economic forecasts and housing needs assessment...economic forecasts and housing needs assessment...

Economic Forecasts

and Housing Needs Assessment

Peter Brett Associates

June 2018

Office Address:

33 Bowling Green Lane, Clerkenwell, London EC1R 0BJ

T: +44 (0)207 566 8600 E: [email protected]

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© Peter Brett Associates LLP 2018

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CONTENTS

0 EXECUTIVE SUMMARY.............................................................................................. 1

Introduction .................................................................................................................. 1

Employment land ......................................................................................................... 1

Housing ........................................................................................................................ 2

1 INTRODUCTION .......................................................................................................... 5

2 ECONOMIC FUTURES ................................................................................................ 7

The business-as-usual forecast .................................................................................... 7

The policy-led scenario ...............................................................................................15

3 EMPLOYMENT LAND ................................................................................................27

Future need .................................................................................................................27

The Local Plan ............................................................................................................30

4 HOUSING ...................................................................................................................33

Ground rules ...............................................................................................................33

Demographic projections .............................................................................................34

Jobs and housing ........................................................................................................39

The Local Plan ............................................................................................................40

5 SUMMARY AND CONCLUSIONS ..............................................................................43

Economic futures ........................................................................................................43

Employment land ........................................................................................................44

Housing .......................................................................................................................45

APPENDIX: TRANSLATING JOBS TO FLOORSPACE

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0 EXECUTIVE SUMMARY

Introduction

0.1 This study, commissioned by Doncaster Council, is part of the evidence base that will

inform targets (requirements) the emerging Local Plan. It considers needs and targets

for employment land and housing for the plan period 2015-32, under two alternative

economic futures, or scenarios: a business-as-usual scenario, and a policy-led

scenario in which job growth fulfils the ambitions of Sheffield City Region (SCR).

0.2 Both scenarios are based on local economic forecasts provided by Experian. The

business-as-usual scenario is Experian’s standard or baseline forecast, which is their

view of the most likely future for the borough. The policy-led scenario assumes job

growth of 1% p.a., based on emerging SCR targets.

0.3 These forecasts predict future number of jobs in Doncaster, from which we estimate

the demand for employment land that the plan should meet. From the forecast job

numbers, together with demographic modelling, we also estimate the population, and

hence the numbers of dwellings, that will be required to house enough workers to fill

those jobs.

0.4 For the plan period 2015-32, the baseline forecast shows job growth of 13,800 jobs or

812 jobs p.a. The policy-led scenario shows growth of 26,600 jobs over the plan

period, equal to 1,564 jobs p.a. This adds 12,800 jobs to the baseline growth of

13,800 jobs.

Employment land

0.5 We have translated our two economic scenarios into needs for employment land and

floorspace. Over the plan period 2015-32, in the baseline scenario, the resulting need

for net additional space is for 95,203 sq m of industrial / warehouse space and 27,648

sq m of offices, which together would require an estimated land area of 28 ha. In the

policy-led scenario the net additional need is for 751,693 sq m of industrial /

warehouse space and 31,227 sq m of offices, which would need an estimated 193 ha

of employment land. These figures will be the starting point of the employment land

requirement, or target, to be included in the next Local Plan.

0.6 Before these figures are translated into Local Plan requirements, or targets, they

should be adjusted to take account of future losses. The above figures relate to net

change – which means the difference between new employment space to be created

over the period and existing employment space to be lost when employment sites are

redeveloped for other uses. But the Local Plan must supply land to match the gross

demand for new space. In other words, the plan must provide land not only to

accommodate that net growth, but also to replace any existing space that will be lost

over its period. If past rates of loss continue, this additional land area may be very

large, so gross need may be far above net need.

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0.7 In setting employment land provision, therefore, the Council should make an

allowance for potential future loss of existing employment space. Going forward, the

Council should monitor actual losses as they occur. If monitoring shows that actual

losses differ significantly from the assumptions made initially, policy or development

management decisions can be adjusted to ensure that net demand is still met.

0.8 Before translating our forecasts into employment land provision, there are four other

important issues for the Council to consider.

0.9 Firstly, the forecasts should be reality-tested against market intelligence, to verify that

development in line with the forecasts is likely to be in demand and financially viable.

0.10 Secondly, the Council will need to decide which version of the forecast to use –

whether the business-as-usual baseline, the policy-led scenario or an intermediate

version. In the interest of maximising economic growth, it may be right to allocate

enough land over the plan period to match the job-led scenario, even though we

cannot be certain that the corresponding demand will materialise. The new plan may

even provide land above the job-led scenario, if it aims to attract regional / national

demand for strategic warehousing; and to ensure that it is ready able to meet

unexpected occupier requirements, so that no opportunities for economic growth are

missed.

0.11 A third issue is whether the plan should allow a margin for churn in the land market

(‘frictional vacancy’), competition and choice. In our view, a simple and effective

approach is to ensure that at any one time the plan provides at least five years supply

of immediately available and deliverable employment land, as it must do for housing.

0.12 Fourthly and finally, in deciding on total land supply the Council should have regard to

the balance of jobs and housing. We discuss it in the next section.

Housing

0.13 A main objective of our study is to advise on the objectively assessed housing need

(OAN) and housing requirements (policy targets) that should be in Doncaster’s new

Local Plan. The issue is complicated, because the planning system is in transition.

0.14 The Government has published draft revised versions of national planning policy (the

NPPF) and national planning guidance (the PPG), which includes a new approach to

measuring housing need. It expects to finalise those new documents by the end of

July 2018. Accordingly, it is likely that the new Doncaster Local Plan will come under

the new system. But it is also possible that the current system will apply to it, perhaps

because the Government’s timetable slips, as it has done before.

0.15 These alternative outcomes have quite different implications for housing need and

housing provision. We discuss them in turn below. It is important to note that all the

numbers mentioned in this discussion may change as a result of the new official

household projection to be published by ONS in September 2018. The Council should

review the numbers in the light of the new projection as soon as it is published.

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Housing numbers under the current planning system

0.16 If Doncaster’s new plan is submitted under the current NPPF and PPG, the housing

numbers in the plan should be based on projections and forecasts for the plan period,

2015-32. These figures show:

Demographic starting point, from the 2014-based official household projections:

562 net new dwellings per annum (dpa)

Adjusted need, to match business-as-usual job forecast: 579 dpa

Job-led housing need, to match the job growth aspiration of Sheffield City Region:

1,073 dpa.

0.17 If the Local Plan is submitted under the current system, it should analyse market

signals to see if they justify an uplift to the demographic starting point of 562 dpa. This

analysis was not part of the brief for the current study. The number that it produces

will be Doncaster’s OAN.

0.18 The Council should also consider if the market housing provided in line with the OAN

would produce enough developer contributions to meet affordable need – which is

estimated through a separate calculation and is not part of the objectively assessed

need for all housing. If the OAN would not provide enough developer contributions,

the Council should consider an uplift to the total housing number – though recent

legal judgments suggest that this would relate to the target rather than the need. In

this study we have not assessed affordable need or considered whether it would

justify such an uplift.

0.19 As a housing requirement, or target, the Council may consider a higher number,

which takes account of the aspirational, job-led figure of 1,073 dpa. But the target

would not have to be the 1,073 dpa that would result from full achievement of the SEP

target. It may be more prudent to adopt a lower number, perhaps halfway between

562 and 1,073. This is because the policy-led scenario is recognised as ambitious,

and hence the job growth and housing demand that it predicts may not materialise. A

requirement between the two extremes would follow the advice of both the current

and draft revised Framework, that plans should balance aspiration and realism.

