Learning from the Local Nutrient Mitigation Fund

A common theme across the catchments was the need for agile, streamlined decision-making structures to enable funding to be mobilised in line with the demanding timescale conditions attached to the LNMF. This particularly applied within multi-authority catchments, where rapid delivery had to be balanced with collective buy-in.

The Solent case study illustrates the value of overarching legal architecture – in that case, an ‘Inter-Authority Agreement (IAA)’ – in establishing a framework for seamless cross-boundary action. The IAA defines and formalises a set of interchangeable local authority roles for adoption as required on a project-by-project basis.  

The Norfolk governance model – comprising a small fund management team working in conjunction with pan-authority Officer and Member Working Groups – was also found to be highly effective in ‘getting money out the door’.  

Both cases centre on the use of shared local delivery vehicles: the Solent Mitigation Partnership (SMP) team in the Solent and a central fund management team working in conjunction with a joint venture delivery partner (Norfolk Environmental Credits; NEC) in Norfolk. These entities function as instruments for cross-boundary action, able to deliver for each constituent authority while taking a catchment-level view, and providing a shared resource for delivery, modelling, and marketing functions.  

Other key benefits of local delivery hubs include the aggregation of local knowledge and project experience within small specialist teams, and the development of key stakeholder relationships, including with local landowners, NGOs, Natural England officers, contractors, and (in some cases) water companies.

The Solent and Somerset case studies in particular emphasise the importance of a dynamic and adaptive approach to implementation: investment strategies, mitigation portfolios, and pricing models were rebalanced in response to iterative supply/demand modelling, changing market conditions, and emerging project experiences.  

In this context, officers identified the simplicity of the capital funding terms as a key virtue of the LNMF. Within broad parameters, and in contrast to the experience of other central government funding programmes, accountable authorities were given a high degree of autonomy in the application of funds – and this was essential to enabling both rapid spend and an agile, adaptive approach.   

The development of clear standards for scalable and repeatable mitigation has been critical to enabling the release of supply in step with need and spend conditions.  

A key stage in the response to the nutrient challenge has been the use of local innovation and knowledge-sharing between catchments to develop local standards, templates, and frameworks that lay the groundwork for mitigation to be delivered repeatably, efficiently, and on an expansive scale. Earlier development of standard national-level mitigation standards and advice was identified as a factor that could have served to further accelerate delivery by streamlining the technical investigation and feasibility work undertaken at catchment-level.  

In this context, LNMF catchments have largely relied to date on a narrow suite of measures - principally agricultural reversion and upgrades to sewage treatment infrastructure – that can be brought forward within an established framework, with clearly defined standards for design, implementation, assessment, and verification. An initial narrowing of scope was apparent in the early stages of several LNMF delivery strategies, where the proposed investigation of mitigation wetlands and other more innovative or bespoke options was shelved in favour of a focus on these tested, reliable ‘workhorse’ measures.  

The Solent case study describes how local pilot schemes for septic tank upgrades and interventions to council-owned property and infrastructure are being progressed not just to test the efficacy of such measures but as a means to develop repeatable templates and frameworks that can subsequently be rolled out at catchment scale.  

This point notwithstanding, several officers expressed a desire to build greater diversity into their mitigation portfolios. With early mitigation supply headroom secured, a subsequent “re-broadening” of scope is apparent in some catchments: Norfolk has recently developed a local template for ‘enhanced drainage ditch’ interventions, whereas the Solent is trialling a ‘working with land’ programme to explore buffer strips, sediment traps and other more distributed nature-based solutions.  

Significant ancillary benefits – for nature recovery, public access, and water consumption - have been achieved in the early project stages – but are largely considered to have been secondary or incidental to the principal objective of creating headroom for housing delivery. As LNMF programmes continue to mature, there is increased scope for the use of strategic environmental planning to simultaneously target the achievement of other local priorities and broader public value – for example, through confluence with Local Nature Recovery Strategies.  

Officers emphasised the complexity of nutrient mitigation and the relative scarcity of specialist expertise both within local authorities and in general. Shortage of expertise and resource capacity presented significant bottlenecks at various stages, from the provision of advice to developers and mitigation providers to the progression of legal casework.  

In this context, LNMF grant revenue funding was critical to providing resource capacity, injecting specialist expertise, and building the enabling functions required to release and secure mitigation. The experience in Somerset, for example, was that revenue support has had an even greater effect than the larger capital sums, as it has allowed the Council to develop the technical guidance framework within which developer-led and third-party solutions can come forward effectively.

