Subject:ERM Consolidated Review of Housing Need and Requirement in Stratford-On-Avon District
THE CABINET
19 JANUARY 2015
Subject:ERM Consolidated Review of Housing Need and Requirement in Stratford-on-Avon District
Lead Officer:Dave Nash
Contact on 01789 260399
Lead Member/
Portfolio Holder: Councillor C Saint
Summary
This report seeks agreement that the ERM Consolidated Review be accepted into the Council’s evidence base.
Recommendation
That the Consolidated Review of Housing Need and Requirement in Stratford-on-Avon District be received as evidence in support of the Council’s Core Strategy.
1 BackgroundInformation
1.1The Council has the benefit of two earlier reports from Environmental Resources Management (ERM), namely the initial Review of Housing Requirements (April 2013) and the subsequent Update to that Review (December 2013).
1.2At its meeting held on 17 October 2014 the Leader’s Policy Advisory Group (LPAG) considered a report concerning the GL Hearn (GLH) update to the Coventry and Warwickshire Joint SHMA, commissioned to address implications arising from the publication of the 2012-based Sub National Population Projections (SNPP) and of alternative economic forecasts for the area. The report was published in September and is available via the Council’s website.
1.3The JSHMA Update had concluded that, using the 2012 SNPP as a starting point, the objectively assessed housing need (OAN) for the overall housing market area is 4004 homes per annum (2011-2031), a slight increase on the original JSHMA conclusion that OAN was 3750-3800 homes per annum. At district level, the breakdown of this figure showed a significant increase in the need arising from Coventry that is partially offset by reduced need in most areas of Warwickshire, including Stratford District. The indicative OAN for Stratford District was 508 homes per annum, although this is based on more optimistic assumptions about household formation rates returning to those experienced prior to the economic downturn.
1.4The JSHMA Update also considers the economic forecasts produced by Experian (these were used to inform the initial JSHMA report) and Cambridge Econometrics (these were used to inform the Coventry and Warwickshire Strategic Economic Plan). The increased labour demand suggested by these economic forecasts suggests a need for 3747 homes per annum (Experian) or 4579 homes per annum (Cambridge) across the HMA. Expressing these figures at a district level is considered not to be robust, but indicatively the figures for Stratford are around 778 per annum (Experian) and 938 per annum (Cambridge). The figures suggest some degree of mismatch between economic and housing growth, the mismatch being more pronounced in individual districts than across the HMA as a whole.
1.5LPAG accepted that GLH’s conclusions had drawn attention to a potential weakness in the Council’s Submission Core Strategy around the need to present a coherent policy position on housing and employment, as required by paragraph 158 of the NPPF. In summary, the Council must demonstrate to the Inspector at the Core Strategy examination that it has made a proper assessment of employment growth prospects and undertaken sufficient joint working through the duty to cooperate to justify its level of provision for job growth in the district; and that the objectively assessed need and the housing requirement are both properly evidenced and the latter is appropriately aligned with the job growth provided for in the Core Strategy.
1.6Given the above, it was accepted that a further consolidated review both of the housing requirement and of the interaction between housing growth and job growth should be commissioned from ERM. The work was formally commissioned on 29 October 2014.
1.7The Cabinet is aware that the programme for the Examination of the Core Strategy was published early in November. Hearing Statements for the key housing and economic development matters had to be submitted by 2 December 2014. As a result, ERM have had to work very quickly to produce the Consolidated Review in time for it to inform and be submitted alongside the Council’s hearing statements. The Cabinet is additionally aware that the work gave rise to an indication that the housing requirement proposed in the Core Strategy should be revised from 540dpa to 565dpa. This was considered as an urgent item on 1 December and the revised figure was subsequently endorsed at the Council meeting on 15 December.
1.8The Consolidated Review was first published on 2 December in accordance with the timetable required by the Examination Inspector. A small number of drafting errors were subsequently identified and a corrected version was issued on 10 December. This report recommends that the final Consolidated Review (10 December 2014) be received into the Evidence Base. It is presented with the papers for this meeting.
1.9The Consolidated Review references the updated guidance set out in Government documents (NPPF and PPG). It provides an analysis of the demographic basis for assessing housing need and concludes that the latest available information indicates an objectively assessed housing need (OAHN) of 565dpa for Stratford-on-Avon District. It then looks in detail at the economic and employment growth prospects for the District. In accordance with the PPG guidance it considers whether OAHN needs to be adjusted to have regard to economic indicators, market signals or the need to increase the provision of affordable housing. It concludes that there is no evidence to require any adjustment. For ease of reference, the conclusions set out in Section 7 of the Review are attached as an appendix to this report.
