Month: September 2022

What Does The Growth Plan Mean For Development And Infrastructure?

HM Treasury published its Growth Plan 2022 on 23 September 2022. There is so much to take in, this initial blog post simply sets out all of the key passages. A panel including Samuel Stafford, Shelly Rouse, Nicola Gooch, Iain Thomson and myself will be discussing all of this in detail on clubhouse at 6pm on Tuesday 27 September 2022 and we would love to hear your views too. Join the session here (and nowadays if you RSVP within the app you can diarise it, get notified when the session starts etc).

All I would say at this point is that:

  •  I’m not sure whether it’s right to assume that this means the end of the road for the Levelling-up and Regeneration Bill in its entirety? Along the way there is reference to a proposed Planning and Infrastructure Bill but there is no detail yet as to its contents and whether of the LURB will be retained or recycled.
  • There are some eye catching proposals here and the direction of travel is clear, although in most instances of course what we need is a further layer of detail.

From the executive summary

“The Growth Plan 2022 makes growth the government’s central economic mission, setting a target of reaching a 2.5% trend rate.”

“To drive higher growth, the government will help expand the supply side of the economy. The Growth Plan sets out action to unlock private investment across the whole of the UK, cut red tape to make it quicker to deliver the UK’s critical infrastructure, make work pay, and support people to get onto the property ladder. New Investment Zones will provide time-limited tax reliefs, and planning liberalisation to support employment, investment, and home ownership.”

Chapter 2, “tackling energy prices”

“To increase energy resilience, the North Sea Transition Authority will shortly launch a new oil and gas licensing round. This is expected to deliver over 100 new licenses. The government has also announced an end to the pause on extracting reserves of shale. The government is driving the development of home-grown nuclear – including Small Modular Reactors – hydrogen, Carbon Capture, Utilisation and Storage and renewable technologies. The government will unlock the potential of onshore wind by bringing consenting in line with other infrastructure. The UK is a world-leader in offshore wind, with 8GW of offshore wind currently under construction. By 2023 the government is set to increase renewables capacity by 15%, supporting the UK’s commitment to reach net zero emissions by 2050.”

Chapter 3, “growth”

“…the government must cut taxes, streamline the public sector, and liberate the private sector, by making Britain the place for:

• investment: creating the right conditions and removing barriers to the flow of private capital – whether taxes or regulation

• skilled employment: helping the unemployed into work and those in jobs secure better paid work

• infrastructure: accelerating the construction of vital infrastructure projects by liberalising the planning system and streamlining consultation and approval requirements

• home ownership: getting the housing market moving

• enterprise: cutting red tape and freeing business to grow and invest.”

Investment zones

“The government will work with the devolved administrations and local partners to introduce Investment Zones across the UK. Investment Zones aim to drive growth and unlock housing. Areas with Investment Zones will benefit from tax incentives, planning liberalisation, and wider support for the local economy. The specific interventions in Investment Zones will include:

• Lower taxes – businesses in designated sites will benefit from time-limited tax incentives.

• Accelerated development – there will be designated development sites to deliver growth and housing. Where planning applications are already in flight, they will be streamlined and we will work with sites to understand what specific measures are needed to unlock growth, including disapplying legacy EU red tape where appropriate. Development sites may be co-located with, or separate to, tax sites, depending on what makes most sense for the local economy.

• Wider support for local growth – for example, through greater control over local growth funding for areas with appropriate governance. Subject to demonstrating readiness, Mayoral Combined Authorities hosting Investment Zones will receive a single local growth settlement in the next Spending Review period.

Specified sites in England will benefit from a range of time-limited tax incentives over 10 years. The tax incentives under consideration are:

• Business rates – 100% relief from business rates on newly occupied business premises, and certain existing businesses where they expand in English Investment Zone tax sites. Councils hosting Investment Zones will receive 100% of the business rates growth in designated sites above an agreed baseline for 25 years.

• Enhanced Capital Allowance – 100% first year allowance for companies’ qualifying expenditure on plant and machinery assets for use in tax sites.

• Enhanced Structures and Buildings Allowance – accelerated relief to allow businesses to reduce their taxable profits by 20% of the cost of qualifying non-residential investment per year, relieving 100% of their cost of investment over five years.

