A Perfect Storm

This site uses cookies, as explained in our cookie policy. By using this site, you agree to our use of cookies.

Privacy Policy

A Perfect Storm

The consequences of rapid change on plan-making in the West Midlands

The last three years have presented several fundamental challenges to the plan-led system in the West Midlands, and this perfect storm has had stark implications for plan coverage, housing and employment delivery and economic growth across the region.

Headline figures

 
 
The “planning system should be genuinely plan-led”, and “up-to-date plans should provide a positive vision for the future of each area; a framework for addressing housing needs and other economic, social and environmental priorities; and a platform for local people to shape their surroundings” we are told. A statement few, if any planners could disagree with.
 
And, on the face of it, plan-making is quite simple. Indeed, the recipe for it is clearly set out in the National Planning Policy Framework (2021) [NPPF] and supporting Planning Practice Guidance [PPG]. But as most planners will be aware, that surface-level simplicity is far from the truth.
 
Indeed, it is fair to say that the last few years have been choppy, both nationally and in the planning world. Uncertainty; a word at the forefront of most planning professionals' minds over the last few years – arising from the political machinations of successive Governments, Covid-19 and the marked increase in interest rates and construction costs – has had a profound impact on plan-making across the Country.
 
As a result, local planning authority [LPA] plan-making has taken quite the hit nationally, and importantly, in the West Midlands. To some, this is politically expedient, but for those interested in proper, sustainable and strategic planning, this is a concern. The consequences of this might not be immediately obvious, but there will be significant impacts nevertheless. Indeed, for a region that prides itself on its recent economic success and future growth aspirations, a plan-led system is critical. To this end, this Insight Focus seeks to quantify the costs of this perfect storm on immediate and long-term growth for the West Midlands.
 
 
  

West Midlands Plan Coverage

To meet the region's needs and effectively plan for the future, a suite of up-to-date[1] plans is required. So, what does the coverage of Local Plans look like across the region today? In simple terms, concerning. As of November 2023, only one-fifth of the 30 LPAs within the West Midlands have plans that are up-to-date and less than five years old. Nearly 60% of all plans within the West Midlands are already 7-10 years old. In essence, some 24 LPAs within the region do not have an up-to-date plan.
 
Plans should be reviewed every five years[2]; however, against a backdrop of taking c. 7 years to prepare a plan coupled with planning reform and proposed changes to the NPPF, plan preparation activity has significantly slowed, or in many instances completely paused. On the basis of these trends continuing, it is likely that by 2025 this patchwork of out-of-date plans in the West Midlands will significantly worsen. By the end of 2025, only two LPAs would have up-to-date plans, with 77% of LPAs having a plan that is between 7-10 years old.
 
Even if we assume that the Solihull and Shropshire Plans finally pass Examination, and the South Worcestershire Plan sails through its Examination in Public [EiP], this will still only take the coverage of up-to-date plans up to 7 LPAs – or 23% – which is only marginally higher than the current rate of up-to-date plans. Again, across the region, just over three-quarters of LPAs would not have an up-to-date plan. This potential patchwork coverage of up-to-date plans is fundamentally concerning and undermines the core principle of delivering sustainable development in the region. 
 

RETURN TO CONTENTS

 

 

A raft of delays

Following the introduction of the Levelling Up and Regeneration Bill [LURB], which is now an Act, and uncertainties resulting from political commentary on housing targets and the Duty to Cooperate [DtC], a raft of local plans were “withdrawn, ‘shelved’, stalled, or are not taking on the feedback of local plan inspectors” [3]. The draft NPPF in December 2022 then reignited another hiatus in plan-making, with many LPAs thinking sharply about advancing plans under the current NPPF.
 
Whilst the HBF has reported that c.62 plans nationally have been delayed[4], if you look at plan-making in the West Midlands this figure is likely much higher. In August 2022, Bromsgrove delayed its Review[5]. In October 2022 the Black Country Authorities[6] [BCA] emerging joint Plan collapsed following Dudley’s withdrawal[7] which prompted each LPA to “go it alone”. In March 2023 Solihull paused its EiP to await the updates to the NPPF[8]. In September 2023, Lichfield announced that it withdrew its Local Plan Review from EiP[9] , which came after a 9-12 month delay to the EiP[10] . Albeit, it should be noted that, much like the riders of Rohan on the first light of the fifth day, some LPAs are boldly charging forward (e.g., South Worcestershire).
 
Nevertheless, of the 30 LPAs within the West Midlands, 24 are currently in the process of undertaking Local Plan Reviews. Redditch and Tamworth[11] have not even started a review, despite their plans being, or nearly being, out-of-date. The final four authorities in the West Midlands have recently adopted their Local Plans.
 
Of the 24 undertaking reviews, over half are currently at Regulation 18, four are at Regulation 19 and six are at EiP (albeit, Lichfield withdrew its plan from EiP).
 
