Michelmores LLP is delighted to have introduced two highly skilled Residential Property specialists as the new faces of its Sidmouth branch. This follows the recent retirement of Pam Gardner, an Associate and Licensed Conveyancer at Michelmores, who was with the firm for more than two decades.
Susie Jenkin, a renowned Senior Conveyancing Assistant who joined Michelmores in 2014, and Gemma Gilbert, a Solicitor in the firm’s Residential Property team, will now front Michelmores’ conveyancing department in Sidmouth, which is based on Church Street in the bus triangle near the seafront.
Susie resides in Sidmouth and has over 20 years’ conveyancing experience gained at regional firms in Exeter and East Devon. She predominantly deals with the transactional process of residential sales but also assists the Residential Property team with all aspects of purchases, transfers and remortgages of residential property throughout England and Wales.
Gemma advises on all aspects of the residential conveyancing process. Since qualifying as a solicitor in October 2020, she has worked on a variety of conveyancing matters, ranging from leasehold flat sales to commercial purchases.
Louise Peters, a Partner in Michelmores’ Residential Property team, added her support: “Our conveyancing department is renowned in the area for its diligence, expertise, and success. With Susie and Gemma on board, we believe that we can increase volume while maintaining the high standard of service that has made us such a popular choice for residential conveyancing in and around the South West.
“People are our greatest asset and the commitment and excellent client care of both Susie and Gemma will further strengthen our team in Sidmouth.”
Richard Hedger, a Partner in the Tax, Trusts & Succession team at Michelmores and head of the Sidmouth office for over twenty years, adds:
“I am delighted to have Susie and Gemma as the new faces of residential property in our Sidmouth office. Their addition to the site is in line with Michelmores’ strategic growth ambitions and it’s been fantastic to see the team continue to expand and report significant successes for our clients.”
Michelmores continues to look for ways in which the firm can further develop its client offering, providing clear practical advice, delivering a bespoke service designed to meet the needs and goals of each client. The firm’s strong residential conveyancing team has specialist experience with buying and selling high-end residential properties, large country estates and properties with more complex purchase considerations.
Susie and Gemma will frequently be based in Sidmouth and at least one of them will be on site daily. Please get in touch – they look forward to hearing from you.
It will not come as a surprise to those who deal regularly with telecoms matters that yet a further gap was found in the Electronic Communications Code (Code) which required clarification by the court.
In this instance, the question was whether a tenant under a superior lease was a party to the Code agreement for the purposes of termination or renewal under the Code.
The case
The case of Potting Shed Bar & Gardens Ltd (formerly Gencomp (No. 7) (Ltd)) v AP Wireless II (UK) Ltd [2023] EWCA Civ 825 concerned a lease of a telecoms site in Bingley, Yorkshire to Vodafone in 2003 by the then freehold owner.
In 2018 a subsequent freehold owner granted an intermediate lease to APW.
Vodafone wanted to renew its lease and whilst neither the freehold owner nor APW objected to the renewal, it was not clear which party could grant the new agreement.
The Code provisions
The Code provides that a successor in title is to be treated as a party to the Code agreement, but there is no provision in the Code for a party whose interest arises out of a superior tenancy. This is not just problematic when it comes to renewal, but also termination, as only a party to a Code agreement can exercise Code rights to terminate.
As such, it could have been argued that a tenant under a superior tenancy to a telecoms lease could not seek to terminate that lease even if it satisfied the grounds for termination in the Code.
Tribunal decision
Vodafone’s position was that although its lease was binding on APW, absent any specific provision in the Code, APW was not a party to the Code agreement and, therefore, it should seek renewal from the freehold owner. The Upper Tribunal accepted this argument.
Court of Appeal
However, the Court of Appeal disagreed and followed the lead of the Supreme Court in taking a pragmatic and purposive approach to the interpretation of the Code.
It found that the Code was intended to work in such a way that the entities with the benefit and burden of the Code Agreement should be considered to be parties to the agreement for the purposes of exercising Code rights in respect of that agreement; be it renewal or termination.
The effect of the decision was that APW was a party to Vodafone’s agreement and Vodafone was required to seek renewal from APW.
This decision provides welcome clarity to operators, but also comfort to parties with superior tenancies, particularly those who wish to develop and therefore seek termination of an existing Code agreement.
We recently reported that the EU-US data privacy network (EU-US data bridge) took effect to grant partial adequacy for certain data transfers from the EU to the US. On 12th October, the UK extension (UK-US data bridge) also took effect and will facilitate the transfer of personal data to the US without need for further safeguards.
What is the UK-US data bridge and how will it help UK data exporters?
Until 12th October, there was no adequacy decision relating to data transfers from the UK. Following the UK’s exit from the EU, the UK Government granted adequacy only in respect of the countries for which an EU adequacy decision had already been granted. At that time, there was no adequacy decision in place for the US, and so transfers of personal data under both EU GDPR and UK GDPR to the US required additional safeguards to be implemented before transfers could take place.
Unfortunately, UK businesses could not automatically rely on the EU-US data bridge and the UK Government had to legislate to enable the EU-US data bridge to be extended to apply to UK data exports.
In common with the EU-US data bridge, the UK-US data bridge is only a partial adequacy decision. It allows UK organisations to export personal data to US organisations which are self-certified under the FTC’s Data Privacy Framework (DPF) without also needing to put in place a transfer mechanism such as the UK International Data Transfer Agreement (IDTA) or a UK Addendum to the EU Standard Contractual Clauses (SCCs).
Self-certification under the DPF requires US organisations to commit to compliance with certain Data Privacy Framework Principles, to publish privacy policies and to provide details of their data processing activities.
The UK ICO expressed concern about various shortcomings, notably the lack of a legal requirement to specify certain special category personal data as sensitive personal data. Accordingly, the ICO recommends that UK organisations should identify biometric, genetic, sexual orientation and criminal offence data as ‘sensitive data’ when sending it to a US certified organisation. The ICO also pointed to a lack of protection of individuals against solely automated processing which would produce legal effects for them. In the increasingly important context of AI, it will be important to ensure that there are rights for individuals to obtain a human review of automated decision-making. Other concerns are that the right to be forgotten is not as extensive as the control individuals have under UK GDPR, and finally, that there are no protections for data relating to ‘spent’ criminal convictions to be deleted.
How do UK exporters determine whether the UK-US data bridge can be used?
Certification status of a US organisation can be checked by making a search on the DPF website. US organisations which are already certified under the EU-US framework need to amend their certification to include the UK extension. Not all sectors qualify for self-certification under the DPF (those that do not qualify include banking, insurance, telecommunications and personal data gathered for journalistic purposes).
What other documentation is required where the UK-US data bridge applies?
UK exporters still need to prepare Transfer Impact Assessments (TIAs) even when relying on the UK-US data bridge, however, and as we explained in our previous note, these will be much easier to conclude as reference can be made to the data importer’s DPF status. Data processing agreements are also still required.
What if it does not apply?
As the UK-US data bridge is only a partial adequacy decision, UK organisations exporting personal data to the US where the US organisation is not certified under DPF will still need to implement another transfer mechanism, such as the IDTA or SCCs alongside their data processing agreements with US importers.
Is there a risk that the US partial adequacy decision will be revoked?
There remains uncertainty over the long-term future of the data bridge. Given the repeated challenges brought by Max Schrems against its predecessors, Schrems has already indicated that a challenge will be brought.
It may therefore be prudent for organisations exporting data outside of the UK in reliance on the UK-US data bridge to consider including a clause in their contracts that requires the parties to enter into an alternative transfer mechanism in the event that the data bridge is suspended or if the ICO or a UK court determines that the data transfers should be suspended.
Are there any other updates about UK exports of personal data?
The Department for Science, Innovation and Technology (DSIT) recently published its summary and initial conclusions from the first phase of an evaluation into the implementation of the ICO’s IDTA and approaches to data transfers. The evaluation (albeit very limited in scale) concludes that uptake of the IDTA has mainly been by large organisations with in-house data protection teams who tended to have a positive or neutral view of the ease of implementing and low costs relating to use of the IDTA. Unsurprisingly, smaller businesses were generally less aware of their obligations in relation to international data transfers and were mostly not aware of the IDTA or SCCs. They often relied on larger suppliers to drive the process and produce transfer mechanism documents.
For further commentary on the data bridge please see our previous note on the EU-US data bridge, and for advice on international data transfers and data protection compliance generally, our Data Protection & Privacy Team will be happy to assist you.
The idea of escaping from the ‘always on’ work culture and heading out into the countryside with nothing but a backpack for company has become increasingly popular, especially since the pandemic. Whilst alluring for many, it can create problems for landowners. We look at the rules applying in England, Wales and Scotland and consider whether it is legal.
In England
Wild camping is the act of camping anywhere other than a designated campsite and usually requires the landowner’s permission to prevent a person committing the civil tort of trespass. In the UK, there are two very well-known exceptions to that requirement being wild camping in Scotland, and wild camping on Dartmoor National Park’s commons.
Dartmoor National Park has a unique legal framework; it is subject to legislation which applies to all of England and Wales, but it also has an additional bespoke statute, the Dartmoor Commons Act 1985. The 1985 Act empowers the Commoners Council to impose and enforce regulations in relation to Dartmoor’s privately owned common land, which comprises 40% of the Park’s land. The aim of the regulations is to fulfil the objective to maintain the commons and promote proper standards of livestock husbandry.
The High Court decision earlier this year in Darwall v Dartmoor National Park Authority [2023] EWHC 35 (Ch) sparked a large debate over upland areas across England, Scotland and Wales with regards to the competing demands and objectives of agriculture, recreation and wildlife conservation and those of private common landowners and occupiers of the National Park.
Section 10(1) of the 1985 Act provides the public with a right of access to the common land on foot and on horseback for the purpose of “open-air recreation”. The dispute between Dartmoor National Park Authority (DNPA) and Mr and Mrs Darwall (the sixth largest common landowners on Dartmoor), considered this public access right in detail.
The Darwall case
The Darwalls brought a claim in the High Court against DNPA disputing the public access over their land and contending that wild camping is an environmental threat. The court was asked to consider whether the public’s right of access for “open-air recreation” included wild camping. The Darwalls contended that the scope of “open-air recreation” was limited to recreations on foot and horseback, whilst DNPA argued a wider interpretation encompassing wild camping within the definition.
Sir Julian Flaux, the Chancellor of the High Court, favoured the Darwalls more restrictive interpretation by relying on wording within the National Park and Access to the Countryside Act 1949, which considered camping to be a vehicle for recreation, and not the actual activity itself. Sir Julian held that the activity in which wild campers were engaging was actually hiking and that the act of camping was merely a facility enabling them to hike.
