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Written Statements

Wednesday 25 July 2012

Armed Forces: Defence Equipment and Support


The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever): I wish to inform the House that one element of the current Framework Agreement for Technical Support (FATS) contract signed in April 2012 will need to be re-competed.

The Ministry of Defence uses FATS to procure specialist technical support to its defence equipment programmes and it is also used on a limited basis by other government departments. Suppliers compete to become members of the framework; users then place specific tasks through the framework, as and when they arise, preferably by running further competitions between member suppliers. The first iteration of FATS was instituted in 2006.

The fourth iteration of the framework, FATS4, was competed and companies selected to be members, with the framework commencing on 26 April 2012. The framework is broken into two lots. Lot 1 covers general support relating to materials, electrical/ mechanical, power plants, IT, health, medical and transport requirements. Lot 2 relates to safety and duty of care areas such as airworthiness management, safety management, maritime safety, and technical support to platforms and weapons.

Technical issues have been discovered in the way that Lot 2 of FATS4 was awarded. Errors have been found in the way the assessment of suppliers’ technical capability, for Lot 2, was conducted and recorded. Some suppliers are therefore on the framework but should not be, and some suppliers should have had the opportunity to tender for Lot 2 but did not.

As a result, the Secretary of State for Defence has directed that MoD and other government departments must stop using Lot 2 with immediate effect. The current situation is not fair and equitable to suppliers who bid for these requirements and, given that the areas affected relate to duty of care and safety, no risk can be taken over supplier capability. Tasks already placed under

Lot 2 will remain in place as they are not in the affected areas. Lot 1 is unaffected and will continue in use.

Despite this setback, FATS continues to represent a useful and efficient route for procuring specialist technical services and a replacement framework to cover these requirements will be put in place, which we estimate will take around six months. During this time, the Ministry of Defence and other customers will place their own contracts individually for their specific needs following normal procurement process. This process will be managed so that it does not cause any delay in delivering equipment to our Armed Forces. The renewed competition and interim arrangements mean that the actual effect on any one supplier’s business is unlikely to be any different than under FATS.

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The MoD has written to all affected suppliers today to apologise for this failure of MoD process and to inform them of the action being taken. An investigation has been initiated to identify how and why this happened and to prevent similar issues in the future. If evidence is brought to light that proper processes have not been followed then disciplinary action will be taken as appropriate.

Compensation: Mesothelioma


The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud): Later today I am publishing the Government’s response to the public consultation: Accessing CompensationSupporting People who need to Trace Employers’ Liability Insurance. The consultation was launched by the last Government due to growing concerns about the situation faced by people who are injured or made ill through their employment but are unable to claim damages because their employer no longer exists and the relevant employers’ liability (EL) insurer cannot be found.

The consultation proposed the establishment of an Employers’ Liability Insurance Bureau but the Government are not persuaded that this should be established. We are, however, persuaded of the unique and special position that those suffering from mesothelioma find themselves in.

We propose to bring forward legislation when parliamentary time allows enabling a scheme to be set up to make payments so that anyone who is diagnosed from today with diffuse mesothelioma, as a result of their negligent exposure to asbestos at work, and who is unable to trace their liable employer or their employer’s EL insurance policy to claim against, would be eligible to claim from this scheme.

The scheme is intended to be funded by a levy on active EL insurers based on their gross written premium.

These proposals require primary legislation so that all active EL insurers contribute to the levy. We therefore hope to introduce a Bill, when parliamentary time allows, where further details of the scheme will be outlined.

This reflects the Government’s position that there is a special case for providing additional support for people with diffuse mesothelioma, given the nature of this terrible disease, its terminal prognosis and the need for urgent action due to mesothelioma deaths peaking soon after 2015.

The consultation also proposed an Employers’ Liability Tracing Office (ELTO). I am pleased to note that, in advance of the Government’s response to the consultation, the Association of British Insurers has already set up an ELTO, which was introduced in April 2011. ELTO is an electronic database of EL policies to which 99% of the EL insurers provide data and over time this should substantially increase the numbers of traced EL policies so that more people can get the compensation they deserve. We wait with interest to see its first results later this year.