Particularly within multi-authority catchments, grant seed funding has been used to operationalise specialist central teams and delivery units, which will later move to sustainable self-funding from credit sale receipts. An additional benefit of their specialisation is that entities such as NEC and the SMP team are largely insulated from other demands such as development management casework and local government reform.

Some catchments have responded to resource limitations through a market-enabling approach to the generation of mitigation supply - effectively outsourcing development and delivery functions to prospective providers. Somerset and Norfolk, for example, developed guidance and evaluation frameworks within which third-party proposals could be rapidly assessed and prioritised for funding via a transparent Call for Sites or Expression of Interest process. This enables a relatively lean resourcing model, with a focus on managing compliance and fund administration, as opposed to technical delivery.  

Various frameworks and approaches have been adopted for the efficient implementation of potentially high-yielding but highly distributed and micro-intensive interventions such as householder septic tank programmes – which are further complicated by cross-boundary issues and public procurement obligations. The septic tank pilot scheme initiated in the Solent, for example, is based on a grant framework which effectively delegates procurement and contracting functions to each applicant.

LNMF capital funding is intended to have an ongoing and enduring legacy, with funds recycled locally until the point that mitigation is no longer required. This effect is already in evidence in Norfolk, where capital funding committed under the local loan repayment model already exceeds the total sum received.  

Variable availability of private market mitigation supply is one of the key points of disparity between the affected catchments. The development and acceleration of strategic mitigation programmes have generally not been found to discourage further private investment. In Somerset, third-party interventions were widely enabled to proceed in parallel to LNMF-funded projects, whereas the Kent catchment authorities experienced a notable increase in private supply alongside the establishment of the Stour Environmental Credits (SEC) programme (developed on the Norfolk model with support from NEC) – perhaps on account of the market confidence this generated and the perception of SEC as a potential mitigation buyer.  

In this context, newly minted strategic credits have experienced relatively slow initial sales demand in some areas. This is attributed to the effects of a broader slowdown, in addition to market-specific factors such as established buying relationships, price competition in certain sub-catchments, and the relative convenience of ‘full service’ assessment and mitigation offerings presented by some third-party providers.  

Measures taken in response to slow sales demand include the recent adoption in Somerset of a unilateral undertaking template to streamline the legal securement of credit sales - obviating a potentially prohibitive resource bottleneck in preparing S106 agreements. In the Solent, the SMP team is strengthening its marketing activity and preparing to transition from a standard catchment-wide credit price to a dynamic pricing model that will be capable of responding to local sub-catchment disparities in mitigation cost and supply.  

In the Solent and Somerset in particular, LNMF projects were intended to have a market-shaping rather than market-forming role - to address gaps in the private market and shore-up longer-term supply and resilience. This notwithstanding, soft sales demand or slow receipt of purchase funds secured by S106 is problematic for fund-recycling and appears to be a limiting factor in the release of mitigation supply, particularly once the initial backlog of pent-up demand is relieved.  

In response to this, and the uncertainty arising from recent legislative changes, some catchments have paused further capital investment, or adopted a phased approach to further delivery. Officers noted the importance of finding the correct cadence between supply and demand, and of balancing projects with different (long and short-term) repayment timescales.

The requirement for nutrient (nitrogen and phosphorus) neutral development in the catchments of the Broads SAC and Ramsar site and the River Wensum SAC emerged in 2022, and extends across a substantial proportion of the county, particularly affecting development in the Broadland, Breckland, North Norfolk, Norwich, and South Norfolk authority areas.  

In the context of a substantial growth ambition across the Greater Norwich area and acute scarcity of pre-LNMF mitigation options, planning permissions had largely ground to a halt within the affected areas. This created strong pressure for a catchment‑scale solution capable of rapidly unlocking mitigation supply at scale.

The Norfolk authorities have a strong history of sub-regional and countywide collaboration and joint strategic planning, which naturally led toward the adoption of a collaborative, catchment-level approach.  

LNMF funding was applied under the governance of a catchment-scale partnership between the five principally affected LPAs, with Broadland District Council, one of the most acutely affected authorities, acting as the accountable body to receive and administer funding.

Governance arrangements were designed to balance joint oversight, shared accountability, and collective buy-in with the rapid, agile decision-making mandated by LNMF spending conditions and necessitated by the critical mitigation supply position. Implementation was overseen by bespoke Officer and Member Working Groups, both constituted by a representative from each LPA. The Officer Working Group was tasked with assessing mitigation proposals, managing delivery risks, and presenting funding recommendations to the Member Working Group, which provides democratic oversight and strategic assurance.

Final spending decisions were delegated to the accountable body’s s151 Officer and Leader.

