Senior Director / Head of Economics
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Taking the positives first, the NPPF has firmed up its language in the tests of soundness, requiring plan makers to, as a minimum, seek to meet there area’s objectively assessed needs (OAN). This is a very positive strengthening of language at paragraph 35. Reading forward to section 5 (delivering a sufficient supply of homes) reaffirmed the Government’s commitment to provide authorities with a clear ‘minimum’ level of housing need to achieve this end. Reference is also made at paragraph 60 to its ‘standard method' for calculating this minimum need, which it is clear to state should only be departed from in ‘exceptional circumstances’.
So far so good.
A move across to the updated Planning Practice Guidance (PPG) on the standard method, however, provided a quick unravelling of any sense of clarity or certainty.
Instead of what will now (perhaps fondly) be remembered as a comparatively well thought through guidance note on preparing a Housing and Economic Needs Assessments, we now have a three page ‘note’ which explicitly does not constitute full guidance. This note has a distinct air of a late homework submission.
The note is limited to a precis of the calculation method which remains unchanged (household projections, affordability adjustment, cap) from that original published in September 2017.
Unlike the previous draft PPG, it provides no explanation as to what warrants the ‘exceptional circumstances’ for departing from the standard method. It also provides no clarity on how a plan-maker should go about arriving at a housing requirement for a plan, noting that paragraph 60 now only requires strategic polices to be ‘informed’ by, rather than ‘based upon’, the outcome of the method.
Clarity on these points will be critical in ensuring that plans recognise the role of housing as supporting infrastructure (paragraph 81) to enable economic investment as well as addressing social challenges including rising homelessness and a disenfranchised younger generation in search of affordable homes.
The explanation for the lack of guidance is provided in the Government’s response to the consultation on the draft NPPF. Here it is acknowledged that the PPG is not complete, with the full guidance to be provided in ‘due course’. Sir Humphrey, the civil service mandarin of Yes Minister, would be proud of that turn of phrase and level of obscuration.
Evidently setting out to arrive at a one size fits all calculation for need was never going to be a simple task but the Government has had over two years to develop something robust following the first draft of a potential solution proposed by LPEG.
So why a shaking of confidence now in a methodology it had steadfastly retained in the face of notable levels of criticism to date? Why the sudden row-back?
It appears that the Government is facing up to an “inconvenient truth”. That truth is that the first real update of the methodology using the 2016 based household projections is extremely unlikely to meet its stated objective of “boosting supply”.
To many in the industry this comes as no surprise.
Attempting to boost supply using the methodology was always going to be fraught with difficulty because the very supply constraints that the Government are seeking to overcome are “hard wired” into the data that informs the need calculation! No surprise then that these constrain the formulation of more positive projections of need which are the prerequisite of boosting supply from historic or indeed current levels. Reliance on a static indicator of affordability as an adjustment to the calculation is also not helpful to the objective of “boosting supply”.
This leaves a concerning degree of uncertainty until the Government consults upon and adopts a new standard method. This is likely to slow down the process of plan-making as local planning authorities seek to weigh up the best course of action to meet needs and develop robust plans, or in some cases, based on recent precedents, to see if an opportunity exists to provide for fewer homes!
However, and this is an important however, the Government has bought itself time to get the standard method right. It would appear it has conceded that the current methodology is not fit for purpose – facing up to an inconvenient truth that many in the profession have known about.
Correctly in our view, the Government has taken the view that the answer (the need to boost supply to 300,000 homes per annum) is right but the proposed means of getting there is wrong.
In re-writing it is critical that the Government takes the opportunity to correct other flaws in the proposed method. It is vital that the revised methodology releases the constraint that a reliance on trend-based household projections place on the calculation of housing need.
We also hope to see a revised methodology that enables more places to plan positively, flourish and deliver the Government’s Modern Industrial Strategy. That means a housing need calculation that works for more areas of the country and doesn’t disadvantage large parts of the North of England or lead to a lessening of economic ambition.
The clock is ticking and transition arrangements will end on the 24 January 2019. Plan-makers need clarity on the ‘minimum need’ number they should be seeking to plan for and also clarity on what constitutes an exceptional circumstance for departing from the standard method.
It is a brave action to admit that you were wrong, but what matters more is what you do next.
26 July 2018
Senior Director / Head of Economics