Beauty

How can the planning system seek to achieve “beautiful” buildings and places?

What is beauty? How do you arrive at objectivity in matters largely of subjective judgment? Is the customer always right (and who is the customer)?

These thoughts were prompted this week by a few things:

⁃ The resolution of the Corporation of London’s Planning and Transportation Committee on 2 April 2019 to grant planning permission for the Tulip following officers’ recommendations. The application will now be referred to the Mayor who will need to decide whether to intervene (whether by call in or by directing refusal). His stage 1 report dated 14 January 2019 set out his initial concerns.

Obituaries of Bill Heine, responsible for the Headington shark. Is there any inspector’s decision letter with a better passage than this (when allowing an appeal against an enforcement notice)?

“It is not in dispute that this is a large and prominent feature. That was the intention, but the intention of the appellant and the artist is not an issue as far as planning permission is concerned. The case should be decided on its planning merits, not by resorting to “utilitarianism”, in the sense of the greatest good to the greatest number. And it is necessary to consider the relationship between the shark and its setting…. In this case it is not in dispute that the shark is not in harmony with its surroundings, but then it is not intended to be in harmony with them. The basic facts are there for almost all to see. Into this archetypal urban setting crashes (almost literally) the shark. The contrast is deliberate … and, in this sense, the work is quite specific to its setting. As a “work of art” the sculpture (“Untitled 1986”) would be “read” quite differently in, say, an art gallery or on another site. An incongruous object can become accepted as a landmark after a time, becoming well known, even well loved in the process. Something of this sort seems to have happened, for many people, to the so-called “Oxford shark”. The Council is understandably concerned about precedent here. The first concern is simple: proliferation with sharks (and Heaven knows what else) crashing through roofs all over the City. This fear is exaggerated. In the five years since the shark was erected, no other examples have occurred. Only very recently has there been a proposal for twin baby sharks in the Iffley Road. But any system of control must make some small place for the dynamic, the unexpected, the downright quirky. I therefore recommend that the Headington shark be allowed to remain.”

⁃ a nagging awareness that I probably need to cover the Government’s “Building Better, Building Beautiful” initiative in one of these blog posts.

Section 12 of the July 2018 NPPF sought to give more weight, in plan making and decision taking, to design considerations – see MHCLG’s press release Government’s new planning rulebook to deliver more quality, well-designed homes (24 July 2018) and there is more detailed guidance in the PPG. The press release, as with so many Government announcements, focused on the relevance of the policy changes to the construction of new homes.

Is poor design one reason why new development is often not accepted by communities? That’s the thesis leading to James Brokenshire’s announcement on 3 November 2018 of the Building Better Building Beautiful Commission, chaired by Professor Sir Roger Scruton.

The Commission has three aims:

1. To promote better design and style of homes, villages, towns and high streets, to reflect what communities want, building on the knowledge and tradition of what they know works for their area.

2. To explore how new settlements can be developed with greater community consent.

3. To make the planning system work in support of better design and style, not against it.

The commission has five commissioners:

• Sir Roger Scruton (Chair)

• Gail Mayhew

• Mary Parsons

• Nicholas Boys Smith

• Kim Wilkie

It also has an impressive list of “specialist advisors”:

• Stephen Stone, Executive Chairman of Crest Nicholson

• Sunand Prasad, Senior Partner and co-founder of Penoyre & Prasad and past President of the RIBA

• Ben Bolgar, Senior Director of Prince’s Foundation

• Dame Fiona Reynolds DBE, Master of Emmanuel College, Cambridge

• Adrian Penfold OBE, Advisor in Planning and Public Affairs

• Peter Studdert, Chair of Quality Review Panels for the LLDC and LB of Haringey

• Patrick James, Founding Director of The Landscape Agency

• Paul Monaghan, Director of AHMM and Design Council Trustee

• Yolande Barnes, Professor of Real Estate at UCL

The deadline for the Commission’s call for evidence is 31 May 2019.

This “Building Beautiful” initiative, ironically as with the resi PD rights initiative where there no controls over matters of aesthetics and design, has its roots in think tank the Policy Exchange. The Policy Exchange published Building More, Building Beautiful: How design and style can unlock the housing crisis by Jack Airey, Sir Roger Scruton and Sir Robin Wales, and with a foreword by James Brokenshire, in July 2018. It published a collection of essays on the design, style and economics of the built environment Building Beautiful in January 2019.

Stating the position neutrally, it is right to record that the initiative, and Scruton, have their detractors, such as Robert Bevan in the London Evening Standard – I wouldn’t build my dream home in joyless, moralistic Scrutopia (25 January 2019):

The beauty commission has emerged from a report called Building More, Building Beautiful, by Policy Exchange, a Right-of-centre think tank. One of its three authors was Scruton himself. From its cover onwards — a drawing of Georgian houses that gets the historical details all wrong — it has been many decades since a more ludicrous or ignorant report on architecture was published.”

What on earth is going to come from this process?

The visual appearance of new homes is a curious thing. Largely a private sector product with paying consumers, why are we the public often not satisfied with what the market produces, even when the direct customers appear to be?

I won’t reveal the house builder, but there was a piece this week on the BBC website about a couple who had bought their “dream home” but were dissatisfied with a number of defects in its construction. I looked at the photo below with its wrong proportions, verge/garden, largely blank side flank and clay coloured rendering, and initially wondered how a such an ugly, presumably not cheap, house could be anyone’s dream. But beauty is in the eye of the beholder – it’s a new detached home with garden, and home ownership has been promoted by successive governments as to what we should aspire.

(Photo: BBC)

The aesthetic appearance of a new car is probably the only element of its design or function that is not subject to prescriptive regulation and requirements for testing. But it is plainly critical for car makers to invest in the visual appearance of the product, so as to attract the consumer for whom the car will be an extension of the personality that he or or she wishes to express, emphasising qualities such as speed or ruggedness, elegance or urban quirkiness.

So why is the new housing market apparently so different? Is there a lack of choice such that we’re still at Model T Ford “any style as long as it looks like a child’s drawing of a detached house and garden“? Or is it the case, more likely, that the products that we see are those that have been proven to sell? In which case, aren’t there dangers in trying to funnel house builders towards a different approach?

If different products would make it more likely for permission to be obtained and for homes to be built and sold, why hasn’t this been achieved by operation of the market? What is the overlap with the Letwin “delivery” initiative (see my 3 November 2018 blog post Oliver’s Twist: Letwin’s Proposals For Large Housing Sites)?

It is all very well for the Commission’s first aim to refer to local styles of building but where is the architectural integrity in adopting a particular local building style as pastiche simply to gain community buy-in? Surely beauty simply comes from producing well-proportioned good quality buildings with a form that reflects their function (can we ban fake chimneys?) and with as much attention paid to space and landscape as built form? Do we really need the Scuton Commission or indeed any more prescriptive planning policies? Simply assess schemes against those principles, at outline and reserved matters stages, and make sure that there is no room for post-permission dumbing down. And ensure that there is a properly functioning, competitive house building market. Start with getting the market right, not the detailed design requirements (only local stone here, even though it has to be shipped in from abroad).

