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Stock right there: What does the new Standard Method mean for the West Midlands?
The new government has hit the ground running when it comes to changing the previous government’s policy approach to housing delivery. In this blog, I explore what these changes will mean for the West Midlands.
The introduction of the National Planning Policy Framework’s [NPPF] standard method [SM], and subsequent revision in December 2020 with the introduction of the 35% urban centres uplift, raised some practical issues for the delivery of housing across the West Midlands.
For many local planning authorities [LPAs], the current method generated housing need figures lower than the adopted Local Plan requirements, often suggesting fewer homes than historically built. The current method would increase the housing needs in the West Midlands by about 30% compared to the adopted plans, driven largely by Birmingham, Coventry and Wolverhampton being subject to the urban centres uplift, rather than the other LPA's needs increasing. However, there were also concerns in the region that relying on the 2014-based household projections was inappropriate (e.g. Coventry), but this will change as the proposed new SM moves away from this, towards a stock-based approach – we have set out a blog explaining the new SM in detail here.
 
   

The West Midland’s new standard method figures

What are the implications of the Government’s proposed new standard method for the West Midlands? Lichfields has examined the new local housing needs figures for all West Midlands LPAs under the proposed method, including average delivery rates over the past three years and compared these with the current method's figures. These are shown in the map below:
 
Percentage change between current SM and proposed SM

Source: Lichfields analysis

 
Most interestingly, 90% of West Midlands authorities will see an increase in their Local Housing Need [LHN] figure under the new method; save for Birmingham, Sandwell, and Coventry who will see a decrease due to the removal of the 35% urban centres uplift. Despite these decreases, the West Midlands would be expected to deliver 31,751 dwellings per annum, a c.28% increase compared to the current method, amounting to a 47% boost over recent delivery levels.
The chart below shows the spatial distribution of housing needs across the region compared to the current method. The new method significantly impacts rural LPAs adjoining Birmingham, Coventry, and Worcester, especially along the southern edge. The Black Country also sees a notable increase, with Dudley’s housing needs rising by 143%. Most authorities would see increases between 50%-99% and 100%-150%, whilst five authorities would experience a rise exceeding 150%, a marked increase.
  
West Midlands Comparison of Housing Needs

Source: Lichfields analysis

 

A sub-regional challenge

The main conurbations of Birmingham, the Black Country and Coventry have experienced longstanding issues arising from their tightly drawn boundaries, which when coupled with Green Belt constraints, has led to issues of unmet housing needs across their respective housing market areas [HMAs]. This was further compounded by the 35% urban centres uplift. Looking more specifically at these issues under the new SM, the proposed new method will lead to some significant implications for plan-making over the next two to three years.
1. Greater Birmingham and Black Country
The housing needs of the Greater Birmingham and Black Country HMA[1] [GBBCHMA] have long been a subject of debate, which has largely revolved around Birmingham and the Black Country being unable to meet their housing needs. This challenge looks set to continue. The chart below compares these requirements across the GBBCHMA’s.
The new SM would result in Birmingham’s needs being reduced by c.31% compared to the current SM, which is likely to reduce their emerging shortfall of c.46,000 dwellings. In contrast, except for Sandwell, the Black Country authorities [BCAs] would see their needs increase – even with the removal of the urban centres uplift from Wolverhampton. This suggests that the BCA’s emerging unmet housing needs up to 2038 will persist and remain a critical issue for the GBBCHMA authorities to grapple with, alongside their own needs, through their current Local Plan Reviews.
Similar to the regional trend, a majority of the GBBCHMA would see significant increases in the number of houses they should be planning for under the new proposed SM. The most significant increases are expected in South Staffordshire, Tamworth and Redditch. Given the tightly bound nature of the latter LPAs, it is very possible that they will struggle to meet these needs in full, suggesting that other LPAs within the GBBCHMA may also report unmet housing needs as they progress their Local Plans.
 
GBBCHMA Comparison of Housing Needs

Source: Lichfields analysis

 
2. Coventry-Warwickshire
Across the five authorities which make up the Coventry-Warwickshire Housing Market Area [C&WHMA],[2] LHN figures would significantly increase under the proposed new SM. In absolute terms, Warwick and Stratford-on-Avon would see the most dramatic increases when compared to the current method. However, whilst the proposed new SM for Warwick would be well in excess of the level of delivery seen over the past three years, for Stratford-on-Avon, the proposed new SM would actually be c.190 dpa lower per annum than the level of delivery seen over the last three years. In percentage terms, North Warwickshire would see its LHN figure increase by 133% – the highest increase within the C&WHMA. This would be much lower than the adopted housing requirement; although it is noted that this requirement contains unmet need contributions to both Coventry and Birmingham in addition to their own needs.
As expected, the housing need of Coventry would decrease as a result of the removal of the 35% urban uplift; although this would still be c.300 dpa higher than the adopted housing requirement, and would equate to a c.22% increase in need when compared to the level of delivery achieved over the last three years. Given the Council’s emerging land supply, the city could still place pressures on the surrounding Warwickshire LPAs to accommodate its unmet housing needs.
For Nuneaton & Bedworth, the proposed new SM would result in an LHN c.42% higher than their emerging Local Plan requirement – which is currently at EiP – which was already higher than the current SM-generated LHN. Given the transitional arrangements – which I discuss below – they may well need to consider whether their emerging Local Plan will require a review post-adoption, in advance of the statutory five-year requirement, and under the new style Local Plan system.
 
C&WHMAComparison of Housing Needs

Source: Lichfields analysis 

 
3. An emerging challenge for strategic planning
Alongside the Government’s consultations on the NPPF and new SM, they are also consulting on other changes to the planning system. As a part of this, Combined Authority Mayors will be expected to prepare Strategic Development Strategies, which will include a requirement to meet the cumulative housing needs of the authorities within the Combined Authority’s administrative area.
For the West Midlands Combined Authority [WMCA][3] the new SM would result in a 12% reduction in housing needs across the WMCA when compared to the current SM. Despite the marked increase in the needs within the Black Country, these are more than offset by reductions in the LHNs for Birmingham and Coventry. But with 6 of the 7 constituent authorities tightly bound, or with limited opportunities to expand even with Green Belt release, the WMCA may need to look to the non-constituent authorities[4] and beyond[5] to meet any unmet housing needs arising through the current round of plan-making.
The key to unlocking this challenge may be to instigate a regional approach to Green Belt review and release, and retain an effective Duty to Cooperate (or a future iteration) to secure agreements on distributing any unmet housing needs in the WMCA and beyond – both of which are strengthened by the proposed changes in the draft NPPF in respect of strengthening obligations on cross-boundary working and Green Belt release.
  