The DNPA appealed and the Court of Appeal ([2023] EWCA Civ 927) overturned the High Court’s decision. It concluded that the words in the 1985 Act provide members of the public the right of access granted for the purpose of open-air recreation, which includes wild camping. Sir Geoffrey Vos, in the leading judgment stated that:
“In my judgment, on its true construction, section 10(1) of the Dartmoor Commons Act 1985 confers on members of the public the right to rest or sleep on the Dartmoor Commons, whether by day or night and whether in a tent or otherwise, provided that the other provisions of the 1985 Act and schedule 2 to the 1949 Act and the Byelaws are adhered to.”
This decision means that landowners of commons in Dartmoor National Park cannot pursue an individual who wild camps on the commons for the civil wrong of trespass. This case marks a reaffirmation of the public right to wild camp on Dartmoor commons without the landowner’s express permission. One might assume that this decision would set a precedent for other parts of the UK, however it should be remembered that Dartmoor has its own particular rules which do not apply elsewhere. Landowners prior consent is therefore required in other parts of England if wild camping is intended.
In Wales
Wales, unlike England, has no exceptions to the rule of obtaining the landowner’s permission. In Welsh national parks such as Eryri (Snowdonia), Pembrokeshire Coast and Bannau Brycheiniog (Brecon Beacons), the landowner’s permission to wild camp must be sought before striking camp, otherwise the camper commits the civil offence of trespass. Some national park authorities have already sought local landowners’ consent to wild camp on their land in the National Park and a list is readily available to the public.
In Scotland
Scotland’s rules are different again; it is the only part of the UK with laws in favour of wild camping. The Land Reform (Scotland) Act 2003 provides the pubic with the right to roam in Scotland across most unenclosed land. However, there are some areas, such as Loch Lomond and the Trossachs National Park, which are protected and subject to wild camping local byelaws, which enforce restrictions due to overuse at popular sites.
In the recent decision in Lemos v Church Bay Trust Company Ltd [2023], the court found that the bankrupt’s intention in making a declaration of trust was to clarify the delineation between his assets and those of his wife. Whilst an aspect of this was to protect her assets from his creditors, the required intention to amount to a transaction defrauding creditors was not present, as the bankrupt’s purpose had not been to put his assets beyond the reach of his creditors.
Background
On 11 March 2015, Christos Lemos (Christos) was declared bankrupt following an $18 million judgment against him in favour of his sister Joanna Lemos (Joanna).
Joanna brought a claim challenging a declaration of trust made by Christos in favour of his wife Kalliopi (Kalliopi) on the basis that it was a transaction defrauding creditors, contrary to s 423 of the Insolvency Act 1986 (Act).
Christos and Kalliopi were married in 1972. Shortly after their marriage, Christos and Kalliopi lived together in a flat rented by Kalliopi’s father (Captain Nikolos).
In 1981 Captain Nikolos, sought to purchase a house for his daughter, so she could maintain financial independence from her husband. Panagia (the Company), was formed for the purpose of purchasing a property (Property). The Property was purchased by the Company and the 500 shares in the Company were split between Kalliopi (450), Captain Nikolos (25), and Kalliopi’s mother (25).
The documents produced to the court demonstrated that the Company’s record keeping was piecemeal and inconsistent. Accordingly, there had been confusion as to ownership of the Company and who its appointed directors were.
In 1994, Christos made a declaration of trust in respect of the shares in the Company, declaring that any interest he has was held for Kalliopi.
In 2013, the Property was transferred out of the Company to a trust company, and it was registered as the legal owner in 2014.
Issues
The Claimants maintained the declaration of trust was a sham document, and that prior to its existence Christos had a beneficial interest in the Company, and therefore an interest in the Property. On this basis, they asserted that the declaration of trust was a transaction defrauding creditors.
Kalliopi contended that the declaration of trust showed that Christos’ interest was that of a trustee and that the purpose of the declaration was to protect Kalliopi’s own assets and differentiate them from Christos’.
The issues were therefore as follows:
whether Christos had a beneficial interest in the Company when he made the Declaration of Trust;
whether, in making the declaration of trust, Christos acted for either of the purposes in s.423(3) – which is to either a) put assets beyond the reach of someone who was making, or might make a claim against him, or b) prejudice the interests of such a person; and
what, if any, relief, should be granted.
Decision
Based on the chronology of events and the available evidence – the judge found that the intention of all parties was that Kalliopi was to hold the whole of the beneficial interest in the Property from the date of its purchase. Various documents produced over the years indicated that this was both the intention of Captain Nikolos and understood to be so by all others. Christos therefore had no beneficial interest in the Company.
Given this, and the subsequent lack of clarity surrounding ownership of various assets, the judge found that when making the declaration of trust, Christos’ purpose was to segregate his assets from Kalliopi’s.
Accordingly, the purpose of the declaration of trust was not to put assets beyond the reach of a person who was making, or might at some point make, a claim against Christos or of otherwise prejudicing the interests of such a person in relation to such a claim. The act of moving “assets to safety”, as described by the judge, is allowable if it is not “to deceive and is not motivated by the potential prospects of a bankruptcy petition being issued”. The key point in this case was that the assets being moved were not the bankrupt’s but Kalliopi’s. When assessing the question of intention, “it is a question of subjective intention” and in order to satisfy the requirements under s 423 “the court has to be satisfied that the person entering into the transaction actually had the relevant purpose, not that a reasonable person in their position would have had it.”
Based on the above, Judge Wicks found that there had been no transaction under s 423 and that the documentary evidence and oral evidence of Kalliopi and Christos supported this. He considered it to be clear that the party’s intentions had pre-dated the bankruptcy considerably; the documentary evidence played a vital role in securing this position.
Conclusion
Whilst the scope of s423 has been expanded in recent decisions, this case illustrates the need to prove the requisite intention. In particular, the case highlights the fact that the intention must be to put assets of the debtor beyond the debtor’s creditors.
The case also serves as a reminder of the evidential difficulties that Claimants may encounter associated with witness evidence relating to events taking place decades ago. As a consequence of the historical nature of the events that had occurred between the signing of the declaration of trust, to the claim being issued in December 2016 and the trial date in September 2023, the “fallibility of human memory” was raised by the judge, who commented on the possibility of witnesses providing evidence by “recollection” or “reconstruction”. The judge was tasked with “considering the reliability of oral evidence… when evaluating the evidence”, the documentary evidence being a key motivator in the outcome of the case as it provided proof of the parties’ intentions.
Law firm Michelmores welcomed more than 30, year 9 girls from state schools around Exeter to a special workplace event on Friday 10 November which aimed to introduce them to career opportunities within professional services.
The girls, who are aged 13 and 14 years came from Isca Academy, Clyst Vale Community College, West Exe School, St Lukes Church of England School and St James School. The morning included a workshop on communication skills and confidence with professional business coach and personal development consultant Judy Salmon as well as a talk on early careers opportunities at Michelmores. It concluded with office tours hosted by the Firm’s trainee solicitors, apprentices and placement year students.
Chloe Vernon-Shore, Partner, who helped to host the students said:
“As a Firm we are working hard to make law more accessible. It is an important part of our strategy under one of our core goals: Significance of Impact. This is an area that many of my colleagues feel passionate about. We have recently introduced several initiatives which focus on social mobility and inclusion. These have included revolutionising our recruitment processes by introducing contextual recruitment for our early careers’ roles and ensuring that those from lower socio-economic backgrounds are given the opportunity to apply and succeed at interview; introducing inclusive work experience initiatives and launching our schools’ partnership programme: Momentum.
Our workplace event aimed to support all of this activity and ensure that girls who might not consider a career in professional services were given the opportunity to see what life in a law firm is really like and to inspire them to think about their future career options.”
The morning was coordinated with the support of Empowering Girls Exeter which helps to link year 9 girls from local secondary schools with professional women in the city for a programme of mentoring. Four employees at Michelmores have taken part in the initiative which aims to increase confidence, improve communication skills and provide a clearer sense of direction. Empowering Girls Exeter founder, Sarah Abrahams who attended the workplace event said:
“Michelmores has been a great support to the Empowering Girls project with a number of female colleagues mentoring secondary school girls over the last few years to broaden horizons, raise career aspirations and challenge gender stereotypes. This support was taken to a whole new level by a fantastic workplace visit last week, which offered over 30 13/14 year old girls from across five secondary schools in Exeter an insight into pathways to careers in law.
As part of the session, it was a pleasure to watch the girls grow in confidence, enabled by the carefully curated workshop delivered by Judy Salmon. Chloe and the rest of the Michelmores’ team ignited curiosity in many of the girls who gave positive feedback about the visit and shared a keen interest in exploring a career in law further. Many thanks for the time and effort coordinating this value adding event.”
Of the experience a student from Clyst Vale Community College said:
“Thanks for today I loved it, it really helped me with thinking about what I want to do when I’m older and made me feel more confident.”
To find out more about Michelmores’ work in inclusion and belonging, please visit the Firm’s ESG webpage on the website.
Hello, I’m Adam Corbin. I’m a partner in the Agriculture team at Michelmores.
00:04.91
Ben Sharples
Hi, I’m Ben Sharples. I’m also a partner in the Agricultural team at Michelmores and I head up the Natural Capital group here.
00:12.25
Adam Corbin
So we’re here to talk about Natural Capital. Let’s start off Ben, with ‘what is Natural Capital?’
00:18.56
Ben Sharples
Well, it’s the natural environment, effectively.. It’s the the soil, the trees, water — everything around us in that natural world, as it were, that is capable of being utilised in some way and is indeed being being done so now and is emerging as a new sort of asset class in terms of the capability to invest in it and for it to carry out a service for the wider benefit of the community.
00:52.17
Adam Corbin
And has is it now become a ‘thing’? Why is it now important?
00:58.29
Ben Sharples
I mean it always was important. It’s been important for agricultural purposes for time immemorial. You know, we’ve used it to produce food.
01:09.32
Ben Sharples
We’ve used it for water. We’ve used it for generating power in terms of hydroelectric power, wind power, and renewable energy generally, but it’s become more of a focus point because of the need to tackle climate change, the need to generate food more sustainably, and to really deal with the host of environmental problems that face us and governments around the world and ours in particular have focused on the ability of these assets to help solve those problems, so we’ve had the deaf for a 25 year plan and. A lot of other reports that have focused on this issue and so it has very much come to the fore in the last few years in particular.
01:58.40
Adam Corbin
And in a Natural Capital deal, who tend to be the buyers and and who tend to be the sellers? Who are the players on the pitch?