After all, whilst planners love to arrive at quasi-objective ways of assessing largely subjective matters (needs must, I suppose) and the tools for doing that are getting ever better (for instance, primarily in an urban context, vu.city and Cityscape Digital), save where particularly justified surely we should restrict the role of the state in telling us what we are going to find beautiful? Heritage decisions based on assessment of architectural quality are difficult. Decisions in relation to NPPF paragraph 79(e) (the green light for proposed isolated homes in the countryside where the design is of “exceptional quality” in that it is “truly outstanding or innovative, reflecting the highest standards in architecture..”) are difficult. It is quite something to appoint a planning committee or inspector as cultural arbiter on our behalf and to expect their decisions not to be underpinned, consciously or unconsciously, by political or social priorities and assumptions.

I still like that shark. Jury out on Tulip.

Simon Ricketts, 6 April 2019

Personal views, et cetera

NPPF & PPG In Court

Hanging over me all week was a deadline for preparing a legal update about the NPPF. Then, thank you judges, just like London buses but with more barristers on board, along came three interesting cases.

Is the NPPF subject to the requirements of SEA?

The question as to whether the latest version of the NPPF required strategic environmental assessment was the question before Dove J in Friends of the Earth v Secretary of State (Dove J, 6 March 2019).

 

You will recall that requirements of the SEA Directive apply to plans and programmes which are “required by legislative, regulatory or administrative provisions” and which “set the framework for future development consent of projects”.

 

The Government argued that neither applied in the case of the NPPF. It was always going to be a stretch to argue that the, er,  Framework does not set the framework for the future development consent of projects and the judge wasn’t going to accept that. But he did conclude that due to the Framework’s curious, non-statutory, legal basis it could not be said to be required by legislative, regulatory or administrative provisions and therefore SEA was not required: “there is in reality nothing by way of any formal provisions which might be said to govern or regulate the production of the Framework“.

Incidentally, I had always assumed that fear of being caught by SEA requirements was one reason why the NPPF has remained so determinedly non-spatial but, on Dove J’s reasoning, even an NPPF with spatial policies would not require SEA.

Was consultation on the draft NPPF legally inadequate in relation to fracking?

The hearing in relation to Stephenson v Secretary of State (Dove J, 6 March 2019), a claim brought on behalf the Talk Fracking campaign group, immediately followed the Friends of the Earth hearing and one of its grounds (ground 3) was covered by the previous case. The other grounds focused on the new NPPF’s pro-fracking paragraph 209(a):

Minerals planning authorities should:
a) recognise the benefits of on-shore oil and gas development, including unconventional hydrocarbons, for the security of energy supplies and supporting the transition to a low-carbon economy; and put in place policies to facilitate their exploration and extraction
.”

Ground 1 contended that “the Defendant unlawfully failed to take into account material considerations, namely scientific and technical evidence, which had been produced following the adoption of a Written Ministerial Statement by the Secretary of State for Business and Energy and Industrial Strategy and the Defendant on 16th September 2015 (“the 2015 WMS”)

Ground 2 contended that “the Defendant failed, in publishing the policy in paragraph 209(a) of the Framework, to give effect to the Government’s long-established policy in relation to the obligation to reduce green-house gas emissions under the Climate Change Act 2008“.

Ground 4 contended that “the Defendant failed to carry out a lawful consultation exercise in relation to the revisions to the Framework which were published on 24th July 2018.”

Dove J started with ground 4, because “at the heart of the dispute” was the questions as to “what the Defendant was doing when incorporating paragraph 209(a) into the Framework or, more particularly in relation to Ground 4, what a member of the public engaging in the consultation process and reading the publicly available material as a reasonable reader, would have concluded the Defendant was doing“. The issues “cannot be disposed of by simply considering the Defendant’s private intentions“. In the documentation there was no suggestion that the merits or substance of the policy represented by the 2015 WMS were outside the scope of the consultation.

By contrast with what the reasonable reader would have discerned from the publicly available material, the Defendant had a closed mind as to the content of the policy and was not undertaking the consultation at a formative stage. The Defendant had no intention of changing his mind about the substance of the revised policy. Further, the Defendant did not conscientiously consider the fruits of the consultation exercise in circumstances where he had no interest in examining observations or evidence pertaining to the merits of the policy. This had the effect of excluding from the material presented to the Minister any detail of the observations or evidence which bore upon the merits of the policy. Given my conclusion as to what the reasonable reader would have concluded from the publicly available documentation the consultation exercise which was undertaken was one which involved breaches of common law requirements in respect of consultation and which was therefore unfair and unlawful.

Ground 1 accordingly also succeeded: it was unlawful to fail to take the Talk Fracking material into account in decision making as to the final form of the NPPF, given that it was clearly relevant to the questions posed. “The fact that the Defendant believed that he was taking a far more narrow and restricted decision from that which he had advertised to the public does not provide a basis for avoiding that conclusion.

Ground 2 failed, but on the basis of reasoning which may be helpful to the anti-fracking community, in that the judge accepted the Secretary of State’s submission that “in individual decisions on plans or applications the in principle support for unconventional hydrocarbon extraction, provided by paragraph 209(a) of the Framework, will have to be considered alongside any objections and evidence produced relating to the impact of shale gas extraction on climate change. These are conflicting issues which the decision-maker will have to resolve.”

The judge has not yet determined the appropriate relief (ie what should be done) to give effect to his judgment. But surely we are now likely to see further consultation as to paragraph 209(a) and potentially another tweaked NPPF in due course. NPPFs are also now coming along like buses.

What is the legal status of Planning Practice Guidance?

This question was relevant in Solo Retail Limited v Torridge District Council (Lieven J, 4 March 2019) as it went to complaints about the approach taken by a local planning authority to retail impact assessment, in a challenge by one value retailer to a planning permission granted to a competitor. The complaint was that the guidance in the PPG has not properly been followed.

Of course if there is doubt as to the legislative, regulatory or administrative basis for the National Planning Policy Framework, that doubt is accentuated in the case of the Government’s subsidiary Planning Practice Guidance.

The judge found that the NPPF and the local development plan were not prescriptive as to the form of retail impact assessment required to be carried out. The claimant therefore had to fall back on the detailed steps for assessment set out in the PPG.

However:

In my view the NPPG has to be treated with considerable caution when the Court is asked to find that there has been a misinterpretation of planning policy set out therein, under para 18 of Tesco v Dundee. As is well known the NPPG is not consulted upon, unlike the NPPF and Development Plan policies. It is subject to no external scrutiny, again unlike the NPPF, let alone a Development Plan. It can, and sometimes does, change without any forewarning. The NPPG is not drafted for or by lawyers, and there is no public system for checking for inconsistencies or tensions between paragraphs. It is intended, as its name suggests, to be guidance not policy and it must therefore be considered by the Courts in that light. It will thus, in my view, rarely be amenable to the type of legal analysis by the Courts which the Supreme Court in Tesco v Dundee applied to the Development Policy there in issue.

These points are illustrated the paragraphs of the NPPG that are most relevant in this case. Paragraph 015 says that “the impact test should be undertaken in a proportionate and locally appropriate way…” However, paragraph 017 says “The following steps should be taken in applying the impact test…”. Taken at face value these words would seem to suggest that the following elements are mandatory where there is a policy requirement for any form of impact test. However, in my view that cannot be the case. There is a judgement for the LPA as to what level of scrutiny of possible impact is appropriate in the particular circumstances of the proposal, taking into account the need to be proportionate. Paragraph 017 therefore cannot and should not be interpreted and applied in an overly legalistic way as if it was setting out mandatory requirements.”

