Standard Method Mk2 – Has the Government finally cracked it?

As part of the review of the Government’s standard method we have been presented with a new formula which, on the face of things, looks to be a vast improvement on its older brother from the 2018 Framework. England now actually has a national housing target which could deliver on the aims of 300,000 homes a year – however the success will be very much determined by how issues such as cross-boundary need and the Green Belt are dealt with. The method isn’t without its flaws and, as explored by Cameron Austin-Fell below, there are some refinements which would greatly benefit a fair and balanced plan for growth.

 

“For the first time, all local authorities will be expected to assess housing need using the same methodology. A big improvement on the current situation where different councils calculate housing need in different ways with expensive, or time wasting consulting and opaque methodology.

Ultimately, we must be guided by where people want to live. And a standardised approach will help us do this – by establishing a level playing field and giving us a much clearer, more transparent understanding of where the need for housing is most acute”.

Though you could be forgiven for thinking these are the words and vision of the current Secretary of State Robert Jenrick, they come in fact from his predecessor (twice removed) Sajid Javid; commenting at the launch of the 2018 National Planning Policy Framework.

Originally introduced in 2018, the Standard Method was meant to bring clarity to a process of establishing housing need which had become bloated; frustrating Local Plans and planning appeals alike.

It promised a simple, clear and transparent approach to aid and expedite the delivery of Local Plans, supporting the delivery of much needed homes where they were needed most. However, whilst simple in mechanics, it quickly became clear that the methodology would not deliver on the Government’s aims. Alarm bells should have been ringing when, at the point of launch, it became clear that the method only derived around 270,000 homes per annum – less than the 300,000 figure targeted by Government. Things took another turn with subsequent household projections reducing this further, leading the Government to step in to apply a ‘short-term’ sticking plaster over the cut.

Two years on we can see that the ‘clear and transparent’ approach of the Standard Method hasn’t sped up the delivery of Local Plans as intended. In fact (whilst noted that housing need is just one issue to consider), the stats show that since the Standard Method came into force[1], of the 30 Plans submitted, only five have been found sound at Examination.

Of these five plans, only one actually employed the Standard Method, as the remainder either fell within National Park/Development Corporation areas (or in the instance of Oxford City, the figure was disregarded due to the notably low figure presented under the method). The only authority that has successfully relied upon the Standard Method is Chesterfield, where as part of the Examination the Inspector reasoned that the derived target was only marginally lower than that prepared under the older guidance of the 2012 NPPF. This is hardly a glowing endorsement of the method’s simplicity.

So where are we now?

The new methodology is currently out for consultation until 01 October 2020[2] and, though it stands alongside the published Housing White Paper, looks set to be adopted in advance of the wider overhauls of the planning system.

Importantly, the new method results in the potential for 337,000 homes - a vast increase on the previous approach and, crucially, sits above the national commitment of 300,000 homes. On this point alone it’s immediately clear that the revision of the Standard Method is a positive move and demonstrates the Government’s commitment to growth.

Within the industry many, including RPS, have pointed to the reliance on household projections as the starting point to be the key failing of the method.

As a remedy, the Government has added a safety valve through the inclusion of housing stock as a new indicator, and the starting point is benchmarked either by the housing stock or the household projections, whichever is higher. As a result the target for around 36% of English authorities is higher than if based on household projections alone.

The affordability uplift has been retained as part of the calculation however the new metric not only includes the current ratio of house prices to earnings, but also considers the relative change (or worsening of position) over the past 10 years. Whereas the previous methodology ‘capped’ the level of uplift from this stage to 40%, the new standard method removes any cap. The result is a much more solid methodology, which is much more resilient to annual changes in data and is less likely to cause upset to Local Plans that are in the throes of submission.

 

Where will the growth go?

The 337,000-figure outlined by Government is the headline, but we get a clearer picture of the impact when we dig a little deeper into the data. Compared to its predecessor, the new standard method results in higher targets for all regions, with notable increases to London and the South East, driven in part by the significant affordability pressures in those regions (as shown in the graph below). These two areas combined account for around 155,000 dwellings per annum, representing nearly half of the overall growth under the new method.  

We can see that things play out slightly differently when considered at a local authority level. The map below shows that although there are some authorities that will see a drop in numbers through the proposed methodology, we can see uplifts in a large number of authorities, and overall there is a 28% increase on the 2018 Standard Method. Click to enlarge.

Under the new method there’s a particular hotspot in the South and East Midlands. On the surface it also suggests that Cumbria in the North of England will boom, though this may be misleading and should be caveated with the fact that under the 2018 Standard Method these figures were severely depressed. Cumbria would benefit from the new method, but figures would still remain lower than observed in existing adopted plans.

