The Regional Growth Fund will provide funding for projects that offer significant potential for sustainable economic growth and can create new private sector employment. The fund aims to assist communities that are currently dependent on the public sector, so that they can make the transition to “private sector led growth and prosperity”. This is a key factor in the discussions to date and indicates that certain geographical areas will probably be favoured in the allocation of the RGF.

RGF will be available for two years only, 2011/12 and 2012/13. It was previously announced that the fund would be worth £1bn. The RGF will operate in England only and in London there will be different arrangements agreed with the Mayor and London Boroughs.

Consultation

Published on 23rd July the consultation document can be found on the BIS website:  http://www.bis.gov.uk/assets/biscore/regional/docs/c/10-1078-consultation-regional-growth-fund.pdf.  The closing date for responses to the consultation is 6th September.

The consultation document sets out the objectives of the Regional Growth Fund, suggests how the government thinks the fund should be designed to meet the objectives and raises questions on how RGF might be allocated.

Two main objectives identified:

• “To encourage private sector enterprise by providing support for projects with significant potential for economic growth and create additional sustainable private sector employment; and

• To support in particular those areas and communities that are currently dependent on the public sector make the transition to sustainable private sector led growth and prosperity.”

There is emphasis on bringing together fragmented funding streams, presumably currently either government, regional or local government managed budgets.  Existing “capital and assets pathfinders” in 11 locations (Cambridgeshire, Durham, Hackney, Hampshire, Hull, Leicester/Leicestershire, Leeds City Region, Solihull, Swindon, Wigan, Worcestershire) are working through joint governance and commissioning arrangements to make better use of assets and this may become a model for all of England.

The initial consultation questions focus on the basis of allocation, suggesting that direct grants to LEPs may be appropriate or bidding through competitions/challenges may suit particular types of projects. Secondly the question of which activities should be supported is raised, including support to remove barriers to employment through improving housing or transport, for example.

A proportion of the funding will be allocated by a bid process and proposals need meet the following criteria:

• “Bids will be required to demonstrate that they are creating additional private sector jobs and provide information on how people living in areas vulnerable to job losses as a result of public sector cuts will benefit.” As local government redundancies will be widely distributed will be interested how this criteria is met – it is very different to previous closures of coal mines or steel works, for example
• Demonstrate how the proposals fit with economic priorities of the area and “set out how they will integrate with local planning policies, where appropriate, and any potential links with national infrastructure investment.”
• Must have significant private sector “leverage” – matched funding in other words
• Offer clarity on possible risks and their mitigation
• Projects must be State Aid rules compliant and will be appraised by Treasury Green Book processes
• “Address a clear market failure”

It is also proposed that there should be “at least two rounds of bidding for the Fund”. The deadline for the first round of bids should be end December 2010, with a view to decisions on successful bids being announced by the end of February 2011. “A further round of bidding before the start of the 2012-13 financial year is suggested.”

In a section on the role of Local Enterprise Partnerships the consultation sets out their role and the expectation that they will be bidders for RGF, indeed “looked on favorably”. However it is suggested that non LEP bids for RGF may also be submitted – “Private sector companies and other public-private partnerships will be invited to bid for the fund independently by submitting a proposal directly to the Independent Approval Panel”.

“The Independent Approval Panel will be chaired by Lord Heseltine, with Sir Ian Wrigglesworth as deputy chair, and will have members representing a cross-section of the private sector” – note no local authority or government members, nor any social enterprise representatives.

“The final decision on bids will be made jointly by the Secretary of State for Business, Innovation and Skills, the Secretary of State for Communities and Local Government, and the Chief Secretary to the Treasury under the Chairmanship of the Deputy Prime Minister, and drawing in relevant Ministerial colleagues where they have an interest.”

The final question in the consultation asks whether this RGF structure may have a long term future as a means of managing and allocating funding to meet economic objectives.