A reminder not to interpret the PPG legalistically. There may be internal inconsistencies within it. Guidance means guidance.

Simon Ricketts, 9 March 2019

Personal views, et cetera

Delivery!

MHCLG’s announcements this week have clarified three separate issues which go to whether the “tilted balance” in paragraph 11(d) of the NPPF applies in relation to applications for planning permission for housing development.

Where the tilted balance applies, Government policy is of course that planning permission should be granted unless:

(i) the application of policies in this Framework that protect areas or assets of particular importance [being specific categories of policies set out in footnote 6 to the NPPF] provides a clear reason for refusing the development proposed; or

(ii) any adverse impacts of doing so would significantly and demonstrably outweigh the benefits, when assessed against the policies in this Framework taken as a whole.”

Two situations where the tilted balance applies are:

⁃ “where the local planning authority cannot demonstrate a five year supply of deliverable housing sites” with an appropriate buffer percentage of 5%, 10% or 20% calculated by reference to paragraph 73 of the NPPF; and

⁃ “where the Housing Delivery Test indicates that the delivery of housing was substantially below [a defined percentage of] the housing requirement over the previous three years” the defined percentage being 25% in the case of Housing Delivery Test results published in November 2018, 45% in the case of results published in November 2019 and 75% in the case of results published in November 2020 and thereafter. (Additionally, the authority needs to publish an action plan where the delivery percentage is less than 95%, “to assess the causes of under-delivery and identify actions to increase delivery in future years“).

Paragraph 177 of the 2018 NPPF disapplies the presumption in favour of sustainable development (and therefore the possibility of the tilted balance applying) where the project requires appropriate assessment under the Conservation of Habitats Regulations, which has proved problematic following the Court of Justice of the European Union’s judgment in People Over Wind, which led to far more projects requiring appropriate assessment.

This week’s announcements have clarified three things:

1. How “deliverable” is defined for the purposes of that first situation.

2. The presumption in favour of sustainable development is no longer disapplied if there is a negative appropriate assessment.

3. What the November 2018 Housing Delivery Test results are for in relation to each English local planning authority (the results not having been, er, delivered on time by MHCLG).

After a long wait, and initial indications that this would all be done before Christmas, on 19 February MHCLG published:

Government response to technical consultation on updates to national planning policy and guidance

housing delivery test 2018 measurement

further revised NPPF

The revisions to the NPPF are limited but care will be needed when referring to decisions and court rulings to be clear as to the relevant policy basis: the 27 March 2012 NPPF, the 24 July 2018 NPPF or the 19 February 2019 NPPF.

What is deliverable?

Footnote 11 to the 2012 NPPF defined “deliverable” as follows:

To be considered deliverable, sites should be available now, offer a suitable location for development now, and be achievable with a realistic prospect that housing will be delivered on the site within five years and in particular that development of the site is viable. Sites with planning permission should be considered deliverable until permission expires, unless there is clear evidence that schemes will not be implemented within five years, for example they will not be viable, there is no longer a demand for the type of units or sites have long term phasing plans.”

The degree of probability required, given the words “realistic prospect“, was considered by the Court of Appeal in St Modwen Developments Ltd v Secretary of State (Court of Appeal, 20 October 2017), where Lindblom LJ said this:

35…Deliverability is not the same thing as delivery. The fact that a particular site is capable of being delivered within five years does not mean that it necessarily will be. For various financial and commercial reasons, the landowner or housebuilder may choose to hold the site back. Local planning authorities do not control the housing market. NPPF policy recognises that…


37… Had the Government’s intention been to frame the policy for the five-year supply of housing land in terms of a test more demanding than deliverability, this would have been done…


38 The first part of the definition in footnote 11—amplified in paras 3–029, 3–031 and 3–033 of the PPG—contains four elements: first, that the sites in question should be ” available now”; second, that they should “offer a suitable location for development now”; third, that they should be ” achievable with a realistic prospect that housing will be delivered on the site within five years”; and fourth, that “development of the site is viable ” (my emphasis). Each of these considerations goes to a site’s capability of being delivered within five years: not to the certainty, or—as Mr Young submitted—the probability that it actually will be. The second part of the definition refers to “[sites] with planning permission”. This clearly implies that, to be considered deliverable and included within the five-year supply, a site does not necessarily have to have planning permission already granted for housing development on it. The use of the words “realistic prospect” in the footnote 11 definition mirrors the use of the same words in the second bullet point in paragraph 47 in connection with the requirement for a 20% buffer to be added where there has been “a record of persistent under delivery of housing”. Sites may be included in the five-year supply if the likelihood of housing being delivered on them within the five-year period is no greater than a “realistic prospect”—the third element of the definition in footnote 11 (my emphasis). This does not mean that for a site properly to be regarded as “deliverable” it must necessarily be certain or probable that housing will in fact be delivered upon it, or delivered to the fullest extent possible, within five years.”

The wording in glossary to the 2018 NPPF was made more specific:

“”Deliverable: To be considered deliverable, sites for housing should be available now, offer a suitable location for development now, and be achievable with a realistic prospect that housing will be delivered on the site within five years. Sites that are not major development, and sites with detailed planning permission, should be considered deliverable until permission expires, unless there is clear evidence that homes will not be delivered within five years (e.g. they are no longer viable, there is no longer a demand for the type of units or sites have long term phasing plans). Sites with outline planning permission, permission in principle, allocated in the development plan or identified on a brownfield register should only be considered deliverable where there is clear evidence that housing completions will begin on site within five years.”

Due to concerns as to potential ambiguity (which I didn’t really see) as to the treatment of non-major development (ie developments of less than ten homes, with a site area of less than 0.5 hectares), the wording has now been changed in the 2019 NPPF to read as follows

“Deliverable: To be considered deliverable, sites for housing should be available now, offer a suitable location for development now, and be achievable with a realistic prospect that housing will be delivered on the site within five years. In particular:

a)  sites which do not involve major development and have planning permission, and all sites with detailed planning permission, should be considered deliverable until permission expires, unless there is clear evidence that homes will not be delivered within five years (for example because they are no longer viable, there is no longer a demand for the type of units or sites have long term phasing plans).

b)  where a site has outline planning permission for major development, has been allocated in a development plan, has a grant of permission in principle, or is identified on a brownfield register, it should only be considered deliverable where there is clear evidence that housing completions will begin on site within five years

But there will remain room for argument: “realistic prospect” inevitably requires judgement and the local planning authority’s assessment as to the position of individual sites will always be potentially controversial given its interest (and/or that of objectors to development) in demonstrating an adequate supply so as to avoid the tilted balance. We will no doubt still see cases such as East Cheshire Council v Secretary of State (Deputy Judge Justine Thornton QC, 1 November 2018), East Bergholt Parish Council v Babergh District Council (Sir Ross Cranston, 7 December 2018) and (no transcript available but the link is to a useful Cornerstone summary) R (Chilton Parish Council) v Babergh District Council (Deputy Judge Robin Purchas QC, 2 February 2019.

