Friday, 31 August 2012

Is it even viable?

Is this AI's only financially viable plan?
Back in April, DCC was asked whether it could verify "That Aggregate Industries confirmed to the Council prior to the Consultation that, besides Blackhill, there are a number of other commercially viable alternative locations for the processing of material from the area at Straitgate being consulted upon." 

DCC replied that "Aggregate Industries have confirmed there are other suitable locations for the processing of material but we cannot state whether they are commercially viable. We would not expect to go into the detail of commercial viability at this stage of the process." 

This was surprising because the NPPF says “173. Pursuing sustainable development requires careful attention to viability and costs in plan-making and decision-taking. Plans should be deliverable.” DCC appraised 45 factors for each site, but commercial viability was not one of them. A site might perform best environmentally but if it does not make business sense for an operator it is not going to be deliverable.

For Straitgate to be included in the Minerals Plan, DCC would need to know that, if processing at Blackhill on the heavily protected Woodbury Common was not to be permitted beyond 2016, it would be commercially viable for Aggregate Industries to set up plant at Rockbeare or Straitgate for the relatively limited amount of sand and gravel available. Without that knowledge there would be no substance to the Council's Plan, merely wishful thinking.

Poor profit margins on sand and gravel mean an assessment of commercial viability is important. Not only for the Council to be assured of continuity of supply, but also so that local people may have a modicum of faith that the operator will afford restoration plans, or in the case of financial default another operator could be attracted to continue and restore the site.

RICS has just released "Financial viability in planning". Whilst this is more concerned with housing development, it still emphasises that "Financial viability has become an increasingly important material consideration in the planning system" and "Viability considerations should form a critical part of the evidence base behind planning policies".

To date it would seem that commercial "viability considerations" have been absent from DCC's thinking, and before going any further Aggregate Industries should be asked for assurances that if they had to finance another plant the numbers would stack up.