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Freeports and planning: benefits and challenges

Freeports and planning: benefits and challenges

Overview

The UK Government has been keen to talk up the potential benefits from a planning perspective of being based in a freeport. But what exactly are these benefits and how significant could they be? And are there other planning issues that businesses need to be aware of in relation to freeports?

Freeports: the background

Earlier this year, the UK Government announced plans for 10 new freeports, which it hopes will support its "levelling up" agenda. Freeports are special economic zones based around one or more transport hubs (e.g. a port or airport). In the UK, they will offer a range of benefits, including advantageous tax and customs treatment. For more information, see our briefing "freeports: what, where and when?"

What is planning consent likely to be needed for?

The development of the proposed freeports is likely to require new construction and regeneration of existing sites; in particular, the Government hopes that businesses involved in manufacturing/processing and logistics/warehousing will want to establish within freeports. There will be an expansion of facilities required for customs and tax at the port site itself. As the rationale behind the freeports extends beyond the port itself, infrastructure, such as road and rail transport links may need enhancement in order to link the port to manufacturing, business, storage and distribution facilities in the hinterland. For developers, obtaining planning permission is a material risk financially and in terms of time, particularly where there are complex environmental issues to address, or where appeals against refusal lead to public inquiries.

Is a special planning regime needed?

The existing UK planning system is already able to facilitate the delivery of the proposed freeport facilities, so unlike the case of tax and customs, there is no need to for a freeport-specific regime. However, as explained below, there are areas in which the system can be speeded up and the risk for applicants minimised, whilst balancing the need for proper scrutiny, public accountability and environmental protection.

What planning benefits will be available in freeports?

The Freeports Bidding Prospectus

The central part of freeport facilities comprising the actual port area forms the core. The Freeports Bidding Prospectus (the "Prospectus") identifies a hinterland extending up to 1500 square kilometres. There will be different planning regimes likely to predominate in these zones. The Prospectus also identifies the need to speed up and simplify the planning consent process, including revising the requirements for environmental impact assessments. There have been changes to secondary legislation to facilitate delivery of the Freeports, and there are further changes in the pipeline.

Permitted development rights

The core area comprising port facilities already benefits from extended permitted development rights ("PDR") which came into force on 21 April 2021. PDR allow certain kinds of development to be carried out without the need for planning consent. These changes apply to operational land, i.e. attached to existing use and facilities. PDR for ports were extended to match those in existence for rail and airports. Port operators and (now) their agents are able to erect buildings intended to be used in connection with the operation of port facilities and services. This is an extension of the previous scope of PDR beyond shipping in connection with passengers, goods, livestock or traffic. It means that tax and customs facilities, for example, may now be included and other activities related to port activities, but which are not directly connected with shipping. Such buildings are limited in scale, size, height, etc and proposed use, as is the case for all PDR. It is therefore a quick, efficient and low risk but limited means of extending existing facilities.

Local Development Orders or Development Consent Orders

For more extensive development required to establish new or regenerate existing port facilities, local planning authorities are encouraged to make use of the existing regime for local development orders. Local Development Orders ("LDOs") and Development Consent Orders ("DCOs") are a form of blanket planning consent for specified areas for specified kinds of development. LDOs are created by a local planning authority, DCOs by the Secretary of State. They both enable a specific area – in this case the core port area - to be developed to provide a specified range of port and related facilities.

Benefits of LDOs or DCOs

The LDO and DCO regime reduces the risk to developers substantially, as automatic consent is granted for relevant development. It also means that matters such as remediation of contamination and environmental impact assessment may also be undertaken on a site-wide basis rather than on a plot-by-plot basis. The Prospectus encourages the use of the LDO/DCO regime as a means of achieving the desired speed and certainty in bringing forward freeport development. It is worth noting that, in some instances, establishing an LDO may involve more than one local council, in which event a DCO established by the Secretary of State may be more appropriate.

