Overview and Scrutiny Committee Report
Report of Director of Corporate Services
Author: James Dearling
Tel: 01483 444141
Email: [email protected]
Date: 15 March 2016
Request for the Committee to consider the SHMA
(Strategic Housing Market Assessment)
In accordance with Council’s Overview and Scrutiny Procedure Rule 9,
Entitlement to place items, including a Councillor Call for Action, on an Agenda,
Councillor Susan Parker has requested the Overview and Scrutiny Committee
consider whether scrutiny of the SHMA should be added to the Overview and
Scrutiny work programme.
Please find below:

Overview and Scrutiny Procedure Rule 9;

Overview and Scrutiny Work Programme Development and Topic
Selection Flowchart [Appendix 2 to the Overview and Scrutiny Procedure
Rules];

Councillor Parker’s request; and

Officers comments on proposal.
The Committee should consider Councillor Parker's request in accordance with
the Overview and Scrutiny Work Programme Development and Topic Selection
Flowchart.
Overview and Scrutiny Procedure Rule 9: Entitlement to place items, including
a Councillor Call for Action, on an Agenda
In normal circumstances, requests to include an item on the OSC [Overview and Scrutiny
Committee] agenda will be forwarded to the chairman and vice-chairman of the OSC for
consideration in accordance with the procedure set out in Procedure Rule 7 above.
However, any member of the OSC or its sub-committees shall be entitled to give written
notice to the Director of Corporate Services that he or she wishes an item relevant to the
functions of the committee or sub-committee to be included on the agenda for the next
available meeting of the committee or sub-committee. Any such notification shall be
accompanied by:
(a)
reasons for the proposed item, including justification for the item not being
progressed through Procedure Rule 7; and
(b)
the outcome that the councillor would wish to see in response to the OSC’s or subcommittee’s consideration of the matter.
On receipt of such a request, the Director of Corporate Services will ensure that it is included
on the next available agenda. The OSC shall consider the request in accordance with the
OSC work programme development and topic selection flowchart attached as Appendix 2 to
these procedure rules.
Notwithstanding the above provisions, any councillor may refer a councillor call for action
(CCfA) to the OSC for consideration in accordance with the protocol attached as Appendix 1
to these procedure rules.
The OSC shall also respond, as soon as its work programme permits, to requests from the
Council and, if it considers it appropriate, the Leader/Executive to review particular areas of
Council activity. Where the OSC does so, it shall report its findings and any
recommendations back to the Leader/Executive and/or the Council.
Proposed question raised by Cllr Susan Parker
I request that the Overview and Scrutiny committee agrees to scrutinise the SHMA
(Strategic Housing Market Assessment) as one of the elements of the evidence base
underpinning the Local Plan, and to appraise the Housing Target for Guildford as
part of this process. I would request that this item should be urgently added to the
work programme of this committee. In practical terms this must be done before full
council consideration of the draft local plan, since the housing number underpins the
local plan.
The SHMA and the housing target should be reviewed in terms of
1.
OAN and Targets
We should consider whether Guildford Borough Council should regard the
recommended proposal from the SHMA (included within the report as the
“objectively assessed housing need” or OAN) as the actual housing target (as we
understand it is intending to do) or whether a different housing target should be
selected. (The case of Gallagher Homes v Solihull sets out the differences between
housing projections, housing need and housing requirement (or target), and
differentiates between these - see below. GBC treats these as the same and has
not assessed the OAN. Each element should be evaluated.)
2.
Application of constraints
Constraints have been applied to the OAN in other boroughs, and Guildford BC has
received ministerial advice that Greenbelt and other factors including infrastructure
are legitimate grounds for constraining the housing target, sent by Sir Paul Beresford
MP to the council. Notwithstanding this we now understand that it is anticipated that
no constraints will be applied. Should this committee seek legal advice about the
scope to apply such constraints to the OAN in our borough? Should Guildford apply
constraints to the OAN?
3.
Is the OAN properly constructed?
We need to determine whether the OAN set out within the SHMA is itself properly
constructed and calculated. The assumptions and parameters for the OAN should
be properly appraised. Sensitivity analyses should be carried out.
