Standard Method RIP. The writing was on the wall during the summer Conservative leadership campaign when both Liz Truss
[1] and Rishi Sunak
[2] argued against the idea of “top down”, “Whitehall-inspired” and, famously, “Stalinist” housing targets.
Change was seemingly affirmed on 8
th September when Simon Clarke, the new Secretary of State said
[3]:
“We need to move away from the culture of top-down housing targets which have done so much to poison the relationship between individual communities and government on the question of how we build the houses that we need.”
In truth, the Standard Method has been in purgatory for months; a host of local planning authorities had cited its expected demise in deciding to abandon plan making
[4] contributing to a situation where
59% of the country does not have an up-to-date local plan, and with no sense that Government would intervene to deliver on its December 2023 deadline. This has had significant adverse economic costs (our
analysis of eight abandoned local plans found that 69K homes would be lost, costing the economy £1.9billion of economic output (GVA) annually.
Housing delivery is now heading in the wrong direction
[5]:
- Starts on site (April to June 2022) down 15% on the same period last year
- Net additional dwellings in 2020-21 down 11% on 2019-20
- 280,000 homes granted permission in the year to June 2022, down 16% from the 334,000 in the same period last year.
Capital Economics is now forecasting a further fall in starts of 38% to just 110,000 in 2023 and 2024, before a small recovery to 130,000 in 2025
[6]. This would be a function of the current economic-crisis (on sites already with permission that stall or build out more slowly), but the reduced bank of permissions, particularly in the stronger markets
[7], means this market cycle fall starts from a lower base.
In the context of current economic headwinds, the Guardian
[8] was briefed on the contents of a new planning policy “
reset”:
"Government sources also said the target of building 300,000 new homes a year by the mid-2020s had quietly been abandoned. They said it was unlikely to be officially abolished, as it had been a 2019 manifesto pledge, even though Truss hit out over the summer at “Soviet-style targets”.
But blue wall Tory MPs in the south-east of England are pressing for a firm commitment that the nationally imposed housing target will be dropped, and are wary of further planning reforms that would lead to a significant increase in development.
They are seeking to ensure local authorities maintain a “master veto” over developments before pledging their support to Clarke’s plan. This would keep any drastic new developments to areas that want them – but potentially limit the plans to turbocharge housing numbers."
Despite this, the Times reports that the 'reset' is
not intended to reduce new supply
[9] but "
to boost house-building and drive economic growth."But how? In this blog I look at what the removal of the Standard Method might mean for housing delivery, consider the role of housing targets in plan making, and provide a few concluding thoughts on factors that might be considered in shaping the detail of a new policy.
What will removal of the Standard Method mean for housing delivery?
The answer – obviously - depends on what, if anything, replaces it. And here there is no real clarity.
In her interview in the Telegraph
[10], the now Prime Minister was reported as saying:
“I want to abolish the top-down Whitehall-inspired Stalinist housing targets; I think that’s the wrong way to generate economic growth… The best way to generate economic growth is bottom up by creating those incentives for investment through the tax system, simplifying regulations.”
Ms Truss wants to amend Mr Johnson’s Levelling Up Bill to legislate for new low-tax “investment and building zones”. The centralised targets are a “Labour approach”, she says. “It’s not Conservative.”
The views of her Secretary of State were reported
[11] as:
“he wanted ‘to build more houses’, but do so ‘in the right way’, by ‘accelerating development of brownfield sites’ and ‘building beautifully’. He said: ‘We want to grow organic communities, not impose cardboard boxes across our shires. As with investment zones, local consent will sit at the heart of our plans.’
In comments made to the Times at the weekend, Clarke implied that greater incentives for local communities to accept development were likely to replace the compulsion for housing contained in the “top down” housing numbers. He told the Times that he wanted to “create incentives for residents to support development”. He said: “What I would like is to have a system … whereby if you’re a resident of X community there is something in it for you about a new settlement in your area.”
