987: New National Policy Statement for Roads, Rail and Freight and Budget-related nuclear and infrastructure news

Today’s entry looks at the new draft National Policy Statement for National Networks, and infrastructure-related measures in the Chancellor’s March budget.

Highway to growth

It’s welcome that the revised, draft National Networks National Policy Statement has now been published. We’ll be preparing a formal response, and are keen to swap notes with friends and colleagues. In the meantime, what are the big changes in the draft National Policy Statement for National Networks?

First, it’s important to note that the revised draft, once finalised post-consultation and Parliamentary scrutiny, will only have effect for any application accepted for examination after designation of the amended version, and the existing NPS will continue to have effect for projects before that date. That is unsurprising, and to be expected – like the draft Energy NPSs and projects decided since the last consultation, the limited amount of weight given to prospective NPSs is widely accepted. It will be necessary for all involved in the process not to over-reach the applicability of this draft NPS which is subject to change.

Second, on need, the draft NPS sets out a number of drivers for new national networks infrastructure including maintaining network performance and meeting customer needs, economic growth, ensuring resilience in networks, supporting the government’s environment and net zero priorities and maintaining and enhancing the safety of national networks. It concludes with a strong statement of support for such infrastructure:

‘The government has, therefore, concluded that at a strategic level there is a compelling need for development of the national networks – both as individual networks and as a fully integrated system. The Examining Authority and the Secretary of State should, therefore, start their consideration of applications for development consent for the types of infrastructure covered by this National Policy Statement (NPS) on this basis.’

It will be important not to read too much into the deletion of the separate paragraphs (as compared to the existing NPS) concluding there are ‘compelling’ needs for rail and road schemes. This is no doubt driven by the new overarching conclusion – which applies to both road and rail – that ‘at a strategic level there is a compelling need for development of the national networks’ quoted above. Indeed, for roads specifically, the draft NPS confirms that the needs ‘demonstrate that continued absolute traffic growth is likely under all scenarios, and therefore enhancements on the national road network will be necessary in order to ensure the national road network operates effectively in the face of growing demand‘. For freight, the draft NPS confirms ‘relying on the existing infrastructure is not viable and would cause a constraint on economic activity.’ It’s fair to say that so far as England is concerned, the case for new roads, rail and freight is heavily supported and will carry substantial weight going forward notwithstanding the requirement for decarbonisation, which we now turn to.

Third, on carbon, we have an endorsement of the approach which is now readily accepted in various decision letters, as well as the High Court / Court of Appeal judgments on Drax Re-Power, Manston Airport, and the Road Investment Strategy 2:

‘Operational greenhouse gas emissions from some types of national network infrastructure cannot be totally avoided. Given the range of non-planning policies aimed at decarbonising the transport system, government has determined that a net increase in operational greenhouse gas emissions is not, of itself, reason to prohibit the consenting of national network projects or to impose more restrictions on them in the planning policy framework… Operational emissions will be addressed in a managed, economy-wide manner, to ensure consistency with carbon budgets, net zero and our international climate commitments. Therefore, approval of schemes with residual carbon emissions is allowable and can be consistent with meeting carbon budgets, net zero and the UK’s Nationally Determined Contribution.’

No doubt green-fingered litigants will be targeting this paragraph of the draft NPS. The draft NPS also confirms that for forthcoming projects, ‘a carbon management plan should be produced as part of the DCO submission’ – some projects have already started doing this. Interestingly, the draft NPS states that such plans could include ‘whether and how any residual carbon emissions will be (voluntarily) offset or removed using a recognised framework’. Separately, it also suggests that ‘a Greenhouse Gas Reduction Strategy’ should be ‘secured under the Development Consent Order’. That Strategy could include ‘mitigation through woodland creation on or adjacent to the site and registered with the Woodland Carbon Code, contributing significantly to offsetting residual emissions.’

Fourth, the draft NPS includes a line which is based on the draft Energy National Policy Statement in relation to Habitats Regulations Assessments:

‘During the pre-application stage, and without prejudice to the formal Habitats Regulation Assessment of the submitted plan or project, if the Statutory Nature Conservation Body gives an early indication that, irrespective of any anticipated mitigation measures, the proposed development is highly likely to lead to adverse effects on the integrity of one or more habitats sites, the applicant must include with their application such information required to assess a potential derogation under the Habitats Regulations.’

The draft version of Energy National Policy Statement (EN-1) – published last year, a revised version out shortly – is somewhat distinct:

‘If, during the pre-application stage, the SNCB indicate that the proposed development is likely to adversely impact the integrity of HRA sites, the applicant must include with their application such information as may reasonably be required to assess a potential derogation under the Habitats Regulations.’

Eagle-eyed readers will quickly discern that the draft National Networks NPS only requires a without prejudice derogation case where the SNCB considers it to be ‘highly likely’, whereas draft EN-1 requires it where the SNCB considers it ‘likely’. The dilution of the requirement to carry out a ‘without prejudice’ Habitats Regulations Assessment derogation case is welcome, though I question whether the mere ‘indication’ by the SNCB should warrant such action when its clear from several decision letters that the Secretary of State frequently disagrees with the assessment of the SNCB. There is of course a more esoteric question of how an ‘early indication’ could stretch so far as concluding something is ‘highly likely’ in any event, but we can be charitable and say policy statements are not intended to be overread.