 

How soon will these needs impact on planning?

1. Plan-making
Alongside the consultation on the proposed changes to the SM, the Government has also published a draft NPPF. In this, it is seeking to introduce transitional arrangements in respect of plan-making to address the housing needs generated by the proposed new SM.
These are set out in paragraphs 226-229 of the consultation document and will apply from the adoption of the revised NPPF in Autumn 2024 plus 1 month. Simply put, they require that any LPA at the Regulation 18 stage of Local Plan preparation will need to immediately utilise the new SM for plan-making purposes and any LPA at the Regulation 19 stage whose emerging requirement is more than 200 dpa lower than the new SM will need to update and submit their emerging plan within 18 months of the adoption of the revised NPPF to address the new SM alongside any other new requirements from the revised NPPF. Even LPAs that have submitted their Local Plans will need to address their new SM needs in short order, where the adopted requirement is 200 dpa lower than the new SM via beginning a new-style plan immediately post-adoption. This is a challenging requirement and will place significant resource pressures on the LPAs affected.
Inevitably, the proposed new standard method will have immediate, and profound, implications for plan-making across the region. Despite LPAs across the region having progressed their Local Plan reviews, many will now need to revisit their proposed spatial strategies, and Green Belt assessments, and seek to markedly increase their proposed housing delivery numbers.
Based on Lichfields’ understanding of the region's current position on plan-making, and assuming the constituent LPAs follow their stated timescales for preparation, as of Autumn 2024, of the 26 LPAs undertaking reviews, some 18 plans that are at the Regulation 18 stage will need to factor in a higher LHN figure as a minimum. One plan, which is significantly advanced, will have 18 months from Autumn 2024 to re-visit their Local Plan proposals to address the increased housing needs. By way of example, assuming South Staffordshire adheres to its Local Development Scheme timescales (i.e. a January 2025 submission), it will need to revisit its Local Plan review to accommodate an additional 449 dpa – no small feat. Even authorities with a submitted plan may soon need to consider starting the process again. In summary, the new SM will impact most of the region's local authorities immediately, and within 2-years for the rest in terms of plan-making. The spatial implications of the transitional arrangements are depicted below.
 
Transitional Arrangements – Impact on plan-making

Source: Lichfields analysis

 

2. Decision taking
In the NPPF consultation, it is proposed to return to the previous governments’ (September 2023) NPPF’s approach to the requirement for LPAs to demonstrate a five year housing land supply (“5YHLS”). To this end, for those authorities whose Local Plan is over five years old and has not been updated, for the purposes of a 5YHLS, the housing need will be measured against the area’s LHN, calculated using the standard method.
This means that whilst some authorities may not need to grapple with the increase in housing through a Local Plan for c.18 months to 2 years, there may be an immediate impact on planning decision-taking due to that Council’s ability to – or not in some instances – demonstrate a 5YHLS in the context of planning application determination.
Lichfields estimates that just over three-quarters of LPAs in the West Midlands will see immediate impacts on their 5YHLS as of 1st November 2024. On average, the increase in housing needs resulting from the changes to the SM over a five-year period would equate to each of these LPAs needing to deliver an additional 2,092 dwellings on average (exclusive of buffers).
It’s not only the LPA with significantly less than a 5 year supply of housing that will suffer, even those authorities with relatively strong housing delivery may find themselves susceptible to decisions influenced by the ‘tilted balance’ mechanism. When this concern is coupled with the draft NPPF’s proposed changes to Green Belt policy, it will be in the interests of some LPA’s to progress their Local Plan reviews as quickly as possible. Overall, LPAs will be advised to carefully consider the implications of the new SM and its impact on their 5YHLS as a matter of urgency.
 
Transitional Arrangements – Impact on decision-taking

Source: Lichfields analysis

 

Summary

The significant increase in housing needs across the West Midlands under the proposed new SM will inevitably once again raise legitimate and cogent arguments about the availability of brownfield land and the need for Grey Belt/Green Belt release, in order to ensure sufficient land is available to deliver the homes that are needed. Consequently, the debate around where such land is to be found, alongside how these needs can be distributed across the West Midlands HMAs, looks set to continue for the foreseeable, but will at least operate under a framework that sets clear expectations on how this should be achieved (i.e. effective cross-boundary engagement and Grey Belt/Green Belt release).
 

[1] Comprising Birmingham, Bromsgrove, Cannock Chase, Dudley, Lichfield, North Warwickshire, Redditch, Sandwell, Stratford-on-Avon, Tamworth, Walsall and Wolverhampton; albeit, North Warwickshire and Stratford-on-Avon fall within the Coventry-Warwickshire HMA.
[2] Comprising Rugby, Coventry, Warwick, North Warwickshire, Nuneaton and Bedworth and Stratford-on-Avon

[3] Comprising: Birmingham, Wolverhampton, Coventry, Dudley, Sandwell, Solihull, and Walsall

[4] Comprising: Cannock, North Warwickshire, Nuneaton & Bedworth, Redditch, Rugby, Shropshire, Stratford-on-Avon, Tamworth, Telford & Wrekin, Warwickshire County

[5] E.g. Lichfield, Wyre Forrest, South Staffordshire, Warwick etc. 

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NPPF: Consultations and further changes

NPPF: Consultations and further changes

Seán Farrissey & Paddy Hynes 31 Jul 2024
On July 30th the Government released a host of statements, policies and consultations and targets aimed at reforming the planning system. The proposed changes were long anticipated and signal the Government’s intentions with regards to planning reforms. These proposed changes are discussed here:
This blog discusses the important proposals that might have been missed amongst the headlines focussing on the consultation which runs for 8 weeks to the 24th September 2024.

 

Contents

Changes to planning application fees and cost recovery for local authorities related to Nationally Significant Infrastructure Projects

Building Infrastructure to grow the economy

Strengthening Section 106

Changes to local plan intervention criteria

Changes to the local plan examination process

Rowing back on beauty – the impacts for design

 

Changes to planning application fees and cost recovery for local authorities related to Nationally Significant Infrastructure Projects

The Government is consulting on changes to planning fees (again). This builds on the changes to planning fees introduced by the previous government in December 2023 and discussed in this Insight . The headlines include:
  • Proposed fee increase for householder applications to £528 (from £258) to meet cost recovery levels.
     