There has also previously been much uncertainty as to the circumstances in which the new standard method for assessing local housing need should be used as the basis for assessing whether a five year supply of specific deliverable sites exists in the case of a plan with strategic policies which are more than five years old (unless those strategic policies had been reviewed and found not not to require updating). Footnote 37 in the 2019 NPPF makes clear that the standard method should indeed be used (which reflects the 5 February 2019 decision of the Secretary of State in relation to the Edenthorpe Doncaster called in application, blogged about by Lichfields on 21 February 2019).

Appropriate assessment

Hooray, paragraph 177 now reads:

The presumption in favour of sustainable development does not apply where the plan or project is likely to have a significant effect on a habitats site (either alone or in combination with other plans or projects), unless an appropriate assessment has concluded that the plan or project will not adversely affect the integrity of the habitats site.

The Housing Delivery Test

Well, the results are finally in. The housing delivery test 2018 measurement. According to analysis by Savills:

⁃ no authority is subject this time round to the tilted balance by virtue of delivering less than 25% of its housing requirement over the last three years

⁃ 86 out of 326 authorities are subject to the requirement of a 20% buffer on their five year housing land supply figure as a result of having delivered less than 85% of their housing requirement over the last three years

⁃ 107 out of 326 authorities have to prepare an action plan as a result of having delivered less than 95% of their housing requirement over the last three years.

A future blog post will deal with the “need” side of the equation…

Simon Ricketts, 23 February 2019

Personal views, et cetera

Oliver’s Twist: Letwin’s Proposals For Large Housing Sites

Sajid Javid had given Sir Oliver Letwin the following terms of reference for his review into the “build out of planning permissions into homes” that was announced in the Autumn 2017 budget.

The Review should seek to explain the significant gap between housing completions and the amount of land allocated or permissioned in areas of high housing demand, and make recommendations for closing it. The Review should identify the principal causes of the gap, and identify practical steps that could increase the speed of build out. These steps should support an increase in housing supply consistent with a stable housing market in the short term and so that over the long-term, house prices rise slower than earnings. The review will provide an interim report to the Chancellor of the Exchequer and the Secretary of State for Housing, Communities and Local Government in time for Spring Statement 2018 and a full report for Budget 2018.”

Has Letwin’s final report (published alongside the budget on 29 October 2018) twisted itself away from the examination question that he was set? In my view, read as a set along with the previous two stages of his work, it is pretty clear how his thinking has developed. But he has ended up making a surprisingly radical and, to my mind, impractical, set of recommendations that surely will not find traction with this Government and which on any reflection would surely not increase the “speed of build out“. Perhaps due to the deadline he was set, the recommendations in the final report are not accompanied by any evidence. They are also set out in some detail (see for example the tables embedded in a later part of this blog post) at the expense of any commentary on, for example, the proposals to encourage timely delivery that were set out in the February 2017 white paper.

Dear Philip and Sajid

There have been three stages to his work. In his 9 March 2018 letter to the Chancellor and Secretary of State he provided this initial analysis:

The fundamental driver of build out rates once detailed planning permission is granted for large sites appears to be the ‘absorption rate’ – the rate at which newly constructed homes can be sold into (or are believed by the house builder to be able to be sold successfully into) the local market without materially disturbing the market price. The absorption rate of homes sold on the site appears, in turn, to be largely determined at present by the type of home being constructed (when ‘type’ includes size, design, context and tenure) and the pricing of the new homes built. The principal reason why house builders are in a position to exercise control over these key drivers of sales rates appears to be that there are limited opportunities for rivals to enter large sites and compete for customers by offering different types of homes at different price-points and with different tenures.

When a large house builder occupies the whole (or even a large part) of a large site, the size and style (and physical context) of the homes on offer will typically be fairly homogeneous. We have seen examples of some variation in size, style and context on some large sites; but the variations have not generally been great. It has become apparent to us that, when major house builders talk about the absorption rates on a large site being affected by “the number of outlets”, they are typically referring not only to the physical location of different points of sale on the site, but also and more importantly to differences in the size and style (and context) of the products being offered for open market sale in different parts of the site. Even these relatively slight variations are clearly sufficient to create additional demand – and hence additional absorption, leading to a higher rate of build out.

It is also clear from our investigation of large sites that differences of tenure are critical. The absorption of the ‘affordable homes’ (including shared ownership homes) and of the ‘social rented housing’ on large sites is regarded universally as additional to the number of homes that can be sold to the open market in a given year on a given large site. We have seen ample evidence from our site visits that the rate of completion of the ‘affordable’ and ‘social rented’ homes is constrained by the requirement for cross-subsidy from the open market housing on the site. Where the rate of sale of open market housing is limited by a given absorption rate for the character and size of home being sold by the house builder at or near to the price of comparable second-hand homes in the locality, this limits the house builder receipts available to provide cross-subsidies. This in turn limits the rate at which the house builder will build out the ‘affordable’ and ‘social rented’ housing required by the Section 106 Agreement – at least in the case of large sites where the non-market housing is either mixed in with the open market housing as an act of conscious policy (as we have frequently found) or where the non-market housing is sold to the housing association at a price that reflects only construction cost (as we have also seen occurring). If freed from these supply constraints, the demand for ‘affordable’ homes (including shared ownership) and ‘social rented’ accommodation on large sites would undoubtedly be consistent with a faster rate of build out. And we have heard, also, that the demand for private rented accommodation at full open market rents (the scale of which is at present uncertain) would be largely additional to, rather than a substitute for, demand for homes purchased outright on the open market.

The interim report

His interim report in June 2018 then focused on three issues:

• what the build out rate on large sites in areas of high housing demand actually is;

• why the rate of build out on these sites is as it is; and

• which factors would be most likely to increase the rate of build out on these sites without having other, untoward effects.

The interim report is a solid document with strong analysis and a variety of conclusions, one of which being that “if either the major house builders themselves, or others, were to offer much more housing of varying types, designs and tenures (and, indeed, more distinct settings, landscapes and street-scapes) on the large sites and if the resulting variety matched appropriately the desires of the people wanting to live in each particular part of the country, then the overall absorption rates – and hence the overall build out rates – could be substantially accelerated. The policy levers required to bring this about without damaging the economics of individual sites or the financial sustainability of the major house builders are topics for the second phase of my work, on which I shall report at the time of the Budget.”

The final report

And this is precisely what he has sought in part to do in his final report, published alongside the budget on 29 October 2018. I say in part, as there is no real analysis as to whether his proposed policy levers would or would not damage “the economics of individual sites or the financial sustainability of the major house builders“.

Underlying his conclusions seems to be his scepticism as to whether the encouragement in the NPPF for “residential developments to have a mix of tenures, types and sizes which reflect local housing demand (as well as emphasising the importance of good design)“, together with the 2018 NPPF’s requirement for local authorities to encourage the sub-division of large sites, is sufficient to lead to less homogenous development or “the prospect of significant increases in the rapidity of build out on such sites“.

He gives no evidence for this assumption. Even the 2012 NPPF (as now revised) is, after all, still working through into plans and permissions.