2 Options available to The Cabinet
2.1The Cabinet has the following options:
Option 1:
- To consider the contents of the Consolidated Review of Housing Need and Requirementas evidence to inform the Core Strategy.
Option 2:
- To discount the Consolidated Review of Housing Need and Requirement as evidence to inform the Core Strategy.
2.2 Given that the key recommendation emerging from the Consolidated Review has already been endorsed by the Council and that the evidence prepared for the Core Strategy Examination Hearings makes significant reference to the document, The Cabinet is strongly recommended to favour Option 1.
3 Implications of the Proposal
3.1 Legal/Human Rights Implications
3.1.1 It is a legal requirement that the preparation of Local Plans is based on robust evidence.
3.2Financial
3.2.1There are no direct financial implications.
3.3 Environmental
3.3.1The need to accommodate a higher level of development over the period to 2031 will have certain environmental impacts that will be assessed when planning applications are submitted.
3.4Corporate Strategy
3.4.1 An increase in the overall level of housing provision will bring with it an increase in the number of affordable homes constructed. The available evidence suggests that the revised housing requirement produces a more appropriate balance with the Council’s ambitions for economic development in the District.
3.5 Analysis of the effects on Equality
3.5.1 No specific equality impact issues have been identified.
3.6 Risk Assessment
3.6.1 The Council’s evidence to the Examination Hearings would be severely compromised if the Consolidated Review were not to be accepted into the evidence base. This would constitute a significant financial and reputational risk.
4 Conclusion
4.1 The Consolidated Review provides fresh insight into the dynamics of the housing and labour markets within the District. It identifies important evidence that will be material to the examination of the Council’s Core Strategy. The adoption of the recommended modest adjustment of the housing requirement to 565dpa has produced a more robust position having regard both to the demographic evidence and to the improved balance it produces with the predicted level of job growth. The Cabinet is therefore recommended to endorse the proposal that the Consolidated Review be accepted into the Council’s Evidence Base.
Paul Lankester
CHIEF EXECUTIVE
Background Papers
ERM briefing paper “Consolidated review of Housing Need and Requirements”
Appendix
ERM CONCLUSIONS ON HOUSING REQUIREMENT
7.1.1 The aim of the Consolidated Review of Housing Need and Requirement has
been to ensure that the Core Strategy evidence on ‘objectively assessedneed’ and the housing requirement is robust and in accordance with theNPPF, PPG and good practice.
7.1.2 A particular focus of the Consolidated Review has been on the recentCWSHMA Update, which considered the latest 2012 SNPPs, and on theavailable employment growth evidence for SoAD. We have also consideredrelevant representations on the submitted Core Strategy and the Inspector’smatters and questions and for the examination.
7.1.3 The CWSHMA, in Table 97, identified the objectively assessed need forSoADC as 11,400 dwellings (570 dpa). The ERM Update Review conclusionwas that the objectively assessed need should be 525 to 540 dpa. The CoreStrategy, as submitted, sets a housing requirement of ‘at least 10,800additional homes’ over the plan period.
7.1.4 The CWSHMA Update identified a demographically assessed housing needfor SoAD, based on the 2012 SNPPs, of 508 dpa. Having reviewed thisprojection, our view is that, because it was based on the most recent fiveyears of migration into SoAD, this demographic projection should be adjustedupward to take account of migration assumptions derived from the ten yearaverage from the most recent data, which better reflects the migration levelsassociated with SoAD’s past and potential employment growth. This wouldyield a demographically assessed need projection of 11,300 dwellings overthe plan period, an average of 565 dpa. As the EPB agreed housing numbersfor other districts in the HMA already vary from the CWSHMA Update figures,making such an adjustment would not be incompatible with the overalladopted objectively assessed need for the SHMA of 4,004 dwellings pa whichshows a shortfall of 234 dwellings yet to be distributed among the districts.