02:05.50
Ben Sharples
Well, at the moment a couple of markets have really taken, sort of, the front running, as it were. So, we’ve got biodiversity net gain (BNG) and nutrient neutrality and we’ll talk about those both in more detail later. But, in those 2 particular markets: The buyers are essentially developers, house builders who require — they have to show an increase in Biodiversity Net gain in order to secure planning permission. And, equally, if they’re in a relevant catchment area that is affected by phosphate and nitrate pollution, they need to demonstrate that their developments are nutrient neutral before they’ll get the go-ahead from the local planning authority. So they’re very much the market makers at the moment. The sellers are the landowners, who control the natural asset, the natural capital, the land which can generate biodiversity credits or nutrient neutrality ,respectively. So they’re essentially the two sides of the the commercial equation. But then there are other players involved as well like the local planning authority and potentially contractors, and so on, who might be carrying out work on landowners’ behalf. So there’s a reasonably complex web of arrangements potentially, in order to get one of these deals off the ground.
03:30.51
Adam Corbun
And thinking about the landowners briefly, why don’t they just sell the land and why don’t the developers just buy it? What’s to stop them from doing that?
03:31.88
Ben Sharples
First.
03:40.76
Ben Sharples
There’s nothing to stop them from doing that and some investors in natural capital markets are buying land they are acquiring freehold interest, but I think there’s a desire on the part of landowners often to keep the estate intact, to keep land in family ownership and so they will look for different models to perhaps take advantage of these markets. You know, they could lease land for a long period of time to, for example, a habitat broker who will then create biodiversity credits on that land and sell them on to developers, or equally they can do it themselves. They could create the habitat themselves or they could use a contractor to do that, to create those biodiversity units to then sell them as as credits in the wider market. I think some investors have started off thinking that purchases are the way forward and perhaps have realised that, you know, the the blocks of land that are required the size of operation that is required isn’t widely available on the market and so they’re looking at alternative structures like leasing or joint ventures in order to facilitate it. You know, Green Finance inward investment into these sorts of schemes.
04:54.43
Adam Corbin
And a credit? What does a credit represent on the land? Does it represent what’s there at the momenan? And does it represent all elements of natural capital that are on the land at the moment? Or does it just represent a part?
05:11.49
Ben Sharples
A credit.. I tend to think of it in terms of units and then credits and languages, you know, you can get hung up on it. But I think it is quite important in order to try and clearly explain what we’re talking about. If you’ve got an area of land which, for example, is an arable rotation at the moment you could take that out of the arable rotation and you could create habitat on it. And habitat creation is often thought to be very complex and, you know, involves loads of tree planting and so on. Often not the case you can create habitat and you can increase biodiversity relatively easily by, you know, discontinuing arable farming and creating some, you know, mosaic scrub or whatever it might be. If you do that, you will increase the biodiversity on that site. So you’ll have a baseline of the arable biodiversity which will be relatively modest and then if you create a habitat you’ll have a higher level of biodiversity. So you’ll have an uplift in the number of biodiversity units on that land — those units can be converted to credits by way of a credit purchase agreement and sold to a developer. So that’s a distinction between units and credits. And units represents the uplift in biodiversity. So you have your baseline in terms of what’s already there, your new higher level that you’ve created, and the difference is your
06:41.22
Ben Sharples
Your net gain and your units that can be sold as credits.
06:46.20
Adam Corbin
So some of the time there’s a promise to do something in the future that’s going to improve the natural capital and some of the time you’re maybe selling What’s already there.
07:00.62
Ben Sharples
Yeah, absolutely. So, you might have a situation where, for example, you know some of the the habitat brokers and there’s some big well-established players in the market. They will have acquired sites and they will have started to create habitat already. And they will be, well on the way to that journey of creating that habitat and therefore crystallising those units and selling them as credits in other circumstances. You might have a developer come along to a private landowner and say “look I need some credits, can we do a deal?” and the answer is yes. And at that point, the deal will be done. The habitat will then start to be created and will then be, you know, the work will carry on for the next thirty year period to complete that habitat creation and enhancement. And in those circumstances the developer will.
07:54.87
Adam Corbin
Um.
07:55.73
Ben
Still be able to secure their planning permission because the local authority will see that the process is in train and the work will be carried out because it’s subject to legal obligation. But that’s a sort of, just in time order of credits, as it were. Whereas with the habitat bank model, the credits are already there in the bank. You know, ready to go immediately.
08:16.90
Adam Corbin
So we focused quite a bit there on the BNG and nutrient neutrality side of these arrangements. What are the other horses in in the race?
08:29.53
Ben Sharples
So, the other market is nutrient neutrality and that has sort of come up on the rails somewhat. Biodiversity.
08:38.34
Ben Sharples
You know, has been in the offing for a while because we had the Environment Bill originally and now we have the Environment Act 2021 which deals with all of the biodiversity issues. Nutrient neutrality is a creature not a statute but of European Case Law. There was a case called the Dutch Nitrogen Case which basically established that if you have protected sites, so special areas of conservation, special protection areas ramsar sites, you know, these valuable wetland sites. You can’t make the the nitrate and phosphate pollution situation in those waterways any worse by way of development. So if you want to build development that consists of overnight accommodation effectively, then you need to make sure that that development is nutrient neutral. It isn’t going to be contributing anymore nitrate or phosphate to those waterways. So you have to either, you know, create a wetland area which will deal with the problem and the runoff from the development, or you have to purchase credits, which have been generated by often the discontinuation of agricultural use on other lands so that other land isn’t, you know, the nitrate and phosphate isn’t being applied to that land. So it isn’t running off into the rivers.
10:00.47
Ben Sharples
So that creates the credit and creates the uplift which can then be used to offset the effect of the development and your question which I only partly answered earlier about whether it’s all of the credit or, you know, whether you can sort of stack these these benefits on land. The answer to that is that you can, so you know a landowner might have an area of land where he’s exploited it for biodiversity net gain takes it out of agricultural production now. If he’s doing that, he may well also choose to create nutrient neutrality credits on it, if he’s in a relevant catchment area. And that’s called stacking. So you’re stacking nutrient neutrality onto biodiversity net gain and that represents a greater opportunity for value and for, you know, income for the landowner and is being accepted by the government and Defra as being a perfectly acceptable way of proceeding. So, you know, the 2 can sort of coexist as it were. They’re not mutually exclusive. The point about nutrient neutrality is that it’s only relevant in certain catchment areas. There are 74 local planning authorities that are currently affected by it and if you’re in one of those catchment areas, you will be subject to it. So.
11:07.13
Adam Corbin
Um.
11:14.82
Adam Corbin
Are.
11:17.80
Ben
It is quite wide-reaching, but it’s it’s quite geographically specific and the market is, you know, quite dynamic as a result.
11:28.14
Adam Corbin
So those schemes — I suppose they’re more or less private money because they’re a requirement. For development, is there any public money available for natural capital benefits at the moment?
11:39.90
Ben
There is and that’s another key issue which Defra and the Government have been have been engaging on. There’s the ability to blend public and private money in terms of environmental schemes. Generally, the public money is basically in the form of the environmental land management schemes which the government have launched as the successor to the basic payment scheme. That’s got 3 tiers. There’s the sustainable farming initiative which is the lower tier which is fairly basic works of environmental improvement. You’ve then got countryside stewardship plus which is a bit like the countryside stewardship scheme of old, is a bit more advanced, and then you’ve got the landscape scale recovery which is the sort of catchment scale large schemes at the top of the pyramid. And it’s those sorts of schemes I think that represent an opportunity for landowners or syndicates of landowners to derive the benefits of public money. But then to stack private money.
12:40.26
Adam Corbin
Um.
12:51.58
Ben Sharples
On top in the form of Biodiversity Net Gain credits nutrient neutrality credits, or carbon, or indeed the, you know, the wider market of corporate ESG, environmental and social governance. You know, companies looking to improve their green credentials by, you know, buying up forestry or planting trees. You know, to create carbon offsets to improve biodiversity, you know. And we’re seeing this a lot now and that’s the market which, yeah, the market for BNG is statutory and, you know, is there. The nutrient neutrality market is a bit more subject to change because of the political nature of it at the moment. It’s come under attack from the current government and they they don’t like it. And they want to they see it as a block on development and they want to get rid of it and we’ll talk about that in more detail later. But, you know, this private ESG market is potentially the one which offers great opportunity.
13:59.12
Adam Corbin
And you mentioned carbon.. Is there a real market for it? How does that work?
14:07.33
Ben Sharples
There is a real market and in many ways, it’s the most established market. Ah, yeah, there are auctions for carbon and, you know, there’s a formal trading platform and mechanism for it. So in that sense it’s the most mature and it’s the most certain and you see, you know, inward private investment in the form of sort of corporate investment. Corporate’s the wrong word actually, in in terms of institutional investment. You know, the large funds and so on. They’re quite attracted by that because it provides a return. You know, if you’re in a joint venture with a landowner, you can you can split the return between the investor and the landowner who’s doing all the work effectively and that’s a reasonably certain way of proceeding because there is a price for either. Pending issuance units or carbon credits, depending on what you’re talking about and, you know, you can plan accordingly. Biodiversity Net gain is a bit less certain. You know, it hasn’t come into legal effect yet. But it’s on the statute book. So I, you know, I think they see that as a reasonably safe horse to back. Nutrient neutrality is politically more sensitive as I’ve said so that remains to be seen. But carbon is at the moment, you know it is.
15:30.54
Ben Sharples
The prices aren’t that exciting in terms of what you have to do to earn those carbon credits but that you know, one would think that the direction is only one way on that as more and more companies have to become carbon neutral, it would seem highly likely that the price of carbon per ton will increase significantly.
15:54.18
Adam Corbin
So I think our final horse, perhaps for the moment anyway, is catchment management and I was wondering if you could just elaborate a little bit more on that.
16:05.11
Ben Sharples
Yeah, I mean these are the schemes that really would dovetail in very well with landscape scale recovery that I mentioned earlier. You know, they are big at scale schemes aimed at improving water quality in a particular catchment or river, for example, dealing with flooding. So if you’ve got a town that floods, you know, regularly, you are looking effectively to slow the rate of water flow from the high ground to the low ground down. And that can be achieved by tree planting. It can be achieved by rewiggling rivers, you know, some of these rivers have had, you know, works done to them and to put them in a straight line because everyone you know was obsessed with either getting from A to B as quickly as possible or getting the water from A to B as quickly as possible. Now we’re looking at getting it from A to B as slowly as possible because those at B don’t appreciate being under three feet of water every other year. So you know that requires a holistic approach and a catchment-wide approach and you see the likes of the water companies engaging in these so, you know, you would have various schemes have happened whereby for instance, farmers have been paid to not graze livestock right on a river edge to, you know, reduce that sort of treading in and polluting effect it increases, it improves water quality.