4.
Should the OAN contain a growth assumption?
We do know that the derived OAN includes an assumption of growth. We also know
that Waverley has chosen to use an OAN that does not include growth. Why did
Waverley use the OAN that does not include incremental (“super”) growth, only
organic increases, and why have Guildford chosen to apply a substantial incremental
growth factor without a popular mandate for this policy decision? This must be
considered.
5.
Need for openness
This committee should exhibit the culture of openness and scrutiny that is being
claimed as part of the new administration.
Please can the councillors in committee vote on this matter.
I would request a recorded vote.
Reasons for the item
Background
The request for scrutiny of the SHMA by this committee (and potentially other
established parts of the evidence base for the Local Plan) was raised by me (Susan
Parker) at the informal meeting to discuss the work programme of the Overview and
Scrutiny committee on 12 January 2016. At that discussion it was agreed to defer
discussion of this topic, and a vote on this topic, to a future committee meeting.
This request followed publication of the SHMA, and the associated housing OAN and
targets for the borough, during December 2015 (although the SHMA is dated
September, release of the document only took place in December 2015).
Importance of the SHMA
The SHMA - both in terms of whether it is constrained, and its core output - is critical
to the proposed housing target within the borough.
Promise of consultation
It is currently being treated as an established part of the evidence base, and is
apparently being used to inform the draft local plan, but it has not yet been appraised
formally by any internal process or any external consultation.
Stephen Mansbridge, when Leader of the Council, gave a public undertaking that the
revised West Surrey SHMA would be subject to formal public consultation when it
was published. [The previous Guildford SHMA, only ever published in draft form, was
subject to some measure of public consultation]. The previous Council Leader
resigned before publication of this current document, and this promised public
consultation has never taken place. There has been no formal internal debate on
the calculations within the council. This is not openness. We need to review the
calculations, certainly internally within the council, and ideally also within a public
forum, so that within Guildford we can agree that they are right.
Need for review of OAN and housing target
Review of the OAN is important in any event, but even more vital if the OAN is used
without constraint.
A review of the model, and the derivation of the OAN, with sensitivity analyses,
should be within the scope of this committee, or a working party from this committee
that could be set up. This should be able to scrutinize all aspects, including, for
example, whether the demographic projections are accurate given the distortion in
the age profile of the population caused by the presence of Surrey University.
If the model is deemed to be confidential such confidentiality on this matter must not
extend to councillors. We must be in a position to consider whether the SHMA report
is valid, to appraise the matter fully and to understand the numbers, otherwise we
are not able to give informed consent to the issue of the draft Local Plan.
The House of Commons Select Committee report on the Operation of the NPPF
stated (at para 70):
“We are concerned about the widespread unease surrounding the results of SHMAs.
Communities need to have confidence that the figures on which their local plans are
based are accurate”
This widespread unease is shared by the community within Guildford borough, and it
should be addressed by a proper review of the policy decisions implicit within the
SHMA and the derived housing target.
The housing target number is critical in the structure of the Local Plan. That housing
number determines the scale of development within the borough for the next 15
years, and will change the life of every resident within the borough. The scale of the
housing number selected will determine whether or not it is necessary to consider
building on green fields, or whether it is possible to protect our countryside (as most
councillors have undertaken to do). The housing target will have an impact on every
decision made within the borough for the life of the local plan, in relation to planning,
to housing and to economic matters. We may disagree on the conclusions, but that
does not mean we should fail to discuss this properly in committee or avoid such
discussion.
To accept the housing target blindly would be irresponsible. Every member of this
council has a responsibility to understand how the numbers are calculated and to
assess whether the assumptions used are appropriate. It is not sufficient to delegate
this to a consultant. What if the consultant is venal or inadequate? What if there are
basic errors in computation or understanding? What if the assumptions are set, in
error, to give an inflated figure?
As councillors, we have the responsibility, morally and legally, to consider the
housing number and assess whether we agree with the consultants’ reports. That
housing number is not, ultimately, GL Hearn’s responsibility, nor the responsibility of
Justin Gardner Consulting. It is our responsibility as councillors to consider whether
we agree with the conclusions reached. The consultants have done work for
Guildford BC, but it is Guildford that has to live with the consequences of the
decision taken by Guildford Borough Councillors, and so we must be satisfied with
the consultants’ work.
