170,000 is the number of new households that require a house each year.
Over the 17 years 1992 to 2008 there were on average 153,000 new households per year.
The extra 17,000 is to take account of any slight increase in formation.
Based on analysis of DCLG household data, actuals rather than projections as these are flawed.
DCLG; Table 406: Household projections by district, England, 1991- 2033.
More recent data, the 2016 release, actually results in a lower average over the period 143,000 new households each year. A reduction in total housing requirements again perhaps?