Revenue funding was used to appoint a specialist Fund Manager and administrative support (the local ‘NMF’ team). This role was not primarily intended to fulfil a technical delivery function, but rather to:

• manage the pipeline of mitigation proposals;
• administer grant and loan agreements to prospective and approved providers;
• provide financial stewardship; and
• report, monitor, and audit progress toward implementation.          
   

Alongside this, Norfolk Environmental Credits Ltd (NEC) was established as a not‑for‑profit, publicly owned joint venture delivery entity, governed by directors of the five constituent LNMF authorities, and intended to function as a mechanism for developing mitigation solutions, standardising local approaches, and providing a route to market for credits.

The NMF approach has been notably successful in rapidly mobilising funding: the capital funding stream has been fully committed and additional revenue funding approved for feasibility work. Due to the recyclable nature of the loan model, the total sum of capital funding committed to date already exceeds the original LNMF allocation of £18.4m.

The NMF has had a transformative effect on the local outlook for mitigation supply and housing delivery, with more than 3,000 homes reportedly released to date by NEC credits alone, and capacity for at least 3,000 more in the pipeline.  

Significant ancillary benefits have been achieved – particularly for nature recovery, public access to the countryside, and recreational connectivity – including by:

• Enabling the creation of a new 136ha Norfolk Wildlife Trust nature reserve at Wood Norton;
• Enabling a 40ha expansion to Foxley Wood National Nature Reserve, Norfolk’s largest ancient woodland;  
• Contributing to land use change proposals brought forward as part of a landscape-scale nature recovery project at Wendling Beck.  

• A streamlined two-tier multi-authority governance structure worked well to balance collective buy-in with agile-decision making and enabled rapid mobilisation of funding in the face of a very adverse baseline position.  
• Partnership with a trusted not-for-profit joint venture delivery body has been invaluable to the successful operation of the NMF’s loan-based funding model, particularly when political and economic uncertainty caused private investment to wane.  
• Local development of technical and legal frameworks for mitigation by NEC has been a vital step in establishing repeatable local standards and building scalability.  
• Feasibility funding may have been somewhat scattershot in the early stages, but has been essential to building a project pipeline and de-risking private investment.

A phosphorus neutrality requirement has applied since 2020 within the catchment of the Somerset Levels and Moors Ramsar site and its tributary river systems, which extends across much of the county and into part of west Dorset.  

Before the LNMF, phosphate mitigation supply was limited and uneven across the affected sub-catchments – partly on account of the relative recency of council unification. A strategic credit programme, supported by earlier interim forward funding, was available in only one of the three component river catchments (the River Tone), and the overall level of deliverable mitigation was insufficient to meet demand, with a substantial backlog of new dwellings (estimated at 6,300 in September 2024) awaiting solutions. 

To enable rapid decision-making, authority to commit and reallocate LNMF funding was delegated to the Executive Director (Community, Place and Economy), in consultation with the Chief Finance Officer, with strategic oversight maintained through consultation with the Portfolio Holder and periodic reporting to the Strategic Planning Committee.  

Administration of the fund was resourced by the Council’s Phosphates Team, constituted of senior officers and supplemented by the grant-funded secondment of specialist consultants to inject technical expertise.  

Council-owned credits were directly marketed to developers through expansion of the pre-existing River Tone programme to form a catchment-wide Somerset Council Phosphate Credit Scheme. 

The Somerset funding model allowed for direct investment in feasibility studies, capital works programmes, and ‘bulk-buying’ from new providers, with costs recycled via credit sales to developers.  

The Council divided capital funding between a wide variety of allocation areas, in order to test various potential approaches to delivery, develop a diversified programme, and meet both in-perpetuity and temporary mitigation needs. As summarised in the table below, an initial suite of six allocation or ‘project’ areas was focused down to three as the programme matured and initial learnings emerged. 

The Council placed notable early emphasis on investigating novel bridging solutions – such as bringing forward the achievement of elevated wastewater treatment standards and fallowing farmland with miscanthus grass – to meet short-term development needs prior to the mandated upgrade of treatment standards from 2030. In practice, however, the Council has experienced only muted market demand for temporary mitigation, and none of the proposed bridging measures has yet progressed to market.  

The Delivery Strategy adopted by Somerset reflects a hybrid approach to generating a mitigation supply pipeline - both enabling interventions from third parties, and directly investing in council-owned assets by:

• A programme of upgrading small-scale council-owned rural sewage treatment plans to meet the mitigation needs of new affordable housing (Project Three);  
• Investigating the feasibility of delivering nature-based solutions such as wetlands and riparian buffer strips on council-owned land (Project Four) – which ultimately gave way to an increased emphasis on Project Two due to concerns regarding likely delivery timescales;
• Investigating water efficiency improvements in council stock - identified as a cost-effective measure for future adoption.