While Financial Services Authority rules have made it compulsory for EL insurers to publish online details of the EL insurance they provide, membership of

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ELTO is currently voluntary. So our proposed new primary legislation would also require all insurers (including active and run-off insurers) that provide EL insurance to become members of ELTO and abide by its rules on effective tracing. In order to resolve disputes over evidence of cover, ELTO will establish a technical committee whose decisions on EL insurance will be binding on its members.

The Government are of the view that there should be a mesothelioma pre-action protocol in order to ensure that these claims are processed and settled as quickly as possible. I can confirm that my colleague, Jonathan Djanogly at the Ministry of Justice has asked the Master of the Rolls to look at introducing a new pre-action protocol to expedite the pre-litigation process for mesothelioma claims. The Master of the Rolls has asked the Civil Justice Council to look into this as a matter of urgency

In addition the insurance industry has agreed to introduce an electronic portal for registering mesothelioma claims so they are dealt with in a structured way to support the speed and efficiency of making settlements.

The Government recognise that the cost of civil litigation is too high, including in mesothelioma cases, and are seeking to address this.

The Government are changing the no win no fee conditional fee agreement (CFA) regime from April 2013. However, the new regime will not apply to mesothelioma claims funded under CFAs until a review has been carried out in accordance with Section 48 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012. The Ministry of Justice and the Department for Work and Pensions will work together to ensure that implementation occurs in a synchronised way.

The Ministry of Justice is continuing to work with interested parties to prepare the way for commencement of the Third Parties (Rights Against Insurers) Act 2010, which will help to streamline the process of bringing a claim for civil compensation for mesothelioma where the defendant is insolvent and insured.

As we develop these initiatives, further announcements will be made.

I will place a copy of the Government's full response to the consultation in the House Library and it will also be available later today on the department’s website.

Energy: Renewables


The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Lord Marland): Today my department is publishing the Government’s decision on the levels of financial support that will be available through the renewables obligation (RO) for large-scale renewable electricity generators from 2013-17. This follows a comprehensive, rigorous and evidence-based review of RO subsidies carried out over the past 18 months. We received nearly 4,000 consultation responses and substantial amounts of new evidence from a wide range of stakeholders as part of a public consultation process. We would like to take this opportunity to thank all those who submitted formal responses or took part in the review in other ways.

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The UK needs a strong renewable energy sector. Renewable energy generation is a crucially important low carbon technology with a central role to play in helping us reach our carbon emission reduction goals. It is also essential to our economic growth and energy security. It reduces our reliance on imported fossil fuels, helps keep the lights on and our energy bills down. We have some of the best renewable resources anywhere in the world, and the Government are absolutely determined that the UK will retain its reputation as one of the best places to invest in renewables. We have also legally committed to ensure that 15% of our energy will come from renewable sources by 2020.


Since 2002, the RO has been the mainstay of support for large-scale renewable electricity industry. It has helped to bring about a five-fold increase in renewable electricity generation, from 1.8% of total electricity generation in 2002 to 9.7% by the end of 2011. By the end of the first quarter of this year, renewable electricity capacity totalled 13GW, which is a 36% increase on the same time last year. Since April 2011 alone, industry has announced over £11.3 billion of investment in the renewables sector, potentially supporting around 22,000 jobs up and down the country, contributing to the coalition Government’s objective to rebalance the economy and support economic growth. The changes in RO support levels that we are setting out today recognise the key role of renewables in the UK’s future and will maintain that momentum.

The Government’s decision provides certainty for developers and will ensure continuity of support as we transition towards the new contracts for difference to be introduced as part of our electricity market reforms. It will help unlock generation and network capital investments worth around £20-25 billion in today’s prices in the period 2013-17, and deliver the kind of sustainable, long term growth and green jobs that we need to get the economy moving again.

Future support levels

It is not the Government’s policy to support renewables at any price. Our ultimate aim is for renewables to become competitive without the need for subsidy. Today’s package sends a strong signal to industry that we expect this to happen over time. To get this moving in the right direction, we are reducing support where it can be done while bringing on the deployment that we need from key technologies, such as offshore and onshore wind, to achieve our aims.

