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This weekend sees the annual battle between the UK鈥檚 oldest university towns for supremacy on the water. In recent years the dark blues of Oxford have more often than not secured the bragging 鈥� or braying 鈥� rights, winning seven out of the last 10 races. But Oxford鈥檚 aquatic dominance has not been mirrored in the development track record of these two uncannily comparable city regions. 

Both have dynamic economies boosted by strong university-linked investment and remain the only UK cities outside the capital where average house prices are comfortably above 拢400k 鈥� within touching distance of London. But while Cambridge City has been delivering on ambitious growth plans in its surrounding districts since the days of John Prescott鈥檚 Communities Plan, Oxford鈥檚 demand for new housing has largely remained unmet. Martin Curtis, associate director at public affairs consultant Curtin & Co, says: 鈥淥xford is a real mirror of where Cambridge is. But there鈥檚 an argument it鈥檚 playing catch-up.鈥�

Until now. This month the last of the Oxfordshire local authorities officially approved a central government 鈥渉ousing deal鈥� funded to the tune of 拢215m in chancellor Philip Hammond鈥檚 autumn Budget. By accepting the cash, six Oxfordshire authorities have signed up to produce 100,000 homes in the county in the 20 years between 2011 and 2031 (see Oxford鈥檚 housing challenge in numbers), despite fierce local opposition to expansion plans. And even more development could be on the cards, given the area is at one end of the Oxford-Milton Keynes-Cambridge growth arc also backed by the chancellor鈥檚 Budget. 

But actually delivering this scale of development is another matter. The 拢215m promised includes 拢150m for infrastructure to support growth. But this is just a tiny fraction 鈥� less than 2% 鈥� of the near 拢9bn infrastructure funding gap in the county between now and 2040. There are also concerns that the nature of both the development sites being identified and the housing deal itself could even cause development to slow.

So, what exactly is the scale of opportunity for developers, and how realistic is Oxfordshire鈥檚 100,000-home target?

City challenge: Oxford vs Cambridge*

	Dark blues (Oxford)	Light blues (Cambridge)
Population (Source: uk population2017.com)	163,500	141,300
Average house price (Source: hometrack)	拢425,700	拢404,400
Housing affordability (lower quartile house prices as a multiple of lower quartile annual earnings) (Source: mhclg)	12.5x	13.8x
Average number of homes completed annually in last five years (Source: mhclg)	136	726

*City council areas only

The challenge

Unsurprisingly, local politicians are confident. Cherwell council leader Barry Wood says the overall deal is 鈥渞ealistic and based on a sound evidence base,鈥� while Bob Price, corporate strategy and economic development board member at Oxford City council, calls the 100,000 number 鈥渞ealistic, necessary and achievable鈥�. And developers are already responding. Daniel Lampard, head of the Thames Valley Office at planning consultant Lichfields, says: 鈥淭here is very clear evidence the private sector is buying into this now, with a number of very big sites being promoted in local plans, so much there are competing sites coming forward.鈥� Andrew Whitaker, planning director at the Home Builders Federation and an Oxfordshire resident calls the deal 鈥渞eally positive鈥�.  

But the scale of the task is enormous. Over the last five years, Oxford authorities have seen an average of 2,014 homes built per year. To meet the new target, this will have to rise by 150% to 5,000. Lichfields鈥� Lampard says: 鈥淭he word is 鈥榗hallenging鈥�. But at least there鈥檚 now a clear political objective, and the machinery of central and local government is starting to crank up, and the development industry is playing its part.鈥�

In fact, just getting this level of agreement has been no small achievement. Among other similarities, Oxford and Cambridge share a structural problem of being small cities generating huge housing need but without room themselves to accommodate the growth. Traditionally, the mainly Conservative shire district councils surrounding them have been keen to preserve their green and pleasant rural setting. While Cambridge grasped this nettle over a decade ago, in Oxford co-operation on housing is a more recent phenomenon, catalysed by a strong county council and dynamic Local Economic Partnership (LEP), OxLEP. It was the LEP鈥檚 economic growth plan, which promised to create 80,000 jobs between 2011 and 2031, that led to the realisation that the area needed more ambitious housing plans.