0.20 In addition to the need or demand discussed in this report, in line with the NPPF (para

14) the housing requirement in the plan should take account of supply-side

constraints, such as the Green Belt. If, due to such constraints, the adverse impacts

of development would significantly and demonstrably outweigh the benefits, then the

policy requirement can be reduced accordingly, even below the objectively assessed

need.

0.21 If the Council does opt for an uplifted target based on the SCR job numbers, it should

make it very clear that this is a policy uplift, quite separate from the objectively

assessed need. If there are S78 planning appeals in the time interval before the new

plan is adopted, this will avoid confusion about the ‘requirement’ that should be used

in the calculation of five-year land supply.

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Housing numbers under the new planning system

0.22 If Doncaster’s new plan is submitted under the revised NPPF and PPG, and

assuming that the drafts previously published do not change, the housing numbers in

the new plan will be based on projections and forecasts for a 10-year period, 2016-26.

These figures show:

Housing need produced by the Government’s standard method: 585 dpa

Job-led housing need, to match the aspirations of Sheffield City region: 912 dpa.

0.23 Still assuming that the new NPPF and PPG remain as drafted, the Council may

present housing need as a range, with the minimum at 585 dpa and the maximum at

912, or an intermediate number between 585 and 912. In this way, the assessment of

five-year land supply and the delivery test would be based on 585 dpa, while land

allocations would be based on 912 dpa or the intermediate number (unless there are

supply constraints that make this undeliverable or unsustainable).

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1 INTRODUCTION


inform targets (requirements) for housing and employment land in its emerging Local

Plan. It considers two alternative economic futures for the plan period 2015-32: a

business-as-usual scenario in line with standard forecasts, and a policy-led scenario

in which job growth fulfils the ambitions of Sheffield City Region (SCR).

1.2 As required in the Council’s brief, the study takes account of the proposed new

method for assessing housing need that the Government published in September

2017. It also takes account of the planning reform package issued by the Government

on 5th and 9th March 2018. On 5th March, the Government confirmed that the new

needs assessment method will be taken forward, and issued a consultation draft of

revisions to the National Planning Policy Framework. On 9th March, it issued a draft of

revisions to the Planning Practice Guidance, which include a new version of that

method.

1.3 The 5th March announcements also confirm that there has been further slippage in

the Government’s planning reform timetable. As we show in Chapter 4 below, the

announcements imply that the revised NPPF will apply to plans submitted after

January 2019, and the new assessment method could come into force even later. As

the Doncaster Local Plan is expected to be submitted in spring 2019, it is likely that

the new needs assessment method and the new Framework will apply to it. But it is

also possible that the Plan will come under the old system. Therefore, in drawing

policy implications from our evidence we allow for both possibilities.

1.4 Below, Chapter 2 considers economic futures, providing two alternative forecasts of

jobs and output growth. Chapter 3 translates the forecasts into employment land

demand and draws implications for the Local Plan. Chapter 4 translates the forecasts

into housing demand, and again draws implications for the Local Plan. Chapter 5

brings together our conclusions.

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2 ECONOMIC FUTURES

The business-as-usual forecast

Doncaster 2015-32

2.1 To provide a business-as-usual view of Doncaster’s economic future, we use the

standard (or baseline) forecast from Experian, one of the three main sources of local

economic forecasts in the UK. We use the December 2017 version, which is currently

the latest available. We choose to work with Experian for three reasons: we find that

their methods and assumptions are the most transparent of the three forecasters and

their forecasts are credible, and their model allows testing of alternative assumptions

for demographic and labour market variables, such as population and economic

activity rates.

2.2 The forecasting model takes account of the macroeconomic context, the area’s mix of

industries and services (industrial structure) and its past performance compared to

the UK and the region. It also takes account of future population change, which it

assumes will be as shown in the latest official projection, currently the 2014-based

Sub-National Population Projection (SNPP 2014). The SNPP is based on rolling

forward (‘projecting’) past demographic trends by age and sex.

2.3 Table 2.1 below summarises the baseline forecast for the plan period 2015-32. The

size of the local economy is expected to increase over the period:

The number of jobs located in Doncaster (‘workforce jobs’1) grows by from

134,000 to 147,800, by 13,800 jobs in total (10.3%), equal to 812 jobs p.a.

Productivity2, also grows - by 25.7% over the period.

Growing job numbers and growing productivity drive growing output (GVA)3,

which increases by 36.9%.

2.4 As well as future jobs, the table shows a variable called ‘job demand’. This is the

demand for labour, i.e. the number of jobs that employers want to fill. In other words,

it is the number of jobs that would exist in the local economy if growth were not

constrained by local labour supply. In the Experian model, the calculation of job

demand takes no account of local labour supply.

1 A better label for this number would be ‘workplace jobs’, because it relates to workplaces in Doncaster. But Experian, following Government statistics, calls it ‘workforce jobs’. To avoid confusion, we will simply call it ‘jobs’.

2 Productivity is economic output (i.e. the value of all goods and services produced in an area) per hour worked. Figures on output and productivity are provided in real terms at 2013 prices; this means that the figures are adjusted for inflation. As there are no official statistics on productivity at local authority level, the figures are estimated by Experian from official data on output, numbers of jobs and hours worked per job. 3 Output = jobs x hours worked per job x productivity

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Table 2.1 The baseline economic forecast, Doncaster 2015-32

Source: Experian, PBA

2.5 But the number of actual jobs, labelled ‘workforce jobs’, does take account of labour

supply. If labour supply in an area – taking account of the age and sex profile of the

population, economic activity rates4, unemployment, double-jobbing and commuting -

is enough to meet demand, then ‘workforce jobs’ equals labour demand. If labour

supply is not enough to meet demand, then ‘workforce jobs’ equals the maximum

number of jobs that labour supply can meet. The difference between job demand and

workforce jobs is called ‘excess jobs’ or ‘unfilled jobs’. The presence of unfilled jobs

indicates that the local economy is constrained by labour supply.

2.6 This is Doncaster’s position in the baseline forecast, although the supply constraint is

minimal. By the end of the plan period there are not quite enough people to fill the

jobs that employers in the borough want to fill, and therefore the number of actual

jobs falls slightly short of demand:

4 The activity rate is the proportion of the population that is economically active, or part of the labour force – which means either working or looking for work. It varies greatly by age and sex – as older people are less likely to be economically active than younger people, and women than men.

Thousands unless otherwise stated 1997 2015 2032 Change

2015-32

Change p.a.

1997-15

Change p.a.