  • Seeking views on whether a smaller increase to the householder fee (e.g. 50% increase) would be more appropriate.
     
  • Seeking views on increasing fees for other application types such as prior approval and S73 applications.
     
  • Introducing fees for applications with no fee at the moment such as demolition consent in a conservation area and Listed Building Consent.
It is clear from the consultation that the new Government does not consider that the fee increase introduced in December 2023 went far enough, and that the funding shortfall still experienced by many Local Planning Authorities (LPAs) needs addressing. The proposed fee increase for householder applications to £548 is a large increase that will surprise many; the justification given is that it would allow struggling LPAs to reach cost recovery levels for householder applications. While the industry response was mostly positive to the December 2023 fee increases, it remains to be seen whether the reaction will be so positive when looking at the prospect of further increases. 
The consultation is also seeking views on two models for setting fees locally:
 
Model 1 – Full localisation
No fees set nationally; all LPAs would have to set their own planning fees, within the existing fee categories and exemptions set by the Secretary of State. This would allow LPAs to set their own fee levels up to cost recovery levels.
 
Model 2 – Local Variation (from default national fee)
Local Variation would maintain a nationally-set default fee but give LPAs the option to vary the fees within prescribed limits where they consider the nationally set fee does not meet their actual costs. This would give allow authorities who wish to set their own fees, within the existing fee categories and exemptions set by the Secretary of State the discretion to do so. This could be for all fees, or just select fee categories if LPAs wish to be selective in which fees should be set locally.
Localisation of planning fees would require primary legislation to establish enabling powers, through the Planning and Infrastructure Bill.
 
Cost recovery for local authorities related to NSIP
The consultation is also seeking views on whether to make provision to allow upper and lower tier (or unitary) local authorities to recover costs for relevant services provided in relation to applications, and proposed applications, for development consent under the Planning Act 2008, using the power at section 54A of the Act.
 

Building Infrastructure to grow the economy

As discussed in this blog, the Government has made it clear that planning will be at the centre of the agenda for economic growth. The consultation reflects planning’s critical role in facilitating economic growth, and underpinning public finances. A few important changes are proposed that would propel infrastructure planning to the forefront of economic policy.
 
Changes to the NSIP regime
A number of changes are being proposed to the Nationally Significant Infrastructure Projects (NSIP) process.
 
Building a modern economy
The Government is proposing changes to the NPPF to push commercial development in certain sectors and build a ‘modern economy’. The types of development included in this are:
  1. Laboratories
     
  2. Gigafactories
     
  3. Digital Infrastructure
     
  4. Freight and Logistics
The proposed changes seek to make it easier to build laboratories, gigafactories, data centres and digital infrastructure, and the facilities needed to support the wider supply chain. The proposed changes would create an expectation that suitable sites for modern economy uses are identified in local plans.
The proposed changes also aim to give more explicit recognition of the need to support proposals for new or upgraded facilities and infrastructure (including data centres and electricity network grid connections).
There is a focus on the associated infrastructure needed to support growth of ‘modern economy’ industries as well as a recognition of storage and distribution operations that allow for handling of goods.
 
Directing data centres, gigafactories, and laboratories into the NSIP consenting regime process
Where proposed projects are within the main fields of infrastructure covered in the Planning Act 2008 (namely energy, transport, water, waste water, waste), but below the thresholds set out in the 2008 Act, the relevant Secretary of State may, on request, direct a project into the regime under section 35 of the Act. 
Also proposed is bringing larger onshore wind development back into the Nationally Significant Infrastructure Projects regime.
The proposed NPPF and associated consultation clearly identifies specific sectors which it regards as contributing the type of (often digital) infrastructure required to grow a ‘modern economy’. There is also greater emphasis on the necessary associated infrastructure such as increased grid capacity which is proposed to be considered through planning policy rather than solely a consideration at determination.

Strengthening Section 106

Section 106 agreements featured a limited amount in the consultation. Where they were mentioned, they were almost exclusively in the context of the ‘golden rules’ to guide development in the green belt (see here for analysis).
However, the House of Commons session in which the NPPF consultation was launched saw numerous references to the role of Section 106[1]. Responding to a question about local Deputy Prime Minister Angela Rayner MP said:
People often reject housing proposals because they do not see infrastructure. That is why we have the golden rules, why I have asked all the Departments to look at what we can do to ensure that infrastructure is there, and why we will support the strengthening of section 106 to ensure that developers do not try to squeeze out of what they promised as part of the development”.
Rayner also said the Government will:
“consult on how to stop developers who have paid over the odds for land using that as an excuse for negotiating down their section 106 contributions”.
Back in October 2023, the Labour party committed to upskilling local authorities on Section 106 negotiations through an expert, central Take Back Control Unit[2]. As well as this, they pledged to
“increase transparency around the viability process for the development of new affordable and social housing by creating guidance on viability levels across different parts of the country and a model assessment form that developers and Councils can use when evaluating this.”
It appears from Rayner’s comments in the Commons that this is a commitment that the SoS plans to uphold. It could also signal the Government’s commitment to the s106 developer contribution model, at least in the short term.
It is anticipated that measures to strengthen Section 106 will come forward in the Planning and Infrastructure Bill.
 

Changes to local plan intervention criteria

Chapter 10 of the consultation seeks views on whether to remove or amend local plan intervention policy criteria set out in the 2017 Housing White Paper, which the Secretary of State must currently read alongside the Planning and Compulsory Purchase Act 2004 if considering local plan intervention. This section of the consultation does not propose to amend legislation.
 
Removing the policy criteria
The Government highlights that within the Planning and Compulsory Purchase Act 2004, tests already exist to justify local plan intervention. Therefore, the document says, removing them would not equate to removing the criteria for local plan intervention. Instead, it would have the effect of restoring the intervention criteria process back what it was prior to the introduction of the 2017 White Paper.
 
