Introducing MOAN -Method for Objective Assessment of Need 2/2

In this second part ill introduce the component of the MOAN Spreadsheet Model.   First Part here.

Having taken the 2014 based Household Projetions (with a 10year baseline) it then applies a number of correction factors.

The figures are split into 2016-2031 (15 years from 2018) as teh current plan period, and then the figure from 2032-3052 (2 years) totalling 25 years.

The concept is that current plans adopted in the next 2 years are based on current methods – to avoid disrupting current plan formation, but that after that plans plan for the long range, and include a shortfall from 2016-2032 based on any gap between the current plan and the new method, as well as strategic allocations for large sites, such as large urban extension townships and Garden towns and Cities, that will complete beyond 2033. Plans need not allocate every site post 2033, they can quite legitimately leave a proportion of total allocations (around 20% from experience of previous plans) in a rolling manner to be brought forward in local plans and neighbourhood plans every 5 years.  The key though being that we marks out the broad locations for strategic scale development for the remaining 80% to ensure we can have joined up long range infrastructure and transport planning across whole regions.

Looking at 2016-2031 here is an example of the spreadsheet based modifications for Warwickshire,  The figures are in thousands with one decimal place (100s) which the correct degree of precision for large scale planning.

The first elements is to convert from households to homes.  This includes a factor for frictional valencies and second homes.  A fairly standard 3% in total.  As with any element an argument could be made that there should be regional variations.  for example in the south West of England second homes could be much higher. However in the first draft it adopts a KISS (keep it simple stupid) approach.  The second adjustment factor is for household formation suppression during the great recession. Empirically comparing similar periods before and after the Great recession this is around 9.4%.

 

These tw0 factors converts from a baseline OAN to a Homes requirement.

Now we need to convert from homes to an OAN target.

We need a figure for lag/non-completions.  this always used to be 10% but in recent years it seems to be a lot higher.  Again ideally LPA by LPA adjustments but as no national dataset we use the DCLG assumption of 10-20% and apply a mid range 15%.

The next element is to make an assumption that in the long run to 205s as a nation we will not only meet the needs of newly forming households but also start biting into the backlog of housing shortfalls created over half a century.  This, in the long run, would be the same things as a market signals and affordable housing ‘Uplift’

We have already adjust for concealed households before the Great Recession, however even before that there was still a big shortfall of people who could not afford to form new households.  The simplest thing here is to re-use a modelling assumption derived from the departments affordable housing economic model by the former NHPAU.  That an uplift of 12.5% would restore affordability to 1987 levels within 20 years.  There may be more recent runs, we don’t know, but as a starting point it applies this 12.5% uplift.

The final element involves applying a second order derived migration effect of 10.5%. uplift.  This accounts for where additional housebuilding creates a multiplier effect from supply chain effects,  expenditure by builders and suppliers etc. on services etc.  for the Oxford Cambridge Corridor study Cambridge Econometrics has estimated the effect at around 10.5%.

In growth areas this uplift will produce a total figure. In other areas however there will be net out migration from land constrained and low employment areas to growth areas, which will have enhanced housing targets and enhanced employment growth figures.  Therefore there will have to be a final round of ‘reconciliation’ to sure that all in and migration flow nationally sum to unity.  This is not included in the current first draft MOAN model as  this can only be done after the determination of where enhanced employment and housing growth areas will be – which can only be done with larger than local planning.

If an area which is land constrained still has an employment surplus it may still suck in migrants (many from abroad) who will enforced share to replace out migrants going to new homes, and in many cases new jobs, in growth areas. – such a the Oxford-MK- Camridge Growth Corridor.  If the donating area  does not have an employment curplus its population will decline or not grow as quickly as it might.  Much of this migration effect is accounted for nationally in the ONS projections, however it does not account for the enhanced in migration is newly designated growth areas and pro-rata internal in migration from non growth areas.

A column needs to be added to the spreadsheet for this reconciliation – and is not yet done.  It will basically take the lowest two quartiles of an index of an growth increases by LPA and weight the 10.4% national uplift according to this index (a ranked index how land unconstrained multiplied by the  growth (homes) for each LPAeach LPA is).    This will require some further GIS based modelling.  currently the model over estimates National Modelled OAn need by 10.4% as a result.

 

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2 thoughts on “Introducing MOAN -Method for Objective Assessment of Need 2/2

  1. A couple of errors in your spreadsheet.
    (1) the Market and Affordable Uplift column – you have multiplied by 0.025 rather than 0.125 (12.5%)
    (2) the Second Order Induced migration effect column – you have multiplied by 0.15 rather than 0.105 (10.5%)
    Apply these amendments and you get an OAN for Warwickshire of 42.8.

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