No, it doesn't. At all. If the school was needed, it would have had enough pupils. Very simple.
You've said a number of times that people would prefer almost any school to no school. I agree. But they didn't need this school; of the 7 original applicants, 4 got better offers elsewhere. If the other proposed Free Schools in Newhmam fill up then, yes, I would agree that this demonstrates a need for school places in the area.
At this point in time, the school wasn't needed where it was situated (or it would have had pupils) and it would be a much better use of public money to use local information to ascertain where there was a demand for which type of places and go from there, rather than giving permission to set up a unnecessary school when there are desperate shortages elsewhere.