Here’s the relevant extract again, from Natural England’s representation  to the Local Plan. (Highlights in bold, by SOS).

‘Strategy 26 Sidmouth – additional comments
We advise that we consider this strategy unsound due to its allocation of 5 ha of employment land ( see below ). In addition the proposed loss of employment land within the town at Manstone Depot (which is now proposed for non- strategic residential land)although significantly smaller than that proposed within the AONB also appears to be contrary to the NPPF.
If residential land is to be allocated at the Knowle, there should be no loss of Green Infrastructure and surrounding parkland as this is an important green space within Sidmouth. Not only is it an important feature for balanced communities – Strategy 4, but because Sidmouth is only approximately 5 km from the East Devon Pebblebeds. It is vitally important that all existing Green Infrastructure within the town is maintained and enhanced to protect the internationally designated site from increased recreational pressure.
Given the importance of the environment’s important role to both residents and to the town as an all year round tourist destination, it is strongly recommended that a similarly worded statement as Strategy 25 (Seaton) bullet point 5 is incorporated.

 
Full text (dated Jan 2013) in DOCUMENTS page on this website.

More thoughts on Knowle at the constantly updated SIN blog  at  http://sidmouthindependentnews.wordpress.com