Instead of trying to work with the grain of the existing system, he recommends that “the Government should adopt a new set of planning rules specifically designed to apply to large sites. The purpose of these rules should be to ensure that all sites in areas of high housing demand whose size exceeds a certain threshold are subject to an additional form of planning control that requires those owning such sites to provide a diversity of offerings on the site which are able to address the various categories of demand within the local housing market. This, in turn, should ensure that houses can be built at a greater rate than at present on such sites, because the absorption rate for each category of housing will be complementary, yielding, overall, a greater absorption of housing by the local market as a whole in any given period.”

Ahead of a new legislative structure (both primary and secondary legislation) and an annex to the NPPF (I suspect it would take more than an annex – he’s driving a coach and horses through the thing as far as large housing sites are concerned), he envisages that the new rules could first be brought in by a written ministerial statement, secondary legislation and the policy annex. “If, for example, the Government decides to adopt my recommendations at the end of 2018, I suggest that it should be made clear to the owners of existing large sites in areas of high housing demand, and to those who are taking such large sites through the current planning system before commencing works, that the new rules governing planning permission for large sites will come into force at the start of 2021, and will therefore govern any permissions granted for large sites on or after that date.”

The primary legislation would:

” • define large sites both in terms of a size threshold (which might, for example, be set initially at 1,500 units2) and in terms of boundaries (to ensure that a site which is allocated as a single entity in a local development plan qualifies, even if it benefits from a number of different outline planning permissions);

• require local planning authorities, when granting allocations, outline permissions or final planning permissions for any large site or any part of a large site in areas of high housing demand, to comply with the new secondary legislation and the new planning policy relating to large sites – and, in particular, to include within all outline planning permissions for large sites in areas of high housing demand a requirement that ‘housing diversification’ on such sites should be a ‘reserved matter’; and

• establish the principle that all permissions for reserved matters granted in relation to such large sites should contain diversi cation requirements in accordance with the new secondary legislation and the new planning policy for large sites.”

The secondary legislation would:

” • amend the Town and Country Planning (Development Management Procedure)(England) Order 2015 to include type, size and tenure mix (alongside the current provision for prescription of access, appearance, landscaping, layout and scale) as characteristics that can be prescribed as reserved matters for large sites in areas of high housing demand; and

• require any applicant making an outline planning application for a large site or an application for final permission for a phase of a large site in an area of high housing demand to prepare a diversification strategy, specifying the types of diversity that will be exhibited on that site or in the part of the site to which the application refers.”

The new planning policy document would set out the diversification principles that are to apply to such large sites in areas of high housing demand in the future. By diversification, he means, for example, “housing of varying types, designs and tenures including a high proportion of affordable housing“, as well as “more distinctive settings, landscapes and streetscapes“. By all means strengthen the NPPF if further strengthening is needed (is it?) but how much of this is specific to schemes of 1,500 homes plus.

Then it really starts to get weird. Because there will be “scope for disagreement about whether a particular applicant has made a genuine effort to provide sufficient diversity to address multiple markets simultaneously and hence to increase the overall absorption rate and build out rate. Accordingly, in order to minimise recourse to appeal or litigation, I recommend that the Government should establish a National Expert Committee.

The primary purpose of this Committee should be to arbitrate on whether any application that causes a disagreement between the local planning authority and the applicant (and consequently comes to appeal) satisfies the diversification requirement, and is therefore likely to cause high build out rates.

The secondary purpose of the Committee would be to offer informal advice to any developer or local planning authority that was considering a large site application. I recommend that the Housing Secretary should guide local planning authorities to consult the National Expert Committee before approving any such large site application in an area of high housing demand.”

Why on earth would a new quango such as this be created?

For sites that will already have an outline planning permission before 2021, Letwin recommends that there should be financial incentives (ie government funding) for house builders to accept changes to their existing site plans. Developers would enter into a section 106 agreement to document their continued commitment to the diversity requirements. Letwin says that he has taken legal advice and is confident that the “voluntary transaction” that he proposes will prove to be lawful – perhaps, but it would certainly be unusual. Would the local planning authority be a party? Who would enforce?

One Step Beyond

He then goes “one step further” in relation to “large sites that have yet to be allocated within a local authority’s local plan“. He recommends “that the Government should, as part of the new primary legislation, introduce a power for local planning authorities to designate particular sites within their local plans as sites which can be developed only as single large sites and which therefore automatically become subject to the new planning rules for large sites. In addition, I believe that the local planning authority should be empowered to specify, at the time of designation, strong master-planning requirements including a strict design code as well as landscaping and full and specific infrastructure requirements.”

This in part appears to be a device to ensure that “the land value of those sites is not raised as far above the alternative use value as would be the case if a site were allocated in a local plan and subsequently obtained outline permission under our current rules“. But this can already be done by local planning authorities for good planning reasons, where comprehensive development is required for reasons of, for instance, sustainability or viability. Is Letwin going further than that?

What if there is no good planning reason why the site could not be sustainably be built out in parts? And what is indeed a single development? This will all prove hugely contentious. Particularly given that he goes on to indicate that to “ensure that a reasonable balance is struck between promoting the public interest through increased diversity and faster build out rates on the one hand, and proper recognition of the value of the land on the other hand, I recommend that the Housing Secretary (when issuing updated viability guidance alongside the new planning framework) should guide local planning authorities towards insisting on levels of diversity that will tend to cap residual land values for these large sites at around ten times their existing use value.”

No evidence is given as to why the level above which land values would be expropriated by the state without compensation (which, after all, would be the effect of the proposal) is set at 10 x EUV.

Letwin recognises that significant support will be needed from Homes England: “planning rules are by their nature passive and reactive. They can prevent things from happening (if they are properly enforced); but they can only do a very limited amount to encourage applicants to follow the spirit of the rules and hence to achieve fully the outcomes the rules have been created to achieve.”

He then goes on to visualise local authorities being empowered to bring forward sites themselves via a development vehicle, in one of two ways:

(a) the local authority could use a Local Development Company (LDC) to carry out this development role by establishing a master plan and design code for the site, and then bringing in private capital through a non-recourse special purpose vehicle to pay for the land and to invest in the infrastructure, before “parcelling up” the site and selling individual parcels to particular types of builders/providers offering housing of different types and different tenures;”

(b) the local authority could establish a Local Authority Master Planner (LAMP) to develop a master plan and full design code for the site, and then enable a privately nanced Infrastructure Development Company (IDC) to purchase the land from the local authority, develop the infrastructure of the site, and promote a variety of housing similar to that provided by the LDC model described above.

He sees local authorities that use these vehicles being given “clear” compulsory purchase powers over the large sites that the authorities allocate and indicates that “it would also make sense to consider the possibility of giving local authorities such CPO powers in relation to large sites that have been allocated in their local plan in the past but which have not obtained outline permission after a long period has elapsed.”

Even when compulsory purchase compensation values have been reduced by the mechanisms requiring build out as a single site (query how that is defined in practice) and by increasing the required diversity until the 10 x uplift on EUV is not exceeded, will development (with the required diversity) be viable for a local authority to bring forward? Will any authority have the resources for the task? Will non-recourse lending really be available to the extent that would be required? Why would anyone start on the process of promoting a large site for development when it can be snaffled as part of a larger “single site” in this way?