The main mechanism for enabling third-party interventions was a pioneering ‘Environmental Call for Sites’ (Project 2), launched between May and July 2024, with the objective of soliciting land-based nutrient and Biodiversity Net Gain (BNG) offsetting proposals, from which the Council could then ‘bulk-buy’ credits. The Phosphates team evaluated promoted sites according to both essential ‘pass/fail’ criteria, and more qualitative ‘graded’ criteria, such as readiness for market, cost-effectiveness, and potential to deliver wider benefits. Acceptable respondent sites were organised into tranches for prioritisation on this basis.

The Call for Sites process gave rise to a substantial pipeline of potential land-based mitigation proposals: the total estimated cost to the Council of acquiring the anticipated credit yield from all shortlisted (‘Tranche 1 and 2’) sites would have more than double the amount of its total LNMF pot, and more than five times higher than the proposed allocation to Project 2.  

This put the Council in a relatively strong position to negotiate cost-effective acquisitions from prioritised proposals, which were secured through binding (S39) management agreements. Respondent proposals which were not, at least in the first instance, allocated capital funding were nevertheless encouraged to come forward as third-party credit schemes within the guidance framework established by the Council, and secured by S106 agreements.  

The first tranche of sites approved for bulk-buying did not include any proposals within the River Brue catchment. To address this spatial imbalance in its strategic credit programme, the Council has considered adapting its strategy to include procuring a septic tank upgrade programme – although this is currently on hold in view of the number of approved third-party schemes available to service development in the area.

With growing availability of both strategic and third-party solutions, local mitigation supply has significantly improved from the pre-LNMF position. As of October 2025, credits were available to mitigate between 2,900 and 5,800 new dwellings, depending on the applicable wastewater treatment standard - and not allowing for elevated post-2030 standards, which will significantly reduce per dwelling mitigation requirements.  

Of 9,068 nutrient neutral dwellings permitted since April 2021, 3,321 were permitted in the twelve months preceding April 2026.

In the context of an expanded overall mitigation market, the Council Credit Scheme has experienced soft initial sales demand – to the extent that it is not considered necessary for the total quantity of available capital to be fully committed at this stage. This suggests both that sufficient headroom is now available to service demand, and that other factors may currently be suppressing housing delivery. Notwithstanding current market conditions, it is notable that average annual housing completions since 2021 have occurred at a comparable (and marginal higher) rate than in the preceding (pre-nutrient neutrality) decade.  

Alongside the expanding availability of mitigation solutions, the cost-effectiveness of LNMF-funded interventions has led to a significant decrease in credit costs: the price of Council phosphorus credits has reduced from a pre-LNMF level of approximately £54,000 (per kg/year) to approximately £34,000 – likely the lowest strategic credit price in the country – and occasioned a corresponding reduction in third-party credit pricing, with clear attendant benefits for viability and the capacity of new development to contribute to public infrastructure costs.  

Mitigation headroom has grown sufficiently to allow the Council to move towards the securement of credits through pre-commencement conditions (as opposed to before the grant of permission), considerably simplifying and expediting the planning and legal process, and easing developer cashflow pressures.

• In the context of persistent resource constraints and an already overstretched ecology service, revenue funding was vital to building capacity and on-boarding specialist expertise: a critical factor in the Council’s response to nutrient neutrality has been the development of technical frameworks that provide the enabling architecture within which mitigation can come forward effectively.  
• Somerset’s procurement model – criteria-based evaluation and ranking of promoted sites – has worked well in securing cost-effective mitigation and driving down mitigation costs across the catchment.  
• The difficulty of securing legal agreements for land use change can be a complicating factor – particularly in situations where the Council is both the local authority and prospective mitigation landowner.  
• Although the initial delivery strategy included a notable emphasis on novel mechanisms for temporary mitigation – bridging the gap till 2030, when per dwelling mitigation requirements will be significantly reduced – local demand for temporary mitigation has largely failed to materialise.
• Uncertainty regarding the future of nutrient mitigation and soft early sales demand have had a restraining effect on investment. The latter factor is partly attributed to the relative convenience of combined assessment and mitigation services offered by established third-party providers, in addition to delays in the completion of S106 casework - although a more streamlined route to securing purchases is now proposed.

The Solent region had been subject to a relatively longstanding nutrient (nitrogen) neutrality requirement – since 2018-19 – and had a comparatively well-established private mitigation market, in addition to several strategic offerings.