The level of support for offshore wind will be set at 2 ROCs/MWh in 2014-15, reducing to 1.9 ROCs in 2015-16 and to 1.8 ROCs 2016-17. This is consistent with our consultation proposals, and reflects our expectation that the costs of offshore wind will fall as mass deployment takes place and industry innovates. We are already working closely with key representatives from industry to reduce costs. The UK has some of the best offshore wind resources in the world and these will be key to the UK meeting its low carbon objectives. The new support levels will ensure that the UK remains in its position as the leading location in the world for offshore wind deployment.

We can confirm that the level of support for onshore wind for the banding review period will be reduced to 0.9 ROCs, guaranteed until at least March 2014. However,

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we will undertake a call for evidence, starting in September and reporting in early 2013, which will re-assess onshore wind industry costs. If findings of the call for evidence identify a significant change in generation costs, the Government will initiate an immediate review of onshore wind ROC levels, with any new support arrangements for onshore wind taking effect from April 2014. Given the importance of maintaining investor confidence there will be full grandfathering and grace periods for projects already committed. As part of the call for evidence, we will examine how communities can have more of a say over and receive greater economic benefit from hosting onshore wind farms.

At the same time we are providing appropriate support for innovative technologies that can play a long-term role in our energy future, such as energy from wave and tidal stream technologies and innovative processes for generating electricity from waste, such as advanced conversion technologies.

The support levels we are announcing will keep us on track to meet our legally binding 2020 renewable target, delivering around 79TWh of renewable electricity each year by 2016-17. The detailed changes are set out in the Government response to the consultation, copies of which are available in the Library and on DECC’s website.

Bill impacts

The RO is paid for by consumers through their energy bills. For that reason, delivering the best possible deal for consumers has been at the heart of the RO banding review. In considering the final shape of the banding package, we have focused on the need to balance cost-effectiveness with the range of objectives that the RO must deliver. As we have sought to take account of the need to contribute to long-term energy security, to keep us on track to meet our carbon reduction objectives for the coming decades and act to drive investment in the UK renewable energy sector, this package reduces the lifetime subsidy cost of the renewables obligation per Wh of renewable electricity generated, by 11% compared to current bands.

These proposals cost around £900 million less than implementing the consultation bands while driving a similar level of deployment. So, delivering more clean power at less cost to consumers. They will also cut the cost of consumers’ energy bills by £6 next year and £5 in 2014-15 compared to the current subsidy regime, a total of £11 across the remainder of this Parliament. There will be a modest increase in bills of around £3 by the end of the banding review period as greater levels of generation come forward.

Further consultations

There are a small number of areas where we need to consult and re-engage with industry and wider stakeholders to ensure we have precisely the right evidence to fully implement our proposals. We will be consulting again shortly on the level of subsidy for large-scale solar generation. Analysis of the new evidence gathered as part of the separate comprehensive review of the feed-in-tariff scheme suggests that RO support rates should be set significantly lower than was proposed in the consultation. Because such a reduction in support would represent a significant departure from the consultation proposals and would be based largely on

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new evidence which was not published until the RO consultation had closed, we consider that it is appropriate to re-consult on this issue.

The consultation evidence also revealed greater interest in biomass generation. We will be consulting soon on a monitoring and review process for biomass co-firing and conversions to ensure effective cost control, and on a supplier cap for dedicated biomass generation.

Subject to parliamentary and state aid approval, the new subsidy levels will come into effect on 1 April 2013.


The Government have today also announced the introduction of a £500 million field allowance for large shallow-water gas fields, to secure investment in marginal gas fields in the UK continental shelf.

Gas is currently the most important primary fuel in the UK, powering industrial processes, domestic and commercial heating and electricity generation. It is a lower carbon fuel relative to the current mix and will play an increasingly important and evolving role in helping the UK move towards a low-carbon future as coal power stations are closed.

