The Office of National Statistics published yesterday (Sept 20) its household projections covering the period between 2016 and 2041. At first glance it looks as if housing need should come down. But Bidwells’ Simon Elliott asks if this should really be the case?
Last year the (then) DCLG published their new Local Housing Need (LHN) standard method, stating that they were targeting 225,000 – 275,000 dwellings per annum (dpa). The standard method indicative results published at the time summed to 266,000dpa. Subsequently, the Chancellor in his November 2017 budget statement, announced that the Government would be targeting 300,000dpa.
The LHN was expected to ebb and flow as new data was released and local plans progressed to adoption. By 20 September 2018, the LHN had risen to 273,000dpa; on course to meet the Chancellor’s target. All was going swimmingly.
On 20 September 2018, ONS published their household projections covering the period between 2016 and 2041. The responsibility for preparing official household projections passed from MHCLG to ONS earlier this year with ONS immediately changing the method, jettisoning all data prior to 2001 and instead focussing on the 2001 and 2011 censuses. In doing so, the new household projection method assumes that the housing crisis, which has its roots in the 1980s, is the new normal. Unsurprisingly therefore, the projections suggest far fewer households being formed in the future compared to the previous MHCLG versions.
Roll on to 20 September 2018 and the effect of these new household projections means that the LHN has fallen by 22% to 213,000dpa; not the kind of data Mr Hammond will want to see two months before his next budget statement. This drop is not evenly spread across the country with the likes of Cambridge and Oxford seeing declines of 101% and 86% respectively.
So what does this mean?
Is it really the case that Cambridge’s housing need is now negative? Has the North East and London’s housing need really fallen by 35% and 34% respectively overnight?
Well, no. MHCLG were well aware this was going to happen and noted in their response to the revised NPPF consultation that they may need to change their LHN standard method so that it continued to sum to something close to 300,000dpa. It perhaps would have been appropriate if MHCLG had released a statement to that effect on 20 September rather than leaving it hidden away in a technical document. Better yet would have been for their revised standard method to be published for consultation shortly after ONS’s household projections.
We therefore need to look at the implications for the housing sector.
First off, both the Chancellor and the MHCLG will want this resolved as soon as possible, to the point that a consultation document is likely to be published within the next few weeks. The 24 January 2019, when the implementation rules for the revised NPPF fall away, is likely to be the deadline for having the new method in place.
In the meantime, an element of pragmatism is essential. We know that these LHN figures in no way represent the true housing need and any planning decisions made based on them run the risk of being overturned once the revised standard method goes live. Well informed dialogue between applicants and planning authorities will be essential to understand the permutations of these figures, and the impact of the future revised method, to ensure everyone keeps calm and carries on.
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