• Employer National Insurance contributions relief – zero-rate Employer NICs on salaries of any new employee working in the tax site for at least 60% of their time, on earnings up to £50,270 per year, with Employer NICs being charged at the usual rate above this level.

• Stamp Duty Land Tax – a full SDLT relief for land and buildings bought for use or development for commercial purposes, and for purchases of land or buildings for new residential development.

The Department for Levelling Up, Housing and Communities will shortly set out more detail on the planning offer. This will include detail on the level of deregulation and the streamlined mechanism for securing planning permission.

The government will deliver Investment Zones in partnership with Upper Tier Local Authorities and Mayoral Combined Authorities in England, who will work in partnership with their relevant districts and/ or constituent councils. All Investment Zone agreements will contain tax and development sites. Areas will be responsible for putting forward sites and demonstrating their potential impact on economic growth, including by bringing more land forward and accelerating development.

Investment Zones will only be chosen following a rapid Expression of Interest process open to everyone, and after local consent is confirmed. However, examples of illustrative sites that may have the potential to accelerate growth and deliver housing in the way the Investment Zone programme envisages can be found in Annex A.

The government is in early discussions with 38 Mayoral Combined Authorities and Upper Tier Local Authorities who have already expressed an initial interest in having a clearly designated, specific site within their locality. A full list of these 38 authorities is available in Annex A.

The government will deliver Investment Zones in Scotland, Wales and Northern Ireland and intends to work in partnership with the devolved administrations and local partners to achieve this. The government will legislate for powers to create tax and development sites in Investment Zones where powers are reserved.

The government remains committed to the progress of the Freeports programme. The government will work with local partners involved in current and prospective Freeports to consider whether and how the Investment Zones offer can help to support their objectives, as part of the wider process for identifying Investment Zones. This will ensure that both programmes complement one another.”

Annex A lists 24 examples of “illustrative sites that may have the potential to accelerate growth and deliver housing in the way the Investment Zone programme envisages” and 38 authorities with which the government is in early discussions with a view to establishing an investment zone in their area.

There is also this investment zones factsheet.

[Added 24 September 2022] Additional information on investment zones in England has also been published by the Levelling Up Department and HM Treasury: https://www.gov.uk/government/publications/investment-zones-in-england/investment-zones-in-england (24 September 2022). See e.g.

“The government envisages that Investment Zones will be one or more specific sites within an MCA or UTLA where a variety of tax, regulatory innovations and flexibilities, and planning simplifications will apply within those site’s boundaries.

As MCAs and UTLAs consider coming forward to express interest in pursuing Investment Zones with the government, they should consider which sites will best drive a substantial contribution to the UK’s economic growth and a significant acceleration of delivery of additional housing. There is a strong expectation that Investment Zones will bring forward additional development, and that they bring forward a mix of both commercial and residential development. Both of these will be considered in the EOI assessment process.

Sites may be aligned with existing local growth strategies and transport plans. Sites that already have a masterplan, development order or outline permission could be considered by MCAs and UTLAs as a potential Investment Zone, as could sites where planning consents are not yet in place. Development sites where planning simplifications apply may be co-located with, or separate to, tax sites, depending on what makes most sense for the local economy.”

Housing

“To make buying a home a reality, the government must accelerate housing delivery. Planning permission was granted for more than 310,000 homes last year, up 10% on the year before,10 but further reform is needed. Later this autumn, the government will set out its vision to unlock homeownership for a new generation by building more homes in the places people want to live and work and by getting our housing market moving. This will boost growth across the UK helping more people afford to live near good jobs. The government’s full proposal will be set out in due course.

The government will promote the disposal of surplus public sector land by allowing departments greater flexibility to reinvest the proceeds of land sales over multiple years. This will encourage the sale of more public land for housing and allow departments and the NHS to reinvest in public services. Devolved administrations have bespoke flexibilities to move funding between financial years and the government will discuss the implications of this change with them in due course.”

Planning

“The UK’s planning system is too slow and too fragmented. For example, an offshore wind farm can take four years to get through the planning process and no new substantive onshore wind farm has received planning consent since 2015.”

