In many fields of enterprise, the nuances and differences between local authorities are to be celebrated. While a weekly bin collection is favoured in one authority, a fortnightly bin collection is welcomed in others; different local cultures prevail. Well, perhaps not when it comes to bin collections. When it comes to assessing local housing need, however, the Government has tired of the ‘little platoons’ and yearns for nationwide homogenisation.
The pretext for the Government’s proposal of a standard method for calculating local authorities’ housing need (which would be enshrined within national planning policy) is the perception that the current approach is costly, time-consuming and lacks transparency. Instead, the Government has set out a three-step approach which would be used by local authorities to set housing requirements in their area.
The first step retains the fundamental tenet of the existing approach; an assessment of housing need founded on demographic change. It involves setting the demographic baseline which is proposed to be the annual average household growth over a ten-year period in each local authority area. The second step is to adjust this figure to take into account market signals (the price of homes); the Government considers that this adjustment should be based on median affordability ratios which compare the median house prices to median earnings in a local authority area. In order to achieve projected housing need, the Government’s modelling proposes that each 1% increase in the ratio of house prices to earnings above 4 results in a 0.25% increase in need above projected housing growth; cue formula for adjustment and some worked examples for the less mathematically inclined. However, simplicity cannot come without complexity and the Government’s application of the standard approach in each local authority area has clearly produced some slightly alarming results (more diplomatically termed ‘a significant increase in the potential housing need’). As such, the third step involves the creation of an exception to the formulaic rule which is to cap the level of any increase according to the current status of any authority’s local plan at 40%2.
To accompany the consultation, the Government has published the housing need for each local authority using the proposed standard method on the basis of current data. This creates a total housing need across the country of 266,000 homes. When announcing the consultation to MPs, Sajid Javid (Secretary of State for Communities and Local Government) noted that, for almost half of the local authorities which the Government has data for, the new assessment of housing is within 20% either way of the authorities’ original estimates.
The consultation proposes transitional arrangements for the introduction of the new standard approach which differ according to the progress made by local authorities with their local plans. In brief, the standard approach should be used by local authorities whose plans are over five years old or by local authorities whose plans have not been submitted to the Secretary of State before the later of (i) 31 March 2018 and (ii) the publication of the revised NPPF.
Standardisation is coming; deviation from the new method will only be permitted in ‘compelling circumstances’.