The notions in the report could be read as moving to the public sector the role of strategic land promotion companies, which I suspect (for all that they are maligned) to be responsible for a high proportion of the major housing sites that do come forward at present. So, to misappropriate Kit Malthouse’s recent analogy that he applied to Homes England, we would lose some WD40 in the system: the companies with the incentive to identify sites, assemble them, identify and overcome infrastructure constraints, devise a viable and acceptable form of development, pursue allocation and permission, open up land with strategic infrastructure and dispose of parcels to house builders. And, going back to the original terms of reference, this will “increase the speed of build out“?

I appreciate that this report was delivered to a deadline, which it achieved, but (unlike the previous stages of Sir Oliver’s review) it seems to me to lack any robust evidential basis at all to justify the wholly new structure that it proposes for allocating, permitting and delivering schemes with 1,500 or more dwellings. Nor does the review interest itself with any more practical nudges that could be introduced into the current system. If it just goes on the “nice but radical ideas” shelf, another year will have been wasted, without any real progress towards making practical improvements that might improve build out rates. After all, Homes England is already playing a hugely positive role in unlocking large-scale housing development and indeed on 30 October 2018 published its strategic plan for 2018/2019 – 2022/2023, setting how it intends to go much further to use its “land, money, powers and influence to increase the pace, scale and quality of delivery“. When the Government responds to the Letwin report in early 2019 I will be looking to see whether any measures that are to be taken forward will pragmatically assist Homes England’s practical work – they are the ones rolling up their sleeves on all this.

Lastly, if as a consequence of implementation of these proposals we were to see the private sector focusing its attention on smaller sites, in preference to these sites which can really make a difference in terms of delivering at scale, that would in my view be inconsistent with the brief that was set.

Stick or twist?

Simon Ricketts, 3 November 2018

Personal views, et cetera

PS No sooner had I finished this post and poured some strong coffee than I saw this morning’s announcement that the Secretary of State has appointed Professor Sir Roger Scruton to chair a ‘Building Better, Building Beautiful’ Commission – no-one could criticise the current build out rate of MHCLG when it comes to reports and reviews.

LAMP lighter

MHCLG Consults On A Changed Basis For Assessing Local Housing Need & Other Urgent Repairs

I’m not sure anyone was expecting MHCLG to act quite so quickly to try to mend a number of problems that have been arising from the July 2018 NPPF (although perhaps problems of its own making).

Its technical consultation on updates to national planning policy and guidance (26 October 2018) invites comments by 7 December 2018 on the following:

Local housing need assessment

I referred in my 29 September 2018 blog post OAN Goal to the confusion caused by the publication by the ONS on 20 September 2018 of updated 2016-based household projections that resulted in the national minimum housing need calculated by the NPPF’s standard method falling significantly from data published in September 2017 which had been based on 2014 household projections.

There was widespread concern that the updated figures were not reliable. The Government had indicated that the figures would not lead to a reduction in the national 300,000 new homes target. A revision to the standard method was to be made so that the new household projections did not cause that target to be missed but in the meantime how were authorities to plan?

The consultation paper is unambiguous: the Government has decided that it is not right to change its aspirations and the ONS figures are indeed misleading due to the way that they only draw from two censuses (rather than previous projections based on five censuses) “which focuses it more acutely on a period of low household formation where the English housing system was not supplying enough additional homes“. In addition:

⁃ “Household projections are constrained by housing supply

⁃ “The historic under-delivery of housing means there is a case for public policy supporting delivery in excess of household projections, even if those projections fall“.

⁃ “Other things being equal a more responsive supply of homes through local authorities planning for more homes where we need them will help to address the effects of increasing demand, such as declining affordability, relative to a housing supply that is less responsive“.

⁃ “The above factors have led to declining affordability…This indicates that the Government should not be less ambitious for housing supply“.

The Government has decided that the best way of responding to the ONS household figures is to ignore them completely, ie in its language:

1. For the short-term, to specify that the 2014-based data will provide the demographic baseline for assessment of local housing need.

2. To make clear in national planning practice guidance that lower numbers through the 2016-based projections do not qualify as an exceptional circumstance that justifies a departure from the standard methodology; and

3. In the longer term, to review the formula with a view to establishing a new method […] by the time the next projections are issued.”

So for local plans submitted from 24 January 2019, the 2014-based household projections as per the September 2017 data are to be used but with current figures used for the calculation of the ratio of local median house prices to local median earnings (where the ratio exceeds four the standard method formula will continue to increase local need above household projections). This all provides authorities with welcome clarity – ignore the September 2018 ONS projections and no need to wait for tweaks to the methodology.

Housing land supply

The 2018 NPPF provides that in calculating how many years’ supply of housing land supply each authority has, the standard method for assessing local housing need is to be used as the baseline for housing land supply calculations where plans are considered to be out of date. The NPPF is to be amended (and updated planning guidance is to be published) so as to clarify that whilst in exceptional circumstances authorities can use a justified alternative approach to the standard method for calculating housing need, this only applies to plan making rather than in the calculation of need in the determination of applications and appeals where the scale of housing land supply is relevant.

The definition of deliverable

In order to determine whether an authority has a five year supply of deliverable sites, the definition of “deliverable” is critical. The Government has held its hands up: the definition of “deliverable” in the 2018 NPPF could be clearer. It proposes the following revised definition:

To be considered deliverable, sites for housing should be available now, offer a suitable location for development now, and be achievable with a realistic prospect that housing will be delivered on the site within five years. In particular:

a) sites which do not involve major development and have planning permission, and all sites with detailed planning permission, should be considered deliverable until permission expires, unless there is clear evidence that homes will not be delivered within five years (for example because they are no longer viable, there is no longer a demand for the type of units or sites have long term phasing plans).

b) where a site has outline planning permission for major development, has been allocated in a development plan, has a grant of permission in principle, or is identified on a brownfield register, it should only be considered deliverable where there is clear evidence that housing completions will begin on site within five years.”

There will be further guidance in due course “to provide further information on the way that sites with different degrees of planning certainty may be counted when calculating housing land availability“.

Development requiring Habitats Regulations Assessment

The Government belatedly intends to address a problem that has arisen from the European Court of Justice’s ruling in People Over Wind (see my 20 April 2018 blog post EU Court Ruling: Ignore Mitigation Measures In Habitats Screening). The 2018 NPPF followed the 2012 NPPF in disapplying the presumption in favour of sustainable development where appropriate assessment is required, even though the effect of People Over Wind is that appropriate assessment is now routinely required in relation to proposed developments where mitigation will avoid any potential from harm, thereby removing the presumption in relation to many more development proposals than had previously been the case.

Paragraph 177 is now proposed to be amended to read:

The presumption in favour of sustainable development does not apply where the plan or project is likely to have a significant effect on a habitats site (either alone or in combination with other plans or projects), unless an appropriate assessment has concluded that there will be no adverse effect from the plan or project on the integrity of the habitats site.”

So now the need for appropriate assessment will not be a bar to the presumption applying. The wording in fact now allows the presumption to apply to more schemes than was the case pre People Over Wind.

The Government could have dealt with this issue before the 2018 NPPF was published. It makes the rather weak excuse: “Although some consultation responses asked for an amendment to the Framework in the light of the ruling, there was not an opportunity for all interested parties to comment at the time.” Well, why was there not even a written ministerial statement to clarify the position? I’m sure I am not the only one to have lost a planning appeal partly due to the absurd position that arose.