2015-32

Labour Force 126.400 148.200 153.200 5.000 1.211 0.294

Labour Force - 16 to 64 142.000 143.900 1.900 7.889 0.112

Labour Force - 65 Plus 6.300 9.300 3.000 0.350 0.176

Population - 16 Plus 226.500 246.700 256.500 9.800 1.122 0.576

Population - 16 to 64 180.600 190.500 180.300 -10.200 0.550 -0.600

Population - 65 Plus 45.900 56.100 76.200 20.100 0.567 1.182

Total Population 288.800 304.500 311.700 7.200 0.872 0.424

Economic Activity Rate (%) - 16+ 55.8 60.1 59.7 -0.4 0.239 -0.024

Economic Activity Rate (%) - 16 to 64 74.5 79.8 5.3 4.139 0.312

Economic Activity Rate (%) - 65 Plus 11.1 12.2 1.1 0.617 0.065

Employment rate (% of 16+ population) 50.6 55.4 56.6 1.2 0.267 0.071

Productivity (£GVA per hour 2013 prices) 20.700 24.500 30.800 6.300 0.211 0.371

Total GVA (£mn 2013 prices) 3,551.500 5196.100 7112.900 1916.800 91.367 112.753

Workforce Jobs 113.000 134.000 147.800 13.800 1.167 0.812

Jobs Demand 113.000 134.000 148.100 14.100 1.167 0.829

Excess Jobs 0.000 0.300 0.300 0.000 0.018

FTE Jobs 87.400 107.800 117.600 9.800 1.133 0.576

Workplace based Employment 129.300 139.400 10.100 7.183 0.594

Residence based Employment 114.500 136.700 145.100 8.400 1.233 0.494

Net Commuting (inflow) -7.300 -5.600 1.700 -0.406 0.100

Unemployment 11.800 11.500 8.100 -3.400 -0.017 -0.200

Unemployment Rate (% of labour force) 9.4 7.8 5.3 -2.5 -0.089 -0.147

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Over the plan period job demand grows by 829 jobs p.a. But each year 17 of

those potential new jobs do not become actual jobs, because they are not filled.

By 2032 the forecast shows demand for 14,100 jobs, but the actual number of

jobs is fractionally lower, at 13,800. The difference between the two equals 300

‘excess jobs’, or unfilled jobs.

The resident labour force grows by just 294 p.a., significantly less than the

number of jobs.

This is partly because the total population, as shown in the official projection,

grows more slowly than jobs.

It is also because that population is ageing. In the core working age group, 16-64,

numbers fall marginally over the period. By contrast, the 65+ population – of

which a much smaller proportion is in the labour force - increases by more than

one third. This accelerated ageing applies across the UK, but it is especially

marked in Doncaster.

2.7 At 300 jobs, around 0.2% of total demand, Doncaster’s supply deficit at the end of the

plan period is very small. Given the uncertainty around economic forecasts, such

small numbers should not be taken literally. In common sense terms, the message

from the forecast is that, in a business as usual economic scenario, if population

grows in line with the official projections Doncaster is likely to be on the brink of a

labour shortage. In other words, there is a threat that local economic growth will be

constrained by labour supply.

2.8 Later in this report we will run alternative scenarios, in which population increases

above the SNPP figures to meet labour demand. Here, we continue to look at the

baseline scenario. In that scenario, the growing pressure of labour demand against

constrained supply produces several changes in the labour market5:

i Doncaster’s unemployment rate falls steeply, from 9.4% to 5.3%. This is partly

due to macroeconomic factors, as UK unemployment also falls over the period –

but to a much lesser extent, from 5.4 to 4.4%. The reason why Doncaster’s

unemployment falls faster than the UK’s is the tightening of the local labour

market. The outcome is that the gap between Doncaster and UK unemployment

narrows, from 4.0 percentage points in 2015 to 0.9 percentage points in 2032.

ii The reason why the gap does not quite close is that in Experian’s view around 5%

is the ‘lower bound’ unemployment rate for Doncaster – a level below which

unemployment cannot realistically fall, regardless of how many jobs are on offer.

The lower bound for the UK is higher, at around 4%. Experian’s view of the lower

5 We have been asked to clarify the sources of employment, unemployment and activity rate figures in the analysis below. All figures are taken from Experian’s data set, which provides both history and forecasts. As a general principle, those Experian figures in turn are derived from official statistics wherever possible. However, where official data are not provided at the frequency, geography or detail required, or official data are internally inconsistent, Experian uses techniques to make its own estimates. Specifically, numbers of residents employed, unemployed and economically inactive are taken from the Annual Population Survey (APS) and the ONS model-based estimates of unemployment. Employment rates, unemployment rates and economic activity rates are the ratio of those numbers to the resident population, taken from the ONS mid-year population estimates (MYEs). At local level, the APS is affected by sampling error, because survey samples are small. To adjust for this, Experian smooths the APS figures and controls them to national numbers.

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bound for each local area is based on history (how low unemployment has fallen

before) and the profile of the labour force (people with more ‘junior’ occupations or

lower skills are at higher risk of unemployment).

iii Doncaster’s activity rate for people aged 16-64 also increases, from 74.5 to

79.8%. Again, this partly reflects an increase for the UK, from 77.2 to 79.4%, but

in Doncaster the increase is greater. The likely reason is what economists call the

encouraged worker effect: when job opportunities improve, some people who

would otherwise be inactive (full-time parents, retirees etc) join the labour market.

The outcome is that Doncaster’s deficit against the national benchmark

disappears. By 2032, the borough’s 16-64 activity rate is slightly higher than the

UK rate.

iv For people aged 65+, however, Doncaster’s activity rate rises more slowly than

the UK’s, and by the end of the period it is just 12.2% to the UK’s 15.5%. The

reason is that, in Experian’s view, higher 65+ activity rates for Doncaster would be

unrealistic. Again, this view is based on Doncaster’s history and the profile of its

labour force.

v The overall activity rate (16+)6 is the outcome of the age-specific activity rates

discussed above, together with the age profile of the population. Both in

Doncaster and the UK this overall rate falls very slightly over the plan period – the

outcome of an ageing population – which lowers the overall rate – largely

counterbalanced by increases in some groups. By 2032 Doncaster’s rate is

59.7%, very marginally below the UK rate of 61.1%.

vi The employment rate - the proportion of the 16+ population who is in work – is the

joint outcome of the activity rate and the unemployment rate. It is an important

metric, because as note earlier one proposed objective of the SCR is to lift the

employment rate so it equals the UK’s In Doncaster the employment rate

increases very slightly over the period, from 55.4 to 56.6%. In the UK it falls even

more slightly, from 59.2 to % 58.9%. The outcome is that Doncaster moves closer

to the UK’s over the period, but by 2032 the borough’s employment rate is still

2.3% below the UK’s.

vii A final measure of labour market balance is net commuting – the difference

between residents of other local authorities working in Doncaster and residents of

Doncaster working in other local authorities. Doncaster’s net commuting is

negative, indicating that more people commute out than commute in. Over the

plan period this net outflow is forecast to fall slightly, from 7,300 to 5,600. Again,

this results from the tightening labour market. The result is that residents of the

borough have a better chance of finding work locally.

2.9 In summary, the Experian baseline forecast predicts that Doncaster will gain 13,800

jobs over the plan period. Assuming that the population of the borough and nearby

areas changes in line with the latest official demographic projections, it also predicts

that by the end of the period the borough will be on the brink of a labour shortage,

6 The activity rate calculation excludes people younger than 16, because with a very few exceptions the law does not allow them to do paid work.

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with not quite enough workers to meet labour demand. This tightening labour market

benefits local residents, as it results in lower unemployment, higher proportions of

people participating in the labour market through the encouraged worker effect, and

slightly fewer people commuting out. In the forecast, Doncaster by 2032 is as close to

full employment as Experian considers it can be given the profile of its labour force.

Comparisons

2.10 As well as forecast change over the plan period, the table shows historical change

from 1997, the earliest year in Experian’s dataset7. Comparing past growth with that

forecast over the plan period:

In 1997-2015 job growth was1,167 jobs p.a., well above the 812 dpa forecast for

2015-32.

Thus, compared to the long-term past the forecast long-term future shows a

marked slowdown in growth (Figure 2.1). In percentage terms, jobs in Doncaster

increased by 1% p.a. in 1997-2015, while in 2015-32 the Experian forecasts

shows them increasing by just 0.6% p.a.

