Comment

Representation ID: 2948

Received: 08/09/2017

Respondent: Barratt Homes and David Wilson Homes

Agent: Turley Associates

We recognise that the Black Country authorities and South Staffordshire have sought to update their evidence base with regards to the future need for housing in the area, with the SHMA published in March 2017. This is presented as complying with the current Planning Practice Guidance (PPG). 2.14 The I&O Report cites the SHMA in seeking to meet the objectively assessed need (OAN) for 78,190 homes over the period 2014 to 2036 - equating to 3,554 dwellings per 3 annum - and confirms that this figure will be used as the basis for deriving the BCCS Review housing target. It is noted, however, that the SHMA and therefore the OAN may be updated in the context of new projections and guidance. This potential for the OAN to change is recognised and considered in the context of the current evidence and guidance below as well as factors which may affect this going forward. 2.15 The OAN for the Black Country in the SHMA is based on the following conclusions for each of the prescribed methodological steps set out in the PPG: * The 'starting point' is correctly identified as the 2014-based sub-national household projections (SNHP) which indicate a projected need for 75,502 dwellings for the period 2014 to 2036. This equates to circa 3,432 dwellings per annum; * No further demographic adjustments are concluded as appropriate following consideration of the factors which have historically shaped migration or household formation rates. It is concluded that there is no evidence of younger household suppression due to worsening affordability or undersupply of housing, or evidence of longer-term or more recent levels of population growth which suggest a higher or lower level of projected need;* No adjustment is considered necessary to support baseline (or policy-on) forecast employment growth, implying that the growth in labour force associated with the demographic projection is sufficient to accommodate future economic growth; * No adjustment to the demographic projection is considered appropriate in response to evidence of worsening market signals between housing supply and demand; and * The concluded OAN also seeks to resolve a shortfall in housing provision in the Black Country between 2011 in 2014, in order to maintain consistency with evidence prepared across the Greater Birmingham Housing Market Area (HMA). This does not suggest any accommodation of unmet needs, but simply addresses a recognised deficiency in supply over this historic period. This represents an addition of 2,603 dwellings in the Black Country to the 2014-based SNHP, translating into the concluded OAN of 78,105 dwellings over the plan period, or 3,550 dwellings per annum. 2.16 In essence, this means that the OAN for the Black Country is simply based upon a translation of the household growth in the latest 2014-based DCLG projections into dwellings by allowing for vacancy, with no subsequent adjustments made against each of the PPG's methodological steps. In considering the robustness of the conclusion for each of the steps above, we have a number of concerns that lead us to conclude that the OAN arrived at within the SHMA underestimates the full need for housing in the Black Country authorities. The planned level of provision proposed within the I&O Report is therefore considered to not be appropriate, requiring consideration of a higher level of housing provision to ensure that needs are met in full while retaining a level of flexibility. 2.17 We have outlined our main areas of concern relating to the OAN below.

Demographic Adjustments 2.18 The PPG highlights the importance of sensitivity testing the demographic trend-based 1 assumptions which underpin the 'starting point' of the official 2014-based projections . As set out above, the SHMA applies no demographic adjustment in this regard, retaining the level of population and household growth implied by the 2014-based projections despite alternative longer term trend-based projections presented in the SHMA indicating a higher level of housing need in the Black Country over the plan period. 2.19 Since the publication of the 2014-based projections, the Office for National Statistics (ONS) has continued to estimate the population of local authorities in England. The latest 2016 mid-year population estimates - which were not available when the SHMA was produced - indicate that the population of the Black Country has increased by circa 16,000 persons since 2014. This represents a level of population growth which is some 27% higher than projected over the same period by the latest 2014-based projections, which anticipated population growth of around 12,600 within this geography. This has resulted from higher levels of net international migration and a significantly smaller net outflow of residents to other parts of the UK, suggesting greater success in retaining those assumed to have moved elsewhere. 2.20 Importantly, this indicates that official projections have underestimated population growth to date, which if sustained could underestimate the future need for housing in the Black Country. It is considered important to ensure that the latest available demographic evidence is taken into account in planning to meet housing needs in the Black Country, particularly given the SHMA's retention of the 'starting point' projection without adjustment as its concluded OAN. The Relationship with Employment Growth 2.21 The SHMA considers the relationship between future employment growth and the changing size of the projected labour-force. The conclusion is reached that the concluded OAN can accommodate forecast employment growth. This takes account of the upward adjustment to South Staffordshire's demographic need, which is applied on the basis of a market signals uplift. 2.22 There is a notable concern, however, that the approach adopted in considering the relationship between jobs and housing need risks failing to adequately support future job growth. The SHMA confirms that the analysis has directly extracted the demographic outputs of the economic forecasting houses' models, without subjecting the assumptions applied in "flexing" future labour-force behaviour changes to any sensitivity testing.