The government also indicates that it is “considering what other changes to regulations and guidance may be necessary following the European Court’s ruling“.

In my view MHCLG should take some credit for trying to sort out all of these issues. It is also interesting that the previous approach of avoiding making running repairs to the NPPF has been abandoned – we can soon expect NPPF version 2.1.

Simon Ricketts, 26 October 2018

Personal views, et cetera

The Up Right

In his speech to the Conservative party conference on 1 October 2018, James Brokenshire announced that the Government will consult “in due course” on “introducing a new permitted development right to allow property owners to extend certain buildings upwards, while maintaining the character of residential and conservation areas and safeguarding people’s privacy“.

Not that one again?!

My second ever blog post, on 15 June 2016, Permitted Development: What Next? summarised the February 2016 consultation paper jointly published by DCLG and the previous Mayor of London, which sought views on proposals “to increase housing supply in the capital by allowing a limited number of additional storeys to be built up to the roofline of an adjoining building through permitted development rights, local development orders or development plan policies”. The paper set out in some detail the criteria and prior approval requirements which would apply.

Nothing then happened, perhaps due to the change in Mayor and the ministerial changes that followed the June 2016 referendum, or perhaps it was always going to be a difficult piece of legislation to draft in a way that arrived at a mechanism that would be simpler for developers than a traditional planning application but which secured necessary amenity protections.

My 17 March 2018 blog post Permitted Development: À La Recherche Du Temps Perdu reported on the conflict between on the one hand a ministerial policy statement on 5 February 2018 which appeared to make it clear that the initiative (now across England, not just London) would be dealt with by policy, within the NPPF and then on the other hand Sajid Javid’s speech launching the draft revised NPPF on 5 March 2018 which had this passage:

And there are also other areas in which we’re ready to go further to take the delivery of housing up a gear.

Including a new permitted development right for building upwards to provide new homes”.

Paragraph 118 (e) of the new NPPF does specifically address upwards extensions: Planning policies and decisions should “support opportunities to use the airspace above existing residential and commercial premises for new homes. In particular, they should allow upward extensions where the development would be consistent with the prevailing height and form of neighbouring properties and the overall street scene, is well- designed (including complying with any local design policies and standards), and can maintain safe access and egress for occupiers.”

In the light of the Javid speech, the Brokenshire announcement was not a big surprise but I do wonder how the permitted development will be drafted so as to avoid the obvious issues that arise and why that NPPF statement isn’t considered to be sufficient.

The RTPI’s response to the announcement on 2 October 2018 was surely right, in which its chief executive, Victoria Hills, said:

Densification of built-up areas can bring about much needed housing supply, but quality is as important as numbers. Blanket height extensions come with issues that have potentially serious impact on streetscape and people’s access to light. National policy can provide a favourable steer, but local communities should be able to set standards which enable higher buildings to make a positive contribution to housing supply.”

There is no indication as to when the consultation will take place. For instance, is the Chancellor’s 29 October Autumn budget statement too soon?

It is interesting that Brokenshire did not take the opportunity at the party conference also to reheat the Autumn 2017 budget policy paper announcement that “the government will consult on introducing… a permitted development right to allow commercial buildings to be demolished and replaced with homes“.

In the meantime, the existing office to residential permitted development right continues to be controversial.

Earlier this year, the RICS published a research paper, Extending permitted development rights in England: the implications for public authorities and communities (1 May 2018)

The study estimated that “between 86,665 and 95,045 dwellings (depending on how student accommodation is classified) might potentially have been created under the extended PD rights between 2010 and 2017. The bulk of these additional dwellings arises from small-scale (less than 10 units created) conversions from commercial uses (including offices) to residential use and from agricultural buildings use to residential use.

These small schemes have been broadly distributed (largely in locations with relatively low property values) through cities and towns without any marked regional patterning. The large-scale conversions of office and other commercial uses to residential use that are a key matter of concern to policy makers are less important with regard to the overall number of dwellings delivered and are overwhelmingly concentrated near the cores of major urban areas. These large scale office conversions (excluding student accommodation) are concentrated in the South East. The scale of PD occurring entirely within the industrial and commercial use classes is relatively modest.

Cost-Benefit Analysis (CBA) compared the direct costs and benefits to local authorities of extended PD rights with the outcomes of an identical development that had obtained formal planning permission. The key findings were that:

The largest estimated financial impact is the loss in affordable housing contributions. This amounted to about £42.5m.

The benefits arising from savings in staffing costs within planning departments (£14m) are not enough to offset the loss of fees (£22m).

Overall, this part of the analysis estimates that the direct financial impact of the extension of PD rights is a net loss to all the Local Authorities across England of around £50m.”

The research indicates that office to residential conversions under PD have also produced a higher amount of poor quality housing than schemes governed through full planning permission.”

But the mechanism still has its cheer leaders. Conservative MP Nick Herbert wrote a piece in the Standard, Permitted development is key to race to build homes on 8 October criticising the London Mayor for encouraging, in the draft London Plan, boroughs to use article 4 directions to remove the permitted development right.

Then a penny dropped. Nick Herbert is chairman of a think tank, called The Project for Modern Democracy. Who should be the research director for the “Planning Change” strand of the think tank’s work but Alex Morton? As set out on the Project for Modern Democracy’s website:

“Alex was Special Adviser to then Prime Minister (David Cameron) for two and a half years, focused on housing, planning, and local government. He also drafted the Conservative 2015 Manifesto on those areas. Prior to working in No.10, he led on housing and planning at the Policy Exchange think tank.”

He was lobbying for a permitted development right to convert offices to residential as long ago as 2011 in a Policy Exchange paper, More Homes: Fewer Empty Buildings.

Morton has now published a short paper, A backwards step on Permitted Development (26 September 2018) on which the Nick Herbert article was based. The piece seeks to rebut criticisms of the office to residential permitted development right, particularly that it has led to shortages of business space, lower affordable housing and “unsuitable homes“. Read it for yourself but I found it a pretty weak analysis. I also found it strangely inconsistent with a comment piece he had written in the Independent in 2013, which contained passages like this:

Finally, there are unnecessary and unhelpful side-shows like the extensions debacle last week, which stripped immediate neighbours of their powers to object to major changes next door, and which even most supporters of planning liberalisation felt went too far.

I wonder what the Project for Modern Democracy thinks about the proposed Up Right?

Simon Ricketts, 13 October 2018

Personal views, et cetera

OAN Goal

The Government’s goal remains as per Philip Hammond’s 22 November 2017 Autumn budget statement:

So today we set out an ambitious plan to tackle the housing challenge.

Over the next five years we will commit a total of at least £44 billion of capital funding, loans and guarantees to support our housing market.

To boost the supply of skills, resources, and building land.

And to create the financial incentives necessary to deliver 300,000 net additional homes a year on average by the mid-2020s.”

Will that number be reached? What pressure will the Government be under from its supporters, at next week’s party conference and subsequently, to resile from that 300,000 target in the light of the Office of National Statistics’ statistical bulletin, household projections in England published this month?