“The Growth Plan announces that new legislation [the Planning and Infrastructure Bill] will be brought forward in the coming months to address […] barriers by reducing unnecessary burdens to speed up the delivery of much-needed infrastructure. This includes:

• reducing the burden of environmental assessments

• reducing bureaucracy in the consultation process

• reforming habitats and species regulations

• increasing flexibility to make changes to a DCO once it has been submitted.”

Infrastructure

“The Growth Plan also announces further sector specific changes to accelerate delivery of infrastructure, including:

• prioritising the delivery of National Policy Statements for energy, water resources and national networks, and of a cross-government action plan for reform of the Nationally Significant Infrastructure planning system

• bringing onshore wind planning policy in line with other infrastructure to allow it to be deployed more easily in England

• reforms to accelerate roads delivery, including by consenting more through the Highways Act 1980 and by considering options for changing the Judicial Review system to avoid claims which cause unnecessary delays to delivery

• amendments to the Product Security and Telecommunications Infrastructure Bill to give telecoms operators easier access to telegraph poles on private land, supporting the delivery of gigabit capable broadband.”

“The Growth Plan also sets out the infrastructure projects that the government will prioritise for acceleration, across transport, energy and digital infrastructure. This non-exhaustive list is set out in Annex B and reflects projects which have particularly high potential to move to construction at an accelerated pace. The government will also continue to focus on delivering its wider infrastructure priorities, from major projects such as HS2, to its wider nuclear strategy.”

The agenda is set…

Simon Ricketts, 23 September 2022

Personal views, et cetera

The Planning System Really Does Carry The Weight Of the World On Its Shoulders

The 50th Oxford Joint Planning Law Conference took place this weekend. It was great to see many of you.

On the first morning, Christopher Lockhart-Mummery KC gave a lovely paper contrasting his recollections of the planning system as it was in 1972 with how it was when he retired from practice last year.

Of course, we can all bemoan the modern-day complexity, but of course one reason for it is the range of regulatory checks and considerations which have been shoe-horned into the system, often for the best of reasons but boy does this system take time to load these days.

The now disbanded Advisory Team for Large Applications had the very apt acronym, ATLAS, who is shown in sculptures as carrying the weight of the world on his shoulders (although this was rather an exaggeration as apparently – this is all real, right? – he only held up the sky – which frankly doesn’t sound so difficult).

Rather than write a proper blog post this weekend, I thought I might simply set out some links to previous blog posts where I have covered matters which have become relevant to the consideration of planning applications since the simplistic system of the 1970s that Christopher nostalgically described. These are just some examples of many. No surprise why the system is more complex now than then.

I could add many more. There are so many public policy outcomes which, for delivery, rely in large measure on our poor creaking planning system. There’s little “red tape” in any of this either. “Simplifying” planning isn’t easy.

Simon Ricketts, 17 September 2022

Personal views, et cetera

Fracking

Much has happened since my last blog post two weeks ago. Eclipsing all else has been the death on 8 September 2022 of Her Majesty Queen Elizabeth II – surely one of our greatest Britons. It is right that we mourn as a country as if a family. If anyone deserves that, she does. 

What is appropriate in this period of mourning? Hashi Mohamed and I decided to postpone our clubhouse chat about his new book A home of one’s own that was due to take place this Monday. It will now happen at 6 pm on Wednesday 5 October 2022 and we hope that you can join us. It felt wrong to be promoting the event actively this weekend and having what I hope will turn out to be a lively, no holds barred, discussion on what is wrong with our approach to housing. 

However, it feels equally wrong to pretend that everything else of concern in the world is on hold. There was literally no other news on the BBC last night.

And yet, these are momentous times. Liz Truss became prime minister on 6 September 2022 and on the morning of 8 September 2022, opening a debate on energy policy, she announced an energy price guarantee for individuals and businesses as wider energy policy changes (see Government announces Energy Price Guarantee for families and businesses while urgently taking action to reform broken energy market (press statement, 8 September 2022)). The energy price guarantee (a matter that is literally of life or death to many people, and a matter of survival or not for many businesses) needs to be fleshed out and of course one of the controversial aspects of the measure is the decision not to impose any further windfall tax on energy suppliers. Another controversial aspect is the unsurprising announcement by Truss that the Government would resume its support for fracking:

“We will end the moratorium on extracting our huge reserves of shale, which could get gas flowing in as soon as six months, where there is local support.”

