Housing need methodology - expediency prevails

11 December 2018

It is ironical that having put in place a standard method for determining housing need based on household projections, the Government has found that the change in the methodology for the 2018 projections means they are simply not a suitable basis for doing so. The projections show big reductions in many local authority areas, partly because of falling in-migration, but also because they effectively “bake-in” the effects of the recession and suppressed demand.

So only a short time after the standard method was introduced, we have the current MHCLG consultation which proposes effectively to rule out using the latest projections as the basis, and in the short-term to continue to base housing need on the 2015 projections. There appear to be two main reasons. The first is that the 2018 projections show big reductions in some areas of high demand, Oxford often being cited as an example. The other is that even applying the affordability adjustments, the standard method doesn’t lead in aggregate to anything like the number of homes that the Government considers is needed.

MHCLG continues to refer to the standard method as identifying the objectively assessed housing need. But whilst the method is rooted in evidence in terms of household need projections, those figures are controlled against a national target of building 300,000 dwellings per year. So the reality is that the “need” identified by the standard method is to a large degree a national Government “policy on” target.

The standard method using the 2015 projections produces very big increases for some planning authorities, especially in London and the South East, which they will find it very difficult to meet, especially where there is Green Belt. And by contrast, some Midlands and Northern LPAs see significantly reduced housing need figures, and may have to make a case to go higher to meet their ambitions for their local economy. The methodology is a crude tool.

But it is hard to see how the Government has any alternative but to continue with the published method and the 2015 projections in the short term.  The vagaries of the 2018 projections mean that there is no simple and rational adjustment that they can make to the method, to produce housing need figures which would make sense. At least some kind of status quo would be maintained, albeit a challenging one for some LPAs. There simply isn’t the time for MHCLG to work up a modified or new approach to identifying housing need, consult upon it, and put it in place within any kind of manageable timescale. In the meantime, uncertainty about what effect a revised method would have would make it very hard, if not infeasible in many cases, to make progress with plan-making.

Moreover, keeping with the 2015 projections does have the substantial advantage that many LPAs had already started to adjust to working with them, so it carries forward the same figures rather than requiring adjustment to some new model. The practical message in a sense is that nothing has changed, so LPAs can get on with it.

There are other practical advantages. The approach will make it difficult for some elected members to argue with any success that the revised household projections provide a reason to reduce housing provision, or to hold everything up while they have a re-think. And it will make it difficult for vested interests to claim a basis to argue that plans coming forward should have their housing need figure re-cast to suit their interests; and thereby cause delay and disruption to the planning process.

However, the proposals should be recognised as an expedient: they do not give a permanent solution. MHCLG needs to get on urgently to develop its thinking on how housing need should be assessed in the future, engage effectively with practitioners on its ideas, and bring forward further changes to the NPPF. Because plan making needs to be based upon up-to-date evidence in relation to housing need, just as in any other area of policy.

by Andrew Wright

Category Planning general