Oxford City's housing plan has been rejected. Why?

[Editor's note: since publishing the piece originally, we received a statement from the Liberal Democrats. We have duly edited the piece to include the statement. This is a developing story.]

In a month when the headlines are all full of the Labour Government’s intentions to build 1.5m new homes, no one was expecting that same Government – through its Planning Inspectorate, or PINS for short – to reject Oxford City Council's Local Plan on the grounds it proposes building too many houses.

And though this may seem an abstruse argument between civil servants and a local council, if you live in Oxfordshire and care about your rent, your mortgage, and your commute, this matters to you. (For a more detailed primer of Oxford's housing problem, our Housing Week series starts here.)

Cllr Susan Brown, leader of the Labour-controlled City Council, said:

We are alarmed and extremely disappointed by the recommendation to withdraw our Local Plan 2040 from public examination.  The planning inspectors have failed to grasp the seriousness of Oxford’s housing crisis and the number of new homes we need to tackle this crisis – and don’t appear to have heeded the clear message from government which requires all councils to up their housing delivery ambitions.

The Planning Inspectorate letter was long, but if we had to pull out one sentence, it would be this:

We do not consider that the Council has engaged constructively [...] in relation to the strategic matters of housing needs and unmet housing needs

Oxford Liberal Democrats however have issued the following statement to the Clarion:

Labour have failed to cooperate with their neighbouring councils, and that has thrown delivery of the housing we desperately need into disarray. Oxford Liberal Democrats call on the Labour administration to cooperate closely with all other councils in Oxfordshire to meet Oxford’s housing need, and to go further to meet our own need within the existing city boundary, particularly by putting housing ahead of yet more office space that threatens to send the cost of living even further through the roof.

Let's pick the bones out of this.

What happened?

Oxford City Council, like (almost) all city or district councils, wrote a Local Plan. This is intended to be the framework on which all planning in Oxford City will be judged until 2040. It details the provision of housing development within Oxford City and a needs assessment justifying it. You can read it in full but this extract from the plan gives a summary:

Legally, the Local Plan must be approved by the Planning Inspectorate. Imagine if our old friend Farmer Giles of Ham had 40 fields beside the Windrush. He cosied up to the local authorities and hatched a plan to build a million houses with no employment even close by. The consequences of that for the local infrastructure (employment, sewage, utilities, transport) would be immense. So all the Local Plans get checked by central Government’s Planning Inspectorate to balance the needs of communities all around the country. Once the council and PINS have agreed on a housing allocation - that is, how many houses to build in total - planning applications work to that allocation as part of the signed off Local Plan.

Oxford City Council proposed that 1,416 (or 1,322 depending on different scenarios) homes would be needed each year until 2040. Only 462 of these would be built inside Oxford’s boundaries. The neighbouring districts (Vale of White Horse, South Oxfordshire, West Oxfordshire, and Cherwell) would have to take the overspill.

But on Friday, PINS rejected Oxford City's Local Plan which proposed exactly that. We take this rejection as our base text, along with Oxford City Council's response to this.

Why?

This is where it gets muddy.

The default method for assessing housing need within the National Planning Policy Framework (NPPF) is the “standard method” which calculates how many homes are needed based on housing demand and economic growth of an area. Oxford City Council decided to use a different method, one which forecast more houses.

The rationale for this is that Oxfordshire is an economic hotspot, and thus the standard method understates demand. Instead, an 'Oxfordshire method' was agreed across the county. The PINS report (paragraph 18) states that the standard method calculated that Oxfordshire needed 762 homes per year of the plan. The 'Oxfordshire method' calculated that Oxfordshire needed 1416 homes. The proposed local plan says that only 462 homes could be built within Oxford City per year.

But if it was previously agreed across the county, why are the four rural districts not joining Oxford City Council in their outrage?