However, the specific incentives and simplified regulations are awaited and – due to difficulties with
“the detail” - proposals have been pushed back to November
[12].
In an indicator of possible thinking, the Government’s approach to fracking is reported to involve offering households
“up to £1,000 to approve provisional fracking in their area. The proposal being floated is for companies ... to go door-to-door to convince residents to green-light the move. Cash incentives could be offered, with exploratory drilling allowed to go ahead if more than 50 per cent of households in the local vicinity give their approval.”[13]. This gives new meaning to the old expression of ‘buying a permission’, and – were a similar approach to apply to housing schemes (of which, unlike with fracking, there are literally thousands every year) raises practical questions as to how this process would relate to the local plan making and development management process
[14]. Similar questions arose with the concept of Land Auctions
[15].
The Secretary of State is reportedly suggesting further permitted development (PD) changes
[16] and a relaxation of Green Belt rules for brownfield development
[17]. The evidence for what this will yield is not yet apparent, but our
analysis in May 2014 suggested brownfield sites in the Green Belt had a capacity of just 23,000 homes. On all brownfield land, the maximum capacity of land on brownfield registers amounts to less than 93,000 homes a year even were every site viable, not all of it will deliver the homes with gardens that many families want, and it is not concentrated in areas where affordability pressures are greatest. The last attempt at a
brownfield-led planning policy resulted in annual net housing additions falling to 132,000.
Stepping back from the current policy maelstrom, the past 30 years tells us something about what life without the Standard Method could look like:
- Between 1991 – 2005 (pre-Barker[18]), policy twisted and turned, but an overarching characteristic was that, although housing need and targets were relevant to plan making, they were ‘soft’: not defined by the crisis of affordability, mostly based on unvarnished household projections, shaped by the 60% target for use of brownfield land, and with less focus on deliverability. Housing output suffered accordingly. Annual stock growth was around 0.75%. In the period 1997 – 2003 when ‘brownfield first’ was at its zenith, it was lower still. Across the whole period, supply was on average 150,000 - 160,000 homes per annum, undershooting the official projections of household growth in that period.
- After 2005 (post Barker), the focus turned to how supply could address affordability and whilst the targets were hotly debated, there was – particularly with the NPPF - increased emphasis on meeting need, on Green Belt reviews in strategic and local plans, and on a deliverable supply of land. The annual stock growth in that 15-year period was around 0.85%. Strip out the five years of the financial crisis and the annual output was 0.9%. In the ‘peak’ years of the 2012 NPPF (with the ‘tilted balance’ given force and advent of expanded PD rights) and it was just shy of 1%, securing 230,000 - 240,000 per annum.
This tells us that output is driven not just by housing need and targets, but by how these sit as part of a wider policy environment, including on plan making and delivery (and of course, economic cycle).
If the replacement for the Standard Method is a vacuum or some kind of ‘soft’ target, it will – despite all the talk of incentives and de-regulation – likely lead to a much-reduced level of housing provision.
Why? The current (2018-based) household projections envisage formation of just 164,000 new households each year (baking in trends of household suppression and assumed lower migration). In plan making, ONS local projections would likely be an influence for most LPAs. Whilst some might seek to exceed their figure
[19], absent clear guidance on addressing market signals, affordable housing need or economic growth, most would see it as a maximum to then be moderated by perceived or actual constraints. If there was not an adequate mechanism for Green Belt review or addressing unmet need in our under-bounded, constrained big cities (Birmingham, London, urban South Hampshire, Leicester, etc) then output would be suppressed. If the ‘tilted balance’ policy was not applied with force to areas with out of date local plans, we can reasonably expect the national total would fall well below 160K, perhaps down to 140K.
Quite simply, one could easily predict no real bounce back from Capital Economics’ predicted economic downturn. Any boost from de-regulation or permitted development in a world without clear targets might simply see LPAs reduce the scale of their planned allocations as they would say they were no longer 'needed'.