We see gas continuing to play an important part in the energy mix well into and beyond 2030, while meeting our carbon budgets. Through the 2020s, and beyond if gas proves cheap, we expect it to continue to play a key role ensuring that we have sufficient capacity both to meet everyday demand and complementing an increasing amount of relatively intermittent and inflexible generation. We do not expect the role of gas to be restricted to providing back up to renewables, and in the longer term we see an important role for gas with CCS. The Gas Generation Strategy that we will publish in the Autumn will set out in more detail the role that gas generation will play and what Government will do to enable this.

We are committed to making the best use of UK energy reserves, including the proper development of unconventional gas subject to the appropriate safeguards being in place. This will help ensure that the UK gas market continues to play a key role as an important European gas hub which in turn promotes diversity of gas supply to the UK and Europe. We are committed to ensuring that if gas prices fall UK families and businesses will be able to benefit from lower bills. To meet these demands, we also need investment in UK gas supply infrastructure, including pipelines and potentially more storage, to ensure increased flexibility to respond to greater demand variability. We will be providing more detail on how we will ensure that investment in the development of our gas reserves, gas infrastructure, and gas generation plant takes place in the autumn.

Fire and Rescue Service


The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham): I want to update the House on my department’s progress with the regional control centre buildings—the main legacy asset of the terminated FiReControl project from the last Administration.

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The nine regional control centre buildings were procured through a private developer scheme from 2004 onwards and completed between June 2007 and February 2010. The leases run for 20 or 25 years from completion. As noted on 26 January 2009 (Official Report, Commons, col. 108W) the last Administration decided not to include break clauses in the contracts, forcing taxpayers to shoulder the ultimate liability for the empty buildings.

The National Audit Office, in their report The Failure of Fire Control, were highly critical of the top-down FiReControl project. They stated:

“The FiReControl project was flawed from the outset because it did not have the support of those essential to its success—local fire and rescue services. The department rushed the start of the project, failing to follow proper procedures. Ineffective checks and balances during initiation and early stages meant the department committed itself to the project on the basis of broad-brush and inaccurate estimates of costs and benefits and an unrealistic delivery timetable, and agreed an inadequate contract with its IT supplier. The department under-appreciated the project’s complexity, and then mismanaged the IT contractor’s performance and delivery. The department failed to provide the necessary leadership to make the project successful, over-relying on poorly managed consultants and failing to sort out early problems with delivery by the contractor. The department took a firmer grip of the project from 2009 and terminated the contract in December 2010 to avoid even more money being wasted” (National Audit Office, The Failure of the FiReControl project, HC1272, 1 July 2011).

Following the termination of the FiReControl project in December 2010 by the coalition Government, my department explored whether fire and rescue authorities could make use of the centres as they were purpose built for control services. Our next preference was for other emergency services to take over the buildings. Our prime aims were to ensure value for taxpayers’ money and achieve a localist approach to improvements in resilience.

I can report success for four of the buildings. One is already in use as a control centre and three further buildings will be used by emergency services, as follows:

the London building was officially opened on 1 February 2012—in good time for the Olympic and Paralympic Games—and is fully operational as the London Fire and Emergency Planning Authority’s control centre;as announced by the Minister for Shipping on 22 November 2011 (

Official Report

, Commons, col. 163) the Maritime and Coastguard Agency will use the Fareham building as their operations centre;the Warrington building will be used as a shared control service for four fire authorities (Greater Manchester, Cheshire, Lancashire and Cumbria); andCounty Durham and Darlington Fire and Rescue Authority will use the Durham building as their new headquarters and control room.

Having sought public sector tenants, my department is launching a marketing campaign to attract tenants from a wider range of organisations for the remaining five buildings, including from the private sector. These buildings are located in Wolverhampton, Cambridge, Taunton, Wakefield and Castle Donington. They are built to a high specification and have a number of desirable features, including excellent resilience, good security and easy access to major road networks.

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Buyers of the control rooms will also benefit from the £6,000 a piece deluxe, polished chrome Brasilia espresso machines that were purchased for each of the centres by the last Administration (as outlined on 15 March 2010 (

Official Report

, Commons, col. 665W).

Marketing begins in late July, with sale boards going up at the five buildings. Other marketing activities will comprise some print and online advertising, a brochure for interested organisations, a dedicated website and site visits. My department has looked for cost effective marketing channels, including no-cost and low-cost routes, and will keep the outcomes under review in order to assess effectiveness and progress.