Figure 2.1 Jobs in Doncaster, history and baseline forecast


2.11 The explanation for this slowdown lies in the macro economy, rather than factors

specific to Doncaster. The forecast shows total job growth in the UK also slowing,

from 1.0% p.a. in 1997-2015 to 0.7% p.a. in 2015-32. Economic forecasters, including

the Office for Budget Responsibility, generally agree in expecting this future slowdown

– which is partly due to the ageing of the UK population.

7 Some variables are not available for 1997, as indicated by blank cells in the table.

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2.12 Thus, Doncaster’s past job growth has closely tracked that of the UK over the long

term, and according to the Experian forecast it will continue to do so over the plan

period. It shows significantly slower local growth in the future than in the past,

because total UK growth is expected to slow down.

2.13 However, in relation to productivity – output per hour worked – Doncaster is

disadvantaged relative to the UK. Productivity per worker in the borough is some 80%

of the UK. This relative position has not changed in the past, as productivity in the

borough has grown at a very similar rate to the UK. Experian predicts that it will not

change over the plan period either: in the baseline forecast productivity in the

borough and the nation continues to grow in parallel, at about 1.4% p.a. The city

region as a whole is in the same position.

Figure 2.2 Productivity in Doncaster and the UK, history and baseline

forecast


2.14 Logically there are two possible reasons why a local area’s productivity may be lower

than the UK’s: either the area’s industrial structure is biased towards lower-

productivity sectors, or the productivity of individual sectors is lower on balance in the

area than the UK, or both.

2.15 To understand how these factors may impact on Doncaster, we have looked closely

at detailed Experian data, which break down the economy into 38 sectors (industries

and services).

2.16 The evidence suggests that both factors apply to the borough. As shown in Doncaster

tends to have relatively few jobs in those sectors that show the highest productivity in

the UK as a whole, such as Real Estate, Pharmaceuticals and Insurance & Pensions.

This is shown in Table 2.2, which ranks sectors in order of UK productivity against

Doncaster’s location quotient (LQ). (The LQ measures the representation of each

sector in Doncaster compared to the UK; an LQ below 1 shows that the industry is

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under-represented in Doncaster, while industries with an LQ above 1 are over-

represented in Doncaster) 8.)

2.17 But also, most sectors have lower productivity in Doncaster than the UK. As shown in

Figure 2.3, this applies to 29 of Experian’s 38 sectors.

8 Technically, the LQ for a sector, or industry, is the industry’s share of Doncaster’s total jobs divided by its share of the UK’s total jobs.

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Table 2.2 UK productivity and jobs in Doncaster

£/hour at 2013 prices

Source: Experian, PBA.

Sectors ranked by productivity UK Productivity UKLocation quotient

Doncaster

Jobs in Doncaster

000s

1 Real Estate 231.9 0.4 0.9

2 Extraction & Mining 221.7 2.2 0.6

3 Mfg of Pharmaceuticals 169.5 0.0 0.0

4 Insurance & Pensions 155.2 0.0 0.0

5 Fuel Refining 125.2 0.0 0.0

6 Air & Water Transport 80.9 0.5 0.2

7 Telecoms 64.4 0.8 0.7

8 Utilities 61.5 0.9 1.2

9 Construction of Buildings 53.2 0.9 2.6

10 Media Activities 53.0 0.1 0.2

11 Finance 52.1 0.6 2.4

12 Mfg of Chemicals 51.9 0.3 0.1

13 Civil Engineering 48.9 2.6 2.4

14 Other Private Services 41.7 0.6 2.3

15 Mfg of Transport Equipment 37.6 0.5 0.6

16 Computing & Information Services 36.3 0.2 0.6

17 Mfg of Textiles & Clothing 31.9 0.4 0.2

18 Mfg of Computer & Electronic Products 31.7 1.3 1.1

19 Public Administration & Defence 31.5 1.1 6.7

20 Agriculture, Forestry & Fishing 31.4 0.5 0.8

21 Mfg of Food, Drink & Tobacco 31.0 0.5 0.8

22 Mfg of Machinery & Equipment 28.6 0.5 0.4

23 Professional Services 28.6 0.5 5.6

24 Other Manufacturing 27.4 1.7 2.2

25 Mfg of Wood & Paper 27.2 0.5 0.3

26 Mfg of Rubber, Plastic & Other Non-Metallic Mineral Products 26.7 2.8 2.9

27 Wholesale 26.1 1.1 8.1

28 Specialised Construction Activities 24.8 1.1 5.1

29 Education 24.6 1.0 12.1

30 Mfg of Metal Products 23.6 1.1 1.7

31 Health 23.6 1.5 14.4

32 Land Transport, Storage & Post 21.5 1.8 10.7

33 Recreation 21.2 1.1 4.1

34 Printing and Reproduction of Recorded Media 21.0 0.4 0.2

35 Retail 20.8 1.1 14.3

36 Administrative & Supportive Service Activities 18.3 1.0 11.8

37 Accomodation & Food Services 15.0 0.8 6.9

38 Residential Care & Social Work 10.4 1.2 8.5

Total 32.7 133.7

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June 2018 15

Figure 2.3 Productivity in Doncaster as a % of UK, 2015

£/hour at 2013 prices


2.18 Thus, it seems that much of Doncaster’s productivity deficit is due to the fine-grained

mix of activity within individual Experian sectors, rather than the distribution of activity

between those sectors. Within most sectors, Doncaster’s jobs are weighted towards

lower-value activities.

The policy-led scenario

2.19 The next step in our analysis has been to model an alternative scenario, in which the

economy fulfils local policy aspirations. We have done this in two stages: first to set

aggregate totals for the whole economy, and then to break down these totals into

economic sectors (industries and services).

Method

2.20 For the first step, we have used the emerging targets being considered by Sheffield

City Region (SCR) for the forthcoming update of its Strategic Economic Plan.

Doncaster Council does not yet have such targets, because it is in the early stages of

developing a new economic strategy. The targets in the current SEP are out date, as

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June 2018 16

they were set as long ago as 2013, based on historical data that are now superseded.

Therefore, we have used the emerging targets associated with the current refresh of

the Strategic Economic Plan - albeit they have not yet been signed off by the SCR,

and Doncaster Council accepts that until they are finalised they may be subject to

change.

2.21 The emerging SCR argets are the work of the consultancy Metro Dynamics and have

been provided in several documents, of which the most informative is probably the

Target Metrics report9. They relate to the city region as a whole and are not broken

down either by local authority or by sector.

2.22 For the city region as a whole to 2040, the proposed headline targets are:

i Job growth of 1.0% p.a.

ii Productivity growth of 1.0% p.a.

iii Output (Gros Value Added) growth of 2.0% p.a.

iv Businesses: 20,000 new successful business by 2025 (this is a shorter-term

target than the others)

v Median wages: parity with the UK

vi Employment rates: parity with the UK

vii Housing: 7,000 net new dwellings per year (dpa).