Amending the policy criteria
If amending the policy criteria, it is proposed that a range of new policy criteria would apply in addition to the provisions of the PCPA. It is proposed that decisions on intervention should have regard to:
  1. Local development needs;
     
  2. Sub regional, regional, and national development needs; or,
     
  3. Plan progress.
These tests would sit alongside other material considerations to which the Secretary of State could have regard, with weight applied in accordance with their planning judgment.
If these amendments were brought in, local authorities would be given the opportunity to set out any exceptional circumstances in relation to intervention action.
 

Changes to the local plan examination process

As well as making it easier for the SoS to intervene in local plans, we have also seen an indication from the government of a change to the PINS local plan examination process, towards a system that is less accepting of plans submitted which are deficient across two key Ministerial letters.
As it stands, following a letter[3] in 2015 from then-SoS Greg Clarke MP to the chief executive of PINS, the planning inspectorate are encouraged be “pragmatic” in how they work with councils towards achieving a sound Local Plan. However, in a letter[4] sent by Matthew Pennycook to PINS today (31st July), it would appear the extent of pragmatism has been limited. In the letter, the minister says:
“Pragmatism should be used only where it is likely a plan is capable of being found sound with limited additional work to address soundness issues. Any pauses to undertake additional work should usually take no more than six months overall. Pragmatism should not be used to address fundamental issues with the soundness of a plan, which would be likely to require pausing or delaying the examination process for more than six months overall.”
This was reflected in a letter[5] sent by the SoS to leaders of local councils on 30 July (the contents of which were replicated in a letter from Matthew Pennycook to housing industry stakeholders on the same day), which said:
“We will empower Inspectors to be able to take the tough decisions they need to at examination, by being clear that they should not be devoting significant time and energy during an examination to ‘fix’ a deficient plan – in turn allowing Inspectors to focus on those plans that are capable of being found sound and can be adopted quickly.”
The letters say there will be a focus on progressing local plans with a higher likelihood of being found sound without the need for delay. The focus of PINS, according to the Government, should be on processing plans that are capable of being found sound. For authorities with deficient plans and who have delayed once by 6 months, they will have to revisit their plan and re-submit once identified issues have been resolved.
 

Rowing back on beauty – the impacts for design

Since its introduction in the 2021 NPPF, the industry has been struggling to apply a concept so nebulous and ambiguous as beauty to the acceptability of development proposals in the planning system.
The changes to the NPPF that are set out for consultation seek to rewind this with the more easily defined and analysed attribution of ‘well-designed’. A high bar for the design quality of new buildings and places that are to be delivered is retained, but reversion to the use of the term well-designed can be interpreted with greater objectivity in the context of the National Design Guide and gives greater certainty to those designing and delivering development. It also reflects the fact that there is more to high quality design than subjective aesthetic considerations. 
The section on the effective use of land, provides explicit confirmation that development on brownfield land should be regarded as acceptable in principle (for homes and other identified needs).
Helpfully for those seeking to optimise the delivery of homes in existing urban areas, character assessment, design guides and codes no longer need to be limited by paragraph 129 (introduced in December 2023) which deterred significant average density increases leading to a built form that would be wholly out of character. The test will revert to there being strong reasons for uplifts in density being inappropriate.
The removal of the very specific, and curious, guidance on the acceptability of mansard roofs is also proposed in favour of more general guidance on the acceptability of roof level extensions, including mansards.
In addition, the 2024 NPPF proposes amending paragraph 126(e) of the NPPF so that just the “form”, rather than “height and form”, of neighbouring properties and the overall street scene are considered when assessing a development proposal for airspace development. This proposal is not directly mentioned in the consultation text.

The effect of the revised wording could have implications for the design of neighbourhoods; the revised wording arguably places national policy more in favour of upwards extensions which provide housing. That being said, discussions around the existing “form” of the local area are likely to lead to considerations as to whether the height of a proposed development is appropriate within that.

 

Conclusion

Many of these changes that have not grabbed the initial headlines will have considerable implications for planning and the development industry more widely and we will engage closely with the consultation going forward.

[1] Building Homes - Hansard - UK Parliament
[2] Rayner says Labour will deliver “biggest boost to affordable housing for a generation” - Labour

[3] Letter from Greg Clark (Secretary of State) to Simon Ridley (Chief Executive of the Planning Inspectorate) 21 July 2015

[4] Local Plan examinations: letter to the Chief Executive of the Planning Inspectorate (July 2024)

[5] Letter from Angela Rayner to local authority Leaders in England

 

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Going to (new) town on growth

Going to (new) town on growth

Matthew Spry 31 Jul 2024
The New Towns Taskforce launched on 31st July 2024 completes the jigsaw of Government planning reform announcements before parliamentary recess.
The commission is to be led by Sir Michael Lyons, with Dame Kate Barker as Deputy Chair, with further members to be appointed before September. Both the Chair and the Deputy Chair have an established pedigree in the property development sector and both have carried out significant reviews of planning and housing delivery for Labour[1].
The press release and Policy Statement does not have significant detail in terms of the process to be adopted by the Commission but key points are:
 
  • The New Towns programme is focused on largescale communities of “at least 10,000 new homes each, with many significantly larger”

  • Will include large-scale freestanding new communities but “a far larger number” will be urban extensions or regeneration schemes

  • To governed by a ‘New Towns Code’ focused on ensuring they are “well-connected, well-designed, sustainable and attractive places” with “all the infrastructure and public services necessary” and “targeting rates of 40% affordable housing with a focus on genuinely affordable social rented homes
     
  • A 12-month process that will include,
     
    • meeting with communities on design

    • recommending locations

    • engaging with local communities, working “in lockstep with mayors, local leaders and communities to advise on the right places for new towns

    • a final report with final shortlist of recommendations on appropriate locations
There is little information yet on how the Task Force will go about identifying potential locations.
However, in the notes to editors accompanying the October 2023 press release launching its housing policy, Labour described the process as:
“The Secretary of State … will publish a set of principles for identifying sites, looking for areas that are around busy transport hubs, in areas of very high housing need and avoiding nature spots or important green spaces.
We will open bidding for local leaders to bid for sites on the basis of these principles.
We will also task DLHUC with devising some broad ‘heat maps’ of areas suitable based on these principles, using the latest spatial data from across different departments and agencies.
Within six months, we will work in partnership with local leaders to designate a handful of sites across the country for development as new towns.”
In the Government announcement, Sir Michael is quoted as saying he will “work closely with local leaders and their communities as well as the wider development and investment sectors to make sure these new towns are built in the right places”. Dame Kate referred to it being vital that “the locations will also support economic growth over coming decades.”
Ultimately, it is implied that the process will be a mix of ‘top-down’ heat mapping but also ‘bottom-up’ suggestions from ‘local leaders’. Missing is a direct reference to landowners or developers putting forward their proposals for consideration, although those that wish will presumably not be shy in doing so.
Further clarifying the position, the Minister of State interviewed on the BBC Radio 4 Today Programme on 31st July indicated that the New Towns identified by the Task Force would be  additional to normal local planning and targets, saying:
“just to absolutely clear… our ambition on the New Towns front is over and above the planning changes we announced yesterday that 370,000 housing target so they’re not crucial to that … normal activity of local authorities bringing forward homes through local plans; they will be over and above”
 

