The government’s ‘algorithm for homes’ may be its next A-level style fiasco

Just when the government seems to have finally seen off the A-level crisis – the PM blaming the grading debacle on a “mutant algorithm” – along come proposals for a new planning system that could see similar controversy.

Housing secretary Robert Jenrick’s newly-announced plans to build more homes propose replacing the current method for determining housing need by introducing an algorithm which will determine targets for every English region based on relative affordability and the extent of development in those areas. In other words, the algorithm aims to boost housing numbers in areas with low projections.

On the face of it, this appears an inspired move. Recent evidence shows a third of councils in England are not building enough homes – with 108 local authorities failing to meet the 95% delivery target pass rate under the current system.

For years, Conservative governments have sung the praises of home ownership through increasing housebuilding. The incumbent government is, of course, also keen to cement its support in the “red wall” constituencies it won at the last general election and, to use Boris Johnson’s favourite phrase,“level up” the disparity in wealth and access to housing across the country.

The new algorithm still favours directing more money at more affluent areas

But – as the planning consultancy Lichfields has pointed out – the new system could have the opposite effect. As its number-crunching outlines, the current standard method has failed to provide high numbers of homes delivery in the north of England, leading to some appalling low housing requirement figures for local authorities. The Yorkshire and Humber region is one example, including just 12 homes annually in Richmondshire.

But even under the proposed new system, the north will still lag behind. Yorkshire and Humber would receive the smallest proportionate increase in England - 17,870 new homes compared with 16,395 under the old system, an increase of just 9% and below the number required for the region, according to the National Housing Federation, which says close to 19,000 are needed. Bizarrely, the 17,870 dwelling annual requirement for the region is also 1,465 dwellings fewer than the annual requirement currently set by Local Plans, according to the Lichfields research.

Meanwhile, in the North-west, there would be a 19.6% increase in new homes (24,631 compared with 20,599), Lichfields finds. Again, this is less than the number needed. According to a report last year, the number of affordable homes built across the region since 2015 is less than a third of that required; 14,000 affordable homes were built across the region, but council forecasts say more than 42,600 are required. Furthermore, according to a report this year from the Chartered Institute of Public Finance & Accountancy, residents in the North-west can expect to wait an average of 39 years for council housing because of pressures on supply, with the region having one of the lowest growth areas for affordable homes over the last six years.

Conversely, the new algorithm will continue to concentrate growth in wealthier regions, according to the Lichfields research. In the South-east for example, the new system would deliver a 23% increase in new homes (61,276 instead of 49,773) and a huge 67% increase in London (93,532 compared with 56,023).

Affordability pressures may be more visible to politicians in London and the south – but they are no less apparent in the north. Yet the new algorithm still favours directing more money at more affluent areas.

While the government’s intention is positive and a step in the right direction, more account needs to be taken of local information and regional needs to tackle these anomalies, because if the prime minister really does want to level up, the government’s focus must be to improve existing housing stock and support the growth of cities in the north too.

Otherwise, in the same way that the A-level grading crisis was seen to reward pupils from elite schools, regions that are poorer will be the ones to lose out under the next potential rogue algorithm. 

Clive Docwra is managing director of McBains, a property and construction consultancy