Once upon a time, Oxford City and the surrounding councils had a pan-Oxfordshire agreement on how many homes needed to be built, and where they might go. This became known as the “Oxfordshire Plan”, and saw the Labour City Council working with the Conservative-run district councils. Labour wanted growth in its city, and the Conservatives wanted growth nationally.

Since that plan, the political makeup of the district councils has changed - and worries about housing development unquestionably helped swing them away from the Conservatives. All four are now LibDem, LibDem/Green, or LibDem/Green/Labour. PINS, and to a certain extent the district councils, contend that since the drawing up of those plans, time has passed; the economy has moved on (particularly the rise in working from home); and the Oxfordshire model needs revising in consultation with the other councils if it is to be accepted over and above the standard model. (Otherwise it would not hold up on a planning appeal to the Secretary of State. This is a Very Bad and Expensive Thing.)

The Inspectorate asserts that the City Council failed in its “duty to cooperate” with the other councils on the assumptions and the methodology. Consequently, they have rejected the revised estimates, and with them the housing allocation in their districts that would be justified by the housing need in the model. In PINS terms, this is as close to a spanking as it is possible to get.

But as commenters on Twitter have pointed out since we posted this news yesterday, Oxfordshire is one of the most unaffordable places to live in the UK. It desperately needs more homes. A simple summary is that Oxford City Council has identified the need for these homes and that a seemingly faceless Inspectorate is rejecting it; but that the inspectors’ argument is “You said you needed more homes, but you can't provide them within your boundaries, regardless of the numbers method, and no one has volunteered to provide the homes, and you didn’t consult with three of the four districts in the process of calculating that need.”

A coda, but an important one. Part of the demand for homes is being driven by continual building of employment sites. Osney Mead, Oxpens, Oxford North, ARC Oxford, Oxford Science Park are built, planned or currently being built and contributing to the stellar Oxford economy. Oxford City Council is responsible for granting planning permission to build these. It is creating housing demand but not providing supply within the city boundaries. Some argue that this approach needs to be rethought. But with developers signed up and construction underway, it is arguably too late for these sites at least.

A second coda, not insignificant but peripheral to the argument around why the plan was rejected, is the transport implications. In Paragraph 57 and 58, the inspectors treat increasing amounts of in-commuting as an argument that fewer houses are needed. Transport commentators have pointed out the structural challenge of getting tens of thousands of people to work on a daily basis. You think Oxford's traffic is bad now? Building housing beyond the city boundaries for workers in Oxford without building roads or rails (and let's not get into the theory of induced demand) will further exacerbate what everyone agrees is already too much traffic. A solution to this is housing within cycling distance of, and with good public transport links to, employment sites inside Oxford, but readers of our Housing Week series will already know how challenging it is to do this.

Where next?

What does this mean for the City Council and the city it serves?

Council leaders and officers will be bunkered down in coming weeks working out a way forward. The press release put out perhaps underplays the scale of the challenge, but the PINS report is pretty clear. Some options:

1. Get agreement from the other councils as to the numbers in the new model. This would effectively begin the whole process of negotiating the model again, this time with agreement of the other councils.
2. Revise the draft Local Plan to use the standard model (fewer houses). This still leaves a significant unmet demand in housing, requiring agreement from the other councils as to how they will provide this housing, or a way of increasing housing numbers within Oxford city itself. (Readers of our Housing Week series will be familiar with the scale of this challenge.)
3. Wait for the new Labour Government’s proposed changes to planning regulations to take effect, in particular for cities with limited housing availability (likely end of this year).
4. Nothing. If PINS does not agree a local plan, there will be no local plan in force when the old one expires. The reality of this is that every planning application will become tortuous as there will be grounds for every developer to appeal everything. Pretty much everyone, except lawyers, will agree this is the least desirable option.

As Sherlock Holmes would say, this is a three pipe problem. We do not envy the officers, planning committee or councillors in any of the five councils right now. But a solution needs to be found. The only thing not in debate is that Oxford needs more homes.