17:30.91
Ben Sharples
And cleanliness at the end of the pipe, so it saves them money which they can pay to the farmers to fence off livestock and so on. So that’s onw example. You know, they’ve been schemed in the North of England between groups of farmers in terms of rewetting pete. Again, slowing up water flow again, improving water quality, improving biodiversity, improving carbon sequestration. So, you know, it’s those sort of schemes that can provide a number of outputs from a single input. And rewetting pete is a great example of that it has a number of benefits but you can sort of achieve, kill a number of birds with one stone as it were, with these wider scale schemes that bring in all of the farmers in the area if possible. And you get, you know, two plus two equals seven really, you know, you get this greater than the sum of its parts effect. And it’s those schemes and those opportunities that really provide the greatest interest to investors. I think it’s the scale. It’s the multiple benefits. It’s the you know the unseen benefits in many, in some ways, that will materialise that make them attractive.
18:49.27
Adam Corbin
And finally, what legal and commercial arrangements are usually required in these deals generally?
18:55.33
Ben Sharples
Well, if you look at, sort of, biodiversity net gain and nutrient neutrality as a starting point, you would generally have firstly a commercial arrangement between the landowner and the developer simply selling the credits, so that would be a credit purchase agreement. That’s a commercial deal between the two would have to be negotiated. But the crucial thing about, you know, the credits as opposed to the units is that the credits need to be underwritten by a promise to manage the land in a certain way so that the units are produced which are effectively converted into the credit. And that is achieved by way of a section one zero six agreement between the landowner and the local planning authority. The landowner is effectively promising to, in the case of BNG, to create and maintain the habitat and in the case of nutrient neutrality, to not farm the land to create the phosphate or nitrate credit and the local planning authority can enforce that section one zero six agreement in the usual way if, you know, something goes wrong with the management of the land. Which threatens the viability of the units and then the credits. The point about the deal is that the developer has no interest in managing the land for a long period of time, you know, he or she just wants the credits.
20:08.37
Adam Corbin
Are.
20:22.45
Ben Sharples
And then to walk away and start the next project. So the enforcement, the habitat management angle, is between the landowner and the local planning authority. Landowner might do the work himself. He might engage a contractor so there might be a habitat management agreement alongside to ensure that that work is carried out and that the obligations of each party are clearly set out. So that’s those two markets, the landscape scale recovery. The catchment scale scheme side of things is a bit different in terms of blending public and private money. What Defra want for the public money angle is a single point of contact and contract with the landowner. So I think what you would do there is probably create a special purpose vehicle with the landowner, that would then allow the blending of public and private money. Because private investors will want to see a structure that they recognise, you know, a corporate joint venture (JV) type approach.
21:21.46
Adam Corbin
Um.
21:25.80
Ben Sharples
And then you would have emanating out from that SPV all the sub-agreements underneath, with the occupiers of the land. The tenants, the contractors, the commons, rights holders, the graziers, whoever it might be, who are actually going to deliver the environmental benefits which create.
21:39.15
Adam Corbin
Are.
21:41.60
Ben Sharples
The payments for environmental services, which would then be shared out between the various stakeholders in the way that they’ve agreed previously. And that’s how you would, sort of, tend to structure those. And we’ve seen that and we’ve advised clients on those sorts of deals. Because Defra are doing large pilot projects at the moment to try and launch this landscape scale recovery and Defra want to know, you know, how would these be structured. How would they be documented in order to get the benefits delivered on the ground.
22:14.80
Adam Corbin
Great, well look forward to exploring some of those points in more detail as we go through this series. So, let’s wrap it up there. If you have any questions, do feel free to get in touch with Ben or I. Goodbye.
22:31.27
Ben Sharples
Bye.
Video 2 – What is nutrient neutrality?
00:00.62
Adam Corbin
Hello, I’m Adam Corbin. I’m a Partner in the Agriculture team at Michelmores.
00:05.24
Ben Sharples
Hi, I’m Ben Sharples. I’m also Partnering the Agriculture team here and I head up the Natural Capital Group as well.
00:13.30
Adam Corbin
So, now we’re going to look at nutrient neutrality. What are these nutrients, Ben?
00:19.40
Ben Sharples
Right. The nutrients are nitrogen and phosphorus and nutrient neutrality is the requirement that development that consists of overnight accommodation doesn’t contribute to. The problems that exist in certain waterways in this country. Those waterways are protected areas, special protection areas, Ramsar sites and the like, protected by European legislation and there is a problem with nitrate and phosphate getting into the water and causing algal blooms and other pollution. So, that’s the issue of nutrient neutrality in a nutshell.
01:03.60
Adam Corbin
And why has this suddenly become a problem or suddenly become something that developers need to do something about?
01:11.86
Ben Sharples
Well, there was a European case called the Dutch Nitrogen Case. That established this principle that you cannot make the problem worse in terms of nitrate and phosphate pollution. So if you are developing in a catchment area that feeds one of these protected sites., then you have to make sure that you’re not making the position worse. So you effectively have to make your development nutrient neutral and you can do that by, you know, putting in water treatment works or reed beds, and so on. Or, you can buy nitrate and phosphate credits as an offset to take account of the nitrate and phosphate that you’re putting into the waterway as a result of the development.
01:57.30
Adam Corbin
And can you can you buy these credits anywhere?
02:02.81
Ben
Well, there’s two ways of doing it. You could do a deal with a private landowner, who typically would stop agricultural production. Agricultural production relies on nitrate and phosphate fertiliser.
02:17.71
Ben Sharples
So, if you stop farming, you stop the runoff or you reduce the runoff and that creates a credit which can then be used by the developer. Equally you could purchase statutory credits.
02:32.81
Ben Sharples
Because the Government have set up a statutory scheme which is being piloted in the tees catchment area whereby landowners will set land aside and then the government will do a deal with them and they will then make credits available for developers to purchase.
02:37.23
Adam Corbin
Um.
02:48.39
Adam Corbin
And you have to improve the catchment in the location where the development is, don’t you?
02:55.28
Ben Sharples
Yeah, so the if if the development is in the catchment area of a protected site then the mitigation site, you know… But the land where you’re discontinuing farming, for example, also has to be in that catchment area. So that the river benefits effectively.
03:15.56
Adam Corbin
And you’ve been at the front of this and, in particular, you did one of the first nutrient neutrality deals didn’t you.
03:25.52
Ben Sharples
Yeah, that was for the Forestry Commission in the Stour catchment area and we’ve been very fortunate. They’ve allowed us to, sort of, talk about that fairly widely and use it as a case study which is very kind of them. And that involved the discontinuation of agricultural use and the planting of trees. Which has meant that, you know, there was a phosphate and nitrate credit generated, which can then be made available to local developers. And that was sort of part and parcel of the Forestry Commission’s, you know, purchase of the land and their wider philosophy of planting trees.
04:04.95
Adam Corbin
And is the method of mitigation different for phosphate and nitrates, or do the same things produce the same benefits?
04:15.77
Ben Sharples
Well, the discontinuation will produce a nitrate or phosphate credit depending on the activity that you were doing before. So whether you were arable farming, or for instance, if you were pig farming then the…
04:26.50
Adam Corbin
Um.
04:31.87
Ben Sharples
The phosphate and nitrate levels, particularly the phosphate levels, are much higher with pig farming. So, if you know, sort of, the mother load as it were for nutrient neutrality is finding a pig farm stopping pig farming, and then you’ve got a big phosphate uplift and and a nitrate uplift as well, often to the sellers credits. So, you know, there are opportunities there for farmers if they’re changing or diversifying their businesses to look at this, if they’re in a relevant catchment area.
05:03.33
Adam Corbin
And these arrangements — how are they currently documented? How do you ensure that the obligations are carried on?
05:06.69
Ben Sharples
A.
05:13.51
Ben Sharples
Very similar to Biodiversity Net Gain. You’d have a credit purchase agreement between the landowner and the developer selling the phosphate and unnitrate credits. You’d have a section one zero six agreement between the landowner and the local planning authority. Covenanting to discontinue agricultural use. Whatever it might, be managing the land in a certain way to create the credits and that’s the way that you underpin and underwrite the units and the value of them to the developer.
05:41.10
Adam Corbin
And is there any alignment between the way in which nutrient neutrality is treated by LPA and the way in which BNG is treated? Are they organised and administered in the same way and are the new regulations going to have any impact on huge neutrality?
06:01.41
Ben Sharples
They’re not organised in the same way but LPAs that are in relevant catchment areas should be familiar with both, because they’re having to deal with both. You can stack nutrient neutrality and BNG on the same land so that, you know, we know that from the Defra consultation. And that should now be confirmed in the secondary legislation that’s due in November. But they would be probably dealt with by different teams as the LPA, possibly. I mean logically they wouldn’t be, but they might be. But, you know, the two can co-exist and would form part of the same planning application if you’re in a relevant catchment area.
06:40.27
Adam Corbin
I Guess what I was also wondering, was whether or not the changes that we’re expecting in BNG are going to start to regulate neutrient neutrality? Or whether it’s just going to sit on its own as a separate requirement.
06:52.12
Ben Sharples
I think it’ll sit on its own as a separate requirement. But, what we do have with nutrient neutrality, that we don’t have with BNG is much greater political uncertainty. The Government tried to amend the Levelling Up Bill recently, to do away with nutrient neutrality. They they don’t like the fact that European legislation is having a significant effect on the house building process in this country and they tried to institute significant changes to the Levelling Up Bill. Those were rejected by the House of Lords because they were extreme changes very late in the day. Now Michael Gove and Rishi Sunak both said since, that they want to see this through. That they might sacrifice a Bill in the current parliamentary timetable, bring in a new bill which would be a standalone bill getting rid of nutrient neutrality. If they did that, they would be able to use the Parliament Act to force it through, which they weren’t able to do with the Lord’s recent voting down. So there remains an uncertainty there.
07:53.46
Adam Corbin
Um.
07:57.54
Ben Sharples
Yeah, some people think that will happen. Some people think that the government will simply run out of time and they’ve got bigger things to worry about, you know, you pay us your money, take your choice. But there is that greater uncertainty.
08:10.76
Adam Corbin
Great. I think we’ll wrap it up there on that happy final note. So, if you have any any questions that you want to ask about what we’ve spoken about this time, please do get in touch with Ben or I. Goodbye.
Video 3 – What is Biodiversity Net Gain (BNG?)
00:01.56
Adam Corbin
I’m Adam Corbin, a Partner in the Agriculture team at Michelmores.