Fifth, on alternatives, the text is substantively the same (ie, it unequivocally states that ‘where an options appraisal process has been undertaken [including under a Rail or Road Investment Strategy], it should not be necessary to consider alternatives’). However, the ‘exceptions’ to this now include a nod to the wholly exceptional circumstances which the High Court considered arose in the A303 Stonehenge project (the draft describes these as ‘wholly exceptional circumstances where case law would require consideration of alternatives as the proposed development involves such obvious adverse effects that the possibility of an alternative site or an alternative location within the site proposed by an applicant avoiding such adverse effects becomes a relevant planning consideration’). Interestingly, in the context of alternatives it also confirms a matter which arose in the Aquind Interconnector judgment, namely that where ‘alternative schemes proposed are vague or inchoate, or have no real possibility of coming about, they are either irrelevant, or where relevant, will be given little or no weight’.

Sixth, one significant change which will be welcomed by the freight industry is that the existing NPS makes clear that developers ‘must provide [in the initial stages of development] an operational rail network connection and areas for intermodal handling and container storage. It is not essential for all buildings on the site to be rail connected from the outset, but a significant element should be.’ That latter element has posed a problem for some schemes who have had to delay rail connections, and the draft NPS acknowledges this by removing that requirement altogether and stating that rail connections should be delivered in a timely manner, but with no explicit expectation that ‘significant’ elements should have rail connectivity from the outset.

Seventh, I’ve never really seen the huge benefit of a cross-sectoral NPS. The NPSs are largely consistent on the overarching policy tests, and I am not sure unaligned updates to policy which would arise between a general vs specific NPS has fully been thought through. That said, one thing that’s got my goat are the long-standing, various and distinct planning policy tests for sensitive sites / assets (‘very special circumstances’, ‘wholly exceptional’, ‘clearly outweighs’, ‘substantial public benefits that outweigh loss or harm’). This is clearly a carry-over from the NPPF, but is there a case for rationalising the tests? All of them approximate to ‘leave them alone unless you really can’t.’ On that front, in the context of veteran trees and ancient woodland, the draft NPS conflates two tests which have hitherto been implicitly distinct:

‘The Secretary of State should not grant development consent for any development that would result in the loss or deterioration of irreplaceable habitats including ancient woodland and ancient or veteran trees unless there are wholly exceptional reasons (for example, where the public benefit would clearly outweigh the loss or deterioration of habitat).’

The test for road-widening in an AONB is also altered (the existing NPS states there should be ‘compelling reasons’ which is replaced with ‘exceptional circumstances’ in the draft NPS). Speaking of the NPPF, unlike the existing NPS, the draft confirms that the NPS will take ‘precedence over the National Planning Policy Framework in areas of overlap’. The language of ‘precedence’ is new, though the principle is of course long-standing. It’s notable that the draft EN-1 does not contain this line, though I doubt that is a substantive distinction. Again, a welcome confirmation of a matter which is clearly reflected in the Secretary of State’s decision letters for a great many years.

Get it built!

The Budget document states that in May the government will confirm the route for the new Bedford-Cambridge section of East West Rail (a DCO project the team at BDB Pitmans are advising on).

Happily the budget confirms nuclear is included in the green taxonomy. The Budget also confirmed the establishment of Great British Nuclear which we’re sure has no relationship with Labour’s proposal to establish Great British Energy. This is ‘great’ news: industry has reached a standstill whilst Government has been considering its precise functions. It will be important to provide developers with much needed certainty about what their role is within the Great British Nuclear organisation and process. On that front, it is disappointing that the Future Nuclear Enabling Fund bid winners have still not been announced, despite more than three months passing since the government’s own deadline.

The measures relating to site selection for new nuclear are due to conclude by the end of this year, but Government should make clear that it does not intend to distract new nuclear projects whilst it decides on a series of appropriate sites. It can clearly do this by ensuring that its own site-list is non-exhaustive, and making clear that nuclear will be supported in any location which can be proven to be suitable. Government would also be well-served to provide officials with resources to expedite a new National Policy Statement for New Nuclear – 2025 as the target date is too slow, and avoids providing nuclear projects with the confidence they need to proceed.

Related to wind and solar infrastructure, the Government has temporarily introduced (not-quite) ‘full expensing’. The concept of full expensing is letting businesses deduct the cost of any investment they do from their corporation tax bills straight away. At the moment, for ongoing expenses like pens and paper, businesses can do this already. Full expensing is good for investment and wage growth. Following from the budget, businesses can do this for some more investments – except that hidden away in the budget document is that for some ‘long life assets’, the deduction will be 50% (not 100%). This affects long-life assets like solar and wind. Indeed, so much so that Orsted have come out swinging stating that their offshore wind development will have to be reconsidered, and most concerningly signals a slow-down in the delivery of Hornsea 3. It’s handy that the Hornsea 3 DCO does not need to commence until 2027 (see Requirement 1 on page 37) so perhaps the Government has time to win Orsted back around…

Environmental Outcomes Report Webinar

If you read through all the above, you’re in for a treat. As you know, the government is proposing to replace the existing regime of Environmental Impact Assessment with a new regime based on what they are calling ‘Environmental Outcomes Reports’. Angus is hosting a webinar covering the latest developments in this area, including the government’s consultation on their proposals. You can sign up here.