The limitations of this approach were recently recognised by the Inspector examining the Telford and Wrekin Local Plan. Direct reference was made in the uplifting of the housing requirement in the Draft Plan through the Inspector's proposed main modifications to a recent appeal decision allowing a housing development at Kestrel 2 Close in Newport . Within this appeal decision, the Inspector raised concern with the approach adopted in the SHMA, preferring the appellant's transparent presentation of a 'series of cumulative numerical steps' which explain the impact of different adjustments to labour-force behaviour. The SHMA does not include sufficient information to ensure PPG Reference ID 2a-017-20140306 Council's Formal response to the Inspector's interim note F10 of 30 March 2017, EiP Library Ref: F10b 1 2 5 confidence in the reasonableness of the adjustments applied, thereby posing a risk that the pressures on housing need would be higher than estimated in order to support even a baseline level of growth. 2.24 Outside of this baseline employment growth, it is also important to reference with regards to the appropriateness of the future housing requirement that at a sub-regional level there is an ambition to deliver a level of employment growth which exceeds a 'baseline' position. The West Midlands Combined Authority (WMCA) recently published a Strategic Economic Plan (SEP) based on an 'Economy Plus' scenario that aims to create 504,000 additional jobs and secure gross value added (GVA) which is 5% higher than the national average by 2030. Importantly, the SEP also calls for a level of housebuilding significantly greater than currently provided in development plans or being delivered across housing market areas in the West Midlands.

2.25 The Government has confirmed its commitment to rebalancing economic growth across 3 the country in developing its modern industrial strategy . This requires the realisation of the WMCA's objectives, and indeed the importance of both the Northern Powerhouse and Midlands Engine initiatives in delivering 'more balanced growth' is recognised. This 4 is further articulated within the Midlands Engine Strategy published in March 2017, which signals new funding of £55 million to support local growth in the Black Country - the second highest level of funding of Local Enterprise Partnerships (LEPs) in the region. 2.26 It is noted that the I&O Report recognises the importance of supporting the resurgent economy, with the Economic Development Needs Assessment (EDNA) highlighting the impact of the economic growth ambitions of the Black Country SEP in its concluded employment land requirement. 2.27 The SHMA considers the implications of a 'policy-on' level of economic growth within Appendix B. It indicates that under the SEP scenario the Black Country (excluding South Staffordshire) would see an additional 80,000 jobs. The SHMA concludes that no additional housing would be required to support this significant additional growth in employment. The SHMA identifies that this may well appear 'counter-intuitive' and indeed the level of detail presented in the appendix fails to provide robust justification that this significant additional employment growth would not generate further housing pressures, noting that this almost doubles the level of job growth forecast under the baseline Experian forecasts referenced in the SHMA. In the case of the latter, it is noted that these are predicated on a level of population and housing growth which are closely aligned with the OAN. 2.28 It is understood that the Greater Birmingham HMA authorities have commissioned a fourth stage report which builds on the three preceding stages of work examining OAN and the distribution of unmet needs. The 'Strategic Growth Study' is due to be completed in Winter 2017, and it is understood that its scope of works includes analysis of the scale of housing need associated with supporting the SEP target of 504,000 new jobs as a 'policy-on' scenario. The implications of this work and its alignment with the
Department for Business, Energy and Industrial Strategy (2017) Building our Industrial Strategy HM Government (March 2017) Midlands Engine Strategy

conclusions of the SHMA in this regard will form an important consideration for the BCCS Review to ensure that it supports the wider agreed economic objectives. Responding to Worsening Market Signals 2.29 As set out above, for the four Black Country authorities the SHMA concludes that no uplift to respond to worsening market signals is justified. This sits in contrast to the application of a 25% adjustment to South Staffordshire within the SHMA. It is recognised that the Black Country authorities remain comparatively affordable when set in a national context. However, the conclusion that no adjustment is required is not considered to be adequately justified, particularly when set in the context of the conclusion to apply no adjustments relating to any of the other methodological stages. Future Changes to the Guidance for Calculating OAN 2.30 As the I&O Report alludes, it is recognised that the Government intends to consult on a new standardised approach to the calculation of OAN. It is understood that this consultation is scheduled for September 2017 and, according to correspondence from DCLG (dated 31st July 2017), any Plans which have not been submitted by March 2018 (as will be the case for the BCCS Review) will be required to apply the new standardised methodology. The SHMA's OAN has evidently been calculated based upon the existing PPG, and the implications of the new methodology will therefore need to be taken into account in the future development of the BCCS Review. 2.31 In the context of supporting the economic objectives of the area, it is of note that the Housing White Paper confirms in its commitment to adopting a more standardised approach to calculating housing need the importance of ensuring its consistency with the Modern Industrial Strategy. This will therefore form an important context for the 5 development of subsequent iterations of the BCCS Review . 2.32 We reserve the right to comment further on the OAN where the standardised methodology has been published, and used to calculate the Black Country's needs.