00:06.15
Ben Sharples
I’m Ben Sharples. I’m also a Partner in the Agriculture team and I head up the Natural Capital Group here.
00:10.71
Adam Corbin
So, now we’re talking about BNG. What is that, Ben?
00:16.85
Ben Sharples
It’s biodiversity net gain and the obligation on developers to improve on the pre-development biodiversity levels by 10%. So if you’ve got a site and you’re putting houses on it, you need to establish the baseline of what biodiversity you’ve got there and then improve that by 10 % and that’s the number of biodiversity units you need to acquire in some way.
00:44.54
Adam Corbin
And how’s that Baseline established?
00:47.62
Ben Sharples
So, there’s a very complicated spreadsheet which uses habitat as a proxy for biodiversity in terms of species and you effectively punch in the relevant details of what you’ve got. And that will give you a figure in biodiversity units of your of your baseline effectively and then in order to reach the desired uplift of 10 you can either create biodiversity as part of your development or you could create it off-site or you could buy credits. Um, from a habitat broker in the marketplace.
01:28.19
Adam Corbin
And bearing in mind there are different types of habitat does it does it matter if you don’t get what you’re expecting to get if you if you aim for improving 1 thing and you get something else as long as it’s an improvement in biodiversity does does that matter.
01:43.86
Ben Sharples
It does matter because you can’t trade down in terms of complexity and value of habitat. So, you have to either increase the number of units at the same level or you have to go up the scale and there are.
01:57.71
Adam Corbin
Um, we all.
02:00.49
Ben Sharples
There are different types of habitat. Some are much more complex than others so sort of river and estuarine habitats, for example, and those credits could be quite difficult to obtain or that habitat could be quite difficult to, you know, reproduce or recreate.
02:17.58
Adam Corbin
And it seems like this BNG business has had a bit of a rocky start. Could you give us a potted history of BNG and we’ll have a little explorer as to where we’re going with it.
02:30.30
Ben Sharples
Yeah. I mean BNG has been around for quite a while because we’ve had the Environment Bill originally. We’ve now got the Environment Act 2021 which came in on the 9 November 2021 which really, you know, said BNG will be a legal requirement. But there was quite a bit of activity before then, because BNG was a crime and in things like general development orders some local planning authorities were already insisting on it. There was a pilot scheme involving some local planning authorities. So it was, you know, it was known about. But it hasn’t become part of the mainstream market yet. The Environment Act set out the skeleton of detail and conservation covenants, what biodiversity net gain is, and so on. But we’ve been waiting for secondary legislation to flesh out those details. For the last two years, really. Defra recently announced that there will be a delay to the imposition of biodiversity net gain. They’re saying that we will still have the secondary legislation by the end of November 2023 but that it won’t actually then be a legal requirement until the end of January 2024, so it will give some time for that secondary legislation to bed in and for the guidance and so on surrounding it to be published. And I think their thinking is that they will, sort of, yeah, build us up to it gradually. But it has had, as you say, quite a um…
04:03.24
Ben Sharples
Long and interrupted introduction.
04:09.79
Adam Corbin
So, are developers piling in now to get their BNG requirement development in, or is that really not a practical thing?
04:18.44
Ben Sharples
Well, I think it depends on the planning authority they’re dealing with. Some, as I say, are already insisting on it. You know, in a sort of ‘behaving as if it’s already part and parcel of the of the planning regime’. And local planning authorities have considerable autonomy, as you know, so there is some of that going on. I’m not aware of that happening. But I suspect it probably is because clearly the requirements will be different depending on when you are trying to get planning permission. You know, what I would say, is that we’ve seen deals going through. Ah you know with developers just sort of accepting that this is now part of the everyday operation. And we haven’t seen a dramatic upturn in those but maybe some developments are being pushed through without the requirement to get BNG credits at all, so it may well be happening.
05:19.45
Adam Corbin
And these new rules, or these new regulations that are going to come in, bearing in mind it’s all going on now. Anyway, what are they going to do? How are they going to improve our developers’ approach and the LPS’s approach to BNG?
05:35.94
Ben Sharples
Well I think it will give some certainty and that is now absolutely part of the town and country planning system. So there will be that to start with. Secondly I think we’re going to get more detail that we need on things like responsible bodies. So, the environment act introduced the legal concept of a conservation covenant which is an agreement between a landowner and a responsible body to ensure the management of the land in a certain way, to deliver an environmental outcome. So they are tailor-made vehicles for these sorts of schemes — biodiversity net gain, nutrient neutrality, whatever it might be — but, what we haven’t had is the detail of what it means to be a responsible body on the face of it. You know, it looks reasonably attractive. You know, you’d think some sort of wildlife charities might say well it will be a responsible body. We will deal with, you know, the administration of conservation covenants. But actually, you know, it will require them to be the enforcing authority in terms of conservation covenants. And yeah, that could be quite an onerous responsibility. So it will give us some detail on that. And we’re also awaiting lots of detail on things like the, you know, the biodiversity gainsite register. You know, how that will be administered, who will administer it. You know, we’re hearing it might be Natural England but there’s a lot of detail around the.
07:04.65
Ben Sharples
The detail procedure of you know, getting the site registered, getting it set up, who’s going to be administering it, who’s the responsible body, where do the obligations rest.
07:21.62
Adam Corbin
And is there an idea that there’ll be a site register with ready to go BNG areas and offerings? And so that’s a proactive market and then there’ll also be a more reactive market, I think you touched on that earlier.
07:43.67
Ben Sharples
Yeah, and the site register is a requirement for all biodiversity gain sites to be on a central register. So there is some transparency, so that people can see what the obligations are, which sites have been set aside, you know, what habitat is meant to breate created, and so on. So it’s sort of a control and a transparency measure. It seems to me, and you know, therefore it seems appropriate that someone like Natural England, you know, probably should be administering it. So, it’s not a sort of marketing tool. But it is absolutely vital in terms of the credibility of the scheme and the underwriting of the credits, because people can go and see that, you know, this site is on a register and this is what should be happening in terms of the site. So, people could be held to account if the biodiversity isn’t delivered. And, you know, there will be monitoring. The LPAs will have monitoring and enforcement powers and they will be checking up. You know, initially probably on an annual basis and then perhaps on a five yearly basis as to whether or not the promised habitat is being delivered. You know it’s one thing to say, you know, ‘we will deliver this increase in biodiversity’ and it’s another to actually achieve it. And I think as long as the parties are doing what they are contractually obliged to do, you know, carrying out all the works to create this habitat, then they will have fulfilled their legal obligations.
09:13.74
Ben Sharples
The example I always use is, you know, you can do all the works in all the world, but it doesn’t mean that the, you know, the 50 pairs of breeding lapwings that you would like to see in that habitat are going to come and inhabit that field in that area. There is always an element of uncertainty when Mother Nature is involved, as we all know. And so, really, the emphasis has to be on inputs. You know, the promise to do the work properly at the right time and in the right way. And then, if you create that habitat, hopefully the species will follow.
09:46.78
Adam Corbin
Great! Thanks Ben. I think let’s wrap it up there. If you have any questions about this, or any other aspect of natural capital, then do get in touch with us. Goodbye.
Video 4 – What is Landscape Sale Recovery?
00:00.00
Adam Corbin
Hello, I’m Adam Corbin, I’m a Partner in the Agriculture team at Michelmores.
00:04.29
Ben Sharples
Hello, I’m Ben Sharples. I’m also a Partner in the Agriculture team and I head up the Natural Capital Group here as well.
00:11.43
Adam Corbin
So, now we’re doing landscape scale recovery. Ben, what’s that?
00:18.78
Ben Sharples
It’s the top tier of the Environmental Land Management Scheme system that the government have introduced to succeed the Basic Payment Scheme. So the European funding under cap has gone and this is a more bespoke.
00:37.60
Ben Sharples
Scheme for this country moving forward. And it is a large scale catchment-wide project which they’re aiming to deliver. You know, significant benefits over landscape scale, hence the name of the of the scheme.
00:57.74
Adam Corbin
So, it sounds like it’s quite a grand ideal and when we talk about Landscape Scale Recovery, what what sort of things do you think it’s expected are going to be improved? Are we going to more rolling hills with more trees on them with? Less arable on them? What’s that going to look like, do you think?
01:19.66
Ben Sharples
Yeah, I mean I think that is the aspiration it. It is to affect that level of change on the landscape, but it also will be delivering things like increased water quality, reduced flooding risk because of slowing down water coming off the high ground onto the low ground. Yeah, it will be to preserve the, sort of, the fabric of the rural landscape. You know, the upland, the hill farms, and so on. So I, you know, I think we are going to see some fairly significant change. You know, it’s likely to involve some fairly serious tree planting you know, given all the other requirements of climate change, and so on. But, it is designed to change the landscape I think and that’s the aim.
02:11.65
Adam Corbin
It’s a worry isn’t it, that it’s maybe a bit too big of an ambition for one scheme. And you wonder whether it might mean different things to different people. You know, does it mean it is a way of putting money into public, private enterprises to do those things? Is it a way of affecting change in a bigger way? Or is it something else? Do you think it’s confused, or do you think it’s ‘we know where we’re going’?
02:38.68
Ben Sharples
Well, I think you’re right that it could mean different things to different people. I mean, if you took the example of a large landed estate then they might have a very sort of cohesive clear strategy and management plan. But if you’ve got a
02:46.91
Adam Corbin
Un.
02:56.76
Ben Sharples
Disparate group of syndicate landowners making up the required area for a Landscape Scale Scheme, then you might have very different ambitions and there would be potential for conflict there. So I think the management of it is going to be, you know, quite tricky. The devil will be in the detail, but the one thing that it does represent is scale — and that’s attractive to, you know, green finance investors. Yeah, definite will be putting public money in through the ELM scheme but there is ample opportunity to blend public and private finance. With these projects, yeah, that will give further revenue streams to them and and should create greater environmental benefits as a result.
03:41.12
Adam Corbin
Yeah, I suppose I’ve been thinking about how’s that money going to flow through and, you know, I was thinking earlier: Is it that the public money goes into the stuff that’s more difficult to buy, or is it being paid as income lost, or how do you think that’s going to work?
04:01.82
Ben Sharples
I think you’ll certainly see quite a bit of the debt refund going into, sort of, the initial capital works. I would expect that, I mean each scheme will be structured in a different way, and there may well be payments for, you know, income foreone and there might there may be an element of that. But I think the emphasis is on you know, creating change, you know, infrastructure change to deal with issues like flooding climate change and all the rest of it. You may then see that the private money coming in and that might be aimed more at you know, sort of like, a water company. You know a catchment scale fencing off rivers to stop cattle treading in, you know, the river banks, and so on. Yeah, that sort of approach. But yeah, you know, we’ve done a number of these now and advised on a number of them and all the proposals are very different depending on the landscape, depending on the the farming systems that are in place. So there’s no one size fits all. But if it creates the required benefits then you know the schemes are in with a chance of getting the Defra funding and making it through to the implementation phase. Which is the second of the two stages, the first being the development phase.
