is broken. It is broken both for development, creating delay and adding cost, and for nature, failing to fund the most cost-effective measures that could genuinely reverse nature loss.

The big problem with the status quo is a lack of flexibility. If your high speed railway is set to harm a colony of bats, then to avoid building a £120m bat tunnel you need to be able to design a compensation package that prevents harm to that specific colony. This can be extremely difficult in practice. So the railway builder ends up spending a huge wad of cash on a ‘bat tunnel’ because they don’t want to cancel the multi-billion pound project, even though they know, and bat conservationists know, that £120m could do much more good for rare bats in Britain as a whole if spent on other things.

ChatGPT’s best guess is that £120m could create around 50,000 metres of hedgerow. Even if the particular Bechstein’s Bats near that specific bit of HS2 are worse-off, can anyone seriously argue that this wouldn’t be a better outcome for nature.

This inflexibility is exacerbated by other features of the Habitats Regulations. In some cases, the features were not explicitly included in the Habs Regs themselves, but were the result of legal challenges and case law developing.

There is a long-standing principle that it is not the job of the law to deal with extremely small impacts. In many areas of policy, Britain uses de minimis exemptions to avoid tiny impacts from causing havoc. For example, if someone earns a £25 Amazon Voucher from filling out an online survey, we don’t force them to do a full self-assessment tax return.

This isn’t the case for nature. A tiny loss of habit or a single bird death can trigger major design changes. In a blog, lawyer Catherine Howard (now advising the Chancellor on these matters) cites the example of an offshore wind farm that had to be cut back by 40% because each year a single bird might die.

I say ‘might’ not will. In fact, it was extremely unlikely the development would lead to a single bird death. In reality, at a time when nearby offshore wind farms were built the population of the affected bird trebled and there’s evidence that the bird in question, the Red Throated Diver, already travels enormous distances looking for food.

This takes us to another problem with the system: extreme risk aversion. Britain applies the ‘precautionary principle’. Regulators often ask ecologists working for a developer to effectively ‘prove a negative’. In many cases, this is impossible. Impacts can only be ruled out when extensive surveys find no presence of the affected species, and even then that may not be sufficient. This is what drives developers like EDF to produce an 80,000 page environmental impact assessment for Sizewell C.

In some cases, even when you are confident a protected species is not where you want to build you may still have to modify your plans. Catherine Howard also cites the example of the Outer Dowsing Wind Farm where developers were required to provide compensation for Sabellaria Reefs on sea-bed where Sabellaria Spinosa (a type of worm that constructs reefs out of sand) are not present. It was sufficient that the seabed in question could (to be clear, it hadn’t) be colonised at some point in the future by the worms. At least three offshore wind projects have been held up by this issue.

And even when planning permission is acquired, the requirements to obtain post-consent permits can often re-open questions around the Habs Regs. In the case of Sizewell C, there are around 160 additional post-consent permits that need to be obtained before work can be completed. Many of those permits require their own Habs Regs assessments. In some cases, work from the main planning application can be re-used, but different statutory bodies have different standards of evidence and some surveys may be out of date by the time EDF goes for the permit.

Some people blame bat tunnels and epic environmental impact assessments on a culture of risk aversion within bodies like Natural England. Some are less kind – hinting the only reasons why ecologists might take a pay cut to work in the public sector is because they’re either ideologically opposed to development or just not very good. Others place the blame at lawyers and consultants who exploit uncertainty over what is and isn’t allowed to push for one more study to increase their billable hours.

There’s probably elements of truth to each charge, but infrastructure projects are constantly challenged in the courts. And while it is rare for planning permissions to be overturned – it has only happened four times – it does happen. If lawyers, consultants, planners and regulators were less risk-averse, there’s a decent risk that approvals are overturned by judicial review.

Individually, each aspect of the Habitats Regs creates problems, but it is their combination that produces £120m bat tunnels and 80,000 page environmental impact assessments. Fans of card games like Magic: The Gathering might see parallels. Cards that are individually weak, when combined with other cards can become extremely powerful – more powerful than the sum of their parts.

