Yule Blog 2023 - 7th Day - Nutrient and water neutrality

On this 7th day of our 2023 Yule Blog, we consider the quality and quantity of the water in which our swans are swimming. We take a quick look at the impacts of nutrient and water neutrality in 2023 and consider whether we might see a change in 2024.

Nutrient neutrality

Back in September 2022, we wrote about the impact that nutrient pollution in protected waters was having on housing development across large parts of England as a consequence of Natural England's "nutrient neutrality" guidance. The solutions to the problem considered then were (i) helping developers mitigate the impact of new development alongside (ii) requiring water and sewerage companies to reduce pollution at source. Both solutions have been progressed this year:

• Nutrient mitigation - Natural England launched its nutrient mitigation scheme for new housing developments within the Tees catchment area in March 2023. During the three application rounds held this year, developers could apply to buy credits funding mitigation activities to balance out nutrient pollution that would be produced by the development. However, an increasing number of other credit mitigation schemes have also been launched such as in the Solent, which are having some success in enabling housing developments to proceed.
• Levelling Up and Regeneration Act 2023 - the government also inserted a new Part 7 into the Levelling Up and Regeneration Act 2023 ("Nutrient pollution standards" - sections 168 to 170), the effect of which is to place a duty on sewerage undertakers to meet specified standards for removing nitrogen and/or phosphorus from wastewater discharged into catchments designated by the Secretary of State as habitats sites polluted by nitrogen and/or phosphorus, and to remediate such damage. Whereas the majority of the Act will come into force at a future date (to be set), these sections will come into force on 26 December 2023.

So far so good. However, in August this year, the government proposed further changes to the Levelling Up and Regeneration Bill (as it was then) which threatened to rock the nutrient mitigation scheme boat.

On 29 August 2023, the government announced that they were amending the Bill to "do away with" "EU legacy" nutrient neutrality red tape to help bring forward, by their estimates, over 100,000 new homes. The Office for Environmental Protection responded, warning that the proposed changes would weaken environmental protections, which the government rejected. The Chief Planner published further detail on the proposals on 1 September 2023, explaining that the "targeted and specific effect" of the amendments would be to "no longer require the consideration of nutrient flows from urban wastewater as part of Habitats Regulations Assessments (HRA) for planning decision making and plan-making in nutrient neutrality catchments … where the wastewater is treated by a wastewater treatment works (or private treatment system) regulated through the appropriate regime." Consternation and confusion ensued, so much so that on 11 September 2023, DLUHC published a further explanatory paper.

Why was there so much concern?

The amendments proposed would have empowered the Secretary of State to make regulations revoking or amending any legislation relating to the environment, planning or development in England, protecting habitats sites connected to a nutrient affected catchment area. Local authorities in such areas would have had to assume, potentially even if evidence suggests the contrary, that nutrients in wastewater from potential developments would have no adverse impact on relevant habitats sites. Developers would no longer be required to buy credits for nutrient mitigation schemes because their developments would no longer be deemed to have an impact which required mitigating. Many feared that this would be the end of nutrient mitigation schemes, despite the positive impact that they were having in enabling development to proceed.

However, on 13 September 2023 the House of Lords rejected the government's proposed amendments. Despite indications that the government would re-introduce the proposals through primary legislation in the next Parliamentary session, there was no such mention in the King's Speech on 7 November 2023.

Therefore, until after the general election at least, nutrient mitigation schemes remain developers' best hope of progressing housing developments in 2024 in areas which are subject to Natural England's nutrient neutrality guidance.

Water neutrality

What hasn't made the headlines as much this year is the issue of "water neutrality". Again, this arises from Natural England guidance. At present, the Natural England guidance applies to only a small number of local authorities within the Sussex North Water Supply Zone. However, the impact in this area has been an effective moratorium on new development. Water scarcity as a wider issue affects many other areas of the country where, despite there being no Natural England "water neutrality" guidance in place, development is still being refused over concerns about the overall impact on water supply. This is despite a statutory requirement for water companies to develop and maintain water resource management plans in line with guidance that account for increased demand by reference to housing development and population changes, including changes in occupancy.

In September 2021, Natural England published a position statement which set out an interim approach to water supply issues in the Sussex North Water Supply Zone. As with the nutrient neutrality guidance, this position statement was said to be driven by European case law (the "Sweetman II" and "Dutch Nitrogen" cases). Pending the development of a formal water neutrality strategy, local authorities were asked to delay making planning decisions. If decisions had to be made, then the development must demonstrate "water neutrality" for permission to be granted, ie that "the use of water in the supply area before the development [must be] the same or lower after the development is in place". In February 2022, Natural England published an Advice Note clarifying and expanding on the interim position. Whilst this acknowledges that water neutrality is only one tool available to help achieve compliance with the Conservation of Habitats and Species Regulations 2017 (the Habitats Regulations), the guidance remains in place.

This is a long-term problem for the Sussex North Water Supply Zone. It is also increasingly a problem elsewhere. In January 2023, Cambridge City Council announced that "plans for more homes and jobs under the new Local Plan for Greater Cambridge can only go forward if there is certainty on water supplies." The government's Long Term Plan for Housing published in July 2023, which included proposals to "supercharge" Cambridge, including " a new quarter of well-designed, sustainable and beautiful neighbourhoods for people to live in, work and study", caused consternation among local leaders. The Environment Agency is among others objecting to housing and community developments in Cambridgeshire due to impact on water supply, and it is not just housing that is affected – in September the BBC reported that concerns regarding water supply threatened the proposed Cambridge Cancer Research Hospital.

What could be the way out of this? In their September 2021 interim statement, Natural England stated that "The securing of water neutrality is a matter which needs to be resolved at a strategic level". They were referring to working with affected local authorities to put in place local plan policies, which may then also be used to further inform water resource management plans of water companies. However, plan-making has suffered due to uncertainty surrounding the changes introduced by the Levelling Up and Regeneration Act 2023, and it will be some time before plans are made under the new system. The government might introduce national policies through new National Development Management Policies pursuant to the Act, although these are now not expected until sometime in 2024. Given the impact of climate change, we can expect this to be an issue that will increasingly affect development for years to come.

Previous posts in our 2023 Yule Blog are here:

• Yule Blog 2023 – 12th Day – Drum roll please…
• Yule Blog 2023 – 11th Day – What’s in the pipeline for tenants in 2024?
• Yule Blog 2023 – 10th Day – The Levelling Up and Regeneration Act 2023
• Yule Blog 2023 – 9th Day – 9 ESG Steps for Real Estate
• Yule Blog 2023 – 8th Day – The property cases standing out from the herd

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