05:18.79
Adam Corbin
So I suppose we’re still on the model, aren’t we, where there is a seller of some environmental benefit and then there is a buyer. I suppose it just might be the case that the buyer for instance, award company is is part of the venture. Rather than it being purely transactional.
05:40.12
Ben Sharples
Yeah, you what you might see I think is essentially a special purpose vehicle established by the the landowner that would be a single point of contact and contract with derefore for the purposes of drawing down public funding. But that would also then be, you know, a potential joint venture vehicle with other stakeholders, like a water company, like a green investor. You know, who would have representation on the board in the usual way, would be a shareholder, would have officers of the company. You know, it’s a recognisable corporate structure that they would be comfortable with. You know, we’ve seen it with renewable energy that sort of structure in place. So it’s tried and tested and you would then have the JV then contract with all the occupiers of the land. You know, the tenants, the graziers, the Commons rights holders. To actually deliver the management on the ground, which delivers the environmental benefits, which delivers the income, which is then split according to the deal that’s being agreed and according to the level of investment contributed by the various parties, and the amount of work that they’re doing. So, it’s possible I think to structure these things in a fairly familiar way, but albeit one that’s dealing with, sort of, a new scheme and a new set of problems.
06:57.34
Adam Corbin
There’s a lot of stakeholders though here, isn’t there? I mean, you know when you think of it just landlord and tenant that’s already quite complicated because maybe there’ll be one landlord, but there’s probably going to be multiple tenants. And there might be owner occupiers in the mix in the landscape as well. And then you’ve got the other stakeholders who might have an interest, and then you’ve got the need to kind of wrap that all up in a structure and in a management structure that works. In order to deliver the the benefit. So, it’s going to make some fun interesting novel legal work isn’t it?
07:39.37
Ben Sharples
It is certainly. And I think it is quite complex potentially and people are going to be doing different things to create different outcomes and outputs. And I mean for example, yeah I think there’s a huge role for tenants here. In delivering landscape change and environmental benefits. Generally, you know, they are on the ground, they know the land. They’re very experienced. You know, they’re the perfect sort of custodians of these sorts of schemes. So, I think what will make these schemes work is having the right people doing the right jobs. So, you know, if the tenants are involved in delivering, you know the the environmental outcome that’s likely to be successful. You know, they’re going to be, you know, managing the soil to so sequester carbon. You know, whatever it might be. And the same would apply to the other occupiers and holders of interests on the land equally at the other end of the chain. Yeah, the landowners need to be doing their bit. You know, in a logical way to deliver the outcomes that are required.
08:44.96
Adam Corbin
Yeah, I suppose what I’ve been struck by is, it appears to me, that there’s a real need for some pioneers. And it’s area by area. Not just, you know, one or two pioneers across the country and some pioneers who will just say, ‘well, we’ve got together and we’re going to make this work and these are the pieces of the landscape that we control and that we can make this work on’, and then they can say to others, ‘well are you with us or not, because we’re cracking on with it. We’ve got critical mass and we’re ready to go, I think. I think those arrangements are much easier to see being successful and to see getting up and running than the much more challenging assembly land — assembly of smaller owners and of very diverse interests.
09:41.88
Ben Sharples
Yeah I think undoubtedly, that’s right. I mean, if you’ve got one estate, for example where they’re taking the lead and then saying ‘look, you’re either with us or you’re not’, then that’s going to be more likely to be successful. You know, the way we’ve seen deaf structure it so far is to try and, you know, have a development phase where you formulate what you’re going to do and then the implementation phase, if that’s acceptable, is, you know, how are you going to structure it. How is this going to work. Practically, how are you going to document it. How are you going to deliver. And it’s the first bit that’s often the taxing bit, deciding what you’re going to do and who’s going to do it.
10:21.80
Adam Corbin
Exciting times.
10:23.68
Ben
Yeah, no, it’s going to be interesting and as you say a lot of novel work, I suspect, is going to come out of it.
10:31.12
Adam Corbin
Great, I think that’s wrap. Wrap it up there. If you’ve got any questions that come to mind after watching this, then please do get in touch with Ben or I. Goodbye.
The Competition and Markets Authority (CMA) has recently announced that it has commenced an investigation into a number of suppliers and industry bodies involved in the supply of chemical admixtures and additives for use in concrete, cement, mortars and related construction products in the UK.
The investigation seems to be based solely on the Competition Act Chapter I prohibition and not the Enterprise Act Cartel Offence, so a civil rather than criminal investigation relating to potential agreements or concerted practices which have the object or effect of preventing, restricting or distorting competition.
The UK investigation is in parallel with investigations in the EU and Turkey. One of the consequences of Brexit is that there are likely to be more such UK investigations in parallel with the EU. It will be interesting to see how well the regulators are able to work in parallel.
The investigation seems to have been initiated with a series of ‘dawn raids’ at companies’ premises. We understand that Sika was one target of these dawn raids.
Chemicals and Construction are both industry sectors which have seen more of their fair shares of competition law infringement findings over the years. It is interesting to see them combined in this investigation despite the fact that all parties must be assumed to have active competition law compliance programmes given the sector history.
Another curious point is that the CMA announcement doesn’t just refer to suppliers, but also to “industry bodies”. This suggests the possibility that the competition authorities suspect that trade associations may have been a conduit for passing competitively sensitive information between suppliers.
Should the CMA (and other regulators) investigation result in infringement findings this will not only lead to fines and potential consequences for directors, but also open up the companies involved to potential follow-on actions for damages.
However, none of this is likely to happen quickly. The CMA website says that its initial investigation is likely to take until July 2024. Given that timetables often slip, and that there will be coordination required between authorities which often takes time, it’s difficult to see a conclusion to the investigation before 2025. There will then be the possibility of appeals, in relation to the substance of decisions and/or penalties.
At Michelmores we have considerable experience of advising all parties (those being investigated, those who may be victims and even regulators) in relation to these sorts of investigations. If you have any queries please do get in touch with Noel Beale in our competition team or your usual Michelmores contact.
With the passing of the Agriculture (Wales) Act 2023 we now have the structure for the transition from the Basic Payment Scheme to a new Welsh subsidy scheme. Wales’s new agricultural policy is based upon Sustainable Land Management (‘SLM’); the answer to its delivery is the Sustainable Farming Scheme (‘SFS’).
The Welsh Government is yet to publish its final consultation on the SFS, which will consider in particular the final details for SFS, the transition period and stability payments. The consultation is due to be launched later this year.
Objectives
What we know so far is that farmers are intended to be able to undertake a range of ‘actions’ on their land which are linked to different ‘outcomes’ as a means to fulfilling the SLM objectives. Those are:
Clean air
Clean water
Enhanced access and engagement
High animal health and welfare
Maximise carbon storage
Mitigate flood and drought risk
Protected natural landscapes and historical environment
Reduced greenhouse gas emissions
Resilient ecosystem
Resource efficient
The Principles
In its first consultation, the Welsh Government sets out five principles that will guide the design of SFS. These are:
We must keep farmers on the land
Food production is vital for our nation
We should help build a prosperous and resilient agriculture industry
Future support should maximise SLM outcomes
All farmers should be able to access the scheme
Scheme Structure
The scheme will have 3 layers:
1. Universal Actions
Actions that must be carried out by all farmers who want to join SFS.
This is the baseline for farmers and aims to provide the ‘building blocks’ to enable them to do more with their land, helping them to become more sustainable. It enables them to receive additional payments by carrying out optional and/or collaborative actions.
Whilst the payment calculation methodology is still to be assessed and will form part of the final consultation, what we do know is that farmers who undertake universal actions will receive a baseline payment, capital payments, technical support and access to tools, advice and guidance.
There are five ‘characteristics’ under which SFS actions will be grouped. They are:-
i. Resilient and productive farms
ii. Reduce, reuse and recycle inputs, nutrients and waste
iii. Reduce on farm emissions and maximise carbon sequestration
iv. Protect and enhance the farm ecosystem
v. Benefit people, animals and places
To receive the baseline payment, farmers will have to have to carry out proposed Universal Layer Actions which will be required under the five characteristics.
All farmers will complete a self-assessment once a year against a minimum of the sector and industry KPIs (two per sector or three in total, whichever is higher).
All farms will have the necessary biosecurity measures in place:
Wash stations and disinfectant available for people to clean clothing, equipment and vehicles as they enter/exit farms and livestock areas.
All enclosed land boundaries are secure to stop stock straying.
There is a dedicated secure store for deadstock, which can be cleaned and disinfected. It is away from livestock, feed and water.
Feed stores are secure to keep out wildlife and vermin.
There is a pest control / management programme in place, which includes the responsible use of biocides.
Farmers to carry out professional and farmer soil testing at Scheme entry and in time for contract renewal to include a combination of Nitrogen, Potassium, Phosphorous, Carbon and pH, a biological measure (eg eDNA, respiration counting ‘proxy’ species – earthworms), a physical assessment (eg infiltration rate, bulk density or Visual Evaluation of Soil Structure).
Farmers to submit nutrient account and evidence covering Nitrogen, Potassium, Phosphorous, Carbon and pH.
Farmers will be supported to collect, record and report data on Plant Protection Products use and complete an Integrated Pest Management assessment.
Farmers will need to carry out actions, identified by working closely with their vet, through the ‘Animal Health Improvement Cycle’[1] and calculate and report the average amount of antibiotics used on the farm.
Where peatland exists, farmers will need to manage it appropriately.
Farmers will have at least 10% tree cover on their farm, managed in line with the UK Forestry Standard. This has caused widespread concern within the industry, and as a result, the Welsh Government are considering some flexibility with this requirement which will be considered further during the final consultation.
Farmers will manage new and existing hedgerows in line with the hedgerow management cycle.
To protect soil from erosion, farmers will need to establish a multi-species cover crop on all land which is uncropped over the winter.
Farmers will need to actively manage at least 10% of their land to maintain and enhance semi-natural habitats. Where there is insufficient semi-natural habitat available, farmers will need to select actions to create permanent or temporary habitat features on other agricultural land.
Have a fully developed and agreed management plan in place ready for implementation for protected sites under the farmer’s sole control.
Farmers will have to restore and manage existing permanent wildlife ponds and/or create a number of temporary ponds (scrapes).
