Planning matters blog | Lichfields

Planning matters

Our award winning blog gives a fresh perspective on the latest trends in planning and development.

The Liverpool City Region’s Spatial Development Strategy:  Show me the numbers!
Following approval by the Liverpool City Region Combined Authority [LCRCA], a public consultation on the Liverpool City Region [LCR] Spatial Development Strategy [SDS] commenced on 10th November and will run up to the 1st February 2021. This consultation represents the second public engagement on the SDS, following an initial consultation exercise in 2019.
This blog assesses the key content of the consultation, and explores whether the objectives of the LCRCA can realistically be achieved through its proposed strategy for housing and economic growth.

What is the LCR SDS?

The SDS will set out a spatial planning framework for the LCR for the next 15 years, covering the City of Liverpool and the Metropolitan Boroughs of Knowsley, St Helens, Sefton, Wirral and Halton.
The SDS will be different to the Greater Manchester Spatial Framework [GMSF] in that it will not allocate housing and employment sites throughout the region and will not make changes to Green Belt boundaries. In the LCR, these policies will be contained within the development plans for the constituent local authorities.
Based on the recent struggles experienced by the Greater Manchester Combined Authority in adopting the GMSF (see my colleague Brian O’Connor’s blogs on this topic[1]), this key difference may lead to a quicker adoption of the SDS – but does it really harness the huge potential of the City Region?

Purpose of the Current Consultation

It is encouraging to see the SDS progressing and taking shape despite complications presented by the pandemic.
In terms of its content, the consultation is focused on the overall vision for the SDS, and is based around 5 key strategic objectives and policy areas (see Figure 1):
Figure 1: 5 Strategic Objectives of the SDS

Source: Liverpool City Region Combined Authority

These objectives are well-intentioned starting points from which to develop detailed policies.  The LCRCA is obligated to address key themes such as climate change and health and well-being, and has also sought to pursue an inclusive growth strategy alongside this with a clear focus on promoting social value and creating high-skilled, quality employment across the City Region. 
There is significant merit in this approach, which if addressed effectively alongside an ambitious plan for housing and economic growth, will benefit both current and future generations living and working within the LCR.   
However, my concern with the LCR is not necessarily what it is saying at this stage - which are generally high level aspirations that in many cases are difficult to disagree with - but what it remains silent on.  There is next to no detail on what will ultimately be the most crucial (and most controversial) aspects of the SDS, namely the scale of housing and employment need and its spatial distribution across the LCR. 
Although this is expected to be published in the next round of consultation in Summer 2021, it is difficult to be too enthusiastic about the latest draft without understanding the direction of travel that its growth agenda will ultimately take.
It is acknowledged that the LCR had sought to wait for the outcome of the Standard Method review, though question marks remain over the general approach being pursued by the Combined Authority.

Scaled Down Ambitions?

In the context of the Government’s aim to try and ‘level up’ the north, there is a considerable opportunity for the LCR to take a leading role for growth and set ambitious housing and employment targets which go above and beyond.
However, the LCR will not be reviewing or releasing Green Belt through the SDS, and will instead pursue a ‘brownfield first’ approach to development.  Targeting brownfield land first signifies a policy compliant approach which ties in with Government objectives – though it arguably does not represent an ambitious ‘pro-growth’ plan.
It is widely acknowledged within the industry that there are significant viability issues associated with developing brownfield land within the City Region, and the LCRCA has itself acknowledged this by seeking significant levels of funding from Government to unlock these sites for development.
However, there is currently no indication as to how much funding the LCR will be receiving, and there are obvious question marks as to whether the amount due to be handed down will enable the LCR to fully address the scale of the viability issue.
Furthermore, the Standard Method 2.0 will lift the housing numbers for Liverpool City by over 35% (as explored below), and even more land in the urban area will therefore be required to accommodate this hugely increased need.  

Impact of the Standard Method 2.0

The Government launched the new Standard Method for local housing need on 6th August 2020.  However, the Government revised its approach and issued further updates to the Standard Method on 16th December, simply reverting back to the method it introduced in 2018, but with a modification to top up numbers in the 20 largest cities and urban areas by 35%[2].
This 'cities and urban centre uplift' of 35% applies to the City of Liverpool, which results in an increased need of almost 545 dwellings per year from the previous Standard Method figure (see effect of the uplift in Table 1 below).