After topdown targets for individual authorities, derived from regional plans directly overseen by government, were abolished by the incoming 2010 coalition government, the 2012 NPPF has required each local authority to work out for itself, without any centrally prescribed methodology, what the objectively assessed need for housing is in its area. That quickly proved to be a recipe for complexity, uncertainty, local politicking and delay.

So the Government has been trying since 2015 to arrive out how to arrive at a simpler system that isn’t seen as centrally prescribed. As set out in my 20 September 2017 blog post Housing Needs: Assessed Or Assumed?, the Government decided to consult on a new “standard method” which would provide authorities with a minimum figure, desired from a formula based on household projections, local affordability and a cap on the extent of any increase deriving from the new formula.

Alongside its 14 September 2017 consultation document it published a spreadsheet showing “indicative” figures that would result for each authority from the new method, draft figures which it warned should be “treated with caution“. The total number totted up to 266,000 – a number that made the 300,000 look like a decent stretch target.

All admirably transparent and fascinating at the time, but surely in retrospect it was not helpful to publish those figures, particularly given that it was also stated that the new standard method would apply to local plans that weren’t submitted for examination by the later of 31 March 2018 and publication of the new NPPF?

Numbers drive actions. For some authorities there was clearly an immediate incentive to rush to submit their plan before the standard method was imposed, for others quite the reverse. We have seen corners cut by some authorities in their haste and the position became even more confused once (1) the possible 31 March 2018 deadline became, once the new NPPF was published containing a six months’ grace period, 24 January 2019 and (2) it became clearer that the figures and methodology were liable to change in any event.

The numbers were always likely to change given that the September 2017 household formation projections were arrived at by MHCLG using date going back to 1971 and the task for arriving at the final numbers was to be given to the Office of National Statistics, who would use the 2016-based population projections published in May 2018. When the ONS published its proposed methodology in June 2018 it became clear that ONS would only use trends in household formation back to 2001. Lichfields were expressing concerns about the likely consequences in a 27 June 2018 blog post:

We know that in the decade 2001-11 housebuilding fell to its lowest level and household formation amongst young adults changed significantly. If the new household projections only draw upon this (relatively) short term trend for projecting future household growth, is there a significant risk of ‘baking-in’ trends which are not reflective of future ‘need’ but simply an illustration of what the number would be if we continued more of what has been before?

ONS had consulted on its approach in 2017, and many respondents (including Lichfields) pointed out the need for the methodology to reflect not just a ‘purist’ demographic approach, but reflect on the real-world implications for housing need. Suggestions were made that ONS might wish to consider producing local ‘variant’ projections (as DCLG used to do at a national level) with modified formation rates as the basis for the standard methodology. It does not appear ONS intends to follow this advice.”

To be fair, the Government was not blind to what was likely to happen. As I set out in my 5 August 2018 blog post Housing Needs, Housing Shortfalls, when it published the final version of the NPPF on 24 July 2018, it published on the same dayits response document to the consultation on the draft, with this passage:

A number of responses to this question provided comment on the proposed local housing need method. The government is aware that lower than previously forecast population projections have an impact on the outputs associated with the method. Specifically it is noted that the revised projections are likely to result in the minimum need numbers generated by the method being subject to a significant reduction, once the relevant household projection figures are released in September 2018.

In the housing white paper the government was clear that reforms set out (which included the introduction of a standard method for assessing housing need) should lead to more homes being built. In order to ensure that the outputs associated with the method are consistent with this, we will consider adjusting the method after the household projections are released in September 2018. We will consult on the specific details of any change at that time.

It should be noted that the intention is to consider adjusting the method to ensure that the starting point in the plan-making process is consistent in aggregate with the proposals in Planning for the right homes in the right places consultation and continues to be consistent with ensuring that 300,000 homes are built per year by the mid 2020s.”

So, as at July the position was that updated household projection figures would be released in September and the Government would then “consider adjusting the method after the household projections” and would “consult on the specific details of any change at that time.

The updated figures were indeed then published, on 20 September, and show significant downward movements in the projections for individual authorities and an overall decrease in the total required, from 266,000 to 213,000. There has been a quick succession of excellent blog posts from planning consultancies, going into the statistical detail and likely implications, including (with apologies to those I don’t mention) Bidwells, Barton Willmore, Turley and Lichfields. There have inevitably also been many calls from objectors to housing numbers within emerging local plans for those numbers to be reviewed in the light of the new figures.

But the goalposts haven’t moved (yet). I assume that the Government will now indeed consult on changes to the standard method to increase numbers back within spitting distance of the 300k. There is surely no point in any authority taking any steps in reliance on the September 2018 ONS figures, but then again the September 2017 MHCLG figures have a large question mark against them. If you are an authority looking to make progress with your plan with a view to submission after 24 January 2019 you really have very little to go on as to the approach to be adopted.

So it is urgent that the Government consults as to proposed changes to its methodology and what that is likely to mean for individual authorities – although that consultation paper is going to end up running very close up to the 24 January 2019 date, leaving very little time for, er, planning.

Furthermore, I’m not sure that the ONS numbers are going to be standing still. As Planning magazine have identified in their useful coverage of the new numbers, ONS’ analysis that accompanies their figures makes it clear that it is aware of some of the deficiencies in the data. It refers to responses to consultation on its proposed methodology:

There was a view that only using the 2001 and 2011 Censuses would result in a downward trend in household formation for the younger age groups, which in turn would downplay the need for housing for younger people. With these views in mind, Section 8 shows the results of sensitivity analysis in which 2014-based HRRs (projected using 1971 to 2011 Census data) are applied to the 2016-based subnational population projections (SNPPs), should users wish to investigate the impact of the change of HRR methodology on the household projections.”

ONS is also “planning to publish a set of variant 2016-based household projections in which household formation rates for younger adults (those aged 25 to 44 years) are higher – provisionally scheduled for 3 December 2018. The purpose of this variant would be to illustrate the uncertainty in the projections around the future household formation patterns of this age group.”

You numbers people will know better than me whether this is also likely to have an appreciable effect on the numbers, at least in some areas.

But it does seem odd that in order to gauge the level of housing need, in order finally to look to put right the increasing shortage and unaffordability of housing, the starting point has been to look at the rate at which people have been able to form households in particular areas, during that very period where lack of supply and high prices have led to them sharing with others or not moving from the parental home – or, in areas of particularly high demand and/or restraint, not having a hope of living near their family or job (or the job that they would seek were suitable affordable accommodation available).

There is now the dilemma at a national level that echoes the dilemma that local plan inspectors have had to grapple with at an individual authority level: whether to accept a coarse, hypothetical approach that can be implemented with relative ease or whether to insist on getting to a “pure” statistical answer. The latter may in my view be unrealistic: we need targets, with consequences if they are not met and we need to avoid giving convenient excuses for delay. Those targets need to be based on the best evidence but are ultimately political choices where national leadership is essential – this is not a local issue where individual authorities can operate without regard for wider consequences.

I would be disappointed if the Government, faced in any event with the prospect of not meeting its current target (which conveniently is expressed in any event by reference to a time frame, the “mid-2020s“, that takes it past the next election), were to see this current position, which should be a surprise to no-one, as an excuse to retreat from the 300k commitment. But they won’t get an easy ride from some I’m sure.

Simon Ricketts, 29 September 2018

Personal views, et cetera