Constraints
We have had a number of letters, from planning ministers, from the head of the
planning inspectorate and from MPs, confirming that it is admissible to apply
constraints to OAN in order to arrive at targets. This has also been confirmed by
case law. Gallagher v Solihull sets out most clearly the distinction but there is
substantial other case law indicating that there is no need to meet housing OAN
where there is significant Green Belt. Such constraints have not been applied. This
is a policy decision.
We have the choice to reduce the OAN to a more acceptable number, and to a
number which will not impose intolerable burdens on Guildford’s infrastructure. Our
infrastructure is inadequate for substantial increases in housing. Roads, sewerage,
water supplies, energy supplies, medical and educational services cannot cope and
the geographical constraints of a “gap town” mean that funding alone is not a
solution to (eg) road infrastructure problems. We have 89% Green Belt, and we have
around 44% AONB, and a significant amount of land affected by the Thames Basin
Heath SPA, all of which are legitimate constraints as set out by National Planning
Policy Guidance (see below) which could reduce the housing target relative to OAN.
This committee should scrutinise the decision as to whether constraints should be
applied to the OAN.
Understanding of assumptions and agreement with them
There are a large number of assumptions implicit within the model, and we must
determine whether the appropriate assumptions have been made. Anyone who has
ever engaged in any financial or planning modelling will realise that what seem to be
very small or trivial changes in assumptions can have huge impact in terms of
outcomes. The only way to explore the sensitivities here is to look at varying
scenarios, and assess different assumptions. The birth rate, the rate of university
students who stay resident in the area, the number of overseas students attending
the University of Surrey, the expected inflation rate and whether or not there is
continued membership of the EU will all have huge impacts on the eventual outcome
of the numbers. (Note: although the procurement rules from Guildford prohibit subcontracting, GL Hearn has subcontracted the work to Justin Gardner Consulting Ltd
on two occasions.)
Justin Gardner Consulting Ltd advertises its model as permitting sensitivity analyses.
We must therefore have access to that facility (which has been advertised as one of
the merits of the service we as a Council have bought), to explore sensitivities. We
should choose to run various iterations of the model, to explore such sensitivities.
Ideally we would also have access to the mechanism of the model to appraise the
inbuilt assumptions which are implicit within the model itself. Any spreadsheet has
implicit assumptions which are suggested by the way calculations are made and we
should be able to appraise and understand these implicit adjustments.
Reviewing sensitivities is suggested within the National Planning Policy Guidance see paragraph appended below (paragraph 017) which states “plan makers may
consider sensitivity testing, specific to their local circumstances, based on alternative
assumptions in relation to the underlying demographic projections and household
formation rates. Account should also be taken of the most recent demographic
evidence including the latest Office of National Statistics population estimates.
Any local changes would need to be clearly explained and justified on the basis of
established sources of robust evidence.”
As plan makers, councillors are, within NPPG, therefore tasked specifically with
explaining any divergence from ONS estimates clearly, and justifying these on the
basis of robust evidence. Evidence which cannot be reviewed cannot be deemed,
either by the community or by an inspector, to be robust.
Significance of the growth assumption
One of the most critical assumptions is the assessment of growth. Guildford BC has
chosen to apply assumptions of significant economic growth to the population model.
This is not organic growth but is seeking incremental “super” growth, which is not
necessarily a matter that has been considered as part of any consultation.
The previous SHMA, with very similar housing target numbers (albeit slightly lower)
had no growth assumption. New “super growth” assumptions have been introduced
in this SHMA, and this has resulted in housing numbers that are raised (the current
proposal is to use a figure of 693 dwellings per annum as OAN and Target).
This is an increase from the OAN/Target of 652 dwellings per annum used in the
previous draft Local Plan.
The previous SHMA did not include any uplift for incremental growth in assessing the
OAN. If the same methodology had been used as for the last report, this would have
resulted in significantly lower numbers. The conclusions within the current SHMA
present a core OAN of around 517 dwellings per annum for Guildford. These have
then been uplifted for growth, affordability, possible increase in student numbers etc.