2.23 The basis of the above targets is explained in the Metro Dynamics report and its

appendices. Their starting point is the historical performance of the city region, and

their broad aim is that this performance should improve, both in absolute terms and

relative to the UK. The targets do not use economic forecasts; the report makes it

clear that they are aspirations rather than predictions:

‘We believe that these targets will push Sheffield City Region to further improve its

economy. Below, we discuss why they are attainable, yet challenging. They will

ensure that SCR continues to move forward, creating an economy that works for all

its citizens. But they are targets, rather than predictions. They require significant

policy interventions and economic investments to achieve them. All of them are set

higher than what we believe would occur without changes, and are meant to

encourage action towards them

…

Further, there are a number of policy challenges at a local, national or global level,

which introduce even greater uncertainty into any targets set for SCR. Most

prominently, Brexit makes any forecasting very difficult to do, with significant changes

expected on a wide range of policies, and little hard information at this point. There is

potential for large upward or downward revisions, depending on the outcome of

negotiations. Due to this, we would like to state that our targets are our best

predictions of SCR’s ambitious potential, given what we know at this point, and

should not be taken as anything more than that going forward.’

9 Metro Dynamics, Target Metrics Sheffield City Region, 29 June 2017

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June 2018 17

2.24 Our policy-led scenario is based on the first of the targets on the list, job growth of 1%

p.a. For the SCR as a whole this would produce 7,800 net new jobs p.a. over the plan

period, which is close to the 7,000 jobs p.a. in the current Strategic Economic Plan10.

For Doncaster, we use the same target growth rate of 1% p.a. as is set out for the

SCR, so that in our scenario Doncaster’s share of the total SCR jobs stays constant

over the plan period.

2.25 Our scenario does not incorporate the SCR productivity and output targets, because

they show growth below the Experian baseline. Thus, for the city region as a whole

the SCR productivity target is growth of 1.0% p.a., while the baseline forecast for the

plan period shows 1.4% for the city region – and virtually the same rate for Doncaster

and the UK. If Doncaster’s (and the SCR’s) level of productivity is to move closer to

the UK’s, the growth rate of its productivity will need to be faster than the nation’s.

This is a central objective of Doncaster Council’s emerging economic strategy, but no

quantitative target has been set for it.

2.26 The remaining four SCR targets are not included in our modelling, for different

reasons. Successful businesses are difficult to define or count, and no economic

forecast includes them. Earnings are not covered by economic forecasts either, at

least at local level; but they are measured indirectly by productivity, which is shown in

the forecasts: if SCR and Doncaster narrow their productivity gap against the UK,

their wage gap will also narrow.

2.27 The targets for employment rates and housing growth raise different issues. In the

Metro Dynamics report these two targets are not connected. The employment rate

target is based on a general aspiration to improve the life chances of local people.

The housing growth target is the result of demographic modelling11 that started from

the 2013 SCR target of 7,000 additional jobs p.a. for the city region, as distributed

between local authority areas by the Ekosgen study12, and aimed to estimate the

population and housing that would be needed to fill those jobs. That modelling was

part of the evidence base for the SCR Infrastructure Plan. It made its own

assumptions about future employment rates, which of course were different from the

(more recent) Metro Dynamics target.

2.28 The Metro Dynamics report explains why it has not updated the SCR housing target

as follows:

2.29 ‘We have not undertaken analysis on the housing target. This maintains the target in

the 2016 Integrated Infrastructure Plan, which we understand has been used in the

city region’s local plans too. Given that this target is already stretching and has been

10 Some of the difference may be due to different measurement methods. While the Experian data relates to total jobs, both employed and self-employed, Metro Dynamics rely partly on BRES, which does not count all self-employed jobs. 11 Edge Analytics, Sheffield City Region Demographic Forecasts 2012-13, Phase 1 Report, April 2014; Phase 2 report, April 2015 12 Ekosgen, Sectoral and Local Authority Distribution of SCR 70,000 Jobs Target – Assumptions Report, not dated

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June 2018 18

crafted through extensive work by the city region, we have focused attention on the

areas where SCR is ahead of target.’

2.30 In the present study, we do reconsider the housing target, because it is based on

economic targets which are now being updated, and also on quite old data; for the

purpose of its emerging plan Doncaster Council needs to know whether these new

targets and new data have different housing implications to the old ones. We consider

this in Chapter 4 below, based on an updated SCR job target, an updated view of

Doncaster’s share of that target, and the latest available data, about employment

rates among other things. Therefore, rather than apply the SCR employment rate and

housing targets to Doncaster, we will produce new forecasts of those variables.

2.31 For this, we commissioned Experian to model alternative scenario that assumes the

SCR target is achieved, so job demand in SCR and in Doncaster increase by 1% p.a.

over the plan period.

Results

First-round forecast

2.32 Table 2.1 below summarises the results of the first such scenario. In this version of

the future, job demand grows in line with the SCR target. But the population is the

same as in the baseline, still taken from the official projection, SNPP 2014.

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June 2018 19

Table 2.3 The policy-led economic scenario, Doncaster 2015-32


2.33 In the policy-led scenario:

Job demand over the plan period grows by 24,200 jobs (1,424 p.a.) This is 10,100

jobs (594 p.a.) above the baseline number. It is also above the 2013 SCR target

for Doncaster, which was calculated in the Ekosgen report as 1,119 jobs p. a.

But labour supply is not enough to meet this demand. Of the additional demand of

24,200 jobs, 11,100 are unfilled jobs.

‘Workforce jobs’ - the actual number of (filled) jobs - grows by only 12,800 jobs

(753 p.a.). This is just over half the forecast demand. It is also slightly less than

the baseline forecast. This is because, as mentioned earlier, in the policy-led

scenario other places in the SCR also enjoy above-baseline job demand, which

pulls above-baseline out-commuting from Doncaster to those other places.

As higher demand pushes against a limited population, the labour market tightens

further than in the baseline scenario. This of course is partly due to higher

demand in Doncaster. But it is also caused by above-baseline growth in the rest

of SCR, which draws additional net commuting from Doncaster.

Thousands unless otherwise stated 2015 2032 Change Change p.a.

Labour Force 148.200 153.800 5.600 0.329

Labour Force - 16 to 64 142.000 144.400 2.400 0.141

Labour Force - 65 Plus 6.300 9.400 3.100 0.182

Population - 16 Plus 246.700 256.500 9.800 0.576

Population - 16 to 64 190.500 180.300 -10.200 -0.600

Population - 65 Plus 56.100 76.200 20.100 1.182

Total Population 304.500 311.700 7.200 0.424

Economic Activity Rate (%) - 16+ 60.1 60.0 -0.1 -0.006

Economic Activity Rate (%) - 16 to 64 74.5 80.1 5.6 0.329

Economic Activity Rate (%) - 65 Plus 11.1 12.3 1.2 0.071

Employment rate (% of 16+ population) 55.4 56.8 1.4 0.082

Productivity (£GVA per hour 2013 prices) 24.500 30.700 6.200 0.365

Total GVA (£mn 2013 prices) 5196.100 7117.600 1921.500 113.029

Workforce Jobs 134.000 146.800 12.800 0.753

Jobs Demand 134.000 158.200 24.200 1.424

Excess Jobs 0.000 11.400 11.400 0.671

FTE Jobs 107.800 118.000 10.200 0.600

Workplace based Employment 129.300 138.500 9.200 0.541

Residence based Employment 136.700 145.600 8.900 0.524

Net Commuting (inflow) -7.300 -7.100 0.200 0.012

Unemployment 11.500 8.200 -3.300 -0.194

Unemployment Rate (% of labour force) 7.8 5.3 -2.5 -0.147

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June 2018 20

Although supply is tighter against demand, the unemployment rate is exactly the

same, and activity rates are virtually the same, as in the baseline forecast. That is

because, as discussed earlier, with baseline employment growth the local labour

market was already at capacity.

Net out-commuting still falls over the plan period, but only slightly, and by less

than in the baseline scenario. Again, this is due to the pull of above-baseline job

growth elsewhere in the SCR.