Conclusions

The short consultation document gives a broad indication of the expected use of the RGF, with emphasis on private sector leadership, a presumption on LEP led bids, a high level of private match funding and bidding rather than grants. No significant surprise in this approach and it is very unlikely to change after the short consultation period. As before the key policy statement will be the White Paper, to be published in mid September and we will provide commentary on that as soon as it is available.

Transport for London (TfL) has recently enshrined Construction Logistics Plans (CLPs) and Delivery Servicing Plans (DSPs) within their updated Traffic Assessment Guidance. This means that for referred applications, a CLP and an outline DSP will be required to demonstrate that construction materials taken into the development and waste out will be managed in a sustainable way. Post construction, the applicant will be expected to demonstrate the same for delivery and servicing.

Why is all this important? Firstly, the application is likely to proceed more smoothly if the CLP and DSP is set out during the early stages of the traffic assessment process. Secondly, it makes sense to think carefully about delivery and servicing arrangements before the ‘as built’ designs are locked in. We anticipate that more applications will be subject to scrutiny as the impact of these requirements becomes more apparent.
To understand more about how we can help, please click here.

0n 29th June the Government issued a letter to Local Authority and Business Leaders seeking their views on the proposed replacement for Regional Development Agencies. Later in the summer a White Paper will be published setting out proposed legislation for removing RDAs and establishing LEPs.

The remit of the new partnerships is to focus on economic growth and development, with a role in “planning and housing, local transport and infrastructure priorities, employment and enterprise and the transition to the low carbon economy “. It is anticipated that groups of upper tier local authorities i.e. County Councils and Unitary Authorities will work together with local businesses and there is a presumption that business will chair/lead the LEPs. This suggests that areas will be smaller than current regions – SEEDA, EMDA, etc. and probably closer to the Thames Valley Economic Partnership and “Gatwick Diamond” sub regional models or “travel to work” areas (although Government may want few LEPs rather than too many and so will favour larger groupings, despite the localism pledge). Boundaries are not being set by Government, but are to be determined locally. It is expected that councils and businesses may be members of more than one LEP.

Separate arrangements are planned for London and it is anticipated existing organisations such as West London Business and South London Partnership will emerge as the sub regional LEPs – useful as we have existing strong relationships with many of these organisations.

The government will maintain a national role for “inward investment, sector leadership, responsibility for business support, innovation, and access to finance, such as venture capital funds”.

As Government intends to scrap existing Regional Spatial Strategies there is an expectation that the LEPs will set the strategic economic priorities and direction for their sub region, but there is no guidance on how this will be implemented at this stage, in terms of new statutory policies being developed by LEPs.

Although there is no indication of the activities of the LEPS beyond strategy setting there is a reference to delivery – “The governance structures will need to be sufficiently robust and clear to ensure proper accountability for delivery by partnerships.” This suggests that LEPs may have some capital funding to establish projects, but that existing (and reduced) regional funding allocations may be redistributed via the £1bn Regional Growth Fund direct to councils rather than through LEPs. The RGF may be allocated through competition, with joint private/public sector bids, much like the Conservative’s previous “City Challenge” established by Heseltine. This will all need to be set out in the White Paper.

Therefore much is dependent on the White Paper on sub national economy and the measures that will be introduced, but as the Minister says, “transition from the existing RDAs be orderly, working to a clear timetable.” This suggests that with a White Paper published late this summer and a Public Bodies Bill in the new parliament it is very unlikely any new structure will be functional before the new financial year, therefore RDAs may limp along until March 2012 (although shadow LEPs could emerge based on existing partnerships).

If you have any questions on this note please contact Bob Pinkett, who is coordinating our engagement with LEPs.

Surface Water Management

The section of the Act that has the greatest impact for developers remains largely unchanged from the Bill. It requires that any works that affect drainage or the ability of the ground to absorb water are approved by the SuDS Approval Body (SAB). The SAB will be the Unitary Authority or County Council in most cases. The approval will be granted subject to compliance with a National Standard on which the Minister is required to consult prior to issue.