This new inclusion of growth (giving consequently much higher housing numbers) is
a very serious policy decision which needs to be considered fully. Clearly the 34%1
uplift from (say) 517 to 693 homes means 35202 homes over the life of the plan.–
which would – for example - save at least one of the supposed strategic sites from
development - and possibly more.
Gallagher v Solihull (quoted below) notes that the OAN should be derived prior to
any adjustment arising from policy; and that policy could, if desired, reduce the core
OAN on the basis of the constraints within the area (ie to a lower number than 517
above) or conversely could increase it to a higher number on the basis of a policy
decision. This 693 is however not the OAN itself but a “policy-on” number which is
higher than OAN. This is a major policy decision incorporating growth inflating the
target above the actual OAN.
This committee needs to scrutinise these policy decisions and ensure that the
implications are understood by councillors who will be voting on it. There is
considerable public concern about the reliability of the housing numbers. We need
to undertake a formal review and to agree the calculations so that we can justify
them in public and in front of the inspector.
Importance of this committee undertaking this review
It is important that this matter is reviewed within this committee because it is only this
committee that has the legal ability, both in general law and within the constitution of
this council, to challenge the decisions of the Executive.
I would submit that this matter complies with the requirements of the topic
selection flowchart as set out on page 64 of part 4 of the Guildford Borough
council constitution, and so I urge councillors to approve this as a proposal.
Desired outcome
A working party to be set up to consider
 OAN and housing targets set out in the SHMA (and scrutinise its assumptions)
 Running various sensitivity analyses of the SHMA
 Should growth be included in the calculation of OAN?
 Whether constraints should be applied to the SHMA/OAN?
 What is the appropriate housing target?
Supporting notes
1)
1
2
NPPF para 14 and its footnotes
(693 dpa-517 dpa)/517 dpa= 34% uplift
(693 dpa-517 dpa) x 20 years = 3520 homes
2. NPPF paragraph 182
3. NPPF Paragraph 159
4. Gallagher v Solihull
As described by the judge in Gallagher vs Solihull at para 37 three elements must be
distinguished:
“i) Household projections: These are demographic, trend-based projections
indicating the likely number and type of future households if the underlying trends
and demographic assumptions are realised. They provide useful long-term
trajectories, in terms of growth averages throughout the projection period. However,
they are not reliable as household growth estimates for particular years: they are
subject to the uncertainties inherent in demographic behaviour, and sensitive to
factors (such as changing economic and social circumstances) that may affect that
behaviour. Those limitations on household projections are made clear in the
projections published by the Department of Communities and Local Government
(“DCLG”) from time-to-time (notably, in the section headed “Accuracy”).
ii) Full Objective Assessment of Need for Housing: This is the objectively
assessed need for housing in an area, leaving aside policy considerations. It is
therefore closely linked to the relevant household projection; but is not necessarily
the same. An objective assessment of housing need may result in a different figure
from that based on purely demographics if, e.g., the assessor considers that the
household projection fails properly to take into account the effects of a major
downturn (or upturn) in the economy that will affect future housing needs in an area.
Nevertheless, where there are no such factors, objective assessment of need may
be – and sometimes is – taken as being the same as the relevant household
projection.
iii) Housing Requirement: This is the figure which reflects, not only the assessed
need for housing, but also any policy considerations that might require that figure to
be manipulated to determine the actual housing target for an area. For example, built
development in an area might be constrained by the extent of land which is the
subject of policy protection, such as Green Belt or Areas of Outstanding Natural
Beauty. Or it might be decided, as a matter of policy, to encourage or discourage
particular migration reflected in demographic trends. Once these policy
considerations have been applied to the figure for full objectively assessed need for
housing in an area, the result is a “policy on” figure for housing requirement. Subject
to it being determined by a proper process, the housing requirement figure will be the
target against which housing supply will normally be measured.”
5 National Planning Policy Guidance on housing need and adjustments
Paragraph: 017 Reference ID: 2a-017-20140306
Can adjustments be made to household projection-based estimates of housing
need?