The 100,000-home figure comes from a jointly-commissioned Strategic Housing Market Assessment (SHMA) conducted by GL Hearn in 2014, predicated on the LEP鈥檚 assessment of job growth. Key to getting acceptance for it from the shire districts was a vision of focusing the growth in a number of large urban extensions and new settlements, such as the Bicester Garden Village in Cherwell, to the north of Oxford; Didcot Garden Village in West Oxfordshire; and Culham and Chalgrove in South Oxfordshire. This series of mega-schemes meant development could remain limited in many other areas. 

Persuaded by the vision, Cherwell council has already shown what can be achieved with proactive council support for big schemes in the context of an adopted local plan. Pushing forward with schemes like the Bicester Garden Village and setting up its own housing company to help deliver 1,900 self- and custom-build homes at Graven Hill has seen it more than quadruple annual housing completions in four years. 

In other parts of the county, however, the authorities, while officially signed up, remain lukewarm. In 2015, West Oxfordshire attempted to get a local plan approved with lower numbers than indicated by the SHMA but was rebuffed by the planning inspector, and right now South Oxfordshire is about to attempt the same 鈥� with a draft plan due for submission in which it refuses to take on its share of Oxford city鈥檚 unmet need. South Oxfordshire鈥檚 leader John Cotton has written of 鈥渟truggling with spurious SHMAs鈥�.

This apparent lack of enthusiasm is hardly surprising, given the opposition to growth in some quarters. Anti-development coalition group Need Not Greed Oxon says the strategy 鈥渋s the biggest threat to rural Oxfordshire in our history and its impact would be irreversible鈥�, arguing that the SHMA figures have never been properly consulted on. The group is not without political support. Lib Dem MP for Oxford and Abingdon West, Layla Moran, has publicly called for a review of the plans, and has spoken in parliament of her 鈥済rave concerns鈥� over a proposed 4,400-home development around the villages of Kidlington, Yarnton and Begbroke.

On top of this, the publication last September of the government鈥檚 standard method for assessing housing need threatened to undermine the authorities鈥� fragile shared commitment. While in other parts of the South-east, the standard method threw up much bigger requirements for more homes, in Oxfordshire the figure generated is actually smaller 鈥� a lot smaller 鈥� than the SHMA assessment. In fact, because it doesn鈥檛 take into account economic growth projections, it predicts a need for just 68,300 homes, rather than the 100,000 from the SHMA. Unsurprisingly, this is something that hasn鈥檛 gone unnoticed by anti-development campaigners such as Moran. Henley MP John Howell has said the proposal 鈥渆stablishes a balance which is currently missing鈥� and 鈥渆nds the tyranny of the current SHMA鈥�. 

The Housing Deal

It was in this context that Hammond in November stepped in with his 拢215m Housing Deal. Michael Knott, planning director in consultant Barton Willmore鈥檚 Reading office, says: 鈥淚t鈥檚 not clear whether or not it was the growth deal that persuaded the authorities not to abandon the SHMA numbers 鈥� certainly it could have happened.鈥� In fact, Cherwell鈥檚 Wood is explicit that the additional government funding was conditional on not giving up the SHMA numbers. While maintaining the high numbers are justified by the anticipated economic growth, he admits that not dropping the SHMA figures 鈥渨as the price of the deal with the ministry.鈥� 

The money is certainly important for local authorities starved of cash with which to pay for much needed local infrastructure. Lichfields鈥� Lampard says: 鈥淎fter seven or eight years of austerity, the money for infrastructure is seen as a real boost.鈥� HBF鈥檚 Whitaker says the authorities are excited about the potential for more government funding. 鈥淭hings like upgrading the A34 are huge local issues,鈥� he says. 鈥淧oliticians can now sell the deal as part of getting that done. If you can sell the benefits of growth, then you can shout down the nimbys.鈥�

There is, however, another reason why the deal may have been attractive to the area鈥檚 local authorities, one which has the potential to be a major fly in the ointment for developers. Because the deal鈥檚 small print also promises as-yet undetermined 鈥減lanning flexibilities鈥� to the authorities taking part. Barton Willmore鈥檚 Knott says this means the authorities are 鈥� ironically 鈥� seeking temporary exemptions from key government planning policies designed specifically to promote growth. The policies they are seeking exemptions from are the need to produce a viable five-year supply of development land as part of their local plans, and the incoming 鈥渉ousing delivery test鈥�. The rationale for exempting local authorities is that because of the length of time it will take to bring forward the mega-sites currently being identified, they shouldn鈥檛 be expected to deliver an uplift in build rates straight away.