Heat Mapping

What might the heat mapping look like? Lichfields has taken three of the indicators identified by Labour to identify the kinds of locations that might emerge, based on applying spatial data on these factors to sift out unsuitable areas and providing a starting point for where new towns might be most appropriately located. The three criteria are locations that:
 
  • are accessible ‘around busy transport hubs’ such that they are sustainable, offer a range of transport modes and are reachable to/from other places. We focused on rail stations on the basis these either will already be, or can be come, busy transport hubs in the future
     
  • respond to housing pressures being ‘in areas of very high housing needs’. We looked at housing affordability, population growth, housing under-supply and economic forecasts of future job growth; and
     
  • protect sensitive areas ‘avoiding nature spots or important green spaces’, such as those areas with national and international designations. We screened out National Parks, National Landscapes, and designated ecological sites (SSIS, Ramsar, SAC and SPAs).
Green Belt is clearly an elective land use policy choice – and it is possible areas protected by that policy might provide good locations for large-scale new development, including urban extensions - but for the purposes of this exercise we have assumed that it is unlikely large-scale developments of the scale of 10,000+ homes will match the emerging 'Grey Belt’ criteria identified in the consultation and will not be priority areas of search. In addition, by virtue of our methodology, our assessment will also exclude opportunities (e.g. of regeneration) that might exist within urban areas.
In the context of the above, the outputs are shown here:
 
Figure 1 Illustrative New Town opportunity heat map

Source:  Lichfields analysis

Obviously, the Task force will develop its own approach, but the above perhaps gives a flavour for the kinds of locations that might emerge.

The Lyons Housing Review

The Lyons Housing Review[2] from 2014 also provides some insight to how the Taskforce might approach its task. Chapter 6 referred to a “A new generation of Garden Cities and Suburbs”. Some of its analysis appeared to draw on its perceived lessons of the (then relatively fresh in the mind) ‘Eco-towns' on which it said:
“The review received evidence about the need to learn the lessons of the Eco-towns program [sic], including from the ‘bidding’ process which can prove problematic. For example, those with the most resources (not necessarily the most sustainable locations) were able to submit bids and a number of recycled, previously failed proposals were re-submitted. Neither was it clear how new Eco-towns fitted in the local, regional or national planning process which antagonized some communities who felt the process bypassed local plans.”
The Executive Summary of the report said:
“It clearly makes sense to build on brownfield land where we can and the brownfield first policy should be strengthened, but building Garden Cities, Garden Suburbs and reshaping and expanding existing towns will be essential to meeting housing need over the medium to long-term. The next government should immediately initiate such a programme, to be delivered by new Garden City Development Corporations and New Homes Corporations based on reformed New Towns Legislation.
Government should set out criteria that Garden Cities would be expected to meet so that local authorities can come forward with proposals to be developed in partnership. Proposals from private promoters will be accepted, but only where they can demonstrate local support.
Incentives should include the ability for new Garden Cities to retain 100 per cent of business rates for 30 years to invest over the longer-term, as well as providing financial guarantees to support up-front delivery. This locally-led development model would be able to play a central role in building a new generation of Garden Cities. This should be combined with a rolling programme of Garden Suburbs. The aim should be for local leadership to promote and enable many more new settlements though a mix of freestanding new Garden Cities, new Garden Suburbs, and remodelled towns, in a range of places across the country. Together our recommendations could help accelerate the delivery of up to 500,000 homes.”
The report itself set out more detail on identifying locations and designating Garden Cities suggesting a three stage approach:
 
1. Identifying broad areas of search
As described in the report this seems broadly comparable to the heat mapping exercise we illustrated above, although specifics might vary.
  
2. Setting the criteria that Garden Cities would be required to meet
The Review suggested criteria that would include: applying principles similar to the ‘New Towns Code’ described by Government; potential to exploit existing or planned investment in national infrastructure networks, including transport, energy and communications and support wider objectives for rebalancing the economy; aligning areas where people will want to live and can access jobs and employment; the support and long-term commitment of local authorities;  tenure mix and increased rates of build out; clear proposals for the delivery, financing and long term funding and stewardship of the new settlement.  
  
3. Designation of specific sites
The review recommended that Government should then invite proposals for sites from individual local authorities or city/county regions, prioritising the areas of search and then progress forward with local authority agreement to create Development Corporations, with the Board appointed by LPAs, with the SoS using powers to designate as a last resort. The report said that it would be “our expectation that sites will be identified by local authorities, in collaboration with residents and businesses.”
 