In terms of delays to plan-making, notably, five authorities have ‘officially’[12] announced pauses to plan-making, whilst six have announced that they will either be starting the process again or going back a stage in plan-making. At least five more authorities have not ‘officially’ announced delays to their respective plans, but have missed timescales previously identified in Local Development Scheme timetables by some margin, suggesting that they are ‘unofficially’ delayed for various reasons. When taken together, 67% of the plans that are currently being prepared across the region have been delayed, in some instances by many years.
 
In essence, one of the consequences of planning reform uncertainties is that some 16 Local Plans are delayed in the West Midlands, with the plan-led system on the verge of not functioning at all within the region.
 

  

RETURN TO CONTENTS

 

 

The lost and the delayed

Based on the analysis previously set out, 18 LPAs within the region are, or at least should be, preparing plans. So what are the implications of this perfect storm on plan-making and delivery?
 
Delayed housing and employment allocations
Of the 18 authorities that have delayed the preparation of their Local Plans or should be reviewing their plans, only six draft plans were sufficiently far advanced to contain draft housing and employment land allocations – when accounting for the former joint BCA Review counting as one singular plan for four LPAs.
 
Obviously, given the intended rolling nature of plan preparation, to meet their identified needs, many of these plans housing land supplies factored in extant permissions and saved allocations from previous plans. This ensures that there is generally a pipeline of supply for some time, allowing new allocations to feed the supply – naturally – later on; whether the existing supply fully addresses housing and employment needs in that interim period is arguably another question.
 
Nevertheless, whilst some of these draft allocations will come forward in the future (although not in all cases – for example, where draft allocations comprise of land that is currently within the Green Belt and which might therefore not come forward), their formal allocation and delivery will be delayed. That means that they will take longer to build out, thereby reducing the need for additional allocations in future plan reviews – all in all reducing the overall long-term delivery of housing.
 
So, within the six delayed draft plans, when accounting for extant supply, some c.55,000 houses on draft-allocated housing land, and 730 ha of draft-allocated employment land, is being held up from delivery across the region. It is important to note that this housing and employment growth is not ‘lost’, but rather delayed. Whilst some of these allocations may be de-allocated as a part of some of these plans revisiting housing needs and spatial strategies due to going back a stage or indeed starting again, it is fair to assume that most of these allocations will come forward at some point in the next few years. However, the implications of these delays are quite striking.
 
Indeed, at an average of 2.4 people per household in the West Midlands according to the 2021 Census, this equates to enough new homes for over 130,000 people, and represents delayed capital investment of over £8 billion based on average build costs[13]. Similarly, applying a standard 40% plot ratio as used in employment land evidence, 729 ha becomes over 9 million sqm of employment floorspace which has got stuck in the system, enough for tens of thousands of new jobs. In fact, if we apply the existing split of office/B2/B8 floorspace across the West Midlands, which is roughly 15%/70%/15%[14], and use standard employment densities, the potential employment which could be supported by these delayed allocations could be as high as 85,000 jobs.
  
 

RETURN TO CONTENTS

 

Lost housing delivery
Of course, some housing has been lost and not just delayed. Indeed, it could be argued that this housing is truly lost as the NPPF’s Standard Method [SM] does not factor in past undersupply and with plan periods being pushed back this is likely to omit delivery from these past years where undersupply has occurred.
 
As noted above, the uncertainties facing LPAs has had a pronounced impact on housebuilding across the West Midlands. But as demonstrated above, the delays to plan-making are likely to persist, and as a result, up-to-date plan coverage is not likely until at least 2025 given a fair wind. So, what are the impacts of this perfect storm on housing delivery in the West Midlands?
 
Looking at delivery rates between 2020 and 2022[15] , and future supply between 2023 and 2025[16] for each of the 17 authorities, we can build an understanding of how much housing the plan-led system has allowed to come forward for this five-year period. Drawing on the latest housing needs evidence, or SM where this isn’t available, we can then compare this supply with each area's housing needs to establish whether these needs have/will be addressed by 2025 given the ebb and flow of land supply[17].
 
Whilst some authorities have met their needs, at least seven LPAs will not meet their housing needs between 2020 and 2025 and we estimate that the number of lost homes equates to around 16,500 over the period 2020-2025. Again, at an average of 2.4 people per household, this equates to the under-delivery of new homes for 40,000 people in the West Midlands. It could be argued that these lost homes are being driven by the perennial issue of unmet housing needs within the region that are not being planned for, such as Birmingham’s emerging shortfall of around c.78,000 dwellings, the BCA’s now uncertain ‘emerging’ c.28,000 dwelling shortfall.
 
However, going back to the ‘lost’ housing delivery, when applying average per unit build costs for the West Midlands [18] indicates that this equates to over £2.5 billion in lost capital investment over a five-year period. Based on the number of workers supported by £1 million of investment in new housing as taken from Homes and Communities Agency guidance, building these 16,500 new homes over a five-year period would have supported an estimated c.7,600 FTE construction jobs per year, and a further c.8,100 indirect FTE jobs in the construction supply chain (based on NHF multipliers) [19]. Together these jobs would be worth around £1.4 billion in GVA in each year of construction[20].
 