Do we have the right tools to deliver this figure?

So, can we now expect a system which will consistently deliver us over 300,000 homes a year in the right places? Unfortunately, the answer is not quite so simple and through Plan-making there will be a need to reconcile the growth needed against features in the Government’s proposed new ‘protect’ designation. Although the Government has not identified a closed list of what will be included under this banner the Housing White Paper indicates that this includes a mix of designations, including the Green Belt, Areas of Outstanding Natural Beauty (AONB), high-flood risk areas, important open spaces and Conservation Areas. It's expected this list will be extended to include other key designations of note, and to explore what the impacts might look like, the map below has captured these protection areas, set against the national standard method figure. Click to enlarge.

We can see that some of the higher growth areas, particularly around metropolitan areas overlap with areas that would be caught by the ‘protect’ tier of zoning. This brings back into play the perennial debate around what is more important, growth or protection. Should an authority decide it can’t meet all of its housing need under the new methodology, what then?

Following the departure from regionally generated targets, the 2012 National Planning Policy Framework (NPPF) gave us the Duty to Cooperate (DtC). Since its inception, the DtC has proved to have been one of the more contentious parts of the Framework, derailing 13 Plans in the last 8 years. The constant cause of frustration in the process has been housing need – whether this is unmet need arising from the authority itself, or from neighbouring authorities.

However, as part of the Housing White Paper the Government has signalled the DtC will be removed, something that is sure to be met with relief in the industry. But what will take its place? On this issue the Housing White Paper is silent. Though the paper accepts there will still need to be cross-boundary arrangements to deal with infrastructure or strategic sites, there is no further mention of what authorities should do when faced with the dilemma of balancing housing need against areas of protection. This is one area on which we can expect much more detail to come from Government. The failures of the DtC are very fresh in the mind, and we now know what happens when councils are simply told to ‘get on with it’ without clear guidance.

The North/South divide

Policy constraints forming part of the ‘Areas of Protection’ will likely inhibit the ability to meet the minimum housing need figures in certain areas. How this unmet need will be dealt with is a matter for Local Plans to reconcile. But within the new method lies a more insidious matter, which cuts to an inequality in the distribution.

The shortcomings in the 2018 Standard Method really came to the fore when looking at the north of England which, driven by household projections, would have led to negative figures in some authorities; particularly those where low population movements had been recorded.

In the north of England (i.e. the North West, North East and Yorkshire/Humber) the 2018 Standard Method created great uncertainty when it was published. Consequently, a number of authorities sought to lower growth targets and committed to undertake (very) early Local Plan reviews to attract a more politically palatable figure. The previous method therefore only resulted in a 1% increase on figures adopted within existing Plans for the north of England. Comparatively, the newly proposed methodology would see a target just shy of 50,000 an annum, a 17% increase on the existing local plan position, but is this enough?

It's worth noting that across the three regions the annual target is only just over half the figure for London. For a significant geography containing numerous city regions, the figures pale into insignificance when compared to the southern counterparts. This is highlighted in the map below which identifies the areas expected to grow more or less than the England average. Whilst monikers such as the ‘Northern Powerhouse’ help to imbue a passion and drive into a vision for the north, this is not supported by policy proposals for growth. If the Government is indeed serious about a growth deal appropriate for the north, more needs to be done here. Click to enlarge.

What would we want to change?

The proposed standard method is, in my view, a positive move away from a significantly flawed methodology and does turn the ship in the right direction. But there are a number of icebergs to navigate if we are to meet the 300,000 figure in a fair and well distributed way. Until clear arrangements are set out to guide authorities on how housing need can be redistributed or agreed cross-boundary, meeting the figures for the south of England seems highly ambitious/unrealistic; especially for London which was struggling to meet the lower target under the old method

The other key issue that the Government needs to consider is the north. Whilst it would be easy to sidestep changes to the methodology now and allow, as the current framework does, arguments for uplifts though Plan Examination, this goes against the simple and streamlined approach that the methodology set out to achieve in the first place. The Government should cast their eyes over the standard method again and see what else could be done here. For example, if a 0.7% stock figure was used in the north instead of 0.5%, the northern target would increase to 63,000, a 47% increase on the currently adopted figures. There are likely to be a number of other derivations in how this can be done, and it’s expected that during the course of the consultation the Government will be presented with a number of alternative approaches from the industry, including leading figures in the north.

 

[1] Plans submitted after 24 January 2019 – NPPF, Paragraph 213

[2]  as part of the document titled ‘Changes to the Current Planning System – Consultation on Changes to Planning Policy and Regulations

A guide to the proposed changes

A breakdown of the regional implications.

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