An updated algorithm designed by government to set how many new homes need to be built in local areas will lead to London and the South seeing a housing boom while swathes of the north will see fewer homes built, the Local Government Association has claimed.
The LGA said the new formula had introduced a stark variation in where new homes were required to be built without regard to the wider levelling-up agenda.
Analysis of the new government formula showed that, compared to the current formula, the highest percentage increase in new homes growth would be expected in the Midlands and the South, with lower growth rates in northern regions, it suggested.
The LGA warned that the new methodology would also disproportionately impact on rural rather than urban areas. “Some of the most rural places in England will see a requirement for a 59% increase in homes compared with those required to be built under the current algorithm, compared to a 20% increase in major urban areas.”
The association said that with nine in 10 planning applications approved by councils, and more than a million homes given planning permission in the last decade not yet built, “it is the housing delivery system that is fundamentally broken, not the planning system”.
The LGA called on the Government to use the forthcoming Spending Review to allow councils to retain 100% of Right to Buy receipts and be given the flexibility to set discounts locally in order to invest in new and existing stock.
Cllr David Renard, LGA housing spokesperson, said: “Councils have raised concerns over the Government’s new housing numbers and it is positive that ministers have indicated that they are willing to listen and work with local government to get this right.
“Under these plans, some parts of the country will have to ramp up housebuilding with existing targets doubled. Others, mainly cities in the north, will be told they need to build less, which risks reducing the number of homes they had earmarked for development and bulldozing their current house-building plans.
“This seriously jeopardises any ambition to level-up the country. Building new good quality and affordable housing is vital to regenerating our towns and cities, improving our health and wellbeing, creating jobs and enabling local economies to thrive and bounce back following the coronavirus pandemic.”
Cllr Renard added: “Algorithms and formulas can never be a substitute for local knowledge and decision-making by councils and communities who know their areas best. When decisions about housing need and developments are made locally, wider issues can be considered, such as ensuring they come with necessary infrastructure and affordable homes.
“If we are to truly fix our chronic housing shortage, the Spending Review needs to ensure councils have the tools, powers and flexibilities to plan for and deliver the quality homes and places our communities need."
Responding to the LGA’s analysis, Cllr Tom Beattie, Vice Chair of the District Councils’ Network, said: “The Government’s planning reforms are proposing a national house-building fiasco based on a muddy formula cooked up in Whitehall which rides roughshod over local housing need.
“Local communities must have the powers to shape the future of their local areas, where housing need is determined and supported by proper evidence, not arbitrary spreadsheets.”