With this the last day of consultation on the Government’s proposed national method for calculating Objectively Assessed Need this post finished by series critiquing the method and suggesting a more soundly based and simpler ‘fudge free’ alternative.
DIAGRAM OF THE MOAN METHOD
The starting point for this model is the spreadsheet proposed by the ONS – the 2014 based household projections.
Tis gives projections for every local planning authority in England and then conveniently groups them by county and region to 2039
This spreadhsheet is then extended first to include household to homes conversions factor then a homes to OAN conversion factor. The spreadhsheet is then extended in time to cover 35 years (to 2052). Why 35 years? Because experience of post war planning shows that 35 years is the typical build out time of a New Town. So if Garden Cities/New Towns are part of the solution then we have to plan over this period.
The result is a model where the resulting outturns for each planning authority and teh compoents of each element of the OAN fare fully transparent. In other words it is not a ‘black box’ model/ A charge that could be laid at the DCLG OAN Method.
Transparency could be further raised if the OAN model itself modelled the components of household formation change in a single model. All element are published, and it is possible to put them together in a single model or series of models (using R or such like) as the GLA has done.
Two notes on the baseline. It uses a 10 year baseline for protecting households, as the DLG rightly recommends. The GLA have modelled 5 and 15 years years baselines as well as a ‘central’ 10 year baseline.
A second qualifier. The ONS, in a source of eternal frustration, releases sub national population projections every 2 years and sunn national household projection every 4 years. Quite why it does this is unclear however I think it may have been to avoid disrupting old structure plan timetables by releasing data on a predictable medium term cycle linked to plan revision. It is possible to reconstrict teh baseline using 2016 based sun-national projections, as the GLA and many private consultancies have done, however you then can lose the elegance of the ONS tables with its summaries for counties metropolitan areas and regions. For simplicity I have stuck with the 2014 based data, and consider that changing national OAN numbers every two years is too short a cycle that would disrupt plan making.
The starting point of the model is household growth using the ONS method.This is of course just a projection, not a forecast, least of all a target, as the ONS always stress. This can therefore produce distortions of you then go on to use it in a ‘predict and provide’ manner simply basing the targets n past trends. for example areas with little housebuilding will see a low increase in household formation. Areas where people are forced to ‘bunk up’ and share will see low increases in headship rates.
The best way to deal with these issues is to make corrections to thehousehold formation projections rather than to abandon them. The demographic method using household formation is the only demographically based game in town. Imagine the scenario where a country did build enough housing, and that all overcrowded and concealed households could afford a home. What would the household formation rate be in these circumstances?
This is the underlying philosophy of the MOAN method. England fully and completely meeting its housing needs in the period of 35 years
This is a different philosophy than the government/s atomistic approach of calculating each LPA’s need and adding them up as its baseline, with an ‘uplift’ based on affordability. Rather MOAN calculates OAN as it would be in a supply=demand England. Then once this provisional baseline is calculated a calculation i made of the deliverability of housing in land constrained areas, and the deliverability of compensatory housing in employment growth areas. The assumption being that need will migrate from land constrained to employment growth areas. The best way of doing this is through a strategic plan informed by modelling. Though in the absence of strategic plans a model can provide a baseline.
Finally an adjustment is made for the second order effects of housing growth. Areas with additional housebuilding will experience additional growth from a multiplier effect, from construction, household goods, supply chain effects and impact on services. This will suck in additional in migration.
To ensure there is no double counting a ‘reconciliation’ is made within the model to ensure all in and out migration figures add to unity nationally. This is done by increasing migration from other ‘areas.
As you can see this treats household formation, employment growth and migration as part of a singe integrated and consistent model rather than separately atomistic and likely mutually inconsistent approaches/ Ideally it should be done in an iterative way where the impact of different growth scenarios in different areas can be assessed, the essence of planning., rather than attempting to use a spreadsheet to solve all national houing problems without human input.
The advantages of a single stock-flow consistent model though are legion. It can be for example integrated with other economic, transport and combined land use and transport models without fear of internal consistency, because MOAN uses the same kind of integrated modelling assumptions used in these kinds of models.
The second part of teh post to follow this afternoon.