But, if agreed, it will mean that developers won鈥檛 be able to bring speculative sites forward as they would elsewhere when a local plan fails to provide a five-year supply of land. From developers鈥� perspectives this would be a major obstacle to speculative applications, but for Oxford City council鈥檚 Bob Price, such planning flexibilities would allow the authorities to develop their strategy free from 鈥渢he spectre of unplanned development鈥�.

Barton Willmore鈥檚 Knott says all this puts delivery of homes at risk. 鈥淚t all seems rather counterintuitive, but housing numbers could even go down. These plans make delivery entirely reliant on these really large sites delivering homes at the expected rate.鈥� And given that former cabinet minister Oliver Letwin is currently undertaking a review of the failure of large sites to deliver homes quickly, it is fair to say this isn鈥檛 a given. Knott adds: 鈥淵ou could end up with a very severe shortfall in numbers, but with the planning flexibilities potentially running till 2024, it takes away the mechanisms in the system supposed to address that.鈥�

鈥淭he government wants housing, and the local authorities desperately want infrastructure growth, so it all makes sense鈥�

Martin Curtis, Curtin & Co

Oxford鈥檚 housing challenge in numbers

Oxford councils	What current plans call for annually	What the government鈥檚 standard method for assessing housing need on an annual basis says	Actual delivery - five-year annual average to 2016/17
Cherwell	1,142	762	582
Oxford City	1,400	746	136
South Oxfordshire	775	617	508
Vale of White Horse	1,028	689	562
West Oxfordshire	660	601	226
Oxfordshire	5,005	3,415	2,014
Total number over 20 years	100,100	68,300	40,280*

*forecast of actual delivery is current annual average rates remain the same

Source: MHCLG

The funding gap

The other big concern is over the level of funding (see Oxfordshire housing deal, facing page). The Oxford Infrastructure Strategy says a near 拢9bn funding gap exists, meaning the 拢150m in the deal addresses less than 2%. To put this money in context, the proposed upgrade to a single junction of the A34 is 拢100m, while widening the whole route is estimated at nearer 拢1bn. 鈥淭he housing deal is a lot of money,鈥� says Curtin & Co鈥檚 Curtis, 鈥渂ut inevitably it won鈥檛 be enough.鈥� However, Oxford council鈥檚 Price points out the housing deal money is additional to traditional funding routes, as well as separate pots such as the Housing Infrastructure Fund, from which Oxfordshire has asked for 拢500m.

Whether enough or not, the authorities 鈥� with only South Oxfordshire still to get its own local plan adopted 鈥� are now moving on to the next stage: a single joint spatial plan for the whole area, running up to 2050. Given the fact the 100,000 figure has been factored in since 2014, it is in this joint plan that the impact of government鈥檚 recent commitment to the Oxford-Cambridge growth corridor is likely to be felt. Among other things, this corridor proposed a significant new settlement near Bicester, and construction of an 鈥渆xpressway鈥�, which will likely open up numerous development sites along its route. Hence this document 鈥� which will take three years to produce 鈥� is the real focus of developers鈥� attention. Knott says: 鈥淭he real excitement is beyond [the LEP plan鈥檚 target for] 2031, on the longer-term opportunities. Given the lead-in time for delivering large sites, they鈥檒l need to be identified in this plan.鈥�

With the chancellor last week announcing the government鈥檚 second housing deal, for the West Midlands, the model of cash and planning flexibilities in return for promises on development is likely to become a familiar one to developers. Similar such deals have already been mooted in the Thames Estuary, Greater Manchester, Leeds, and the West of England. But doubts remain over how much difference they will make. Curtis says: 鈥淭he government wants housing, and the local authorities desperately want infrastructure growth, so it all makes sense. The only hesitation is how much is in the pot.鈥� Time will tell if it鈥檚 enough to let Oxford close the development gap with its oldest rival.