There is a twin track approach. If the SuDS are also part of a planning application made under the Town and Country Planning Act, the SuDS and planning applications will be considered concurrently. Alternatively, if the works do not require planning consent then a stand alone SuDS application can be made to the SAB.

My colleague Dan Hayes has written a detailed assessment of this aspect of the Act here.

Reservoir Safety

As predicted, the Act has reduced the threshold volume of a large raised reservoir to 10,000 cubic metres, which will be of concern to those developers who maintain and supervise bodies of water. The definition of how to calculate this volume is to be clarified through further regulations, but it appears largely unchanged from the existing Reservoirs Act.

The reservoirs which are registered will fall into two classifications, high risk and not high risk. Our initial reading is that the provisions of the Reservoirs Act, in respect of inspection and supervision, will only apply to those in the high risk classification, these being defined as those where an uncontrolled discharge of water could endanger human life. Future regulations may also add reservoirs to the high risk category based on their construction, maintenance and use.

Where required by the Environment Agency, undertakers must prepare a Flood Plan (i.e. an emergency plan covering required actions in the event of an impending or actual dam breach, introduced in the Water Act 2003) in consultation with the Supervising Engineer.

Flood and Coastal Erosion Risk Management

The emphasis here is on production of national and local strategies in accordance with the Flood Risk Regulations 2009. This places a duty on the Environment Agency and Local Authorities to produce these strategies and supporting information within a prescribed timescale.

There is a new ability to designate features which affect flood and coastal erosion risk which may be of concern to landowners in flood risk areas. The circumstances under which this designation can be made have now been clarified. Now, there are to be specific provisions for appeal against the designation itself and also applications for consent to modify a designated feature.

The key message is that the roles are now clarified and all sources of flooding are now catered for. It is also reasonably clear that all local strategies will be subservient to the national strategy produced by the Environment Agency. The Environment Agency will also provide guidance to local authorities, to which they must adhere.

Water Resources

Little has changed in regard to water resources that would be of interest to the development community.

Overall, we will continue to monitor the Act as it is implemented and consultation on new legislation is announced. The Act itself may be slimmer, but we expect to see the other elements from the original draft Bill emerge over the coming months.

The proposed changes for the implementation of sustainable surface water drainage systems remain largely unchanged from those originally made in the draft Bill, although the ambiguity surrounding many issues is now resolved.

The Secretary of State will publish National Standards covering the design, construction, operation and maintenance of Sustainable Drainage Systems (SuDS), following a consultation exercise later this year. With sustainable drainage essentially now a mandatory requirement, we eagerly await the National Standards consultation to assess the implications on land development density and cost.

Arguably the biggest change is the creation of new Approval Bodies for surface water drainage design and consent, which is separate from the planning process. Without the Approving Body’s consent, no construction work can commence on a project.

There will be two types of SuDS approval, firstly a free standing application for work where no planning consent is required, and secondly, a combined planning and SuDS application process.

Although there is a combined approval mechanism, this remains in effect a twin approval process, where planning consent could be obtained but SuDS approval potentially refused.

Where the Approval Body is also the planning authority in the case of a Unitary Authority we would expect the SuDS approval process to be integrated into the planning system. However, it remains to be seen whether in practice the new approval process will become an onerous constraint where the responsibilities are shared between first and second tier authorities.

Any approval given by the Approving Body may be subject to conditions including: the requirement for providing a non-performance bond, payment of fees and inspection requirements.

The automatic ‘right of connection’ to a public sewer has been removed by the Act and connection can only be obtained where the drainage system has been approved by the SuDS Approving Body.

The good news is that any proposed connection to a public sewer which has associated Approving Body consent cannot be refused by the sewerage undertaker on the grounds that it will convey land drainage, which has been a problem in the past.