Farms with historical environment features identified on their land will need to follow general guidance on how to manage them.
Farmers will be required to complete a minimum level of learning, including on Health & Safety.
2. Optional Actions
Farmers have some flexibility in that they can choose which actions they undertake and how they undertake them in order to receive payment.
These higher-level actions will need to be tailored to each farm and/or specific land and will enable farmers to receive additional revenue and/or capital payments, technical support, access to advice and guidance.
3. Collaborative Actions
Carried out by multiple farmers (minimum 2) or land managers in a co-ordinated manner on a national, catchment or landscape scale. These are likely to involve joint projects and may involve those who are not part of the SFS. They are aimed at more specific priorities which will require flexibility in terms of deliverability as different actions may be required to capitalise on the benefits claimed on the land.
One of the examples given by the Welsh Government in their ‘Sustainable Farming Scheme Outline Proposals for 2025’ is ‘collaborating to develop supply chain opportunities through establishing producer organisations or co-operatives, collectively securing investment for infrastructure, or creating a unified brand for marketing and promotion’.
Farmers will receive revenue and/or capital payments, technical support and advice and guidance.
National Minimum Standards
Underpinning the actions are the National Minimum Standards (‘NMS’), consolidating the existing agricultural regulations into one piece of legislation. NMS will apply to all farmers and not just those joining SFS.
The AWA 2023 does not include provision for NMS so we are yet to see the extent of compliance which will be required by all farmers. NMS must be implemented in time for the introduction of SFS in 2025. The Welsh Government indicated in their ‘Agriculture (Wales) White Paper’ that they do not propose raising the current regulatory baseline.
Eligibility
It is proposed that an applicant for Universal and Optional Layers will be subject to the following criteria which must be satisfied throughout the duration of their SFS contract:
They must be a farmer undertaking agricultural activities.
They must be able actively to perform, at least the applicable Universal Actions throughout the duration of the contract.
The agricultural land must be in Wales.
They must farm a minimum of three hectares of eligible agricultural land.
Separate eligibility criteria will apply to Collaborative Layers given that it could involve land owners or managers who are not part of SFS.
The eligibility criteria are being considered further as part of the second phase of the Welsh Government’s ‘Co-design for a Sustainable Farming Scheme for Wales’.
Sustainability Review
Every farmer will have to complete a Sustainability Review online before being able to enter SFS. It will provide an entire farm assessment of ‘the economic, environmental and social aspects of the farm’ and will be used as the baseline for entry and as an ongoing monitoring tool to enable farmers to maximise the performance of their farm.
It is proposed that the Sustainability Review will require:
Basic farm and land information (similar to the Single Application Form);
Carbon Assessment; and
Habitat Baseline Review.
SFS Contracts
SFS contracts for Universal and Optional Layers are expected to be for periods of up to five years.
SFS has been designed to operate on a five-year rolling basis. Flexibility will be permitted for tenancies which end during the contract period.
It will be interesting to see how the proposals develop once the Welsh Government has had the opportunity to consider the responses to its final consultation. But what is clear is that any farmers and land managers wanting to access the financial support of SFS are also going to have to take on the numerous and wide-ranging conditions and obligations required by the scheme.
[1] This is a pro-active process for improving how disease is prevented and controlled on a farm. The same AHIC process will be universal for every farm, but the specific actions carried out will be bespoke.
This article provides an overview of some of the potential legal considerations and risks for employers to contemplate when seeking to deploy artificial intelligence in the workplace. It mainly focuses on employment law considerations, but also touches on other key issues such as data protection and generative artificial intelligence.
Most organisations already use artificial intelligence (AI) in some form or another, including to support workplace and HR functions – whether it’s using email spam filters, having auto-complete functions, or using preliminary CV scanning at the recruitment stage. Recent technological advancements, and the ease of access to generative AI (GenAI), is accelerating the pace of adoption of AI and new AI-based products, and there are a whole host of attractive AI solutions available to improve workplace efficiencies.
This note does not intend to cover all aspects of AI and the associated legal risks, but it aims to give you a brief overview of some of the potential legal considerations and risks for employers seeking to deploy AI in the workplace. The requirements of each organisation will vary, and organisations may also be subject to sector regulatory requirements, so in this note we have reflected on some of the core considerations, which will be common to all organisations.
What laws regulate AI at work, and will new laws be introduced?
There is currently no specific UK legislation regulating the use of AI generally, nor the use of AI in the workplace. The House of Commons Library recently published a report which reviews the interaction between AI and the current employment legislation, which can be accessed here. Existing laws relating to data protection, equality and common law principles such as the mutual duty of trust and confidence, will all be relevant when considering how AI can be used at work, but there is no single piece of legislation governing its use.
In light of the UK Government’s White Paper, released in March 2023, it is unlikely that any new UK legislation will be introduced on this topic in the immediate future. Instead, the government will support existing sector regulators to control these technologies in their sector using a principles-based approach to AI regulation, focussing on the following guiding principles (which will not be statutory): safety, security and robustness; appropriate transparency and explainability; fairness; accountability and governance; and contestability and redress.
As such, it currently falls to existing legislation to govern the use of AI in the workplace. Given AI has the potential to touch on almost every aspect of the employment relationship, it’s important that organisations are familiar with the current legal landscape and how this interacts with AI at work, to ensure they can maximise opportunities and mitigate risk. Organisations with a workforce based outside of the UK will also need to consider the legal landscape in each of the different countries of operation.
What legal risks do we need to consider if we wish to introduce AI into the workplace, and how do we manage such risks?
There is no doubt that AI can be extremely positive and help businesses operate more efficiently, but there are a number of relevant risks to consider. We’ve highlighted a few of the key ones below.
Discrimination
Perhaps the most commonly reported criticism of AI, in an employment context, is the discrimination risk. It’s widely acknowledged that AI tools can exhibit biases – this could be because the training data an AI system learns from might be unbalanced (i.e. if the majority of the data has come from one predominant group this could adversely impact groups who are not as well represented) or even reflect past discrimination. Discrimination may also arise from the way in which AI is used or because an employee hasn’t reviewed the output sufficiently.
There’s the potential for AI to be discriminatory on the basis of any protected characteristic. For example, it’s been widely reported that in 2014, Amazon developed a recruitment tool, which aimed to screen CVs to identify the strongest candidates, but it had to be shut down because it discriminated against female candidates.[1] Indeed, Uber Eats’ use of facial recognition technology to verify the identity of workers when they log onto a shift has been the subject of allegations of race discrimination, after concerns were raised that the system didn’t work fairly for people of colour and failed to recognise them. Furthermore, a recent study by University of East Anglia, suggested that the ChatGPT model (built by OpenAI using large language models), had a ‘significant and systemic’ tendency to return politically left-wing responses when questioned.[2]
In terms of liability, employers can be vicariously liable for the actions of their employees in certain circumstances – this would extend to the use of AI. Further, if an employer adopts AI systems which are inherently biased or discriminatory, they will be liable for any resulting discrimination.
It’s important to evaluate the potential discriminatory effects of any AI tool you are considering using before introducing it. The use of AI may well amount to a ‘provision, criterion or practice’, which, if it has a disproportionate impact on someone with a protected characteristic, could result in indirect discrimination claims. Further, if there’s a blanket use of AI in disability cases, there may well be claims for failure to make reasonable adjustments and/or discrimination arising from disability.
It’s therefore crucial that an organisation understands how the AI model operates and the intended outcomes before it is introduced; it is also important to ensure that the data sets which will be used to train the AI are verified and biased data has been removed.
Contracts with AI providers should specify the requirements for the training data and for testing the AI to address bias before it is deployed. They should also set out the steps the supplier will take if, after deployment, it becomes apparent that the AI displays bias or provides an output which causes discrimination.
Appropriate training on how the AI system works and how to interpret the output should be provided to any individual who is going to use it. We’d also recommend that you introduce a policy which governs acceptable use of AI: setting out clear guidelines and expectations should help mitigate risk. For more information on introducing a Generative AI policy, see our recent article. Finally, it goes without saying that any decision produced by AI must be subject to careful human review by an individual with appropriate skills and qualifications.
Lack of transparency
Transparency is a key AI guiding principle as well as one of the seven GDPR data protection principles (see below). Reliance on AI can result in a lack of transparency. The transparency ‘void’ makes it harder for employers to justify decisions and harder for employees to challenge those decisions. Indeed, in some cases, employees may not even be aware that AI has been used in their employer’s decision-making process.
If an employer is using AI in the workplace, they need to be clear and transparent about what AI they are using, when they are using it, for what purpose they are using it and the impact of its use on their employees. There must be a legitimate reason for the use of AI, and it must be proportionate. In addition to the data protection risk, failing to tell employees about the use of AI in a way which impacts them undermines the mutual duty of trust and confidence between an employer and employee and is likely to lead to significant employee engagement issues. Indeed, in serious cases, it could lead to a fundamental breach of contract resulting in an employee resigning and claiming constructive dismissal.
Once AI has been introduced, an employer will also need to be able to justify any decision which has been made been made in reliance on AI. This will inevitably involve the employer (i.e. the individuals who will be making decisions on behalf of the business) having a sufficient understanding of the AI model to explain the decision. If a manager is not able to understand how the AI operates, they are not going to be able to explain their decisions, nor demonstrate that the decision was rational, fair and made in good faith. Again, this feeds into the need for mutual trust and confidence in the employment relationship.
To reduce the risk of unfair decisions, an individual with appropriate skill and expertise should always have the final oversight and say on any decision. It goes without saying that the individual should also have training on how the AI works, and how to interpret the outcome data. Being unable to explain or justify a decision is not only going to damage the relationship with an employee, it may also lead an employee to believe that a decision has been for other reasons (which may be discriminatory or otherwise legally unfair) in the absence of a rational explanation.
In practice you will need to ensure that there is a user manual for managers, which is kept updated as the model develops. It will also be important to ensure that a record-keeping repository is maintained to help explain decisions if they are subsequently challenged.
Changes to the workforce
The introduction of AI has the potential to fundamentally change the way the workforce operates.
In some cases, AI might lead to roles being eliminated and a redundancy process ensuing. On the other hand, it could lead to a recruitment drive with new jobs being created or staff being upskilled. It may also lead to roles being amended over time.
It’s therefore not out of the question that restructures and reorganisations may be needed as AI technologies become embedded in organisations. This will need to be handled fairly and sensitively, and meaningful consultation will need to be undertaken to reduce legal risk. Again, engaging with staff (and unions if relevant) and being transparent about the introduction of AI should help tease out any issues and help balance interests.
