Object

Representation ID: 177

Received: 10/10/2019

Respondent: Mick George

Legally compliant? Yes

Sound? No

Duty to co-operate? No

Policy MP1: Aggregate Provision
1. MGL considers that the Local Plan severely under-provides for sand and gravel. The LAA proposes to retain use of the 10 year average to assess demand for S&G.
2. MGL notes the following facts drawn from the latest Nottinghamshire LAA (2018) supplemented by other sources.
• The MLP uses the 10 year average from 2016 for determining Local Plan provision.
• This is 1.7 Million tonnes per year (Mtpa) for sand & gravel and 0.37Mtpa for Sherwood sandstone.
• The LAA contains no forecast of aggregate demand.
• The LAA reports (table 5) that exports have increased to Northants from 0 to 406 thousand tonnes (kt), and to South Yorks from 145kt to 386kt.
• The LAA reports (table 6) that imports have grown from Lincolnshire (361kt) and Staffordshire (155kt).
3. Comparing AM2009 with AM2014 imports of sand & gravel to Notts increased from 327ktpa to 583ktpa (a rise of 78%).
4. It appears that the sum of Nott’s sand & gravel used within the county has fallen from 750kt to 126kt between 2009 and 2014 (a drop of 84%). However, the LAA claims that unknown destinations should be added to this sum which reduces the difference but still indicates a fall of 23% between 2009 and 2014/18.
5. When looking at future demand the LAA notes that
a. Population is forecast to increase by 9.6% during the plan period.
b. The house building programme is planned (i.e. Local Plan commitments) to increase from current 4695 units to 8025 units by 2020/1 falling to 3031 units by 2027/8 (not the whole plan period). This is an average of 5264 units per year. (table 12)
c. House building rates have risen by 71% since 2013/4 (fig 4).
6. The LAA says that housebuilding is only a part of the aggregates market and that sand & gravel is used for other uses. However, if this is accepted it follows that a combination of a
a. 71% increase in housebuilding activity since 2013, plus
b. associated infrastructure/community/commercial/industrial development, plus
c. the major infrastructure project of the East Midlands Gateway Rail Freight Interchange,
would have raised sand & gravel demand by a conservative 25%. However, figure 1 shows that the sand &gravel sales have flatlined.
7. In addition, the LAA quotes with approval the MPA estimate of the use of 50 tonnes of aggregates for each new house. This figure is derived from a BGS document “The need for indigenous aggregates production in England” (Open Report ORJ08/026) Case Study 2: New Homes. This shows that in addition to the 60 tonnes of aggregates used in a typical new house, as much as 400 tonnes extra is need for associated infrastructure and roads. Not all of this will be sand and gravel, but a large proportion will be, as any visit to a local building site will verify.
8. Increased aggregates demand but not supplied from Notts sources can be gauged by the steep increase in imports to the county from Lincolnshire (historically not a significant exporter to Notts) and from Staffordshire.
9. Support for higher aggregates demand is the LAA’s observation that quantities of CD waste have grown by an estimated 11% since 2011 indicating higher levels of construction (para 3.31).
10. Support for higher aggregates demand also comes from the observation in the LAA that in the East Midlands sand & gravel sales rose from 5.5 Mtpa in 2009 to 6.96 Mtpa in 2016 falling slightly to 6.79 Mtpa in 2017 (para 5.8). This represents a regional growth in sand & gravel demand of 23%-26%. Only in Notts and Northants have sand & gravel sales flatlined.
11. The evidence is clear that the sand & gravel sales in Notts have been constrained. The LAA says this is because of the recession and the replacement of worked out quarries has remained low. This puts Notts in a special position which means that sales do not fairly represent the demand for sand & gravel in the county. In this respect, it is like Oxfordshire which was recognised at Examination to have had suppressed sales because of commercial decisions during the recession to mothball sites. In Nottinghamshire’s case, similar commercial decisions and an unreadiness to be able to replace sites is judged to have been the cause for low sales and make up of demand principally from imports. In short, this is an anomalous situation which should be recognised in the LAA and accounted for in planned provision.
12. There are essentially three approaches to calculating forecast demand from data which counters the effects of the recession on the 10 year average and plans for future growth.
a. The last year house build rates were close to the planned average (5264 units) was in 2005 (4842 units) when sand & gravel sales were 3.08Mt. Allowing for higher planned rates of housing suggests sand & gravel provision should be at least 3.10Mtpa.
b. Using the approach adopted in Oxfordshire of calculating the % share of sand & gravel production before the recession and applying it to current conditions, gives the following result.
i. In the five year period prior to the recession (2004-2008) Notts sand & gravel sales (as a proportion of all England averaged 6.53%. In 2016 the proportion was 3.85%.
ii. If this is converted into a figure for the county linked to the current level of sales in England which in 2016 was 41.26 Million tonnes, then applying a pre-recession proportion of 6.53% gives a demand for Notts of 2.694 Million tonnes.
iii. Once an allowance for soft sand has been deducted, the like-for-like sand and gravel demand figure is about 2.32 Mtpa.
iv. Although this is lower than the first method, this is because all the Oxfordshire method does is restore the county to conditions as they were before the distorting effects of the recession; it does not explicitly take account of future growth.
