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Deal or no deal? Oxfordshire Housing & Growth Deal update

Last week Christopher Pincher, Minister of State for Housing, announced changes to housing land supply requirements for Oxfordshire. Our team explore what the changes mean in practice for the Oxfordshire authorities and the Housing and Growth Deal.

In November 2017, the Government announced the Housing and Growth Deal of up to £215 million of new funding to be granted to support the ambition to plan for and deliver 100,000 homes in Oxfordshire by 2031. This was linked to a number of other commitments from Government and the Oxfordshire councils, including the adoption of an Oxfordshire-wide statutory joint plan (covering the period to 2050) by 2021. 

The Oxfordshire councils are all signed up to the Housing & Growth Deal, and, in addition to the significant levels of funding, were granted time-limited ‘planning flexibilities’, namely:

• a three year housing land supply requirement until the adoption of the Oxfordshire 2050 Plan (which was to have been adopted by April 2021); and
• a bespoke housing delivery test thereafter.

The Oxfordshire Growth Board has been requesting an extension to the flexibility of the three year housing land requirement since last year, reflecting the delay to the Oxfordshire 2050 Plan which should be nearing adoption, but is delayed by at least a year.

However, in a ministerial statement released on 25 March 2021, Christopher Pincher announced that although the timescales for the preparation of the Oxfordshire 2050 Plan have been extended to 2023, the associated three year housing land supply flexibility has been revoked and Oxfordshire councils will now immediately be required to demonstrate a five year housing land supply.

The ministerial statement explains that:

“Since 2018, Oxfordshire have not finalised and adopted their Joint Statutory Spatial Plan. Therefore, in the best interests of housing delivery in the region, my Department have extended the time afforded to Oxfordshire for the delivery of this plan to 2023. This extension however will not be subject to the original land supply flexibilities. From today, Oxfordshire will need to maintain a five year housing land supply in accordance with the National Planning Policy Framework.”^[1]

We have always considered the use of a three year supply requirement to be flawed.  Not only was the wording of the Growth Deal unclear (for example, what would happen if the Oxfordshire Plan 2050 was found unsound), but evidence now indicates, as we expected, that it has contributed towards a downward trend in the authorities’ housing supply position over recent years.

What does the increase to a five year supply actually mean for Oxfordshire authorities?

As a starting point, paragraph 73 of the NPPF explains that the standard method for assessing housing need should be used for calculating the Housing Land Supply position when the housing requirement in adopted strategic policies is more than five years old.

However, the text in the framework does not appear to have considered the circumstance which has emerged in Oxfordshire.

In the case of Cherwell, their Local Plan (with the exception of a Partial Review) is now the first in the county to be more than five years old, and so the standard method should now be used for calculating housing supply. In 2016, the Growth Board decided on a ‘working assumption’ that Oxford City’s unmet need amounted to 15,000 homes to 2031, with this to be apportioned to each authority.  The recommended apportionment for Cherwell District was for 4,400 homes in addition to its existing Local Plan commitments (some 22,840 homes).

But, the standard method figure now is significantly lower than the identified housing requirement in the Cherwell Local Plan, let alone the additional contribution which Cherwell makes towards addressing the unmet housing need of Oxford City.  It is those figures which represent Cherwell’s role in achieving the growth commitments of the Deal.

Plainly put, calculating housing land supply in Cherwell against the standard method avoids the strategic significance that each Oxfordshire authority makes towards achieving the level of growth committed to by 2031, at an individual authority level and in meeting the unmet needs of Oxford.

The significance of this is highlighted by the fact that the Local Plan requirement (which is a fundamental component of the overall Growth Deal expectations) requires 5,710 dwellings over five years  - (before any shortfall is added, the buffer is applied and before any contribution to the unmet needs of Oxford is included).

The recently released affordability ratios have just reduced the standard method figure in Cherwell further, from 752 dpa to 714 dpa. Therefore, measuring supply against the standard method requires 3,570 dwellings (before any buffer is applied). 

The standard method, by its very nature, does not take into account any historical shortfall or meeting any needs of neighbouring authorities, as is the case in Oxfordshire. 

If the Housing & Growth Deal is of such strategic significance in the county, it is a real concern that housing land supply is now measured against lower expectations in one of the authorities.

The implication of this, in Cherwell District at least, it is that it places an onus on the local authority to ensure it has a deliverable supply well in excess of that required by the standard method, in order to ensure that the district continues to play its role in supporting the aspirations of the Growth Deal.  After all, those levels of growth are founded upon a recognition of worsening affordability and the need to support economic growth in a key part of the Oxford – Cambridge Arc.

Summary

On one hand, the Oxfordshire Housing & Growth Deal is based on a very positive premise. The authorities agree to plan for a level of growth, support its delivery and receive significant funding to support that level of development through infrastructure delivery. The reversion to a five year housing land supply requirement is also positive – it puts more onus on the authorities to ensure that they have a greater supply of housing, and in doing so should offer greater confidence that the Growth Deal requirements can be achieved.

The issue is one which the authors of the NPPF (or the Growth Deal) may not have foreseen, and in reality it might not have arisen at all had the ‘mutant algorithm’ in the draft version of the standard method (summer 2020) not been dropped (when the housing requirement was expected to increase in Cherwell to 1,305 dwellings per annum).

This situation highlights the need for policies at all levels to be aligned in the support of growth. This issue has arisen in Cherwell, but other Local Plans in Oxfordshire will be more than five years old in the not too distant future, and there is no sign that the Growth Deal is to be abandoned. The issue highlights that local decision takers may well be faced with the need to plan for levels of development greater than the NPPF may allow them to when calculating housing land supply.

With the lower housing requirements under the standard method, it will be interesting to see how Cherwell and other Oxfordshire authorities now respond. We would suggest that the existence of the Growth Deal, and the related commitments that the Oxfordshire authorities have made to growth, should be regarded as a significant material consideration even if a five year housing land supply can be established against the new standard method. 

The establishment of new Growth Deals may have stalled, but other initiatives are in play, for example the progress being made with the Oxford - Cambridge Arc, itself premised on much greater levels of growth. Perhaps those forthcoming initiatives will provide the opportunity for national and local policy to become aligned so that growth ambitions are achieved.

For more information please contact Emily Rickard, Tim Burden, Donna Palmer or David Murray-Cox.

29 March 2021

[1] https://questions-statements.parliament.uk/written-statements/detail/2021-03-25/hlws895