In the meantime, we have taken firm steps to reduce the costs of the unused control centres. For example, the facilities management bill has been reduced by 25% and the utilities bill by 35%. A second review of the facilities management arrangements will result in a further reduction from April 2013. While we will continue to seek to drive down these costs to make savings for the taxpayer, the largest saving will come from finding suitable tenants to take over the buildings.

I want to inform the House of my department’s intention to provide an authorised guarantee agreement to the landlord of the North West regional control centre building. This Statement sits alongside a departmental minute I have laid before the House setting out the contingent liability associated with the provision of an authorised guarantee agreement.

As set out in the departmental minute, the lease for the North West control centre in Warrington has been assigned to NW Fire Control Ltd, a consortium of four fire and rescue authorities. The consortium will use the building to provide a shared control service. This is positive news, which will result in emergency calls being taken in a specialist, highly resilient, purpose-built centre. We are providing an authorised guarantee agreement to the landlord, as provided for in the lease.

My department and NW Fire Control Ltd have already entered into a formal agreement regarding the control centre building for the lifetime of the lease, which runs until 2033. As such, we expect there to be no costs to Government from the provision of this authorised guarantee agreement.

It is clearly unsatisfactory that taxpayers have had to foot the bill for this poorly conceived and poorly implemented project from the last Administration, and taxpayers will no doubt resent such expensive buildings lying empty because of the botched procurement and handling of FireControl under the last Government. However, the coalition Government have taken firm action to protect the public purse from the botched programme and sought to minimise the cost of these inherited liabilities, in as far as we are able to given the constraints of the contracts that were signed.

Ministers will continue to keep Parliament informed of progress.

Food: Dairy Industry


The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Taylor of Holbeach): The UK has a long and proud tradition of dairying. However, the recent cuts to farmgate milk

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prices have been a severe blow to the industry with farmers already facing the pressures of rising feed costs and adverse weather.

The Government understand that dairy farmers cannot produce milk below the cost of production for any length of time. The cuts in price for raw milk have caused real difficulty for many people in the dairy industry, but they cannot be resolved overnight and disruption and protests are not the answer.

The Government cannot and should not set prices. Instead, we are working to get all levels of the supply chain to make the real changes needed to guarantee the UK dairy industry's long-term future. Over the past 12 months, the Government have encouraged real changes at all levels of the supply chain so that they can get back on their feet and take advantage of the huge opportunities that exist—in domestic markets and abroad. This outcome will not be achieved unless all involved show that they can work together and break the cycle of blame being passed from one part of the supply chain to another.

The Government take these issues extremely seriously and we have brokered a deal with farmers and dairy processors on an industry code of practice. This will cover issues such as the way that price is determined, notice periods, the duration of contracts, volume and exclusivity. Provision has also been made for an independent person to review the operation of the code if both parties agree that this would be beneficial. The finer details of the code of practice are expected to be finalised by all parties by the end of August. This will include the precise role that an adjudicator could play and who would be best placed to carry out such a function. The code must be given time to work, but if it does not then we will legislate for written contracts between dairy producers and processors.

The Department for Business, Innovation and Skills has introduced a Bill to create an adjudicator to uphold the groceries code and so to help ensure that suppliers are treated fairly and lawfully in accordance with that code . The adjudicator will be able to intervene to address instances of supermarkets breaching the groceries code in their dealings with their direct dairy suppliers. Dairy farmers who are indirect suppliers will also be able to bring issues to the attention of the adjudicator, for instance if they believe that an intermediary processor is being treated unfairly under the code. Resolving such cases could in turn help to relieve pressure on farmers further along the dairy supply chain.

Within this remit, it is clearly desirable to be able to draw on any expertise that the adjudicator gains in relation to the dairy sector. For instance, if the adjudicator was to discover breaches of the groceries code relating to UK dairying, it would be sensible for someone reviewing an industry code of practice for UK dairying to take the adjudicator’s reports on these breaches into account. Ministers from the Department for Environment, Food and Rural Affairs will continue to discuss the possible role of the groceries code adjudicator in relation to the dairy sector with their colleagues in Government.