Source: Planning matters: Mangling the mutant: change to the standard method for local housing need

The uplift represents a reduction on recent delivery (2017-2020) of 397 dwellings per year, which on face value would suggest that accommodating this increased need may not be an issue, as they have recently been delivering far in excess. 
However, the uplift is expected to be met by the cities and urban areas themselves rather than the surrounding areas, with brownfield and other under-utilised urban sites prioritised[3].  For the City of Liverpool this increase will predominantly need to be met on land within the urban area.  With brownfield land already in scarce supply, this could create problems further into the next plan period.
It will be interesting to see whether this uplift influences the proposed approach being taken by the LCR, or if they continue along the same path regardless.

Where will the houses go?

The factors outlined above leads me to one main question:  
  • How does the LCR seek to tackle deprivation across the region and pursue objectives outlined in the current consultation (such as inclusive growth and achieving social value) and yet rely solely on delivering brownfield sites, the majority of which will only be viable with significant funding from Government?
It is unrealistic to consider that a ‘brownfield first’ approach will provide even the bare minimum of land required, particularly with the additional 35% uplift also applicable in Liverpool. 
Furthermore, delivering housing solely on brownfield land in the urban area is likely to result in the delivery of predominantly higher density development (i.e. apartments).  Over the last twenty years, the majority of new housing delivery in Liverpool City (some 90%) has taken the form of flats.
A continuation of this approach neglects a clear need for a wider mix of market and affordable housing in the LCR, particularly the delivery of homes with gardens or outdoor amenity space.  The demand for traditional family homes with gardens is also likely to have increased as a result of the pandemic as people reflect on their living environments. 
It is likely that the LCRCA will need to do 2 things in order to address this and achieve its overall vision and objectives:
  1. Balance the ‘brownfield first’ objective by identifying additional sources of land, such as Green Belt.
  2. Pursue an arrangement to distribute any unmet need across the City Region through the Duty to Cooperate.
Based on evidence from around the country (including Greater Manchester), distributing any unmet need across constituent authorities has proven to be a painstaking process, and is rarely completely successful when numerous local authorities are involved dealing with large housing numbers within complex urban areas.
Green Belt release will obviously be met with widespread objection.  
The LCRCA may therefore view these options as undesirable, but could be left with no viable alternative.  Clear answers on this issue will need to be provided by the Combined Authority through the next consultation.   

Final thoughts

Preparation of an ambitious, ‘pro-growth’ spatial plan presents a significant opportunity for the LCRCA to take a leading role for growth in the North West, helping to deliver the Government’s levelling up agenda and tackling the deprivation experienced across the City Region. 
This consultation provides a (tentative) first step on this path providing very limited detail on key issues, but does identify a number of important high level objectives centred around achieving inclusive growth, promoting social value and responding positively to health and well-being in light of the COVID-19 pandemic. 
However, looking ahead, the Combined Authority must seek to do more than just provide the bare minimum in terms of housing and economic growth in order to realise its objectives.
One only has to look down the East Lancs Road to see an example of a cautionary tale in spatial plan preparation, with the GMSF failing in its ambitions for achieving aspirational growth for the Greater Manchester sub-region. 
Preparation of the framework has been plagued by mixed messages from politicians, a suppression of growth needs despite all available evidence, and an overriding reluctance to release Green Belt land.  This has led to consistent infighting amongst constituent authorities, considerable delays and ultimately a failure of the plan making process.
It is hoped that the LCR takes note of this and seeks to avoid the same pitfalls and failures moving forwards.  The next engagement is key to identifying ambitious housing and employment land targets – and perhaps an entirely different spatial approach – in order to shape the SDS into a positive and transformational spatial plan for the City Region.