If compensation was more flexible then even without a de minimis exemption, development could still proceed by offsetting the small impact. But because compensation isn’t flexible, there are limited options to do this. In some cases, there just isn’t a compensation option available, which means ‘no bat death is acceptable’ and developers need to fund expensive mitigations instead. When you add in our extremely ‘precautionary’ approach and the extremely high standards of evidence needed to rule out certain impacts, it is easy to see how environmental impact assessments get to be so long and how small (or unlikely impacts) such as HS2 killing bats can derail a project.

Part 3 of the Planning and Infrastructure Bill is an attempt to fix all of this. Instead of doing environmental protection on a project-by-project basis, everything gets shifted up a level. The Government creates ‘Environmental Delivery Plans’ (EDPs) that covers the likely impact of multiple projects – for example, every housing development built in an area where there are water quality issues – and developers then offset those impacts by paying into a big fund (the Nature Restoration Fund) which sets up nature recovery projects.

The idea is that not only would this speed up development by cutting the need to carry out project-specific impact assessments, design project-specific mitigations, and fund expensive project-specific compensation measures, it would also do more to protect nature. The Nature Restoration Fund, in theory, can choose from a much wider range of projects and at different levels of scale. Developers are no longer locked into smaller scale, and likely less effective, measures.

If done right, this policy would be transformative. Yet, as drafted, the Bill is unlikely to deliver on the expectations of politicians like Reeves, Starmer, and Reed.

The Habitats Regulations are still in place and apply to any development not covered by an EDP. In fact, any impact that isn’t covered by an EDP will be covered by the existing Habs Regs. So development covered by an EDP could still be forced to produce a Habitats Regulations assessment.

And getting an EDP in place won’t be easy either. It will require Natural England to be persuaded that not only would this EDP be, on-net, good for the environment, but that it would produce an improvement for each and every environmental feature covered. In response to a backlash from environmentalist NGOs and some backbenchers, the Government amended the Bill in the Lords in ways that would make it even harder to put EDPs in place. The Lords went further to try to restrict EDPs to only a subset of environmental issues – issues like nutrient neutrality and air quality where the superiority of landscape-scale approaches was non-controversial. However, this attempt to neuter Part 3 was rejected in the Commons.

The reality is that most projects – and particularly the biggest – will not be covered by an EDP in the near term. This is one reason why Heathrow expects to spend the best part of a billion pounds on their planning application. It is why if I were a betting man, I would feel confident that the page count of infrastructure planning applications does not meaningfully shorten (e.g. halve) by the end of Parliament.

So, what should be done?

In the run-up to the budget, there were reports that the Government was considering a second attempt at planning reform. The form this might take is unclear. Further reforms could come in a dedicated Nature bill – Steve Reed’s comments at the Housing, Communities, and Local Govt Select Committee suggested this was more likely – alternatively many reforms could be part of a dedicated nuclear bill if the soon-to-be-published Nuclear Regulatory Taskforce Report proposes legislative changes.

Some ideas that were floated at the last minute for potential inclusion in the Planning and Infrastructure Bill are worth resurrecting. In particular, a failure to kill the duty to further the aims of National Landscapes will likely collapse the Government’s Clean Power 2030 plan (and push up bills). There is merit too for the idea of creating a list of ‘British Endangered Species’ to avoid applying extremely tough protections to species that are relatively common in Britain.

However, the key thing is to fix the way the Habitats Regulations work so that all developments, not just those covered by EDPs, are not delayed (and made more expensive) by disproportionate environmental requirements.

To that end, four things need to change:

• First, the Government should clarify, in guidance and legislation, that de minimis’ impacts do not have an adverse impact on a site’s integrity, including in combination with de minimis impacts from other projects.

• Second, the requirement to prove a negative should be removed. Natural England should only be able to block a project if there is scientific evidence that it will adversely impact the integrity of a protected site.

• Third, more flexibility should be granted so that measures that benefit the national network of protected sites count as compensation. This flexibility on compensation should be restricted to compensation that improves features affected by the plan/project or contributes towards meeting an Environment Act 2023 strategy in the vicinity of the project.

• Fourth and finally, the requirement to produce a Habitats Regulations assessment should not apply to licenses, permits, and conditions for projects that have been granted planning permission.