Implications

It remains to be seen how the New Towns Taskforce will carry out its mission but one can already piece together some challenges and possible contradictions, over the issue of local support and the net additionality of the initiative:
  1. Genuinely large-scale developments of over 10,000 – especially those that are “much larger” for example, 15- 25,000 homes – can be said to be nationally-significant in scale and it is unproven to what extent genuine local support is a prudent indicator of whether or not an otherwise good location for a new town should come forward.
  2. Locally-led initiatives have to date been more likely to be compatible with the ‘Garden Town and Village’ scale of development; of the 49 designated Garden Communities[3], the majority were below the 10,000 home size threshold and a number of the largest-scale projects (such as the 43,000 home North Essex initiative) actually comprised multiple separate schemes (and not all were actually succesfully allocated - although that's another story).
  3. Local support was not obviously a major feature of how the post-war New Towns were identified, with objecting residents of Stevenage old town famously losing out to then Minister Lewis Silkin who found himself greeted at Stevenage railway station with the signs altered to read "Silkingrad", a reference to what many felt were similarities between Silkin's approach and that of a totalitarian regime[4].
  4. The Government’s mantra on planning reform is ‘how’ not ‘if’ and this is the approach it has adopted to mandatory local housing need. No ifs no buts, local authorities must aim to meet those numbers (themselves or across boundaries). Relying on local leadership for new town selection would seem to run counter to that approach.
  5. Finally, and perhaps most significantly, what incentive will there be for local authorities to identify and support these New Towns? The Minister of State’s interview on Today was clear that the ambition of the programme is additionality: they will not count towards meeting local targets drawn from the Standard Method. They will not, of themselves, reduce the pressure those areas will face to allocate other land to meet often punchy local housing need figures. In that context, LPAs who do support new towns as a form of development – and who might otherwise allocate them in Local Plans – might find themselves holding back their preferred options from the Taskforce and saving them for their own allocations, on the basis that in doing so their projects will count against their local targets. They would also still be able to make use of locally-led Development Corporations and CPO powers if needed. If New Towns were to count against local plan targets, the additionality of the proposal will be lost. 
In the context of the above, it is clearly right and proper that the taskforce draws upon engagement with local communities, Mayors, LPAs and other bodies in identifying opportunities (and welcoming support if it is there). But it seems more consistent with the policy approach for this to be focused on defining the ‘how’ not the 'if' (or 'where'). The Taskforce will need to be careful ensuring that locally-led is not the only source of inspiration for this nationally-significant initiative, and the difficult-to-measure level of local support should not represent a power of veto over what can come forward, particularly in the areas where New Towns are most appropriate or likely to bring the most benefit in the national interest.
 

[1] The Lyons Housing Review is available here. The two Barker Reviews are Housing Supply and Land Use Planning
[2] Lyons Housing Review pp 90-99

[3] See How Does Your Garden Grow: A Stock Take on Planning for the Government’s Garden Communities Programme – 2019

[4] See this BBC article here

 

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A new Standard Method: Stocking up?

A new Standard Method: Stocking up?

Bethan Haynes, Paddy Hynes & Matthew Spry 30 Jul 2024
Among the changes proposed by Government (much trailed in the media) is a new Standard Method (SM). If adopted, it will provide the kinetic force that drives the boost to housing delivery that the Government is seeking.
The SM for local housing need has a long history (see our chronology here). Under almost constant review since it was formally introduced in 2018, it has proved very difficult to change; attempts at its revision (or indeed abolition) have generated controversy and hit the buffers.
The current SM is based on a four-step approach for each local authority area (LAA)[1]:
  1. Using the 2014-based household projections, take the 10 year average growth rate (with the current year being the base year);
     
  2. Apply an uplift, based on the latest median workplace-based affordability ratio (formula set out in national guidance);
     
  3. Apply a cap, where appropriate. Where the strategic policies for housing in the current plan are less than five years old, cap the need (from steps [1] and [2]) at 40% above the current plan requirement. Where more than five years old, cap the need at 40% above whichever is higher of the current plan requirement or household projections; and
     
  4. [For the 20 largest urban areas nationally] – apply a further 35% uplift to step [3].
At the time of writing this generates a national total of around 305.7K net additional homes per annum, of which around 99K is in London. Against this current local need, the aggregate of local housing targets (or requirement figures) in adopted Spatial Development Strategies and Local Plans is 231K; a level around which the supply of extra homes has broadly aligned since 2017[2].  
The proposed new SM adopts a two-step approach for each LAA:
 
  1. Take 0.8% of the current housing stock of the area;
     
  2. Apply an uplift, based on a three-year average of the median workplace-based affordability ratio, with an increase of 15% for every unit above four.
At the time of writing, this generates a national total of around 371.5K net additional homes per annum, of which around 80.7K is in London. Outside the capital, compared to the current SM, 90% of LAAs areas will see an increase in their LHN figure, and 69% will see an increase of over 200 homes per annum.
You can access the specific numbers for each District in England direct from the Government-produced spreadsheet or via our interactive map.
Beyond the individual numbers, what can we say about the proposal? 
 

Mandatory but not binding

A lot of political debate about the SM has conflated it with the term ‘housing targets’ and revolved around what adjective should be used to describe it: is it advisory, a starting point, mandatory or binding?
The NPPF proposals suggests the proposed SM would be:
 
  • mandatory in that it should be the basis for establishing need in Local Plans, with no provisions – exceptional or otherwise – for using a different method;
     
  • not binding in that it is not the same as the housing requirement (or target) in the local plan, which is to be set on the basis of the presumption in favour of sustainable development (NPPF para 11 a) and b)). Local Plans may be justified in providing for less housing than needed in their area if there are areas or assets of particular importance that restrict development or if the adverse impacts of meeting need would significantly and demonstrably outweigh the benefits.
The mandatory element and a 0.8% stock-based starting point means a small number of locations (perhaps more remote areas or towns that have experienced de-industrialisation) will see high estimates of need alongside very low (or even negative) levels of household growth. In these locations, providing new housing as a flat percentage of stock may in some instances give rise to housing market displacement (similar to that which afflicted some areas of housing market renewal in the 1990s) or may prove not to be deliverable. Previously, such areas might have cited the NPPF’s provision for ‘exceptional circumstances’ and sought to rely on an alternative needs assessment; now, if they are to conclude that it would be inappropriate to set a housing requirement that meets the SM figure in full (and if there are not nationally-designated protection policies), it will be necessary for them to explain how adverse impacts of planning for those needs in full will significantly and demonstrably outweigh the benefits under the ‘tilted balance’.
 

A stock-based approach

The Government’s big proposal is to shift from measuring housing need based on demographic projections to one that starts with the current number of homes in an area.
We first explored the potential of this approach in our review of possible Standard Method reforms in 2020 and elements of it appeared as a 0.5% ‘floor’ in the so-called 'mutant algorithm' of August 2020.
The advantages of a stock-based method advocated by Government might be said to be that it:
 
  1. Remains relatively simple, using national and freely-available statistics that are produced consistently for all local areas, are robust and updated regularly;

  2. Uses inputs that are stable over the medium to long term (including using smoothed averages where appropriate);
     
  3. Avoids the circularity and volatility of household projections, whereby:
     
    1. Repeated iterations of ONS population and household projections fluctuate based on trends, making it difficult to plan
       
    2. Low rates of housebuilding lead to low levels of household growth (by migration or household formation) in an area, which is then perpetuated by trend-based projections
       
    3. Addresses the fact that even a big uplift for acute affordability in such an area is unlikely to makes a significant impact if it is applied to a small rate of household growth (a big % uplift to a small number is still a small number).
       
