Here link to Planning for Homes Consultation.
9th is the deadline. Will try and find time for a detailed critique and explanation of the alternative simpler MOAN method by the deadline – however here’s a quick summary of the key problems for those writing their responses.
-The Consultation confuses the ‘Need to Houses’ Demographic Process with a ‘market forces ‘ boost – this is a systematic undercounting
The method starts with the ONS household formation baseline then rounds up the figures nationally to meet the ‘consensus’ figure of how many homes England should build from various studies (without doing the hard demographic graft itself the department stopped doing), then applies a Barker like ‘market signals’ uplift to ensure that baseline meets the assessed national need.
This is to confuse apples and oranges. To convert need to homes to a target you need to add a variety of factors such as frictional vacencies, second homes, an allowance for unbuilt homes, an allowance for repressed household formation (concealed households) in the last 10 years (the great depression) etc. This demographic approach can be put in a simple spreadsheet authority by authority.
A ‘market forces’ uplift should be correcting a historic shortfall, a backlog. In simply meeting the gap between the baseline figure and what output needs to be to meet supply-demands all you are doing is meeting that demand – or more likely below it. This is building in a systematic shortfall of housing, you will never be meeting a backlog, stopping things getting worse, in the best possible case.
Relaying on ‘market signals’ before you plan for more homes is institutionalising a shortfalls forever as it will take years for shortfalls to show up in prices. We need to get ahead of the game in terms of meeting housing need rather than further institutionalising this lagging always behind need. For basic needs you need wait for the market signal of increased food prices because people are starving to death before you plant more crops. Similarly with housing, the need is basic, predictable and should be planned for and met in advance.
-The ‘adjustment’ is a fudge that doesn’t work – assigning in many cases most houses to areas least able to provide more – this will systematically worsen the national housing shortage
The ‘adjustment factor’ on page 11 can only be seen as a ‘global fudge factor’ it is the wrong way of doing things. It adjust based on how unaffordable housing is in an area, affordability is likely to be worse where housing supply falls short of need. However This can be for two reasons. A unwillingness to zone for more homes, and/or a lack of suitable unconstrained land. In failing to distinguish between the two it will allocate more houses in many cases to many locations least able to supply land for additional housing. This can be seen in those areas that have the greatest uplift, many London Boroughs, including inner London Boroughs without Green Belt. Noone could expect for example Greenwich to build five times more housing. What will happen to this shortfall? The method makes no allowance for this. It is left to the weak duty to cooperate (which the papers proposals will make little difference to) so the housing won’t be build worsening not making better a systematic national shortfall. Combined with the housing delivery test this will simply create a free for all in some of the most ‘land short’ authorities in England without doing anything to release more land. It is a seriously dysfunctional formula, a spreadsheet based fudge. not based on systematic spatial analysis on why some areas are falling short. The situation in Green Belt authorities will also lead to greater shortfalls without mechanisms to ensure the shortfall is met. LPAs have previously been told review of Green Belt is optional. They can treat Green Belt as a ‘constraint’ meaning they don’t need to allocate to need. Green Belt Areas, especially in the South-East, will see the worst affordability rations and proportionately to population higher additions from the ‘adjustment factor’ even though under current policy they and sit on their hands and not allocate. Some areas have opportunities to review Green belt, others are covered by environmental designations (such as AONB) and have less land suitable for release, or a lack of sites accessible to sustainable transport modes. By offering a blanket approach again the formula is allocating more housing to the areas least likely to provide additional housing worsening the national shortfall.
Look for example at districts showing sharp downgrades in OAN under the new formula, such as Wealden and West Somerset, land constrained areas with large OAN but with large retired and relatively poor rural populations, so the affordability uplift will be less. It is not that such areas need less housing, rather the global fudge factor produces large distortions that have nothing to do with underlying need.
-In many areas the formula will provide for more housing but not enough – this will worsen affordability
A key lesson of planning in the last 25 years – such as DPM Prescott’s response to the Crow report into the SE Plan. is that increasing housebuilding targets, but ‘compromising’ by making them short of OAN, worsens affordability. This is because housebuilding has positive multiplier effects on the economy – through supply chain effects, service industries etc., leading to additional employment and additional in migration to fill those jobs. These ‘housing accelerator’ is not accounted for in the formula. Cambridge Econometrics estimate it empirically at 10% in growth areas (ref Oxford Cambridge Study). Care should be taken with such an uplift however as people filling the jobs must come from somewhere – most likely from supply constrained areas such as London or from abroad. Therefore following allocation of housing to growth areas an old fashioned ‘reconciliation’ methodology should be applied so that stocks and flow of in and migration add up and cancel to zero in a rigorous balance sheet based approach. This illustrates that it is followed to calculate local need and then to reallocate through the duty to cooperate, the final housing ‘need’ for an LPA is not independent of the strategy of otherwise for growth or restraint compared to other areas. The two need to be integrated in a single process. The application of reconciliation can only happen after the calculation of OAN, application of homes to target demographic adjustments, then the ‘housing accelerator’, then a process of rellocation from constrained to opportunity areas, then finally application of ‘reconcilation’ so that all population flows sum to unity. We call this rigorous approach MOAN – Model for Objective Assessment of Needs. (Having coined the phrase OAN originally I have every right to suggest a new one. Whether it is accepted or not is a different matter. )
-The formula is unsuitable for long range strategic planning – such as planning of new settlements
The formula assumes a ‘flat’ linear projection of household growth over 15 years from which an annual number is derived. the underlying ONS tables do not, they are based on year by year figures calculated from a model, in some areas growth will accelerate, in other decelerate, depending on demographic factors. the methodology is therefore simplistic and flawed creating many local distortions. Undercounting where it is accelerating, overprovision where it is decelerating. This can be simply fixed by applying a spreadsheet LINEAR function over a rolling 15 year period. We have done this in our alternative model (link coming tomorrow).
DCLG officers have praised the dynamic nature of the model – i.e. if housebuilding increases affordability the formula will adjust. However in terms of long range planning for new Settlements etc. this is the last thing you want, starting of f a strategic development, it improving affordability, and then finding the target for that area having to reduce. Long range stability is needed in any modelling for long range planning needs.
-The treatment of employment based uplifts requires reform – but the proposed approach produces perverse results.
The problem with the NPPF based approach of each LPA/LEP providing its own ’employment uplift’ was double counting, and LPEG were right to state this was problematic. For example it could simultaneously imply that people were moving from Cambridge to Oxford to take up employment because Oxford was providing Jobs and Cambridge was too expensive, whilst at the same time mply that people were moving from t Oxford to Cambridge to take up employment because Cambridge was providing Jobs and Oxford was too expensive,; treating both as an ‘uplift’ rather than a net figure in a balence sheet based approach. The LPEG solution of a ‘policy off’ approach is deeply flawed however, there is no such thing as a policy off approach to housing targets. If housing won’t be built because of lack of employment there will be a housing shortfall. All housing therefore should follow employment and the migration this produces factor in. Ignoring employment produces highly perverse results such as dramatically reducing targets for Oxford and Cambridge because it fails to model correctly their non liner growth. This will send precisely the wrong signal to those trying to throttle sustainable solutions to meeting housing needs in these e growth locations.
-There is no mechanism for Making up the shortfall from transitional provisions
There is no objection in principle ot a short term ‘cap’ on uplifts. Hoever there is no mechanism for making this up either elsewhere or later in theplan period. As this housing will therefore never be made up it will be institutionalising a system based on underproviding housing. Rather we need to institutionalise a system for building enough.
In tommorrow’s post ill explain the MOAN Model.