Fracking proposals have effectively been on hold since November 2019, following this announcement by Andrea Leadsom and Kwasi Kwarteng: Government ends support for fracking (press statement, 2 November 2019)

“On the basis of the current scientific evidence, government is confirming today that it will take a presumption against issuing any further Hydraulic Fracturing Consents. This position will be maintained unless compelling new evidence is provided. While future applications for Hydraulic Fracturing Consent will be considered on their own merits by the Secretary of State, in accordance with the law, the shale gas industry should take the government’s position into account when considering new developments.

The OGA has advised the government that until further studies can provide clarity, they will not be able to say with confidence that further hydraulic fracturing would meet the government’s policy aims of ensuring it is safe, sustainable and of minimal disturbance to those living and working nearby.

The Infrastructure Act 2015 included the requirement for operators to obtain Hydraulic Fracturing Consent which ensures that all the necessary environmental and health and safety permits have been obtained before activities can commence. The Consent process also includes the requirement for an independent financial analysis of the operator to be carried out to ensure they can meet their licence obligations, including decommissioning.”

This was followed through into the Conservative manifesto for the December 2019 general election: 

“We placed a moratorium on fracking in England with immediate effect. Having listened to local communities, we have ruled out changes to the planning system. We will not support fracking unless the science shows categorically that it can be done safely.”

With a new Prime Minister, and a new Business Secretary, a new approach. Remember this for instance? Rees-Mogg downplays fracking risk and eyes ‘every last drop’ of North Sea oil (Evening Standard, 4 April 2022)

By way of contrast, as quoted by Sir Keir Starmer in his response to Truss’ speech, this was Kwarteng from March 2022 when he was Business Secretary:

“Even if we lifted the fracking moratorium tomorrow, it would take up to a decade to extract sufficient volumes – and it would come at a high cost for communities and our precious countryside.

Second, no amount of shale gas from hundreds of wells dotted across rural England would be enough to lower the European price any time soon.

“And with the best will in the world, private companies are not going to sell the gas they produce to UK consumers below the market price.”

Surely there are at least five questions at large:

Is there now adequate scientific evidence that fracking is safe?

We are waiting for the publication of a review by the British Geological Survey of the science of fracking, commissioned in April by BEIS, which has apparently had it since early July. Its publication is apparently imminent.

Have we any headroom within the “net zero by 2050” target to allow us to continue relying on extracting and burning hydrocarbons and what example does this set?

A bigger question but surely this is a big step away from where we should be heading. 

Is it feasible in any event to extract meaningful levels of shale gas which would have any meaningful effect either on energy security or energy prices?

Maybe circumstances have changed so radically since Kwarteng’s March 2022 comments such that current gas prices suddenly make fracking a potentially economic proposition? We don’t have the data but what a u-turn that would be from that March statement. In any event is there the evidence that as a country we do even have large amounts of shale gas to extract? The quantities would surely need to be enormous to have any economic impact. 

Given the technical and planning processes involved, and widespread public opposition, how will projects secure local support such that gas can be flowing within six months?

It’s interesting to compare with the on-shore wind policy position – still restrictive, the killer restriction being, by way of footnote 54 of the NPPF, that “a proposed wind energy development involving one or more turbines should not be considered acceptable unless it is in an area identified as suitable for wind energy development in the development plan; and, following consultation, it can be demonstrated that the planning impacts identified by the affected local community have been fully addressed and the proposal has their backing.”

Not at all easy – and fracking is way less popular than on-shore wind. Indeed, there was a fascinating Survation survey last week Polling in every constituency in Britain shows strong support for building wind farms to drive down consumer bills. 34% supported gas from onshore fracking while 45% opposed.

Who knows, perhaps we will see a return to the idea of a “shale wealth fund” for the benefit of local communities that I have just remembered that I was writing about in my 8 August 2016 blog post Back Yard Back Handers?

So is this all largely about anti-woke political positioning – and, as with the decision not to impose any further windfall tax on them, about signalling to energy companies that the UK is still open for (fossil fuel) business? 

In the words of our fictional Prime Minister Francis Urquhart: “You might very well think that; I couldn’t possibly comment.”

Simon Ricketts, 10 September 2022

Personal views, et cetera

NB For up to the minute policy commentary on fracking issues I do recommend the Drill or Drop website.