The Government’s current assessment of housing need is broadly driven by affordability, with less pressure placed on more affordable markets to deliver homes as a result. However, low provision of housing could restrict the potential of economic investment through the levelling up agenda, particularly in areas that have not pushed adopted housing targets beyond the standard method calculation of housing need.

Across England, areas under Tier 1 prioritisation in the second round of levelling up funding have a lower housing target figure than those in Tier 2 or Tier 3. This is partly due to greater affordability of the Tier 1 local authorities resulting in lower housing target figures. The average annual housing requirement for a Tier 1 authority is less than 0.9% of existing stock, compared to an average of 1.3% in the rest of England.

If prioritisation for levelling up is partly driven by economic growth, then thought needs to be given to constructing a housing need metric that reflects this, outside of self-determined growth ambitions set out in Local Plans. A baseline for housing need and delivery should not react to just current affordability issues, but also planned economic investment. The current method does not prioritise this; over 85% of housing need across the North West is in Tier 1 local authorities, but total housing need across the entire region is lower than some individual London Boroughs. As Tier 1 areas are the targets for economic growth, they will likely need the greatest uplift in housing delivery, and as the chart below shows, this has a disproportionate impact in the North of England.

One challenge of delivering housing as part of levelling up is identifying an adequate supply of land. As shown in the previous article, there is very little vacant stock across the UK, even in locations that are economically underperforming. Tier 1 authorities currently have an average land supply of 6.5 years, suggesting there is potential land availability to increase housing supply in the short term. In the longer term, urban authorities with a strong pipeline of planned investment may need to place heavier reliance on strategic planning mechanisms in order to achieve growth in housing land supply.

Strategic planning for new homes

An increase in the supply of homes will be central to the success of rebalancing social and economic opportunities across the UK. But this will not be achievable without systems in place to distribute supply of new homes in city regions across local authority boundaries.

Scotland

Regional disparities in Scotland, despite the nation’s relatively strong GVA per head (ONS), are evident and have been for some time. To illustrate this, Edinburgh is in the top 10 of the UK sub-areas based on GDP, but East Ayrshire and North Ayrshire are in the bottom 10.

Levelling-up adds another piece to a complicated jigsaw in relation to the future of Scotland. With its separate planning system, it is unclear how UK Government levelling up funding directed straight to Scottish Local Authorities (without, currently, any input from Holyrood) relates to priorities established in regional City Deals or existing Local Development Plan agendas. Another conundrum fast approaching is how levelling up will fit with the regional spatial planning objectives of the National Planning Framework 4 when it is adopted as Scotland’s new statutory development plan early next year. The NPF4 does contain a national spatial strategy, sitting alongside a National Strategy for Economic Transformation which highlights the role of regional economic partnerships in driving productivity. Regional spatial strategies should identify areas for future population growth and align with regional economic strategies.

Scottish Local Authorities should therefore have a clearer national, regional and local framework to operate within. However, they will have to juggle UK and Scottish government priorities, and to use all of the money available, wherever it comes from, to make a real difference to some entrenched disparities across the nation.

Wales

Welsh planning policy is the most advanced in the UK for developing strategic spatial plans. Development plans are prepared at three scales; the National Development Framework, Regional Strategic Development Plans, and Local Plans. National and regional growth areas and connectivity corridors are defined in Future Wales, the national development framework. As a consequence, there are clearly defined “delivery geographies” for the new Growth Deals in Wales. Pan–Wales coverage is already in place through the North Wales Ambition Board, a freshly signed deal for Mid Wales, the Swansea Bay City Region and the Cardiff Capital Region.

England

Unlike in Wales and Scotland, there is no regional spatial planning in national planning policy in England. But with mayoral devolution a central feature of the levelling up agenda, combined authorities should play a significant role in driving large strategic infrastructure projects and cross-border housing and employment provision. However, the form of devolved local government will need to properly recognise the role of a joint Strategic Development Strategy, and fully incorporate it into local plan-making.

Despite the clear importance of strategic planning to achieve levelling up goals, only 61% of local authorities in England under Tier 1 prioritisation are part of an existing partnership/structure to produce a plan at this scale. Of those local authorities, 49% are in a non-statutory arrangement, meaning that there is no mechanism for binding the participating local authorities in the implementation of the plan once adopted. In contrast, 75% of Tier 3 authorities are part of a joint planning agreement.

Beyond strategic planning mechanisms, local authorities were previously encouraged to work together through the duty to co-operate to ensure that housing need that could not be met in a single LPA was accommodated elsewhere. The Levelling Up and Regeneration Bill will replace this with a more flexible “requirement to align”, which aims to simplify the plan production process (the duty to cooperate being a frequent reason for plans currently being found ‘unsound’). However, it remains to be seen whether the ‘requirement to align’ will result in plan-making across functional economic geography in the way that Levelling Up requires, or whether it can overcome the tensions that have hindered joint plan-making in many mayoral combined authorities to date.

Case study: West of England Combined Authority

The Government’s revised housing need calculation put greater pressure on core cities across England, with a view to increasing the delivery of homes on brownfield land. For Bristol, this hasn’t worked, with the city simply lacking the volume of brownfield land needed to meet an increased housing need. The only realistic solution to deliver at scale has been to work with neighbouring authorities North Somerset and South Gloucestershire through the West of England Combined Authority (WECA). Progress on the production of a combined spatial has been lengthy and difficult. Most recently, work on the spatial development strategy was halted in May 2022 “as unanimous agreement on the plan by the councils has not been reached.” If the strategy is withdrawn, it will be the second time that WECA’s efforts to produce a joint strategy have failed. 

The significant increase to Bristol’s housing need under the standard approach has been a key issue facing the combined authority, as well as a politically-charged approach to planning from each of the component authorities. These issues will be reflected in cities across the country, with central government intervention perhaps the only mechanism to drive the process forward. However, central government has repeatedly threatened but not intervened to bring forward delayed plans. In addition, any such intervention from central government risks undermining the agency given to devolved city regions, a core pillar of the levelling up agenda.

Core implications for planning

• As part of the Levelling Up Bill, revisit the approach to Mayoral Combined Authorities and Combined Authorities to properly define areas for strategic plan-making (as part of the development plan), with similar political backing to that demonstrated in London.

• Replace the duty to cooperate with a requirement for coordinated (or jointly produced) strategic development strategies. These set housing and employment growth targets, specialised by area (i.e. city region), with a clear priority of planning to assist UK productivity growth.

• Ensure funding priorities in Scotland and Wales are adequately coordinated with the devolved governments.

• Ensure in England workable incentives to produce up-to-date local plans, and penalties for failure, based also on reforms to speed up plan-making, notably in city regions and locations with higher concentrations of Tier 1 areas.

• Adopt a place-specific approach, which ensures that job generation is aligned with housing delivery priorities.

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