  4. Ensures that at least 300,000 homes can realistically be achieved, with this number being at the minimum end of what experts believe is necessary to address affordability and need for affordable homes over the long term;
     
  5. Ensures the SM genuinely 'boosts' housing supply, across all parts of the country, as per the original intention of the policy.
In the context that the 'tilted balance’ of the  NPPF presumption may be invoked in some cases (where the 'harms' of development are weighed against the benefits of new housing) it will be important – in applying a stock-based method – for it to be clear how the numbers associated with that approach in each area are consistent with securing the benefits that new housing will bring, absent the usual demographic starting point. 
  

Higher than past delivery, current local targets, and the current standard method, in every region[3]

Within the headline national increase, the proposed SM would see boosts in every region (see Figure 1). It is double the current North East’s need figure[4] and 76% higher than the figure in the North West. The need would be in the order of 20 – 70% higher than recent rates of housing delivery[5] across all regions except London (where the need figure is well over double). Some individual LAAs will see very marked increases, particularly where the demographic trends in the period 2009-14 (the recessionary period which informed the current SM’s demographic starting point) were very low[6]. A consistent criticism of the current SM was that it under-cooked housing need in many parts of the midlands and north, where local plans were often already aiming to provide for more homes, often for economic and ‘levelling up’ reasons.
Figure 1 Regional Breakdown of Housing Target and Delivery Data

Source: MHCLG / Lichfields analysis

But if the regional story is interesting, it is the type of planning issues it generates that tells us what kind of challenges the new method will introduce and some indication of how many homes the proposed method – alongside the envisaged changes to the NPPF might generate.
 

Targets and Constraints

We have correlated the housing target and delivery data with four ‘types’ of LPA area, to explore what this tells us about the impact of the numbers in combination with proposed new NPPF policies:
 
  • Category 1: London (the area covered by the Mayor’s London Plan).
     
  • Category 2: LPAs where their administrative area is mostly built-up and/or constrained with a significant amount of Green Belt. This is in the context that the NPPF proposes to make brownfield development within settlements acceptable in principle and – most significantly - to compel reviews of the Green Belt and for ‘Grey Belt’ to be capable of development in situations where there is no five year land supply or the Housing Delivery Test (HDT) result is below 75%.
     
  • Category 3: LPAs where the administrative area is mostly built up and/or constrained by other national constraints (e.g. national landscapes) for which there is no fundamental change of policy.
     
  • Category 4: LPAs in the rest of England – i.e. areas which are unlikely to have fundamental other national policy constraints.
The housing target and delivery data is cascaded through these four categories by absolute annual numbers (Figure 2) and as a percentage of housing stock (Figure 3).
Figure 2 Housing Target and Delivery Data by LPA Type (Dwellings per annum)

Source: MHCLG / ONS / Lichfields analysis

Figure 3 Housing Target and Delivery Data by LPA Type (Dwellings per annum as % of Housing Stock)

Source: MHCLG / ONS / Lichfields analysis

This analysis shows that:
 
  1. London has been delivering at 38% of the current SM (at circa 38K dpa), below its London Plan target[7], but its recent delivery (1.0% of current stock) is relatively high compared to other constrained areas. The proposed SM rate is down, from 2.6% in the current method, but at 2.1% is still stretching. One can contemplate that some proposed NPPF changes to policy on Green Belt review might drive higher targets and delivery, but it is untested whether London will meet needs in full – achieving even the current London Plan targets (of 53.2K) by end of the current London Plan target period would be an achievement.
     
  2. LPAs that are predominantly urban and/or constrained by Green Belt have existing local plan targets and recent rates of housing delivery at around 70% of the current SM and a stock growth rate of just 0.7%, reflecting that Green Belt constraints (and the absence of up-to-date local plans) have tended to suppress delivery. The proposed SM represents a 26% uplift compared to the current formula, but in combination with the NPPF proposed change to policy on Green Belt and renewed focus on cross-boundary working, there must be expectation that a far greater proportion of needs will be met. If future plans saw, say, 85% of the higher proposed need effectively planned for (up from 70% of current need now), this would deliver an extra 30-35,000 homes each year at a rate of stock growth of 1.09%.
     
  3. The other areas LPAs that are predominantly built up and/or constrained by other national protections currently see the lowest rates of planned growth (0.7% of stock) and represent a relatively small total share (6-8%) of housing need. It is unlikely their rate of housing delivery will change much as a result of the proposed NPPF or revised SM.
     
  4. Across the Rest of England, Local Plan requirements and recent rates of delivery have been above the current SM (at c.115K per annum); they would be stretched by the new proposed SM (at c.148K) but would – if met in full – still be at 1.4% of stock, similar to the rate that the London Plan has been targeting. On its face, that ought to be achievable, and its contribution to total housing need would increase to c.40% from 30% currently (but its share of recent housing delivery has been punching above its weight, at around half).
 

Will this achieve Government ambitions for 1.5m?