Ministers from that department will continue to work closely with the industry and they are meeting retailers and food manufacturers individually this week

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to talk about increasing the sustainability of the UK dairy industry through greater sourcing and promotion of British dairy products. The Government are committed to continuing to work with all parts of the industry to ensure it has a sustainable, profitable future.

The Government also recognise the value of farmers working together in producer organisations to improve their profitability via efficiency and competitiveness gains as well as increasing their negotiating power. The Department for Environment, Food and Rural Affairs recently announced that £5 million worth of new funding will be made available for farmers to collaborate and to support business-led innovation.

There are potentially bright prospects for the UK dairy industry. Apart from Ireland, the UK has the best climate for growing grass in Europe and we should be producing more value-added products such as cheese, butter and yoghurt for the domestic dairy market. The UK currently has to import 50% of these products, which indicates that the sector is not yet reaching its full potential.

There are also major export opportunities with emerging markets such as China, whose growing middle classes are crying out for dairy products. Early in 2012 the Government published a food and farming exports action plan to encourage more food and drink companies to venture into overseas markets. This includes supporting and encouraging businesses at home and promoting British food abroad and opening up markets.

Securing a healthy future for the UK dairy industry is a real priority for the Government. We are confident that its prospects are positive if the current issues can be resolved.

Regional Strategies


The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham): It is the Government’s policy to revoke existing regional strategies outside London, reflecting manifesto commitments made by both coalition parties in the 2010 general election and subsequently incorporated into the coalition agreement. The Localism Act 2011 provides for the abolition of regional strategies in a two-stage process. The first stage, to remove the regional planning framework and prevent further strategies from being created, took effect when the Localism Act received Royal Assent on 15 November. The second stage would be to abolish the existing regional strategies by secondary legislation. However, any final decision on this must take account of assessments of, and consultation on, the possible environmental effects of revocation of each of the existing regional strategies.

The strategic environmental assessment process is set out in an EU Directive (Directive 2001/42/EC). In March 2012, the European Court of Justice issued a significant ruling on the interpretation and application of the Directive (Inter-Environnement Bruxelles ASBL and Others v Government of the Brussels-Capital Region).

As part of the strategic environmental assessment process, and before the decision of the European Court of Justice, there has already been consultation

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with the statutory consultation bodies on the scope and level of detail of the environmental reports. Public consultation took place between October 2011 and January 2012 on the basis of environmental reports published in October 2011. Detailed responses were provided in the course of this exercise.

Following the decision of the European Court of Justice, in the light of planning policy and legislation that have been put in place since January 2012, in light of the earlier consultation responses, and in order to be meticulous in observing the requirements of the directive, the Government are now updating the environmental reports and undertaking additional consultation. We are publishing the first of the updated environmental reports: the report in respect of the proposed revocation of the East of England Regional Strategy shortly and will place a copy in the Libraries of both Houses. This report builds on and is intended to supersede the previous report.

The period for consultation responses will remain open for eight weeks. We welcome and encourage all interested parties to respond. At the end of that period we will consider all consultation responses, including those already submitted during the October 2011 to January 2012 response period.

In the coming weeks my department will publish updated environmental reports relating to the proposals

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on each of the other regional strategies, so that those proposals too can be the subject of additional consultation. In each case there will be an eight week period for consultation responses. All updated environmental reports will be placed in the Libraries of both Houses as they are published.

The proposed revocation of the regional strategies may be regarded as a material consideration by decision makers when determining planning applications and appeals.

In respect of plan-making, the National Planning Policy Framework implementation period provides councils with the incentive to get their plan policies up to date and in doing so they can have regard to the policy to revoke regional strategies and the new National Planning Policy Framework policies. A local plan document must be in general conformity with the regional strategy at the stage that the plan is submitted for examination but it is open to councils when preparing local plans to take account of the policy to revoke up to the time of submission. Local authorities can also bring forward proposals (for example on housing targets) which have a local interpretation to them in their plans, based on their own sound evidence base where that is justified by the local circumstances. That evidence base is likely to be more up to date than that included in the regional strategies. Each case will depend on its particular facts.