2.34 In summary, if the Experian modelling is correct, and labour demand grows in line

with the emerging SCR target, the SNPP 2014 population will not be enough to meet

labour demand - even though that population will be as fully employed as can

realistically be expected.

Rebalancing the labour market

2.35 In final run of the forecasting model, we asked Experian to produce a forecast in

which Doncaster’s job demand is met in full over the plan period. We call this the job-

led or rebalanced scenario.

2.36 The job-led scenario of course requires additional population to live in Doncaster,

over and above that shown in SNPP 2014. The forecasting model estimates that extra

population, taking account of the factors that link workplace jobs to resident

population – which as mentioned earlier comprise economic activity rates,

unemployment, double-jobbing and commuting. In the model, those variables are

partly driven by national trends: for example, unemployment everywhere is higher in

recessions than booms, and older people’s activity rates are increasing everywhere,

due to rising pension ages and life expectancies. The ‘link factors’ also respond to the

local balance of supply and demand: for example, when the local market tightens

unemployment may fall and activity rates increase, as mentioned earlier.

2.37 In the job-led scenario, we have assumed that the additional population results from

additional people moving to Doncaster from the rest of the UK, over and above the

official demographic projection – which, as noted earlier, rolls forward past trends. To

estimate the numbers and age / sex profile of those additional migrants, we have

applied percentage uplifts to the migration inflows shown in the SNPP. The

calculation assumes that the likelihood of people moving to an area because of job

opportunities varies with age, so in the older age groups fewer people move.

Therefore, we have made a higher percentage uplift for those aged 50 than for those

over 50. The demographic modelling assumes that after moving to Doncaster the job-

led migrants behave like the existing population: it applies to them the same fertility,

mortality and out-migration rates, by age and sex.

2.38 The job-led scenario assumes that the rest of Sheffield City Region, like Doncaster,

receives additional migration to meet policy-led job demand. This assumption impacts

on the results for Doncaster, because if other places in the city region did not have

enough population to meet demand they would attract more net commuting from

Doncaster.

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June 2018 21

2.39 Table 2.4 below summarises the job-led scenario. It estimates what will happen if job

demand grows in line with the SCR target, and that demand is met in full thanks to

above-baseline migration.

2.40 In this version of the future:

By definition there are no unfilled jobs. Job demand and actual (‘workforce’) jobs

now increase by the same amount, 1,565 jobs p.a.13.

The gap between supply and demand is filled by population growth above the

official projections. Population growth over the period is1,259 p.a., against 424

p.a. in the projection.

Age-specific activity rates and the unemployment rate at 2032 are virtually the

same as in the baseline scenario. The overall (16+) activity rate and the

employment rate are slightly higher than the baseline scenario, by just one

percentage point. This is because the population is slightly younger, thanks to job-

led migration. The employment rate is still below the UK’s, but by only 1.2

percentage points.

13 This is slightly more than the 1,424 in the policy-led scenario, because the extra residents attracted to the area by extra job opportunities create extra demand for jobs in local services such as retail and schools. As a result, job growth in Doncaster over the plan period is 1.07% p.a., fractionally above the proposed SCR target of 1.00% p.a. This is an insignificant departure from the target. To avoid over-complicating the calculation, we have not attempted to correct it.

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June 2018 22

2.4 The job-led (rebalanced) scenario


2.41 In Chapter 4 below we will estimate the implications for housing of the additional

population growth in the job-led scenario.

Sectors

2.42 Our next task is to break down the policy-led growth into economic sectors (industries

and services). This breakdown is based on the Council’s emerging economic

strategy. From desk research and workshop sessions with a group of senior officers,

we identified a series of priority sectors – where the Council expects growth above

business-as-usual, due to policy intervention, exceptional projects in the pipeline, or

both. The priority sectors are in two categories: ++ sectors, where the greatest uplift

is made, and + sectors, with a lesser uplift. The above-baseline policy-led growth is

divided between the priority sectors in proportion to numbers of jobs in Doncaster in

the base year, with ++ sectors given double weight.

2.43 The priority sectors are in three broad sectors:

Selected manufacturing industries:

++ sectors: Machinery and Equipment, Transport Equipment

Thousands unless otherwise stated 2015 2032 Change Change p.a.

Labour Force 148.200 166.400 18.200 1.071

Labour Force - 16 to 64 142.000 157.100 15.100 0.888

Labour Force - 65 Plus 6.300 9.400 3.100 0.182

Population - 16 Plus 246.700 273.500 26.800 1.576

Population - 16 to 64 190.500 196.000 5.500 0.324

Population - 65 Plus 56.100 77.500 21.400 1.259

Total Population 304.500 332.700 28.200 1.659

Economic Activity Rate (%) - 16+ 60.1 60.8 0.7 0.041

Economic Activity Rate (%) - 16 to 64 74.5 80.1 5.6 0.329

Economic Activity Rate (%) - 65 Plus 11.1 12.1 1.0 0.059

Employment rate (% of 16+ population) 55.4 57.6 2.2 0.129

Productivity (£GVA per hour 2013 prices) 24.500 30.600 6.100 0.359

Total GVA (£mn 2013 prices) 5196.100 7801.600 2605.500 153.265

Workforce Jobs 134.000 160.600 26.600 1.565

Jobs Demand 134.000 160.600 26.600 1.565

Excess Jobs 0.000 0.000 0.000 0.000

FTE Jobs 107.800 129.800 22.000 1.294

Workplace based Employment 129.300 151.600 22.300 1.312

Residence based Employment 136.700 157.500 20.800 1.224

Net Commuting (inflow) -7.300 -6.000 1.300 0.076

Unemployment 11.500 8.900 -2.600 -0.153

Unemployment Rate (% of labour force) 7.8 5.3 -2.5 -0.147

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June 2018 23

+ sectors: Rubber, Plastics and other Non-Metallic Mineral Products, Metal

Products, Other Manufacturing14

+ sector: Civil Engineering - which covers construction of infrastructure;

Selected transport and distribution activities:

+ sectors: Wholesale and Land Transport, Storage and Post: these sectors

cover both warehouse-based distribution activities and the operation of the

airport – which, surprisingly, is mostly classified to land transport rather than

air transport;

2.44 As well as the priority sectors above, some local service sectors also show policy-led

growth, over and above the baseline forecast. That is because, as noted earlier, to fill

the forecast jobs requires above-baseline population, and those additional residents

create additional local jobs through their demand for additional local services, such as

retail, education and health.

2.45 The table below shows jobs by sector in both scenarios. In the job-led scenario, the

12,800 above-baseline jobs in 2032 are distributed among broad sectors as follows:

Manufacturing 3,000 jobs

Civil Engineering 900 jobs

Transport and distribution – comprising Wholesale and Land Transport, Storage

and Post - 7,500 jobs

Local services 1,400 jobs.

2.46 For manufacturing as a whole, the job-led scenario turns significant decline into

fractional growth. In the baseline forecast the sector loses 2,500 jobs over the plan

period – almost a quarter of the 2015 total, continuing the long-term trend. By

contrast, in the job-led scenario manufacturing gains 500 jobs. In distribution and

transport, the baseline scenario already shows fast growth, and the job-led scenario

adds to that growth.

14 Other Manufacturing includes those parts of Doncaster’s rail industry that provides maintenance and overhaul, as distinct from manufacturing. The reason is that the Standard Industrial Classification, on which Experian’s sector definitions are based, repairs are generally classified to Other Manufacturing.