c. Using a statistical approach, sand and gravel and soft sand sales and housing completions between 2007 and 2016 gives a Pearson Correlation Coefficient (PCC) of +0.700642 which is a statistically significant linear relationship at the 95% confidence level, and which has an equally strong basis as a causative effect. Applying the expected annual average planned housing completion rate for the county over the plan period of 5264 dwellings to that PCC using the forecast function in Excel gives a return sand and gravel/soft sand forecast of 3.03 Mt pa. Deducting a figure of 0.40 Mtpa for soft sand leaves a sand and gravel provision figure of 2.63 Mtpa.
13. It is considered that the minimum level of provision should be to put the county back to where it was before the distorting effects of the recession were felt. This would involve allocating sites to produce 2.32 Mtpa over 19 years or 44.08Mt. Deducting current reserves of 28.5 Mt leaves a provision shortfall of 15.58Mt. The MLP allocates 11.8 Mt so there is a provision gap of at least 3.78 Mt.
14. It is emphasised that this is minimum which does not take account of the significant growth over and above historic levels of demand which is planned for. In all likelihood sand & gravel demand will be nearer to the 2.63 Mt expected by statistical calculation if the planned levels of growth are to be provided for.
15. The MLP delivery schedule (page 136) shows a serious shortfall in provision by year. The schedule presents two sets of figures. First, is the indicative outputs supplied by operators in the call-for-sites exercise. The second is the theoretical output supplied in planning applications if presented. The two figures represent the operators’ current intentions and the sales the site can achieve.
16. Analysing the schedule compared to the MLP provision figure shows that at no time will the sites reach the Local Plan annual provision level in terms of capacity using the first set of figures (see attached schedule and chart). Using the second set provision comes above Local Plan annual provision levels for 8 years from 2020 to 2027. Comparing with the alternative provision level suggested by MGL and set out in this analysis shows that the level of provision is entirely inadequate in terms of productive capacity using either set of figures.
17. The reason for this is that if only the total quantum of shortfall is used to allocate sites then no attention is paid to that part of the allocation that will not be worked in the Plan period. In other words, the allocations should be increased even if no alteration is made to the provision level, in order to preserve capacity to produce at the average provision level.
18. A further point is that the numbers of sites operating towards the end of the Plan period (falling to just five in total) cannot maintain the average level of production, so that more sites need to be provided for the end of the Plan period.
19. Therefore, using the LAA’s own data it is clear there is an underestimation of sand & gravel demand of between 0.62Mtpa and 0.93 Mtpa.
20. Using the Draft MLP delivery schedule shows there is a gross under allocation of sites which will not reach a demand level for sand & gravel using the LAA’s own data for a large part of the Plan period. The shortfall is even greater if a higher sand & gravel demand figure is used.
21. Reliance on a bare 10 year average past sales as a forecast of future demand is clearly not appropriate given the evidence that conditions over the last 10 years have been anomalous. By basing future provision on such a figure the Council risks building in a permanent loss of capacity at a time of increased market demand, and expectations by communities for new houses and more jobs. If Nottinghamshire underprovides for its own needs, it will put strain on other areas to make up the shortfall.
Possible Objections
22. There is a statement in the LAA that implies that one cannot use housing completions to forecast sand and gravel demand because it is only part of the overall demand and sand and gravel gets used for other construction projects. However, this is a red herring for two reasons. One, if there exists a statistically significant linear relationship between two variables which are causatively linked then knowing one variable leads to the prediction of the other variable. This is why statistically significant relationships are researched in all walks of life – to be able to make predictions. Therefore, it is irrelevant that sand and gravel is used for other things. The statistical relationship is all that is necessary to predict future sand and gravel demand knowing future housing completion rates. Two, construction of housing goes hand in hand with other types of development requiring sand and gravel such as commercial, retail, industrial and infrastructure, which are all related to population and economic growth. The driving force of sand and gravel demand is not housing per se but the underlying economic and population growth. Therefore, if it can be shown to be statistically significant then the relationship between sand and gravel and housing completions can be used as a proxy for all types of development.
The Oxfordshire Situation Explained
23. The situation in Nottinghamshire is similar to that pertaining in Oxfordshire. Here, the onset of the recession led to the major operators mothballing sites and delaying implementation of planning permissions, just as in Nottinghamshire and transferring production to other sites outside of the county. These commercial decisions in Oxfordshire reduced the 10 year rolling average below what it would have been had these commercial decisions not been taken. Oxfordshire took the view that it would be prudent to assume that this would only be a temporary market distortion and that as growth returned production would recommence at the affected sites. As such, the 10 year average would underestimate the true level of future demand.
24. Quantification of the effect was approached by considering how the county’s sales had reduced compared to the whole of England during the baseline period. Given that the county and the country were subject to the same recession, it was reasonable to conclude that any differences between the percentages during the period reflected specific local factors.