Watchdog warns MHCLG over planning system's ability to deliver 300,000-home target

The planning system "is not working well" and the government must "take this much more seriously" in order to meet its own target of building 300,000 homes per year from the mid-2020s, the National Audit Office (NAO) has warned.

Housebuilding: watchdog warns over delivery
Housebuilding: watchdog warns over delivery

The public spending watchdog has today published a report looking at how the Ministry for Housing, Communities and Local Government (MHCLG) "supports the planning regime to provide the right homes in the right places".

The NAO said that between 2005-06 and 2017-18, 177,000 new homes per year have been built on average across England.

To meet its 300,000-home ambition, the NAO said that the MHCLG "will need to oversee a 69 per cent increase in the average number of new homes built since 2005-06."

The report examined the government’s recent changes to the planning system which are aimed at boosting housing delivery, including its new housing delivery test.

It said that the test "holds local authorities to account for providing new homes, but this is not fully within local authorities’ control".

"Local authorities can influence home-building by, for example, identifying land in their areas on which developers can build, facilitating the provision of infrastructure and considering planning applications. However, as local authorities are not major house-builders they cannot increase the numbers of new homes directly through their own efforts," the report said.

It said that the MHCLG "needs to assess the numbers of, and the potential implications for, local authorities that are at risk of failing the housing delivery test and set out how it will support those local authorities".

Elsewhere, the report noted "weaknesses" in the government’s new standard method for assessing housing need. It said that the method "gives local authorities limited flexibility to reflect local circumstances" and said it is "unclear whether the methodology is consistent with the overall ambition for 300,000 new homes per year by the mid-2020s."

However, the report noted that MHCLG intends to revise the standard method, so it is consistent with its 300,000-home target.

Elsewhere, the report said that the "way infrastructure is funded is complex and lacks cohesion".

It also said that "the system to get developers to contribute to the cost of infrastructure and affordable housing needs to work more effectively, and local authorities, with [MHCLG’s] help, must apply tools more rigorously and consistently."

Recommendations in the report include:

  • MHCLG "needs to regularly monitor the gap between the number calculated by the standard method, local authorities’ own assessment and the ambition for 300,000 new homes and assess the risks of not meeting its ambition."
  • The department’s "performance metrics for local authorities and the Planning Inspectorate for dealing with planning applications and appeals need to reflect performance more fully, the process in its entirety and take capacity into account."
  • The department "needs to work with local authorities and other government departments to ensure that the necessary infrastructure is funded and delivered."
  • The department "should work with industry bodies on detailed research on the skills gaps in local authorities’ planning teams, particularly on the shortages of experienced planners with specialist skills sets."

Amyas Morse, the head of the NAO, said: "For many years, the supply of new homes has failed to meet demand. From the flawed method for assessing the number of homes required, to the failure to ensure developers contribute fairly for infrastructure, it is clear the planning system is not working well.

"The government needs to take this much more seriously and ensure its new planning policies bring about the change that is needed."

Housing minister Kit Malthouse MP said: "I recognise the challenges identified by the NAO, and the simple truth is over the last three decades, governments of all stripes have built too few homes of all types.

"We are determined to build the homes this country needs, and planning plays a key role in our desire to build more, better, faster.

"But we should also acknowledge that more than 222,000 homes were delivered in 2017-18, the highest level in all but one of the last 31 years.

"We’re conducting independent reviews on build out rates and planning inquiries. And through multi-billion pound funding, planning reforms and giving councils the freedom to borrow more to build homes, we’re helping to make the housing market work for everyone."

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