Another benefit for developers is that the Approving Body now has a duty to adopt SuDS which have been approved and constructed in accordance with the National Standards. The Approving Body can adopt a drainage system on its own initiative or upon the request of a developer. Therefore, the option to retain systems within private ownership will remain for developers wishing to hold and maintain assets.

The duty to adopt does not apply to systems or parts of systems that drain single properties. Publicly maintained roads are also excluded.

More guidance, policy and subordinate legislation will follow, bringing into force the various sections of the Act throughout the course of this year.

Click here for more information on other aspects of the Act.

It is clear in the Energy Act 2010, which has received Royal Assent, that the Government is serious about following its Low Carbon Transition Plan to reduce carbon dioxide emissions by 34% by 2020 and 80% by 2050.

This Act forms part of the first wave of instruments to take the UK into a low carbon and resource efficient economy.

The main focus of the Act is to apply British Carbon Capture and Storage (CCS) theoretical capabilities into deliverable and demonstrated projects. To pay for this, the Act has introduced the potential for the Government to lay an electrical levy onto electricity suppliers. The levy will be managed by Ofgem.

How this electrical levy will be enacted is yet to be decided, but the funds raised are intended to support CCS projects. It is understood that the sum which will need to be raised is in the region of £9 billion over the next 10 years. Inevitably, the electricity suppliers will pass this cost on to consumers, adding what could be in excess of 3% to electricty bills.

If the Government decides to increase the capital sums and shorten the time scales, the impact on our energy bills will be greater still.

From the Energy Act 2010, Ofgem obtains great regulatory powers to tackle market exploitation and drive the low carbon transition. In addition, the Act gives a mandatory social price support mechanism to help alleviate social fuel poverty.

We support the position the Government is taking to drive a low carbon economy and expect to see further Acts that will drive companies and individuals to become resource efficient. However, rather than considering our future as “carbon constrained”, we favour a more positive outlook: being resource efficient will enhance and benefit the way we do business.

There is no escaping the reality that to make national low carbon infrastructure such as CCS more economically viable, the price of carbon will need to rise. This will impact all businesses that consume resources.

The changes are very similar to those proposed in the consultation document. The recent report by CLG confirms overwhelming support for the change in definition of food zones. If implemented in the way CLG intends, this change will pave the way for a more sensible interpretation of Functional Floodplain.

The document suggests that more guidance on the implementation of this change will be required. Since CLG turn to the Environment Agency for this guidance, I fear that the changes will not develop as CLG and the consultees would have hoped.

For these changes to have a meaningul impact on development and regeneration, we have to move away from the definition of risk as probability and be able to take proper judgement as to the actual risks at any particular location.

As this new guidance is tested we will keep you informed of further developments.

Current Defra/Environment Agency guidance requires that the climate change sensitivity allowance is an increase in river flows of 20% for all events for the future period 2025-2115. This guidance is the same for all of England and Wales and makes no allowance for any regional variation in climate change or different responses from varying catchment types. Defra and the Environment Agency commissioned the Centre for Ecology and Hydrology (CEH) to investigate if this precautionary allowance is valid and if the guidance could be improved.

The result of CEH’s four year study into the impacts of climate change on 154 catchments across England, Scotland and Wales is a methodology that can be used to provide a site specific assessment of climate change, for a range of return periods, based on published catchment data and climate change scenarios.

By investigating the impact of an ensemble of 4,200 possible future climate changes on each of the 154 CEH developed a methodology based on “scenario neutral” results, so ensuring the approach remains applicable as climate change projections are refined in the coming years. The ensemble approach identified catchments with the following generic responses:

• Neutral catchments. Percentage changes in flood peak are of similar magnitude to the maximum percentage change in rainfall.
• Damping catchments. Percentage changes in flood peak are of similar magnitude or generally lower than the maximum percentage increase in rainfall – the catchment as a low vulnerability to climate change.
• Enhancing catchment. Percentage changes in flood peak are of similar magnitude or generally greater than the maximum percentage increase in rainfall – the catchment has a high vulnerability to climate change.
• Sensitive catchment. Percentage changes in flood peak are very dependent on the precise characteristics of change, a small increase in rainfall may lead to an much greater increase in flood peak – the catchment has a very high vulnerability to climate change.
• Mixed catchment. Percentage changes in flood peak are mixed depending on the magnitude and seasonal patter of rainfall changes. These catchments are particularly vulnerable to increases in summer rainfall.