The household projections produced by the Department for Communities and Local
Government are statistically robust and are based on nationally consistent
assumptions. However, plan makers may consider sensitivity testing, specific to their
local circumstances, based on alternative assumptions in relation to the underlying
demographic projections and household formation rates. Account should also be
taken of the most recent demographic evidence including the latest Office of National
Statistics population estimates.
Any local changes would need to be clearly explained and justified on the basis of
established sources of robust evidence.
Issues will vary across areas but might include:
 migration levels that may be affected by changes in employment growth or a one
off event such as a large employer moving in or out of an area or a large housing
development such as an urban extension in the last five years
 demographic structure that may be affected by local circumstances or policies eg
expansion in education or facilities for older people
Local housing need surveys may be appropriate to assess the affordable housing
requirements specific to the needs of people in rural areas, given the lack of
granularity provided by secondary sources of information.
Revision date: 06 03 2014
6.
National Planning Policy Guidance on Constraints
Paragraph: 044 Reference ID: 3-044-20141006
Do housing and economic needs override constraints on the use of land, such as
Green Belt?
The National Planning Policy Framework should be read as a whole: need alone is
not the only factor to be considered when drawing up a Local Plan.
The Framework is clear that local planning authorities should, through their Local
Plans, meet objectively assessed needs unless any adverse impacts of doing so
would significantly and demonstrably outweigh the benefits, when assessed against
the policies in the Framework taken as a whole, or specific policies in the Framework
indicate development should be restricted. Such policies include those relating to
sites protected under the Birds and Habitats Directives, and/or designated as Sites
of Special Scientific Interest; land designated as Green Belt, Local Green Space, an
Area of Outstanding Natural Beauty, Heritage Coast or within a National Park or the
Broads; designated heritage assets; and locations at risk of flooding or coastal
erosion.
The Framework makes clear that, once established, Green Belt boundaries should
only be altered in exceptional circumstances, through the preparation or review of
the Local Plan.
Officers comments on Proposal
Planning Policy Manager’s comments in relation to paragraph 1. OAN and
Targets
GBC does not treat the OAN and the Housing target as the same. The Local Plan
process has sought to establish if the OAN can be met in a sustainable way. This
has involved consideration of constraints to development including AONB, Green
Belt, flooding and infrastructure needs. The housing target, which is yet to be made
public, is produced in light of the OAN and is the result of applying constraints to
possible housing sites and establishing if any adverse impacts of doing so would
significantly and demonstrably outweigh the benefits of meeting the OAN.
Officer comment in relation to paragraph 2. Application of constraints
GBC has applied constraints. Many sites that have been proposed by developers
have not been included in the Local Plan as a result of applying those constraints.
This is true for sites in both urban and rural areas.
Officer comment in relation to paragraph 3. Is the OAN properly constructed?
Much work has been undertaken by GL Hearn in response to comments received in
relation to the joint SHMA from all three borough stakeholders. We remain
convinced that the methodology followed has resulted in a robust document that
underpins the Local Plan. This will be tested at the Examination.
Officer comment in relation to paragraph 4. Should the OAN contain a growth
assumption?
The employment assumptions are not created as part of the SHMA and were not
produced by GL Hearn. The Employment Land Needs Assessment provides a
forecast figure of employees within the borough that is used within the SHMA. The
figure was produced by deriving a mean average figure from three nationally
recognised employment forecasting companies. It is not super growth, it is a realistic
forecast of likely employment growth over the plan period. Both GL Hearn and our
barristers consider the approach to be appropriate.
Officer comment in relation to paragraph 5. Need for openness
The Plan making system is transparent and is open to significant scrutiny at many
stages. Ultimately an independent government inspector will report on his/her
findings with recommendations on the plan.
Implications for the Local Plan
Scrutiny sessions are likely to see the Local Plan consultation delayed from June to
September. GL Hearn would need to be involved to answer detailed questions.
An additional issue is that the document is a joint document with Woking and
Waverley. Any alterations to the document would need to be agreed with both other
parties. Given both parties have published the document and are using it to inform
their ongoing local plan work they are unlikely to welcome any further uncertainty in
relation to the methodology.