At the most optimistic, one might see output in a 'no-target' world go as high as, say, 185K if there was a major funding and delivery effort to support brownfield regeneration akin to the early 2000s (and a strong market for the particular form of housing it provides), a permissive approach to other forms of housing development that was treated as windfalls and not to be offset against other planned provision, and a strong commitment to plan making.
Reflecting on this uncertain picture, it is worth turning to why housing targets have a role in plan making more generally.
The role of housing targets
Most planning systems involve some quantification of how much development is needed or desired in an area. This is because it helps the decision maker with judgements over how the impacts and benefits of development are balanced, how large developments should be, how many should be provided and where, what infrastructure is needed to support them, and if they warrant public sector investment. Without an assessment of need and obligation to set targets, experience tells us that many Local Planning Authorities who are, at best, ambivalent about housing delivery, will simply stop new homes being provided.
A good example of why ‘need’ is relevant comes, ironically, from the Government's Investment Zone Expression of Interest process
[20]. In question 2.5 on residential sites, bidders are asked to
“set out here the estimated impact of the site over 10 years. What evidence is there that the site will drive additional or accelerated housing supply?”. Among the metrics requested is “
the level of unmet housing need currently in your MCA/UTLA/Freeport”. Right now, the level of unmet need will be based on, you guessed it, the Standard Method.
A recent attempt to construct an intellectually coherent alternative to the use of housing targets – but not at the expense of addressing the housing crisis - is the prospectus advocated by the Policy Exchange in its 2020 paper – Rethinking the Planning System for the 21st Century
[21] which advocated:
“Calculations of economic and housing ‘need’ should no longer be used (or required) to allocate land uses in a local area.
The supply of new homes, offices and other types of use should no longer be capped by local planning authorities in local plans or by site allocations.
Zonal designations should be separate from any concept of ‘need’. Instead, they should be dependent on metrics that determine whether land has good access potential, whether new development would cause environmental disturbance and the potential for an existing built development to expand.”
In essence, under this approach, rationing of land would not be based on releasing only that deemed necessary to meet a quantified level of need, but simply on whether the land was, per se, deemed suitable for development. The implications of this are readily apparent when one looks at a typical strategic housing land availability assessment (SHLAA) and sees how the housing capacity of sites considered “suitable” is typically greater than what is required to meet an area's assessed need over a 15-year period.
Whilst the Policy Exchange approach seems politically unlikely, it is possible that those who sought abolition of the Standard Method to cut housing supply may in time reflect that they should be careful what they wish for
[22].
Where do we go from here?
If a need and target-based approach is to remain in some form (and it is an 'if'), what factors need to be considered in arriving at a new policy approach? How should need be derived? At what spatial level should judgements be made over how it is met? And how far should national policy expect need to be met through plan making and decision taking? Some preliminary thoughts to conclude:
- History tells us that Government has always faced political difficulties when it was seen to ‘own’ specific 'top down' housing target figures[23].
- The political reality (at least for now) might be some reversion to a method where plan makers generate their own estimate of need, based on evidence, with clear parameters for the relevant factors to take into account, the agreed data sources, and a much-streamlined approach aligned to the digitalisation of the planning system. An estimate of need looking beyond official household projections (as currently formulated) is an imperative if the housing crisis is to be overcome and the approach needs to be stable and predictable.
- A new approach to housing need must be accompanied by a reinvigoration of the evidential justification for housing supply as part of the solution to the housing crisis. Whether we need a headline national target is moot, but the role – identified by Barker and the NHPAU - of supply in addressing affordability, especially in the least affordable areas, would benefit from a refresh. This also can remind us that most comparable European countries - large and small, crowded or sparsely populated - regularly build many more homes per capita each year and are mostly the better for it.
