Could underestimated housing need cramp our economy?

The Yorkshire economy still has a huge opportunity to grow, thanks to its own efforts and the extra push coming from the Northern Powerhouse project.

Growth means jobs, naturally, and jobs mean more people coming to the region. They’ll all need somewhere to live but as planning experts, we at Barton Willmore we are seriously concerned that new Government proposals could leave this region with a damaging shortfall in the housing supply.

A recent White Paper sets out reforms designed to boost the supply of new homes across the country, and calls for a new way to calculate the housing requirements in each region. It argues that the current method is complicated and hard for people to understand, and also causes expensive planning delays.

The Government will be consulting on this new way to work out the measurement, which is called the Objectively Assessed Need. So at Barton Willmore, we decided to work out exactly what the new method might mean, based upon recommendations which have already been put forward by the Government’s Local Plans Expert Group. We used it to model Yorkshire and Humber’s housing needs – and discovered that the result suggests the region’s requirements are 25 per cent lower than when calculated under the current method.

How can that be? Well, the lower estimate is created because the new method removes a key ‘jobs and homes test’ that balances housing supply with jobs growth forecasts. The test is designed to make sure the number of available houses does not become a drag on our region’s economic growth. And after our analysis, it’s our opinion that removing it from the calculation might in fact achieve the exact opposite.

The Northern Powerhouse strategy aims to unleash the full economic potential of the North, including Yorkshire. The region is already successfully stimulating its economy via jobs growth. For instance, as the Leeds City Region Strategic Economic Plan sets out, West Yorkshire is already attracting top-level workers across the digital, energy, health innovation and professional services sectors.

We must recognise the role the housing sector plays in any economic growth and we must not underestimate the provision that will be needed for this growing workforce. Whilst we recognise that National Policy still allows for an integrated approach in the assessment of homes and jobs, the removal of the jobs homes test in the calculation of future housing need does nothing to promote this approach.

Following our in-depth analysis, we are worried that local planning authorities could generate misinformed statistics by using the proposed new formula. The result would be a serious housing shortfall in Yorkshire that could hamper the economy.

In fact, our analysis suggests moving to this new way of calculating housing need could even widen the North-South prosperity divide. We also modelled our neighbouring regions, the North East and North West, and found that they could also see a fall in their estimated housing requirements, by 11 percent and 19 percent respectively. So as the Government’s consultation progresses, at Barton Willmore we will champion the cause for including the ‘jobs and homes test’ in the overall calculation.

If this region is to grasp fully the enormous opportunities presented by the Northern Powerhouse vision, the ability to carry out accurate economic modelling across our Local Planning Authorities is absolutely crucial.