RETURN TO CONTENTS
 
  

Summary

The West Midlands is one of the best-performing regions in the Country in terms of economic growth, with its £1.46 billion pound economy growing by almost 39% in the past ten years[21]. Between the 2021 and 2011 Census, the region’s population grew by 6.2%, which falls behind London and the south, but also behind the East Midlands and East of England. Over the same period, the average household size in the West Midlands has risen to 2.41, making its households the most crowed in the Country outside of London.
 
Clearly, the region is an attractive location to live, work, and build businesses in, but it may also not be reaching its full growth potential due to a sluggish approach to planning for new development.
 
The figures set out in this report are quite stark reading and emphasise the lost opportunities for the region both economically and in delivering homes to meet the needs of its population. Of course, not all of the fault lies at the foot of delayed plan-making, with a perfect storm in play over the last three years, it was always going to be quite challenging to deliver housing and employment land in these circumstances. However, had more up-to-date plans been in place, it is questionable whether the wider impacts on housing delivery would have been so acute, given that there would have been a greater supply to begin with and therefore the impact of delays or reduced delivery would have been less pronounced in totality.
 
Ultimately, what the above emphasises is the critical need for certainty within the plan-making system. Constant suggestions of root and branch reform to the plan-making system have reduced the coverage of up-to-date plans to an all-time low, with future reviews held in limbo until such time as LPAs feel confident in investing significant time and resources in preparing them. The consequences of this are that significant amounts of land for homes and employment land are stuck in the system, which holds up significant investments in the regional economy. Until we have calmer seas, the plan-making world will continue to be choppy, will continue to have all of the above negative consequences, and the West Midlands will be unable to reach its full economic potential.
 
 
 

Insight authors

Jon Kirby

Senior Director, Head of Office
VIEW PROFILE

Myles Wild-Smith

Associate Director
VIEW PROFILE

Alex Davies

Senior Economics Consultant
VIEW PROFILE

   

  

Our Birmingham team

Stephen Hollowood

Senior Director
VIEW PROFILE

Laurence Holmes

Planning Director
VIEW PROFILE

Janet Rowley

Associate Director
VIEW PROFILE

Laura Gaffney

Planner
VIEW PROFILE

Sam Gale

Planner
VIEW PROFILE

Max Sellers

Planner
VIEW PROFILE

Eleanor Inger

Office Manager
VIEW PROFILE

 
 
 
 
  

Footnotes

[1] ‘Up-to-date’ is used as a shorthand for strategic plans adopted less than five years ago and/or reviewed and found not to need updating.
[2] NPPF Paragraph 33
[3] https://lichfields.uk/blog/2022/april/26/counting-the-cost-of-delay-the-economic-impact-of-local-plan-delay-to-housing-delivery/
[4] https://www.hbf.co.uk/policy/planning-policy/delayed-local-plans/
[5] https://www.bromsgrove.gov.uk/council/policy-and-strategy/planning-policies-and-other-planning-information/bromsgrove-district-plan-review.aspx
[6] Comprising Dudley, Sandwell, Walsall and Wolverhampton
[7] https://www.dudley.gov.uk/news/dudley-will-go-it-alone-on-housing-and-employment-plan/
[8] https://www.solihull.gov.uk/EIP
[9] https://www.lichfielddc.gov.uk/planning-policy/local-plan-review
[10] Lichfield District Council, Inspectors’ response to the Council’s letters of 23 September 2022
[11] Tamworth did undertake an internal Review of their Local Plan in March 2020. However, this is not a full review of the adopted Local Plan Review.

[12] Where public statements have been made by the Council to advise that the Local Plan process has been paused or delayed for a stated reason.

[13] From the Build Cost Information Service [BCIS]

[14] CoStar (October 2023)
[15] Based on Net Completions (Table 122)
[16] Based on each LPA’s latest Five Year Housing Land Supply or Housing Trajectory
[17] To reflect the implications of Covid-19 lockdowns on delivery, we have reduced the housing requirement within the 2019/20 year by a month and within the 2020/21 period by four months – per the approach taken in the Housing Delivery Test.
[18] From the Build Cost Information Service [BCIS]
[19] NHF Local Economic Impact Calculator (LEIC): Methodology and assumptions (March 2022)
[20] Experian (July 2023)
[21] ONS (2023): Regional gross value added (balanced) by industry

 

Disclaimer

This publication has been written in general terms and cannot be relied on to cover specific situations. We recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication. Lichfields accepts no duty of care or liability for any loss occasioned to any person acting or refraining from acting as a result of any material in this publication. Lichfields is the trading name of Nathaniel Lichfield & Partners Limited. Registered in England, no.2778116

 

Subscribe

Receive our latest thinking direct to your inbox.

I want to receive…