Shropshire Council plumps for highest housing growth option because it needs the cash

Next Wednesday, the council cabinet is expected to agree a much higher rate of growth in housing and employment land across the county. The government says we need to build 1,270 new homes a year. Shropshire Council wants to build 1,440 dwellings every year for the next 20 years.

Nearly 60% of people and organisations that responded to a consultation earlier this year wanted a lower level of growth. But the council wants the business rates from higher employment growth, so it says more housing is needed.

The hidden agenda to Shropshire Council’s latest planning document lies in council finances. These are in a pretty dire state with reserves being drained as the government cuts how much it contributes to local budgets and adult social care costs soar. George Osborne’s cunning plan was to axe nearly all central grants for local government and leave councils to rely on income from council tax and business rates. Therein lies the rub.

Council tax rises are capped at 1.99% with the option of charging an extra 1.99% for adult social care. This is not enough and auditors have warned that Shropshire Council might not be able to pay for its statutory obligations in the future. That puts the focus on business rates, which are paid by all but the smallest companies in Shropshire. Currently it must pass half the business rate income to the Treasury. From around 2020, Shropshire Council will be able to retain all the rates raised in the county.

So, what does this have to do with housing? The county needs more business rate income. Businesses pay roughly half their rateable value in business rates every year. The only way to grow the income is encourage larger businesses to come to the county. That will require an extra 155 hectares of employment land across the country over and above what’s already planned. That’s another 50 Ludlow Eco Parks.

But if you want more companies to pay the business rates, you need employees. We don’t have the transport infrastructure to bring them in daily, so we need to build more houses. Another 28,750 homes between 2016 and 2036, an increase of around one fifth on current housing stock. It’s is also around 64,000 people.[1] That’s not far short of enough housing and people to occupy a new town the size of Shrewsbury. That needs new schools, GPs practices and hospital capacity. Maybe eating into the green belt that separates our county from Wolverhampton. Maybe new roads. Would it be too much to find a way of reducing our reliance on cars and develop truly sustainable transport? Probably Shropshire Council doesn’t want to pay

I have doubts about this strategy. I am not sure that it will deliver the affordable homes we need. I worry that it will lead to a growth in low paid jobs in Shropshire, not the high value added jobs we crave for. I doubt that we can build 1,440 new homes a year. The average yearly growth in households since Shropshire Council was established is 1,074.[2]

And there is the chicken and egg problem. No one will build a factory in Shropshire unless there is a ready supply of employees. No workers will move here unless there are jobs.

The targets for Ludlow are low. We’ll need to build another 146 homes above those already planned or with planning permission. That’s not huge. If we are to have a well planned expansion of this town, it might not be enough.

This is the first of a series of blog posts on the local plan review. A consultation on those plans will begin on 27 October. The cabinet papers are here.

Notes

[1]. Shropshire has a population of around 312,000 (source: 2016 subnational population projections). It has 140,500 dwellings. That equates to 2.2 people per dwelling.

[2]. Source: Live tables on dwelling stock.