Impact on staff wellbeing
There are legitimate concerns about the potential for AI to have a detrimental impact on employee health. There is no doubt that the introduction of AI can be positive and aid employees in their roles, particularly by making processes more efficient and reducing the administrative burden. However, there are concerns that if every administrative aspect of a role is removed, work could intensify in a way which may risk mental or physical health. Further, if employees are constantly monitored, tracked and micro-managed by technology, this can lead to increased stress and have a negative impact on mental health. This could become even more pronounced if technology trackers are used on portable devices, which could severely impact work-life balance. There is also the widely publicised concern that the widescale introduction of AI could start to render some human held jobs obsolete, which of course, leads and has already led to some fearing for their livelihood.
Given the focus on mental health at work and employee wellbeing, this will need to be handled sensitively by employers. Again, engaging with staff (and unions if relevant) and being transparent about the introduction of AI should help tease out any issues and help balance interests.
Does AI present any particular data protection issues?
Most AI used in relation to the workforce involves the processing of a significant volume of personal data, including special categories of personal data.[3] Organisations seeking to deploy AI should therefore pay careful attention to data protection requirements well in advance of deploying AI technology. The seven GDPR principles (lawfulness, fairness and transparency; purpose limitation; data minimisation; accuracy; storage limitation; integrity and confidentiality (security); and accountability) apply whenever personal data is processed and these principles overlap with many of the AI guiding principles.
The processing of personal data by AI is generally considered to present a higher data protection risk, and the use of AI systems which process special category data and those involving foundation models,[4] can present even greater data protection risks so careful analysis of the risks should be carried out before deployment. The ICO recommends that a data protection impact assessment (DPIA) should be carried out whenever an AI system involving the processing of personal data is deployed. A DPIA will enable you to assess the risks and how those risks can be mitigated. The Information Commissioner has produced a helpful guidance and a toolkit[5] to help organisations seeking to deploy AI.
Each AI system will present different levels of data protection risk, DPIAs should be carried out for each one and revisited on a regular basis throughout the lifetime of the AI system as the risks to data protection may evolve over time. You should consider how the operation of the AI system can be suspended if it transpires that there is a risk of or actual breach of data protection.
Legitimate Interest Assessments are also of critical importance to ensure that there is a lawful basis for the processing of the employees’ personal data and, as is widely acknowledged, there can be risks in relying on consent given the power imbalance in the employer-employee relationship.
Consistent with the AI transparency requirements, information needs to be given to your employees about the processing of their data so you will need to consider what updates may be required to employee policies and manuals as well as whether any further notices are required at the point of the collection of data.
Additional rules apply where an employer carries out solely ‘automated decision-making’ or ‘profiling’ that has legal or similarly significant effect on them.[6] Under GDPR, solely automated decision making is generally prohibited, save in limited circumstances.[7] This topic is outside the scope of this note and we recommend that advice should be taken in any circumstances where there may be automated decision-making.
AI systems which involve biometric data, such as facial recognition systems present further risks and require additional consideration. The ICO has issued draft guidance on the use of biometric data.[8] For further information about the risks involved please also see our article on use of biometric technology.
In view of the complexities and inherent data protection risks in the context of using AI in the workplace we recommend that your Data Protection Officer should be involved from an early stage.
Does Generative AI present other risks?
GenAI, such as ChatGPT and Google’s Bard, which can be used to generate content and provide ‘human like’ answers to complex situations, presents many opportunities and potential efficiencies, which organisations will be keen to explore. However, due to the manner in which GenAI operates by inferences or predictions and the immense quantities of data involved in the building the models which underlie GenAI, the legal risks are even further amplified. Very careful consideration of the risks, mitigations and safeguards should be conducted before GenAI is deployed in connection with HR functions.
We will comment further on the subject of foundation models, large language models and GenAI in future but in the meantime, for more information about introducing a Generative AI policy, you can read our article.
For advice on the data protection implications of AI please contact our Data Protection & Privacy team and for advice on the particular issues to take into consideration when contracting for the procurement of AI please contact our Technology & Innovation team.
If you’d like to discuss any of the employment/HR related issues raised in this note, please contact Lynsey Blyth.
This article is for general information only and does not, and is not intended to, amount to legal advice and should not be relied upon as such. If you have any questions relating to your particular circumstances, you should seek independent legal advice
[1] The AI algorithms were trained to observe patterns in the CVs submitted to the company over a 10-year period. As most of the CVs came from men, the algorithm spotted male preference and then discriminated against female candidates, penalising CVs which included the word ‘women’s (such as ‘women’s chess club captain’).
[2] The findings were published on 17 August 2023 in the journal Public Choice and were based on research carried out in Spring 2023, using version 3.5 of ChatGPT – more details of the study can be found here.
[3] Personal data revealing racial or ethnic origin; political opinions; religious or philosophical beliefs; trade union membership; genetic data; biometric data (where used for identification of a person); data concerning health; data concerning a person’s sex life; and data concerning a person’s sexual orientation.
[4] Foundation models and large language models are AI’s trained on huge quantities of data and are often used as the base for building generative AI.
[6] ‘Automated decision making’ is the making of a decision, about an individual, based solely on automated means without any human involvement and ‘profiling’ is any form of automated processing of personal data to evaluate certain things about an individual.
The Firm is celebrating its latest Legal 500 results, which include 29 team and 39 individual rankings for 2024. This year’s results see five new individual rankings, two improved team rankings, and retention of 9 Tier 1 rankings in strategic areas for Michelmores.
We have been ranked as a Tier 1 firm for Agriculture & Estates (South West) and Tier 2 for Agriculture & Estates (London), with Partner Rachel O’Connor from the Firm’s Agriculture team having climbed up the rankings as a Next Generation Partner.
Ian Holyoak, a Partner in the Firm’s Commercial team, has been recognised as a Leading Individual in the Energy, Project Finance & PFI (South West) rankings joining our four other top ranked lawyers in this area.
Philippa Collison, an Associate in the Firm’s Commercial team, has also been listed as a Rising Star (South West) for her expertise in brand protection and IP transactions. Chloe Vernon-Shore, a Partner in the Firm’s Commercial team, was newly listed as a Next Generation Partner.
New additions to the rankings for Michelmores also include Rachael Lloyd, who was promoted to Partner in May 2023 and has been ranked as a Next Generation Partner in the Employment law sector.
The Firm also increased its rankings in the IT and Telecoms London region climbing to Tier 4 showing recognition of Michelmores services to clients across the technology sector, covering a full spectrum of commercial, corporate, contentious and regulatory matters in the City market.
The purpose of the Legal 500 UK Solicitors 2024 rankings is to help in-house lawyers and legal teams find the right advisors. These rankings reflect the comprehensive analysis undertaken by The Legal 500’s legal directory research team. Along with robust assessments of law firm submissions, they also conduct interviews with thousands of clients who play a key role in informing the results.
For more information about Michelmores or to get in touch, please visit our website.
High Speed Two (HS2) was the Government’s proposal for a new, high speed north-south railway. Phase Two of HS2 was intended to connect the West Midlands to Manchester, Leeds and beyond.
Early preparations for Phase 2 have seen the compulsory acquisition by HS2 Ltd, the public body responsible for developing HS2, of thousands of homes, properties and acres of land, from which owners have been ejected.
The Prime Minister’s announcement that Phase 2 of HS2 from Birmingham to Manchester will be cancelled has caused consternation in many quarters, not least among those land and property owners, whose property will no longer be required for HS2.
There is a glimmer of hope for those land and property owners, who may be offered their land back in accordance with a set of policies set out for this purpose.
Crichel Down Rules
These are non-statutory rules dating from the 1950’s that relate to the offer back to previous owners of land acquired from them by, or under threat of, compulsory purchase. They broadly set out the policy which will usually apply to this situation.
HS2 Land Disposal Policy
HS2 recognised that not all property compulsorily acquired for HS2 would be used permanently for the construction and operation of the new railway. For example, land acquired to be used for access and construction, would be surplus to requirements once the railway is complete.
HS2 therefore developed a Land Disposal Policy, compiled upon the basis of the Crichel Down Rules, containing Guiding Principles, governing how land that was compulsorily acquired, but is no longer required, should be dealt with.
The cancellation of Phase 2 of HS2 means it is likely that more former owners and occupiers of land acquired for the scheme will stand to benefit from the HS2 Land Disposal Policy than if Phase 2 had proceeded.
HS2 Land Disposal Policy terms
The general rule is that where government wishes to dispose of land to which the HS2 Land Disposal Policy applies, former owners will be given first opportunity to repurchase the land at current market value.
Some of the points to be aware of include:
Qualifying Interests: To qualify for the offer back of an interest you must be a holder of one of the following Qualifying Interests:
former freeholders of the whole or part of a site; or
(where the former freeholder does not wish to buy back the site) the former leaseholder who had a lease of the site with an unexpired term of at least 21 years;
the successors of anyone who would have fallen into either of the above categories had the property not been acquired; or
where there was fragmented ownership of a site at the date of acquisition, a consortium of former owners who have indicated a wish to purchase the land collectively[1]; and
in certain circumstances, a sitting tenant of a dwelling[2].
The Secretary of State may however decide that the land should not be offered back where, among other reasons:
any works have materially changed the character of the land since its acquisition, such as where a building with land was acquired and then demolished, but only part of the land has become surplus to requirements;
agricultural land that has been severed is no longer capable of being farmed economically;
in the view of the Secretary of State it makes sense to pool the land with adjoining ownerships in a joint disposal;
the site is required for environmental mitigation, and where the former landowner is unwilling or unable to accommodate those requirements for recreation of community facilities or wildlife habitats;
former owners are not prepared to pay the market value of the site or are not prepared to offer terms that the Secretary of State considers to represent best value having regard to all the circumstances; and
the Secretary of State considers that in the public interest the land should be transferred to another Public Body with compulsory purchase powers.
The Crichel Down Rules contain prescribed procedures and timescales for communication by the disposing public body, in this case HS2, of an intention to offer land back to the former owner. It is important that all deadlines contained in the communications are met.
HS2 Limited and the Secretary of State can be expected to comply with their obligations under the Crichel Down Rules and the HS2 Land Disposal Policy and all associated Guidance where it is decided that the land acquired is no longer required for the purpose for which it was compulsorily acquired. The precise purpose of acquisition, and the extent to which it is deemed the land is no longer required is perhaps likely to be contested in some circumstances.
Our lawyers have experience in advising land owners and public bodies in the exercise of their rights and obligations under the Crichel Down Rules and infrastructure project land disposal polices, as well as in related contested court or tribunal proceedings
[1] N.B. the consortium must be established before the wish to purchase is indicated, and in sufficient time to enable deadlines for notification to be met.
[2] N.B. this does not apply to agricultural units.
