Aiming at the wrong target
The Government is currently wading through the responses to the consultation on the National Planning Policy Framework – the guidance that sets out planning policies for England. One of the issues that features large for CPRE, and perhaps that has received less attention in the media, is the proposed method for calculating how many homes should be built around the country, the so-called Standard Method.
The Government’s idea is to move away from measuring housing need based on demographic projections to one that uses current number of homes in an area as a starting point. Calculating the number of homes we need based on an uplift on existing housing stock is doomed to failure and makes no sense. It moves away from an important principle that targets should be based on evidence of local need. What’s worse, it could end up with more homes of the wrong type, in the wrong place, and failing to tackle the housing crisis we face.
No relation to local need
The mandatory stock-based uplift means that some locations, and particularly those more rural local planning authorities, will see a hike in targets divorced from any assessment of local need. Some areas, like Redcar and Cleveland, have seen increases of over 1,000% unrelated to need. But let’s take one typical county example, Warwickshire, where the proposed NPPF sets higher base figures for every district. Warwickshire is already building a high number of homes, but the new formula mandates a 69% increase on that, every year for the next five years. That’s at least 19,335 more houses. In individual areas of Warwickshire, the percentage increase varies, from 18% in Rugby to 128% in North Warwickshire. That’s an additional 8,330 homes over the next five years that bear no relation to local need.
Add to this the discredited affordability uplift, an idea from 2004 which is based on the idea that if you build more houses in better off areas like Warwickshire then house prices will tumble. The formula is still being applied despite house prices having increased 207% since 2004. Far from falling because of the affordability uplift, prices have more than trebled. The idea that increasing supply will positively impact on affordability of new homes has proven to be flawed. There is no guarantee and little likelihood that the market will provide the increased number of homes the Government hopes for and the formula does not appear to have taken into account sufficiently how much new infrastructure (including new roads) will be required.
Soaring profits for big housebuilders
The biggest fans of this proposed Standard Method are the large volume housebuilders who are focused on maximising profit rather than meeting the housing crisis. We’ve no shortage of four bedroomed detached executive homes built on green fields because that’s where profits are highest – in an industry where even the Competition and Markets Authority recognise profits are higher than anticipated. The big housebuilders contend that a lack of land is at the heart of the housing crisis. That’s a lie that suits their business model but doesn’t help to build enough homes, certainly not the genuinely affordable homes and homes for social rent we desperately need. If you accept that tackling the housing crisis should focus on genuinely affordable and homes for social rent, it’s surely better to focus targets on addressing housing need and boosting supply where the market has failed to deliver.
Targets for social rent homes, genuinely affordable homes and homes built on brownfield sites might better support the Government’s stated ambitions. The only time we’ve successfully built the number of homes being talked about has been when government has intervened and supported the building of homes for social rent. We’ll have to wait for the Budget to find out, but additional funding for social rented homes and increased powers for local authorities to deliver homes could go some way to counteract low levels of delivery due to land banking by private sector developers.
Meeting market demand an ‘inappropriate’ strategy
As CPRE regularly highlights, the danger of national targets divorced from local need is that they lead to a hike in speculative development – even more identikit, car dependent housing estates pot-holing our countryside while the space for 1.2 million homes on brownfield sites remains un-used. Simply meeting market demand is an inappropriate strategy in most rural areas given that large, high priced new homes will not be affordable to people on average incomes or below. We accept that given uneven demand for housing across the country, one size fits all doesn’t work, and regardless of what method is chosen, CPRE recommends that the government makes clear that while housing target setting is a requirement, the use of the Standard Method is not mandatory and that the requirement should be varied based on specific local needs. For example, CPRE supports the 30% target increase for Mayoral Combined Authorities as they are focused on transport hubs, have swathes of brownfield development and can achieve higher densities in town and city centres. Let’s build more homes where jobs, infrastructure and sustainably transport already exist.
Plan for people, not housing
So, what does CPRE recommend, given that we are faced with a housing crisis? Firstly, any formula should be based on up-to-date demographic data. Relying on stock alone does not accurately reflect changing housing preferences or need. We should be planning for people, not housing. Second, we would like to see much more consideration of homes for rent, rather than focus on home ownership, which is out of reach for many. It is security not ownership that is more important for many. Thirdly, let’s measure what matters. The Housing Delivery Test should report on genuinely affordable homes, homes for social rent, and brownfield completions. Finally, let’s get some diversity into the housing market. The Government have a chance to disrupt the market and create a new generation of low carbon, zero bills, affordable homes that respect that our land is a finite resource. As Nye Bevan said in another mission-led Labour government, “We shall be judged in 20 years not by the number of homes we have built, but by their quality.”
