It has emerged that there is a strategic flaw at the heart of the Shapley Heath project. There is a significant mismatch between the expectations they set to Government, the viability study accompanying the funding bid and the testing now being carried out.
The bid documentation clearly set the expectation of up to 10,000 houses. The accompanying viability study showed that Shapley Heath was only viable with 5,300 houses or above. And even that was being generous because significant infrastructure was missing from their calculations. Now the testing being carried out for transport infrastructure is for “up to 5,000” houses.
Catch-22 at the heart of Shapley Heath
The Catch-22 at the heart of Shapley Heath is that if they build less than 5,000, then it’s not viable. It could only be made viable by cutting infrastructure spending or paying less for the land. Yet, the ruling CCH/Lib Dem cabal insist the main reasons for building Shapley Heath is to deliver infrastructure. The only way to make it viable and deliver more infrastructure is to build even more houses. The extra houses will then require even more infrastructure and so on. And yet they continue to insist up to 10,000 houses is just scaremongering.
The real risk here is that they produce an infrastructure plan for 5,000 houses. They then go on to build far more than 5,000 houses to generate more funds to deliver that infrastructure. These extra houses will will then overload the infrastructure. They will have then destroyed the countryside and left us with even more congested roads and more pollution.
You might like to respond to the Shapley Heath survey. We have produced a handy guide with suggestions as to how you might choose to answer the freeform questions. It can be found on the link below. The full survey can be found here.
Government Expectations
Regular readers may remember that the bid for Government funding for the project clearly said that Shapley Heath Garden Community could grow to 10,000 houses. Here is the statement in the Vision document.
Shapley Heath: Vision Document up to 10,000 houses
The actual bid document set the same expectations
Shapley Heath bid document: capacity for 10,000 houses
Viability Study
The viability study that accompanied the bid was carried out on the basis that 5,300 new houses would be delivered.
Shapley Heath Garden Community Viability Summary
This showed a surplus at the end of the project of £32.1m, from a gross development value of nearly £1.7bn. So, the surplus is essentially a rounding error in the grand scheme of things. Reducing the open market housing by 320 units would render the project unviable. This is assuming an average selling price of £500K and a 20% margin (£100K). This means the “up to 5,000” houses is a pipedream.
This study allowed for £164m of infrastructure funding. But this missed out key commitments from the funding bid of one primary school and a health centre. The study was ambiguous about whether it had included an allowance to re-route the high-pressure gas main and electricity transmission pylons. It was also unclear whether proper allowance had been made to improve or replace the railway station. The scale of the road improvements planned is also unknown. Certainly, no mention was made of improvements to the M3 at Junction 5. We covered the flaws in the viability study in more detail here.
So, in summary, the project was only marginally viable at 5,300 units and it is doubtful whether all of the required infrastructure was even included in the costing.
Current Testing
The Council is at great pains to downplay the up to 10,000 mentioned in the funding bid. It now says that they are pursuing a project of “only” up to 5,000 houses. Members of the Sustainable Transport thematic group have not been allowed to see the scope document for the Transport baseline study. However, we have been told that the testing is for up to 5,000 houses. Apparently, the impact of 10,000 houses is not even being considered.