HJ Banks & Company Ltd v Secretary of State for Housing Communities And Local Government

Paragraph 149 of the National Planning Policy Framework permits more than one lawful method of conducting its two-stage assessment. The decision-maker must ensure that all material benefits and adverse effects are taken into account, without double counting or omission. If a residual approach is used, benefits and harms must both be netted off before the residual harm is assessed against the relevant benefits. Reasons must adequately explain the treatment of an important benefit, particularly where it could affect whether benefits clearly outweigh adverse impacts. A decision-maker must also explain the reasoning by which greenhouse-gas effects are said to outweigh an accepted national energy need, especially where the decision departs from the reasoning of the inspector.

Planning permission was sought for a surface coal mine at Highthorn, Northumberland. The local planning authority resolved to grant permission, but the Secretary of State called in the application and refused permission after a public inquiry. The Secretary of State accepted that there was a likely need for the coal, that a window existed for its use, and that the proposal would produce substantial economic benefits. He nevertheless concluded that greenhouse-gas emissions and other impacts were not clearly outweighed by the benefits.

The claimant challenged the decision under section 288 of the Town and Country Planning Act 1990. The issues were whether paragraph 149 of the NPPF had been properly applied, whether biodiversity benefits had been omitted, whether an immaterial planning obligation had been taken into account, and whether the reasoning concerning greenhouse-gas emissions and substitution for imported coal was adequate.

1. Paragraph 149. Paragraph 149 contains a two-stage test. At the first stage the decision-maker assesses environmental acceptability, including relevant environmental benefits, adverse effects and mitigation. If the proposal is not environmentally acceptable, the second stage requires consideration of whether national, local or community benefits clearly outweigh the likely impacts.
2. Both a full re-examination of benefits and impacts and a residual or netting-off approach may be lawful. The essential requirement is that all material benefits and adverse effects are taken into account without double counting or discounting. If a residual approach is adopted, both benefits and harms must be netted off. The Secretary of State had carried all environmental harm into the second-stage balance but had failed to carry forward the material biodiversity benefit. The Decision Letter did not intelligibly explain how that benefit had been treated. Ground 1 therefore succeeded.
3. The Secretary of State had also unlawfully treated the Discover Druridge fund as a benefit. Applying R(Wright) v Forest of Dean DC and the ordinary principles of materiality, a fund whose purposes were so broad that it was unrelated to the acceptability of the development was not a material planning consideration. Non-compliance with regulation 122 of the CIL Regulations did not itself determine materiality. The skills fund was not shown to be immaterial.
4. The reasoning on greenhouse-gas emissions was inadequate. The Secretary of State accepted both a likely national need for Highthorn coal and that refusing permission might result in substitution by other energy sources, potentially with different emissions. He did not identify the replacement low-carbon sources, explain their likelihood or extent, quantify the possible emissions consequences, or reconcile that reasoning with the accepted need for the coal. The Inspector’s discussion of possibilities in C105 and C115 could not supply the missing reasoning.
5. Earlier planning decisions did not, merely because they existed, impose a special duty to give separate reasons for departure. The ordinary duty to give reasons applied. The decisive defect was that the reasons on the principal greenhouse-gas and energy-supply issue were materially inadequate.
6. The application succeeded and the Secretary of State’s decision letter was quashed.