[1] Planning matters: The three certainties in life: death, taxes and delays to the GMSF | Planning matter: GMSF 2020 in a nutshell[2] Planning matters: Mangling the mutant: change to the standard method for local housing need[3] PPG Paragraph: 035 Reference ID: 2a-035-20201216

Image credit: Neil Martin on Unsplash


Round and round in (almost) circles – initial thoughts from the North East on the new new new (!) Standard Method
The issue of housing need and the number of homes being planned for is really important and it’s great to see it getting more airtime and column inches in the mainstream media. But has this led to yet another kneejerk reaction that will result in harmful outcomes for the North East?
When reading the news of the Government’s latest proposals for the Standard Method, I was reminded of an episode of The Thick of It where beleaguered MP, Nicola Murray, pleads “That WAS a U-turn! If I do another U-turn it’s an O-turn.”
The latest iteration of the Standard Method, which has been causing consternation (albeit for different reasons) amongst planners, developers, MPs and the general public since its proposal in 2017, will largely return to the approach suggested previously, with a single modification that falls considerably short of those which its various critics advocated during the recent consultation.
As set out in Lichfields’ recent blog, the Government has now announced that the Standard Method will largely remain that which was first introduced in 2017. The only difference is that an uplift of 35% is applied to the 20 largest cities across England. For the vast majority of LPAs, including 65 of the 72 LPAs in the North, there will be no change in their housing need figure. As a result, it is hard not to feel that a great deal of time and effort has been expended to arrive back at somewhere very close to where we started out over three years ago – and there was broad consensus that that approach wasn’t fit for purpose!

How does the Standard Method work and why is this a problem in the North?

The formula which underpins the new (SM3 - the third and what now seems likely to be the final) version of the Standard Method uses the 2014-based household projections to identify a demographic baseline for each local authority (LPA), which is then uplifted to address local affordability and is finally capped (if needed) based on the age of the LPA’s Local Plan. The ‘cities and urban centres uplift’ is then applied to this figure.
The problems (particularly for the North) with basing the Standard Method on the household projections, has been extensively discussed by Lichfields. The projections are based on historically low population growth which was followed by suppressed household formation rates experienced during the 2008 recession. As a result of the projections being based on past trends, these are perpetuated in future projections. This is acute in the North, where the recession had a particularly significant impact. Given that the newest version of the formula is, for most LPAs, unchanged, it is unsurprising that these issues remain. The increased age of the projections still being used in the SM only compounds these problems.
As a result of the artificially and excessively low baseline, the affordability uplift is largely irrelevant for most northern LPAs, where affordability ratios are typically lower than in the South of England. The third stage of capping the resulting Standard Method figure is irrelevant in the North, as the Standard Method outputs are lower than housing requirements set out in Local Plans.

An opportunity missed?

SM3 results in an overall national figure of 297,600, which is closer to, but still below, the Government’s target of 300,000 new homes each year. It is also significantly less than the figure of 337,300 dwellings per annum generated by the version of the formula consulted on in August 2020 (SM2). The reason why that figure was so high was to ensure that even after some LPAs had justified the use of a housing requirement lower than their SM2 figure, the 300,000 home target could still be achieved.
The difference between the two methods is stark in the North; SM3 results in a figure of 47,500 dpa, higher than the figure of 43,300 dpa generated by SM1 (the current version of the Standard Method), but significantly less than the 49,800 dpa identified by SM2. More significantly, and worryingly, the SM3 figure is over 20% less than the average number of homes actually delivered across the North in each of the past three years - 59,600 dpa.
Figure 1 Comparison of Standard Method approaches for the North

Source: Lichfields

In the North East, the discrepancy between SM3 and past delivery levels is even greater; SM3 results in a total of 6,625 dpa, compared to the average delivery levels of 9,815 dpa, a decrease of 32%. Indeed, SM3 exceeds past delivery levels in only two of the 12 North East local authorities (Gateshead and South Tyneside), even with Newcastle’s ‘cities and urban centres’ uplift.
Table 1 Comparison between original Standard Method, August and December proposals and past delivery

Source: Lichfields (Figures correct as of Dec 2020)

SM2 was considered a moderate improvement on the original approach when applied in the North East (although a number of issues remained unaddressed). The major difference was that the revised approach used the higher of the 2018-based projections or 0.5% of existing stock as the baseline. As a result, the proposed figure across the North East was significantly closer to past delivery rates than when projections alone are used (as in SM1 and SM3). 
Additionally, a stock-based approach provides a much more stable method to identifying a baseline position, as it is based on the number of existing homes in an area which does not experience the significant fluctuations observed through projections, which are updated every two years.
Finally, SM3 reverts to using the 2014-based projections, despite the fact that two sets of projections have been released since. In their rationale for retaining the current (SM1) approach, the Government state that although use of the 2018-based projections has been carefully considered, “due to the substantial change in the distribution of housing need that would arise as a result, in the interests of stability for local planning and for local communities” the 2014-based projections should be used instead[1]. This approach seems counter-intuitive given the importance of using up-to-date evidence, including within the Standard Method itself (affordability ratios) and does not seem like a long-term solution as we move further away from 2014. In the North it causes decline rather than stability.

