In late March, the Office for National Statistics (ONS) published population projections for England forecasting significantly lower growth than previously predicted. The 2018-based sub-national projections forecast average annual population growth between 2018 and 2028 of just 277,500, down from the 320,000 annual average forecast in the previous 2016-based projections and 356,000 in the 2014-based projections (see table and bar chart below).
The figures have extra significance for planners because population projections lie at the root of the government's standard methodology for calculating housing need for individual local authorities. The standard method, which in most cases sets the housing requirement for councils' local plans, is currently based upon household formation projections which themselves are directly derived from the population projections.
While the standard method is currently under review, the latest ONS numbers could have a significant impact upon vital calculations of housing need. Planning consultancy Lichfields has calculated that if these figures were to be rolled forward into the existing standard method, which is still underpinned by the 2014-based projections, it would produce a national housing need for England of just 207,000 homes per year. This is less than what is being produced now and vastly below the government's of-stated 300,000 homes a year target.
But it is not just in terms of the overall quantum of new homes that projections cut directly against the government's stated housing policies. The ONS figures also starkly revise down estimates for population growth in cities and urban areas in favour of more rural locations and sharply reduce estimates of population growth in high-value areas of the wider South East. Shelly Rouse, principal consultant at the Local Government Association's Planning Advisory Service, says the changes have the potential "to be hugely significant".
In London, according to Lichfields, predicted population growth is nearly two-thirds lower under these projections than the 2014 projections. In the East of England and the South East, growth is around half that level. The same analysis shows that, while population is forecast to grow in university towns and cities by a modest 5.9 per cent over 25 years, it will grow nearly three times as fast in remote coastal and rural locations. Yet communities secretary Robert Jenrick said in January that the review of the standard method would be designed to encourage more building "within and near to urban areas".
"These projections see massive falls across areas of government priority for growth, such as the Oxford-Cambridge Arc, Birmingham and Northern Powerhouse cities like Manchester, Leeds and Sheffield," says Andrew Lowe, senior planner at consultants Turley. "There's an increasing detachment in the population projections from what the government says it wants for the housing market."
The sheer volatility in the figures, making them a very difficult basis for long-term plans, has also raised concerns. In Luton, for example, the forecast has moved from the 2,300 annual growth predicted in the 2014-based projections to a decline of 735 in the most recent. Part of the reason for such big swings is that the ONS used a new methodology for the latest figures and took account of only two years of population data rather than the usual five.
But some say the figures also reflect a period of constrained housing delivery in many urban areas, underlining the danger of using projections based on historic trends to formulate future policy.
Barney Stringer, a director at consultants Quod, says the numbers "simply reflect the consequences of constrained housing supply in the past". Cristina Howick, planning director at consultant Stantec, adds: "You can see here the result of just projecting forward from what's happening now."
The figures have little immediate practical impact. The standard method was never intended to be updated upon publication of new population projections. Instead, any changes will wait until release of revised household formation projections, which usually follow around six months later. In any event, in 2018, the government put a temporary stop on that process when the 2016-based household projections came out. So, for the purposes of generating housing need figures in local plans and deciding appeals, the 2014-based projections are likely to remain the starting point until the review of the standard method is complete.
The only authorities for whom the numbers could prompt immediate action are those such as North Hertfordshire and Central Bedfordshire, which submitted plans for examination under transitional arrangements prior to the introduction of the standard method and still await adoption. The transitional arrangements state that the latest population data should be used for calculating housing need. Tom Baker, an associate director at Savills, said that, if the new projections were used to justify revising down housing targets in the plan, objectors would be likely to point out that the figures, being reliant on just two years' of data, "are not really appropriate for projecting long-term housing needs".
This situation could make it harder to win local support for housing numbers in local plans, experts are warning. "It feels slightly ludicrous to be using a 2014-based dataset that is so long in the tooth. Objectors and interested parties will certainly be making that case," says Rouse. How the new data will be incorporated into a revised standard method is now "the million dollar question" for planning authorities, she says. Howick says the figures remain the only valid starting point for a future standard methodology, albeit one that is in need of radical reform.
Given the gap between the latest projections and government ambitions, Lowe suggests that the reliance on population projections as a basis for the standard method should now come to an end. Likewise, Matthew Spry, senior director at Lichfields, says the figures "reinforce why we think government is likely to move away from such projections as the starting point" and create "a new approach" prioritising urban growth and the 300,000-home target.