By Colin Wiles, housing consultant.
You wait years for a dodgy algorithm to come along and then two arrive together. First, the exams algorithm forced the government into an embarrassing u-turn, and now the new algorithm for calculating national housing numbers could do the same.
In my previous blog on the Planning White Paper I welcomed the government’s target for 300,000 homes a year but predicted it could cause trouble. “I suspect there will be a revolt in the Tory heartlands once it is seen how much building will be required, and that decisions are
being taken away from local defenders of the faith in the town halls.”
The revolt seems to have started. Conservative MP Neil O’Brien (MP for Harborough) has attacked the new methodology because it means that many more homes will be built in rural areas, and 17 London Conservative MPs have warned that the algorithm risks “destroying suburbia” and “creating slums”.
The current methodology for producing housing targets was adopted in 2018 in the National Planning Policy Framework. It uses household projections and affordability data to provide a target for each planning authority area.
Crucially, this target is capped to prevent any big increases. Most councils have failed to meet their target. However, household projections do not forecast future need, they just project past trends into the future and are often distorted by concealed households.
The new standard method, set out in this consultation aims to be “more agile” and will take greater account of affordability, requiring more homes in areas where house prices are least affordable (“market signals”). The consultation says, “High house prices indicate a relative imbalance between the supply and demand for new homes, making homes less affordable. The affordability of homes is the best evidence that supply is not keeping up with demand.”
There will be an overall increase in numbers to meet the 300,000 a year target but, crucially, there will be no cap and the new numbers will be compulsory.
If you are interested in the exact formula that will be used, it is on page 14 of the consultation document. In my district in East Kent, for example, the new methodology will require more than double the number of homes, up from 596 a year to 1,279 under the new algorithm.
This is repeated across the country with, in general, rural areas being required to build more, with fewer homes being required in many urban areas (apart from London, where many of the outer boroughs face steep increases, hence the opposition from the MPs mentioned above). That means fewer homes in cities like Manchester, Derby, Newcastle, and Leicester, and more than twice as many being required in more rural places like North Warwickshire, North-West Leicestershire, and Rutland.
You can see a full analysis of the figures here by Lichfields, and see how your area is doing. You can understand why many Conservative MPs will be upset about this. O’Brien says: “In the rest of England the formula takes the numbers down in labour-run urban areas, while taking them dramatically up in shire and suburban areas which tend to be conservative controlled.”
He calls for more building in urban areas, making the argument that we need high densities to encourage walking and cycling and to tackle climate change. I concur. But the fallout from the pandemic suggests that large numbers of people no longer want to live in cities.
They want houses with gardens where they can be safe should another pandemic strike. And if millions of people can carry on working mostly from home, then they will have much more choice about where they live. A big disruption to the market is likely within 12 months and the pressures on leafy suburbs and rural areas will intensify.
Some Conservative MPs claim the reforms will harm the Conservative vote, but it is the voters in the “red wall” and those living in the private sector that the Conservatives will need to attract in order to swing the next election, and the ramping up of housing numbers might well appeal to them.
At the last election, 33% of social renters and 31% of private renters voted Conservative, compared to 45% and 46% for Labour respectively. But in 2017 only 26% of social renters voted Conservative. David Cameron used to say that social housing means Labour voters but I am not sure this is still the case.
I think the arguments on this will rumble on for some time. The big question is whether the government will hold its nerve on the new methodology and face down the nimby dissenters.
A government source (Cummings?) said, “This is not something we’re going to step away from. We’ve got a duty to do this for the next generation.” Indeed.