7.1.5 Section 4 presents an independent review of the evidence in relation to pastemployment trends and the prospects for future employment growth in SoAD.In the recent past, since 2001, employment has been increasing by around 1-1.5% pa on average. Having considered a range of sources, including theExperian and Cambridge Econometrics/Warwick Institute for EmploymentResearch forecasts of job growth, also used in the CWSHMA Update, wehave provided an ERM Indicative Employment Forecast. This suggests nettotal job growth in SoAD over the plan period of 12,100 jobs. This increasereflects a fairly buoyant local economy, although a significant proportion ofthese jobs are likely to be relatively low paid or part time. Furthermore, asubstantial number of them, around 3,000, are ‘bounce back’ jobs lost during2008-2009, some of which have since been recovered, and for which thelabour force was already available in the district in 2011.
7.1.6 Section 4 also provides a review of the Core Strategy employment landallocations. SoADC’s 35ha target, which may well be exceeded, has anestimated capacity of around 8,000 (FTE) jobs. The Core Strategy seeks toencourage economic growth and, in order to provide an appropriate range andchoice of sites and premises over the plan period, for both new and existingemployers, it would be reasonable to make a nominal over-provision ofemployment sites. Our judgement overall is that the Core Strategy target of35ha is appropriate and will achieve an adequate provision to accommodatelikely job growth in the relevant sectors.
7.1.7 Section 5 examines the complex, often indirect, relationship between forecastadditional job numbers and future housing requirements in SoAD. The balanceto be sought is a matter of judgement, based on the evidence, including that inrelation to commuting. SoADC will be seeking to avoid unsustainablecommuting, but projections based on simple assumptions about job to residentratios and commuting rates are only a small part of that evidence. In practice,when there is a substantial increase in job numbers, a range of housing andlabour market adjustments will come into play.
7.1.8 By adopting a demographically assessed housing need of 11,300 dwellingsbetween 2011 and 2031, SoAD could accommodate a net additionalworkforce sufficient to take up 4,300 net additional jobs out of the 9,000 or soforecast to need additional labour. A further 2,000 could be taken up by out-commutersfrom SoAD transferring to local jobs. As a substantial proportion,around 60%, of the net additional jobs are likely to be in relatively low paidsectors and/or part-time, many such jobs are more likely to be taken up by in-commutersfrom nearby districts than by in-migrants, who would normally facehousing affordability difficulties. These are conservative estimates, which takeno account of other factors such as changes in working arrangementsincluding remote working.
7.1.9 Our analysis concludes that a proposed objectively assessed housing need(and requirement), based on the demographic analysis in Section 3, of 11,300dwellings is unlikely to lead to unsustainable patterns of in-commuting.However, if housing were to be provided above the demographic need level,which in itself could meet the labour demand of forecast new jobs as shownabove, there is a likelihood that a higher than planned proportion of new (andexisting) dwellings would be taken up by retired people or out-commutersseeking a congenial residential environment. In the latter case, while the netcommuting balance may improve, the aggregate amount of in and out-commutingwould increase. This could lead to a less rather than a moresustainable pattern of commuting.
7.1.10 A demographically assessed need, of 11,300 dwellings will provide forsubstantial in-migration for employment and would not constrain the economicgrowth potential of the district. Taking account of the evidence, it does notneed to be further adjusted. This conclusion takes proper account of theguidance in PPG paragraph 18.
7.1.11 The market signals evidence for SoAD and the rest of the HMA, set out in he
CWSHMA, is comprehensive and was prepared in accordance with the PPGand good practice. No new evidence has emerged since the CWSHMA thatsignificantly amends that evidence.
7.1.12 The assessment of affordable housing need in Section 10 of the CWSHMA,summarised in Table 66, would require an average of 133 dpa, spread overthe plan period. The CWSHMA notes that this assessment was based on‘zero net migration’ and offers the judgement that if the needs of in-migrantswere taken into account, the requirement for affordable housing would bearound 100 dpa higher. The Core Strategy, in paragraph 5.3.5, reports this asan affordable housing need for ‘around 200 households per year’.
7.1.13 The SHMA Update did not include an update of this analysis to take the latest‘zero net migration’ projections into account. Were this to be done, ourjudgement is that it would increase the average of 133 dpa, but not by asignificant amount. The CWSHMA analysis remains a sound basis for theCouncil’s affordable housing target.
7.1.14 In relation to market signals and affordable housing need, our conclusion isthat no further adjustment to the demographically assessed need of 11,300dwellings is necessary.
7.1.15 The overall conclusion of the Consolidated Review is that, taking the mostrecent evidence into account, the objectively assessed need for SoAD is foran additional 11,300 dwellings over the plan period and that this shouldbecome the basis for the Council’s housing requirement in the Core Strategy.