What if you are outside the area covered by the DCO or LDO?

A LDO or DCO will only apply to a limited area. Beyond the core area, developers may need to rely on existing land allocations in Local Plans to ease through planning applications for freeport-related business, storage and related activities. Land allocations do not guarantee consent but may enhance the presumption for specified kinds of development in certain areas – in this case, land allocated for business, storage and manufacturing uses would be preferred locations for developers to explore. The extent to which this may help developers of freeport related activities depends on the existing Local Plans of the council in the hinterland areas. However, where applications are not assisted by existing land allocations, there is likely to be a positive appetite to encourage economic development in these areas.

Coordinating maritime and terrestrial regimes

The consultation on freeports which concluded in October 2020 explores the potential for integrating the different planning regimes for terrestrial and marine zones. Currently land below Spring High Water mark is governed by the Marine and Coastal Access Act 2009. The Town and Country Planning Act 1990 includes land down to the Spring Low Water Mark. Port development is likely to require development both on land and in the marine zone, so an integrated regime for these areas could save time and costs, and reduce risk and increase certainty for developers.

The National Policy Statement for Ports ("NPSP") published January 2012 provides a framework for the development of UK port proposals and includes associated road and rail links. The Government is considering reviewing the way in which a revised NPSP can support the development of freeports. In addition, the proposals for zonal planning contained within the white paper 'Planning for the Future' of August 2020 may also be deployed to support freeport development, including in the hinterland. 

Environment-related issues

The locations of the successful freeport bids are all, to greater or lesser extents, adjacent to specially protected areas and marine protected areas. This raises various environment-related planning issues:

  • The current Habitats Regulations do not allow development adjacent to such areas.

  • The Prospectus states that the Government intends to seek a simpler mechanism for Environmental Impact Assessments ("EIA"), a statutory obligation for certain kinds and scales of development that may have negative impacts on the environment. Since Brexit, the UK has the power to amend these requirements, which are set by EU legislation. It will be interesting to see what proposals the Government has in relation to overriding EIA requirements, and seeking to balance development and environmental protection. Proposals to amend the EIA regime are expected later this year.

  • The current Environment Bill calls for a 10% net gain in biodiversity and the existing SANGS requirements. It is not clear how this will be deliverable within the LDO or DCO regime, or within the core area of the ports, particularly where land is at a premium.

  • Mitigation for nitrate pollution in the south of England may also need to be considered and will need to be addressed in order to allow a more liberal development regime in or adjacent to currently protected areas.

Whilst these issues will not necessarily act as a complete block on development, businesses interested in freeports need to be alive to the potential risks they pose

Weighing up the benefits and challenges

How significant are the planning benefits?

It could be argued that freeports do not offer any genuinely unique benefits in terms of planning because the relevant mechanisms are already in place, through the amended PDRs and the LDO and DCO regimes and these are not limited to freeports (i.e. in principle, there is nothing to stop other ports/transport hubs making use of them). However, it is important not to consider the planning benefits in isolation. In particular, freeports are the only locations where these planning benefits will be available alongside other benefits such as freeport-specific tax reliefs and special customs arrangements. As such, freeports may be able to offer some businesses a package of benefits which is genuinely unique compared with the position elsewhere in the UK.

As outlined above, measures such as the LDO/DCO regimes substantially reduce the risk to developers. That said, there is still a material risk for developers in obtaining the necessary planning consents. The Government could minimise this through the proposed reforms outlined above but these may take time to come into effect.

How much of a threat is posed by the environmental issues?

There is a fine balance between development and environmental protection which may be hard to attain. The Government will need to ensure that its proposals for amending EIA requirements, promoting national zoning and incentivising freeports and related infrastructure development are coherent and consistent. Reducing the risks attached to obtaining planning permission by increasing certainty through zoning and the use of LDOs and PDRs is admirable, but may not be acceptable to the electorate if it is at the cost of the environmental protection that the UK purports to support.

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