To provide a complete overview of responses, eight different response type catchments, some sub-sections of the above, were identified using a classification based on readily available catchment descriptors and measureable features.

At present, results from this research have not been translated into Government Guidance. However, it is possible for any given catchment in England, Scotland and Wales, using this information provided within these reports and UKCP09 climate change scenarios, to gain a better insight into the increased flood risk resulting from climate change. Such insights can be used to develop appropriate and tailored resilience measures.

By Richard Puttock

At present there is a lack of clarity in the robust identification of when a certain level of contamination in the ground or water environment becomes unacceptable to the current or proposed land use or water body.

This uncertainty stems from the Statutory Guidance issued by Government in April 2000 (modified in 2006) being insufficient to define the level of contamination that results in the definition of contamination as being at the point of Significant Possibility of Significant Harm (SPOSH). This lack of guidance is leading to regulators and practitioners being overly cautious, resulting in either unnecessary remediation at wasteful expense to developers and the UK economy or leaving occupiers and land users exposed to inappropriate risk.

In recognition of this, Defra has been asked by Ministers to review the Statutory Guidance and issue a draft for consultation in the summer. This is not a review of Part 2a of the Environmental Protection Act itself, i.e. the polluter pays principal or the consent that remediation is carried out only to the standard appropriate to the end use. The Government considers the legislation to be appropriate, to which we agree.

The review is targeted only at the Statutory Guidance to address key issues such as:

• The guidance retaining subjective terms to allow a risk-based assessment rather than prescriptive numbers.
• Better definition of SPOSH, which may include statements to exclude natural background levels.
• Define significant water pollution to allow Section 86 of the Water Act to be brought into Part 2a.
• Update to reflect the Environmental Damage Regulations.

Our industry has severe reservations as to the adequacy of the toxicological exposure models to provide sufficient confidence in the risk-bed approach and the acceptability of the levels of contaminant exposure thus derived. Currently, Defra does not want to accept responsibility for the publication of any form of numbers on the basis that these could be open to challenge. In our view, this seems at odds with the government already prescribing levels of contaminants in drinking water and pesticides in food, for example.

We have an opportunity to influence Defra at the end of March, prior to the drafting of the consultation paper scheduled for the summer. We welcome your views and comments, and look forward to discussing the issue further.

Although PPS25 has always recognised the need to consider all sources of flooding and to adopt a sequential approach to avoid it, the general application of the guidance has been to restrict the sequential test to tidal and fluvial flood risk. This was primarily due to the lack of any maps identifying the spatial distribution of flood risk for other sources of flooding.

With the production of the Surface Water Flood Map by the Environment Agency, the Practice Guide now advocates that the sequential test also be applied to surface water flood risk. Since this map is only available to the Environment Agency and Local Planning Authorities and will not be distributed to anyone else an early assessment of risk becomes more difficult as one would not know the risk until these bodies had been consulted.

It is important that this information is made public in the same way that flood zone maps are available online to ensure that these risks can be adequately assessed by developers and their consultants.

Another important change relates to safe access and egress. The previous version of the guide correctly recognised that there would always be exceptional cases where, in existing developed areas, a safe access could not be provided and where it would be necessary to redevelop and manage risk in another way. This explicit recognition has now been removed and thus arguably any development which cannot provide some latitude but it is likely that the Environment Agency will adopt a fairly rigid interpretation of being either safe or unsafe.

We believe that if correctly applied this guidance still provides scope for appropriate floodplain development to be promoted. However, this guidance is still untested and over the next few months we will continue to provide updates regarding the implementation.