In combination, one can see how the proposed Standard Method, in combination with proposed NPPF revisions (particularly on duty to cooperate and Green Belt review) has the potential to unlock planning constraints to housebuilding in many locations that have so far capped local plan targets, and to stretch delivery in less constrained areas where current targets are largely already met. 300K per annum looks readily achievable based on the policy platform set out, in the context that rates close to 250K have been achieved in the recent past, despite the challenges in London and in the areas where around a third of local housing need in England has been locked up in areas where local plan coverage is lower than average and where Green Belt has constrained development, and where rates of stock growth have been consequentially low.
Over the course of an economic cycle, the level of housing delivery will fluctuate with the market, but overall rates of delivery will be a significant function of the amount of land released by the planning system, which is shaped by the targets that are set via a housing need methodology and the national policies of the NPPF that direct how much need is actively planned for in local plans. The Competition and Markets Authority (CMA) found that: “The planning system is exerting a significant downward pressure on the overall number of planning permissions being granted. Over the long-term, the number of permissions being given has been insufficient to support housebuilding at the level required to meet government targets and measures of assessed need.”
In December 2020, we said the current Standard Method was a method that “with a fair wind, [is] a recipe for maintaining (just) current national rates of housing delivery [of around 230K], but seem unlikely to get England over the 300K hurdle.” In February 2023, we said that the then proposed changes to the NPPF could lead to a fall to 156K.
The hiatus in plan making in combination with the recent housing market downturn looks set to see rates of house building at 170-190K this coming year (a fact the Secretary of State highlighted in her Parliamentary statement) and recovery will be gradual. Looking ahead, based on our analysis of the four categories above, we can conclude that the new method alongside the NPPF is readily consistent with achieving an annual run rate of the 300,000. Getting to that by the end of the Parliament is eminently realistic but would nevertheless be an achievement with which the Government could be justifiably pleased, given past rates of delivery and its starting point.
But what about the 1.5m ambition? Even setting aside the practical and market challenges, the new method and policy framework as currently proposed seems unlikely to get there.  This is because it is not proposed to be calibrated to achieving an accumulating 300K pa target over five years.
Until Local Plans are in place[8], housing supply in most areas will be monitored against a target (the SM) that is refreshed each year, with any shortfall from that year wiped clean. This means that the under-delivery against 300K in initial years will not be added to the annual requirement for future years in most places. Therefore planning decisions focused on future delivery will be made based on what is needed to achieve the annual target for five years from that rolling date, not the beginning of the Parliament. Although a worsening affordability due to prior under-delivery in early years might nudge the Standard Method figure up slightly, it is unlikely to be sufficient to 'make good' the annual shortfall of 100-150K that will accumulate in the short term. It might be that some simple adjustments to the NPPF or the PPG to fix the base date of the five year housing land supply calculation in areas without Local Plans is a way of resolving this inconsistency. 
 

Annex: Chronology of the standard method

The introduction of the National Planning Policy Framework (NPPF) in 2012 saw the responsibility of determining local housing needs and housing requirements fall to local planning authorities, having previously been established within Regional Spatial Strategies. Whilst guidance on how housing needs should be assessed was published in 2014, authorities adopted a broad range of assumptions and approaches, and establishing housing need quickly became one of the most time-consuming and costly parts of the plan-making process. The idea for a simple, standardised approach was first mooted in 2016, and has evolved over the last eight years as follows:
  • March 2016 – the Local Plan Expert Group reports to Communities and Secretary and to the Minister of Housing and Planning that key issues facing plan makers include authorities struggling with a complex local plan process and housing needs not being met. The LPEG recommended a shorter, simplified, standard methodology for assessing housing need, which amended the planning practice guidance (PPG) to (1) provide greater clarity on the starting point (based on household/population projections), (2) set a clearly defined market signals uplift (based on either 10%, 20% or 30% uplifts, depending on the affordability ratio) and (3) confirm how to factor affordable housing needs (a further 10% increase to housing needs if required). It was suggested that economic-led factors were removed from the housing need assessment process, but plan-making authorities could include these in the housing requirement if appropriate;
     
  • February 2017 – Government publishes the White Paper ‘Fixing our broken housing market’ and responds to LPEG report confirming it will consult on a standard method for assessing housing needs;
     
  • September 2017 – Government publishes ‘Planning for the right homes in the right places’ consultation which includes proposed standard method as follows; (1) baseline, based on household projections over a 10 year period; (2) uplift for affordability [formula-based]; (3) cap, where applicable, depending on current plan age. At the time, Government estimated this would yield 266,000 homes nationally (of which 72,000 in London). Elements of this stemmed from the LPEG recommendations, but there were differences;
     
  • November 2017 – the Autumn Budget confirms that the Government aims to deliver 300,000 homes a year by the mid-2020s;
     
  • July 2018 – a revised NPPF is published which requires local authorities to use the ‘standard method’ for informing strategic policies, unless exceptional circumstances justify an alternative approach. It is introduced into the PPG in September 2018.
     
  • September 2018 – the ONS publishes 2016-based household projections which indicate substantially lower household growth nationally than the previous 2014-based projections (which underpin the standard method). This significantly undermines the ability of the standard method to achieve 300,000 homes per year nationally. The Government almost immediately consults on changes to the standard method to confirm that the 2014-based projections will continue to be the starting point, in order to support the aspiration to deliver 300,000 homes per year. This consultation also suggested that, in the long-term, government would review the formula and establish a new method by the time the next projections were issued;
     
  • August 2020 – Government consults on proposed changes to the standard method which introduces some amendments to the standard method, including amending the baseline (being the higher of either 0.5% of stock or household projections) and amending the affordability uplift (to also take into account 10-year change). This yields 337,000 homes a year nationally. The proposal proved controversial and was dubbed the ‘mutant algorithm’
     
  • December 2020 – The Government backtracks and instead retains the existing method but with a ‘fix’ to incorporate a 35% uplift to the 20 largest urban areas within the standard method which brings the total annual number to around 300,000, but with concerns about whether or not those numbers can be achieved;
     
  • April 2021 – Government formally withdraws the changes consulted on in August 2020, instead stating that it will retain the existing approach and the additional 35% uplift in the 20 largest urban areas;
     
  • December 2023 – a revised NPPF is published which adds that the outcome of the standard method is an ‘advisory starting point’ for establishing a housing requirement, but continues to state that there may be ‘exceptional circumstances’ which justify a different approach but that this alternative should still reflect demographic trends and market signals. It also states that there is no need for the 35% uplift to be redistributed if needs cannot be met in the urban areas.

 

[1] As explained in the Planning Practice Guidance here at ID2a-001 through to ID2a-016 Revision Date 20 02 2019
[2] See statistics of net additional dwellings here

[3] With the exception of the current Standard Method in London, due to the 35% urban uplift; the proposed figure is 80.7K compared to 98.8K currently, but 73.2K excluding the urban uplift.

[4] Although this is lower than current Local Plan targets in the region.

[5] Based on net housing additions in the three years 2020/21 to 2022/23.

[6] By way of example, Redcar & Cleveland has a current standard method figure of just 45 per annum (just 0.06% of its current stock) which would increase to 642 under the new method; its recent rate of net additions has been 425dpa.

[7] A trend explored by the London Plan Review earlier in 2024. There are some inconsistencies over housing delivery figures in London, as explored by the Review; DLUHC Net additions are used for the purposes of this analysis.

[8] Less than a third of Local Plans are up to date and less than five years since adoption.

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