- The NPPF 2012 was based on meeting locally-derived Objectively Assessed Need (OAN). Its political genius – initially - was that Government was not directly implicated in either need or local targets, whilst setting a real expectation that whatever figure arose should be met through plan making and the requirement for a five year housing land supply. To some extent, it worked. However, it suffered from the length of time it took for local plan-making (often held back by hotly contested calculations of OAN), and there was local push back to on how speculative housing applications filled the vacuum where plans were supposed to be[24].
- Areas will likely need to retain – as now – the ability to determine how much of their need they can accommodate based on the relevant factors in their area (under the 'tilted balance' or similar), but this ought to be governed by a clear expectation that needs are met across housing market areas with an effective governance mechanism for achieving that.
- The concept of need and targets is only as good as the ability of the system to generate positive plan making; this means plans formulated at the right spatial scale to address strategic planning issues (duty to cooperate issues, constrained urban areas and the like), a streamlining of the plan-making system and its outputs to increase productivity (as suggested by the LURB), digitalisation of the process, better resourcing, and the right mix of carrots and stick for plan making bodies, including a political drive.
- Targets must be accompanied by an effective approach to deliverability, so strategies are achieved by a realistic supply of sites, be that through five year housing land supply and/or the proper scrutiny of housing trajectories in local plan making.
- It is a false dichotomy to assume that planning focused on boosting supply must be at the expense of wider policy objectives around quality, design, place making, infrastructure delivery and securing net zero carbon, all of which can be part of the framework.
As we reflect on the short life of the Standard Method, proper attention must now turn to what should replace it. With political will, we have the planning tools available to deliver a more effective approach to planning for the homes we need, but prolonged uncertainty or a target vacuum will make it much more difficult for supply to bounce back from the inevitable downturn.
[1] Widely reported, but as set out in Housing Digital– see here
[2] In the pages of the Daily Telegraph - see here (£)
[3] In an interview on LBC – see here
[4] The tale of woe is well summarised by Zack Simons here and Simon Ricketts here
[5] As shown in the DLUHC September 2022 publication Housing supply: indicators of new supply, England: April to June 2022
[6] As reported in Building – see here
[7] See Figure 4 on Page 14 of Taking Stock: The geography of housing need, permissions and completions
[8] From the Guardian – see here
[9] From the Times - See here (£)
[10] From the Telegraph – see here (£)
[11] In BD Online – see here
[12] As reported by the Times – see here
[13] In the Telegraph – see here
[14] See, for example, how it would square with the provisions set out in the PPG ID: 21b-011-20140612 which says that: “Whether or not a ‘local finance consideration’ is material to a particular decision will depend on whether it could help to make the development acceptable in planning terms. It would not be appropriate to make a decision based on the potential for the development to raise money for a local authority or other government body.”
[15] See Planning Resource article here
[16] Government figures suggest PD rights delivered just under 14,500 homes in 2020-21, down from 19,500 in 2018-19 – see here
[17] Presumably relaxing NPPF para 159 (g) in which, in order to be “appropriate” in the Green Belt, limited infilling or the partial or complete redevelopment of previously developed land must “not have a greater impact on the openness of the Green Belt than the existing development” or “not cause substantial harm to the openness of the Green Belt, where the development would re-use previously developed land and contribute to meeting an identified affordable housing need within the area of the local planning authority.”
[18] Kate Barker Review of Housing Supply (2004)
[19] In 2017, our five year review of plan making found that local authorities with adopted plans (excluding Birmingham and London) exceeded the then household projections for their area by 22%.
[20] The Investment Zone Expression of Interest is here
[21] Policy Exchange – Rethinking the Planning System for the 21st Century
[22] Especially with Mr Airey (the author of the document) recently appointed as special advisor at DLUHC – see here
[23] See, for example, the push back to the NHPAU Supply Ranges of the late 2000s, the hostility to setting of housing targets through RSS/RS, the debacle over the mutant algorithm, the prior difficulties the Government had updating the Standard Method with new household projections, and the rejection of the 2020 White Paper’s suggestion of top down ‘binding’ targets
[24] The problem was diagnosed by the Local Plans Expert Group
