Blog: 10 March 2017North's housing need could be at threat

Dan Mitchell

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Dan Mitchell

Planning Director

Manchester office

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This piece is a little bit technical. Read on if you are: a) involved in Housing and Planning; b) interested in the Northern Powerhouse; and c) just a little bit nerdy (as we are) about objectively assess housing needs (OAN).

Most professionals involved in planning and housing will have picked over the Government’s recent Housing White Paper, ‘Fixing our broken housing market’. Whilst many of the themes require further evolution, it is also true that many of the ideas about speeding up the planning system stem from the recommendations of the Local Plans Expert Group (LPEG), who in March 2016 put forward various suggestions. 

In considering future housing needs, the White Paper states that the current approach to identifying housing requirements is particularly complex and lacks transparency. It suggests that the lack of a standard methodology for doing this makes the process opaque for local people and may mean that the number of homes needed is not fully recognised. It has also led to lengthy debate during local plan examinations about the validity of the particular methodology used, causing unnecessary delay and wasting taxpayers’ money.

We would not necessarily disagree. However, when forecasting future growth isn’t there bound to be disagreement on some of the assumptions to be used?

The Government has confirmed that it will engage in ‘a consultation on a new standard methodology’ for calculating OAN, however the White Paper does not provide any further detail on what form this methodology might take.

LPEG considered this very point and in the absence of any wider debate, could be the Governments chosen route. Here lays our concern. In streamlining the methodology for calculating the OAN, LPEG proposed that the ‘job/homes test’ be removed. This is the element of the assessment seeks to ensure that there is a sufficient supply of labour and, by implication, housing supply to balance with future job growth forecasts. In other words, matching jobs and homes to ensure that the lack of growth in housing is not a constraint on local economic growth.

Whilst the central aim of the LPEG recommendations to streamline the assessment of housing need should be welcomed, the suggested removal of the jobs/homes test could weaken economic growth prospects of some local areas.

With this hypothesis in mind, I asked our head of housing and research, Simon Macklen an important question. How do housing requirements in the North fair under LPEG?

Simon immediately replied by modelling all housing requirements across the North of England against an LPEG methodology. In fact, Simon, being rightly thorough in his assessment, looked at the whole of England as a comparison. Our analysis is interesting.

Click map to enlarge.

In simplifying a complex evidence base and process, housing need under LPEG would be calculated with more emphasis on affordability and market signals, rather than looking at economic led housing need.

  • Existing Local Plan housing targets are 11% higher, than LPEG derived targets would be across the North, comprising:
    • North East is 4% higher;
    • North West is 13% higher; and
    • Yorkshire and Humber is 9% higher.
  • Existing Objectively Assessed Needs are 20% higher, than LPEG derived targets would be across the North, comprising:
    • North East is 11% higher;
    • North West 19% higher; and
    • Yorkshire and Humber 25% higher.

Whilst there are certain ‘winners and losers’, on the whole, the removal of the jobs/homes test under LPEG would generally reduce housing requirements in the North.

With the Northern Powerhouse strategy aiming to rebalance and unleash the full economic potential of the North and the Government recognising the role the housing sector plays in economic growth, the importance on ensuring we are planning for the right number of homes is paramount.

An LPEG based approach could therefore exasperate the North/South divide. Many Councils in the North are rightly seeking to stimulate their economies with greater job growth, accepting that alongside this, there is a need for higher housing targets. This is perhaps obvious. Some northern areas still face significant regeneration pressures and intervention to stimulate areas of previous housing market failure.

On the face of it the suggested omission by LPEG of employment-led OANs could severely impact the housing growth requirements amongst several LPAs.  If we are to make the Northern Powerhouse vision a reality, economic modelling is crucial particularly across northern Local Planning Authorities. We must be ambitious and we have to be planning for the right number of homes.  

If you are keen to understand more about our modelling and what is means for a particular area, do get in touch with either myself of Simon Macklen - see details below.

(See article featuring Simon Macklen on Planning Resource)

Posted with the following keywords:
OAN, LPEG, North, Northern Powerhouse