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June 2018 24

Table 2.5 Jobs by sector, Doncaster

Source: Experian, PBA. The sum of sectors the total jobs shown earlier, because sectors with fewer than 250 jobs are shown as zero, for reasons of commercial confidentiality.

2.47 By contrast, in the transport and distribution sector, the policy-led growth of 7,500

jobs adds to what was already significant growth in the baseline forecast. The sector

is already very large, accounting for 19,000 jobs in 2015 – more than double the

manufacturing total. The baseline forecast reflects Doncaster’s strong track record in

Thousands2015 2032

baseline

2032

job-led

Job-led minus

baseline

Agriculture, Forestry & Fishing 0.800 0.600 0.600 0.000

Extraction & Mining 0.600 0.500 0.500 0.000

Mfg of Food, Drink & Tobacco 0.800 0.600 0.600 0.000

Mfg of Textiles & Clothing 0.200 0.100 0.100 0.000

Mfg of Wood & Paper 0.300 0.200 0.200 0.000

Printing and Reproduction of Recorded Media 0.200 0.100 0.100 0.000

Fuel Refining 0.000 0.000 0.000 0.000

Mfg of Chemicals 0.100 0.100 0.100 0.000

Mfg of Pharmaceuticals 0.000 0.000 0.000 0.000

Mfg of Rubber, Plastic and Other Non-Metallic Mineral Products 2.900 2.000 3.000 1.000

Mfg of Metal Products 1.700 1.200 1.800 0.600

Mfg f Computer & Electronic Products+A23 1.100 1.100 1.100 0.000

Mfg of Machinery & Equipment 0.400 0.300 0.600 0.300

Mfg of Transport Equipment 0.600 0.800 1.200 0.400

Other Manufacturing 2.200 1.500 2.200 0.700

Utilities 1.200 1.300 1.300 0.000

Construction of Buildings 2.600 3.100 3.100 0.000

Civil Engineering 2.400 2.800 3.700 0.900

Specialised Construction Activities 5.100 6.400 6.400 0.000

Wholesale 8.100 8.900 11.700 2.800

Retail 14.300 14.100 14.400 0.300

Land Transport, Storage & Post 10.700 12.700 17.400 4.700

Air & Water Transport 0.200 0.300 0.300 0.000

Accomodation & Food Services 6.900 8.900 8.900 0.000

Recreation 4.100 4.800 4.900 0.100

Media Activities 0.200 0.200 0.200 0.000

Telecoms 0.700 0.700 0.700 0.000

Computing & Information Services 0.600 0.700 0.700 0.000

Finance 2.400 2.700 2.800 0.100

Insurance & Pensions 0.000 0.000 0.000 0.000

Real Estate 0.900 1.200 1.200 0.000

Professional Services 5.600 6.800 6.800 0.000

Administrative & Supportive Service Activities 11.800 13.700 14.100 0.400

Other Private Services 2.300 2.300 2.400 0.100

Public Administration & Defence 6.700 6.100 6.100 0.000

Education 12.100 13.700 14.000 0.300

Health 14.400 16.800 16.900 0.100

Residential Care & Social Work 8.500 10.700 10.700 0.000

Total 133.700 148.000 160.800 12.800

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June 2018 25

strategic warehousing around the M18 junctions, which make Doncaster a highly

competitive location for that use. The job-led scenario additionally takes account of

two exceptional projects in that sector:

The iPort logistics park, where 66.4 ha of land were developed for strategic

logistics in 2015-17, and a further 91.6 ha remain available15. At the standard plot

ratio of 4,000 sq m per hectare and employment density of 80 jobs per sq m, this

provides capacity for around 4,500 jobs in the transport and distribution sector.

Doncaster Sheffield Airport, which in March 2018 published for consultation a

masterplan that proposes major expansion of the airport and large-scale

economic and housing development on surrounding land.

2.48 In relation to this expansion and development, the airport masterplan16 sets out two

scenarios, called ‘core growth’ and ‘high growth’. In the core scenario, full-time

equivalent jobs at and around the airport increase from around 1,000 currently to

5,963 in 2031 and 7,161 in 203717. (The aspirational scenario almost doubles both

numbers). For 2031, which is close to the end of the Local Plan period, the jobs in the

core scenario comprise:

i 1,744 direct jobs in the operation of the airport, covering passenger-related

services, the cargo terminal and aprons

(Based on traffic commissioned from Aviation Economics. Between 2017 and

2037 the forecast, which is not published, shows annual passenger numbers

growing from 1.3m in to 4.7m in 2037 and cargo throughput growing from 10,000

to 70,000 tonnes.)

ii 3,586 jobs in other B-class land uses that are expected to locate on the airport

estate, comprising an aircraft maintenance campus (incorporating a satellite of

Sheffield University’s Advanced Manufacturing Research Centre) and general

industrial and office development, mostly for distribution and manufacturing

(Based on the capacity of the proposed site)

iii 633 jobs in retail and consumer services expected to serve new residents and

inbound visitors

(based on passenger forecasts and the proposed number of new homes).

2.49 Of these forecast airport jobs, the first two categories, totalling 5,330 jobs at 2031,

belong to the broad priority sectors defined earlier – specifically distribution and

transport and manufacturing. In the job-led scenario, those sectors together account

for 10,500 jobs.

2.50 In summary, iPort and the airport together have the capacity to provide around 10,000

new jobs in the identified priority sectors over the plan period. If all these jobs were

created in the plan period, and all were additional to the baseline forecast, these two

large projects would deliver the bulk of the 12,800 additional jobs that are shown in

15 Colliers International for Doncaster Borough Council, Doncaster Employment Land Review 2018, 16 Doncaster Sheffield Airport, Masterplan 2018-37, Draft consultation report March 2018 17 In addition to the permanent jobs discussed here, the scenario shows 604 construction jobs, which will be temporary.

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June 2018 26

our job-led scenario, over and above the baseline forecast. In practice, we cannot be

sure how many jobs will actually be delivered at iPort and the airport over the period;

and a significant (though unknown) proportion of them will already be in the baseline

forecast, because the forecast does take account of Doncaster’s economic strengths,

which include strategic logistics. On the other hand, some of the 12,800 policy-led

jobs are likely to result from exceptional projects and public sector interventions

unrelated to iPort and the airport.

2.51 We conclude that the job-led scenario, which is top-down scenario driven by

economic aggregates, looks consistent with the bottom-up evidence of major projects

in the pipeline.

2.52 However, the scale of growth shown in the job-led scenario is subject to an important

caveat. It is possible that there will be considerable demand for strategic warehousing

over and above the scenario, because this demand is footloose over large

geographical areas. Accordingly, if Doncaster provides high-quality accessible sites

such as iPort it may attract regional and national demand that is forecast to for other

areas, but is displaced from those areas through lack of capacity. To quantify such

strategic demand would require a regional or sub-regional study. How much of it

should be accommodated in Doncaster, is a policy decisions for the Council.

2.53 In relation to productivity, the policy-led and job-led scenarios show virtually the same

results as the baseline forecast: Doncaster has a continuing deficit against the UK,

which stays constant over the plan period. This is because the priority sectors, in

which the forecast shows above-baseline growth, are not especially high-productivity

sectors. For the borough’s productivity gap against the UK, the mix of activities within

each of the 38 sectors would have to change, in favour of those which are more

productive, and /or the individual businesses in certain activities would have to

become more productive, over and above what the baseline forecast expects. Such

productivity improvements cannot be brought about by land-use planning; they are a

central objective of policy interventions in other areas, including infrastructure,

education / training, business support, research / innovation programmes, and inward

investment promotion. No local economic forecast can predict the impacts of such

measures.