In this context, LNMF measures were expected to fulfil a more market-supporting role, with key objectives including: 

• Addressing spatial inconsistencies in the existing market, so that a rolling 5-year supply of mitigation was available in each constituent river catchment area;
• Addressing the acute and more recently arisen need for phosphorus neutrality in respect of the River Itchen SAC (one of the Solent river systems); and
• Building headroom to support longer-term strategic growth trajectories.

The south Hampshire authorities have a long history of collaborative working: the multi-authority Partnership for South Hampshire (PfSH; formerly PUSH) was founded in 2003 and had co-ordinated a joint response to the nutrient neutrality planning environment, led by its Strategic Environmental Planning Team, since 2019.

The Solent LNMF programme is a joint initiative between 16 local authorities, the ‘Solent Mitigation Partnership,’ implemented through this established sub‑regional partnership structure, with strategic governance provided by PfSH’s Joint Committee. Following approval by PfSH Joint Committee, sign-off on the detailed funding decisions was delegated to the S151 officer at Fareham Borough Council (FBC), which acts as Lead Authority and hosts a specialist delivery entity and trading platform, the SMP team.

The SMP team, which evolved out of PfSH’s pre-existing strategic environmental planning capacity, undertakes catchment-scale supply/demand modelling, manages and allocates capital funding, targets and develops mitigation schemes, and markets the resultant credits. Resourcing was funded via revenue grant in the first instance, within an intention to transition toward sustainable self-funding through credit sales and administrative fees.  

The enabling legal ‘infrastructure’ of the SMP is the ‘Inter‑Authority Agreement’ (IAA), which allows for relatively frictionless collaboration, obviating the need for multiple cross-boundary legal agreements to enable project delivery, securement, and reliance.

The IAA defines a framework of authority roles for adoption on each project:

• The Host Authority, under whose operational control a project is delivered and managed (in conjunction with the Lead Authority);
• A separate Monitoring Authority, providing independent oversight and enforcement;  
• Benefitting Authorities: any constituent authority can opt-in to benefit from, and share the liability for, any given scheme – depending, for example, on its respective sub-catchment location and relevance to local development needs.

This mechanism maintains each authority’s autonomy, while short-circuiting the need to achieve unanimous buy-in on a scheme-by-scheme basis. The apportionment of funding released for each project is approved by the PfSH Joint Committee to ensure that mitigation is distributed evenly and according to need. 

In accordance with its more targeted, market-shaping objectives for the LNMF, the SMP used direct investment in a capital works programme to ensure that funding was strategically directed to address specific local needs: 

LNMF-funded projects to date have helped to smooth out spatial inconsistencies in the Solent mitigation market by delivering solutions in under-served sub-catchment areas.  

As of December 2025, current mitigation availability was sufficient to provide at least five years of supply in three of the six constituent sub-catchment river systems. Although the other three areas remain the focus for priority action by SMP, it is anticipated that planned and future SMP schemes should be sufficient to meet projected 5-year supply needs across the board.

SMP projects have delivered notable ancillary benefits including for nature recovery, public access to the countryside, and water consumption – in addition to strengthening value through ‘stacking’ with potential BNG and Suitable Alternative Natural Greenspace (SANG) provision.  

In the context of a relatively well-established private mitigation market, the SMP has experienced soft initial sales demand for strategic credits, impeding its capacity to recover costs and recycle capital into the development of new projects. This can be attributed to strong price competition in certain areas and established relationships between developers and third-party providers. In response, the SMP proposes to strengthen its marketing activity and transition from a catchment-wide standard credit price to a more agile pricing framework, that will reflect different project cost profiles and respond to local differences in market competition and supply across the constituent river catchments.  

• Establishing effective legal architecture, including an interchangeable framework of defined local authority roles to be applied on a project-by-project basis, has been essential to enable and streamline cross-boundary action across a 16-authority catchment. The SMP team has also benefitted from broad political buy-in and support.
• Iterative supply/demand analysis is an important tool for deciding where to focus delivery and justifying prioritisation decisions across a wide, multi-authority geography.
• Although tested workhorse measures have been important to building momentum and supply, the targeting of investment has also been guided by broader public and environmental value considerations. With headroom secured, there is increasing scope for a strategic environmental planning approach including greater portfolio diversification and the pursuance of more distributed nature-based solutions.  
• A standard credit price has clear benefits – and the adoption of a cross-subsidising, blended approach to pricing was seen as a positive milestone in the Norfolk experience. However, it can be misaligned to the context of a highly heterogeneous catchment, with variable levels of private mitigation supply: the adoption of a dynamic, catchment-sensitive pricing model provides greater adaptability ahead of the Environmental Delivery Plan (EDP) era, and flexibility to compete on pricing in areas where mitigation can be delivered more cost-effectively.