20’s plenty…or is it?

As shown in Table 1, in the North East only Newcastle sees a difference in SM3 when compared with SM1. For every other LPA, the Standard Method is back where it started, with all the associated problems. This is because only Newcastle is within the 20 cities to which the 35% cities uplift is applied. Looking more broadly, seven (Newcastle, Manchester, Liverpool, Leeds, Bradford, Sheffield and Hull) of the 20 cities are found within the North.
The uplift is only applied to the LPAs which contain the largest proportion of the population for each of the 20 cities identified (with the exception of London, where an uplift is applied to all Boroughs). This approach is problematic for a number of reasons, as discussed in my colleague Harry’s blog. Specifically in the North East, Newcastle is part of a much larger functional economic and market area that extends into Gateshead, which shares a local plan with Newcastle, and North Tyneside. Both areas play key roles in supporting the wider city. However, under the proposed method, these authorities will receive no uplift to their housing need figure.
Although Newcastle appears able to accommodate the entirety of the uplift, concerns have been raised previously about the proportion of housing delivered in Newcastle that is student accommodation and city centre apartments compared to family housing.
It is also unclear why the Government has chosen 20 cities and a 35% uplift. At face value, both would seem to be arbitrary figures. Why not apply a lower percentage uplift to a larger number of cities, which would help to ensure figures remained deliverable, whilst maintaining the Government’s aspiration to direct more growth to cities and urban areas? This might have the added benefit of directing a greater proportion of the national housing need to cities in the North, supporting the Government’s levelling up agenda.
Finally, the Government’s strategy behind the SM3 is that the urban centres are the most sustainable locations for large amounts of new housing, they have the largest supply of brownfield land and often the most acute affordability problems. That appears laudable in theory but, in reality, there could be problems:
  • Is there enough brownfield land to meet these needs? Is it in the right locations? Is it suitable for the type of housing that is needed? Can it be developed viably? If plenty of suitable, viable and available brownfield land exists, why has it not already been developed?

  • 14 of the 20 cities are constrained by Green Belt[2] or Metropolitan Open Land. Newcastle took the bold decision in their Core Strategy to release land from their Green Belt which has supported their recent healthy supply and balanced the city centre student and apartment accommodation with family housing.

  • Can the physical and social infrastructure cope with this additional concentration of demand?

  • Will there be sufficient supply to address the affordability in other areas?

  • Will there be sufficient supply to address the other reasons why more housing is needed? In the North these are often more significant than affordability

One size simply doesn’t fit all

One of the key criticisms levelled during the consultation on SM2 in August 2020 was that imposing centralised local housing need figures, dictated by national Government, would significantly weaken local democracy by taking decision-making away from local people and Councils.
Further criticisms highlighted the apparently arbitrary inputs to the formula. It was also stressed that reliance on a single formula was no substitute for local knowledge and expertise taking into account constraints and opportunities and does little to address the vast range of housing challenges and local strategies in different areas of the country. In the North East, many discussions focused on the continued absence of an economic uplift factor within the formula, reflecting the importance of providing sufficient quality and choice of housing to support the North’s economic aspirations by attracting and retaining young people.
SM3 does nothing to address these problems. It still only takes account of a very narrow range of factors (if anything the removal of a stock component is a backwards step for the North East). It focuses solely on affordability, which, though a key factor, is just one of a number of challenges that drive housing need and, particularly in the North, fails to recognise other factors which are at least as important. It applies a one size fits all approach and imposes a housing need figure on local Councils. It uses arbitrary inputs and, indeed, has increased these. Lastly, far from ‘levelling up’, it continues to funnel housing development towards London and the South East, at the expense of the North East.
After three attempts, is it time to accept that local housing needs simply cannot be calculated using a simple national formula? A broader debate is needed to consider alternative approaches that recognise the importance of this country’s rich local diversity and actually facilitates ‘levelling up’. 

[1] Government response to the local housing need proposals in “Changes to the current planning system”

[2] Local authority green belt statistics for England: 2019 to 2020#planoraks: Well, now we *really* need to talk about the Green Belt