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June 2018 27

3 EMPLOYMENT LAND

Future need

Method

3.1 We have translated the baseline and job-led scenarios into expected demand for

employment land. Results are summarised in Table 3.1 below. As well as the plan

period 2015-32, the table shows this demand for a 10-year period, 2016-26. That is

because, as discussed in the housing section below, the Government’s new method

for calculating annual housing need uses a 10-year time horizon, regardless of what

the plan period is. As regards the alignment of housing with jobs, therefore, this is

the period the Council will need to consider.

3.2 To translate job growth by sector into demand for floorspace by use, we proceeded in

two steps:

Firstly, we estimated which jobs are based in different types of B-class space. The

method used for this is at Appendix A below. Broadly, it assumes that

manufacturing, some transport and distribution activities occupy industrial /

warehouse space, while offices are occupied by financial, professional, business

and administrative services. There are of course many jobs in sectors that are not

based in employment space, but in other kinds of space, such as retail premises,

health facilities and educational establishments; these ‘non-B jobs’ are not part of

the employment land calculation.

Secondly, we estimated floorspace per job at 2015, by dividing the Experian

number of jobs in each type of space by the VoA figures in the same type of

space. For this, we take jobs from the Experian dataset (which is based on official

statistics) and floorspace from the Valuation Office Agency (VOA) floorspace

statistics.

3.3 The second step produces the following floorspace per job – which includes vacant

units as well as occupied ones:

Industrial space (both production and warehousing / logistics): 72.3 sq m per job

Gross Internal Area (GIA)

Office 12.5 sq m per job GIA.

3.4 These ratios are close to those in the latest HCA Densities Guide published in 2015.

But in our view the ratios we have used are preferable, because they are based on

factual, up-to-date evidence, and that evidence is specific to Doncaster.

3.5 As a further alternative, we have also considered the floorspace per worker ratios

agreed by the Council’s Employment Land Stakeholders’ Group in 2015, for use in

the Housing and Employment Land Availability Assessment (HELAA). Officers have

told us that these HELAA assumptions are as follows:

Offices 18 sq m

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June 2018 28

Business and industry (which in context probably means manufacturing and non-

strategic warehousing) 60 sq m

Strategic warehousing (big shed) 100 sq m.

3.6 The HELAA floorspace categories do not fit those in our job forecasts, because the

job forecasts do not allow us to separate strategic warehousing from other industrial

uses. The HELAA floorspace ratios are based on a mixture of sources, including a

review of previous studies, a survey of nine strategic distribution sites and 23

manufacturing sites in Doncaster, and the views of Stakeholder Group members. We

prefer our own assumptions on floorspace per worker, as shown at para 3.3 above, to

the HELAA ones, for two main reasons: they fit the Experian categories and they are

transparently based on consistent and robust evidence of actual relationships

between jobs and floorspace. That evidence comprises the quantity of floorspace by

land use, as classified and measured by the VOA, and the number of jobs by sector,

as estimated by Experian from Government statistics. We believe that the VoA

floorspace data are very accurate, because they are the basis of business rates. In

relation to local job numbers there is less certainty, because there are no

comprehensive official statistics (the statistics that are available exclude many or

most self-employed jobs), but in our opinion Experian’s estimates are as robust as is

possible.

Results

The forecast

3.7 The table below shows future employment land need forecast through the PBA

method, measured in both square metres of floorspace and hectares of land area.

Land areas assume a plot ratio of 40% for industrial space (including warehousing)

and 60% for offices. For offices, the land areas are only indicative, because plot ratios

may vary widely; sq m of floorspace are a better measure of need and provision. The

figures show net additional floorspace and land, which means

Table 3.1 Employment land need: net additional floorspace and land


Total change Change p.a.

2015-32 2016-26 2015-32 2016-26

sq m ha sq m ha sq m ha sq m ha

Baseline scenario

Industry / warehousing 95,203 23.8 10,196 2.5 5,600 1.4 1,020 0.3

Offices 27,648 4.6 6,724 1.1 1,626 0.3 672 0.1

Total 122,851 28.4 16,920 3.7 7,227 1.7 1,692 0.4

Job-led scenario

Industry / warehousing 751,693 187.9 265,033 66 44,217 11.1 26,503 6.6

Offices 31,227 5.2 8,466 1.4 1,837 0.3 847 0.1

Total 782,921 193.1 273,499 68 46,054 11.4 27,350 6.8

Total change Change p.a.

2015-32 2016-26 2015-32 2016-26

sq m ha sq m ha sq m ha sq m ha

Baseline scenario

Industry / warehousing 95,203 23.8 10,196 2.5 5,600 1.4 1,020 0.3

Offices 27,648 4.6 6,724 1.1 1,626 0.3 672 0.1

Total 122,851 28.4 16,920 3.7 7,227 1.7 1,692 0.4

Job-led scenario

Industry / warehousing 751,693 187.9 265,033 66 44,217 11.1 26,503 6.6

Offices 31,227 5.2 8,466 1.4 1,837 0.3 847 0.1

Total 782,921 193.1 273,499 68 46,054 11.4 27,350 6.8

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June 2018 29

3.8 For office space the forecast demand is very low, less than 2,000 sq m p.a. in the

plan period and less than 1,000 sq m p.a. in the shorter 10-year period in both

scenarios.

3.9 For industrial space, which covers both production (manufacturing) and warehousing,

the forecast demand varies considerably between scenarios:

In the baseline scenario the demand is modest, at 1.4 ha p.a. for the plan period

and 0.3 ha p.a. for the shorter 10-year period.

In the job-led scenario the figures are much higher – not surprisingly, since all the

policy-led growth over and above the baseline is in industrial / warehouse sectors.

Annual demand is 44,200 sq m or 11.1 ha in the plan period, and 26,500 sq m or

6.6 ha in the 10 years.

3.10 For the plan period, the job-led figure is very close to past change, as measured by

the VoA floorspace statistics at 43,100 sq m p.a. for 2000-2016. This adds to the

credibility to our estimates, because, as we showed earlier, in our job-led forecast

future job growth continues the past long-term trend. The VoA figures are likely to be

very robust, being taken from business rates records as mentioned earlier.

3.11 It is important to understand that the figures discussed above relate to net change –

the new employment space created in new development minus any existing

employment space lost in redevelopment or change of use. Gross development or

gross gain – the new space created, without any deduction for old space lost - may be

much higher. Thus, for the past period 2004-2017, the employment land review

estimates gross development at 28 ha per year, of which just over half was for

strategic distribution. Comparing this with the VoA figures suggests that in past years

large amounts of existing industrial land must have been lost to other uses. The

Council’s own monitoring data does not record this, because it only considers gross

gains (new floorspace built), ignoring existing floorspace lost.

Caveat: vacant floorspace

3.12 With regard to future need, our figures assume that floorspace vacancy rates, both for

offices and industry, stay fixed at their 2015 level. This is because, as noted earlier,

our floorspace per job ratios include vacant floorspace, and we have fixed those ratios

at their 2015 levels. This is the correct assumption if the vacancy rate at 2015 was at

the normal or equilibrium level – the level that is necessary for the market to operate

smoothly. But if the 2015 rate was too high or too low, the need figure should be

adjusted so that the market returns to equilibrium. As a rule of thumb, property agents

consider that the normal rate is between 5 and 10% - making an average of 7.5%. A

higher vacancy rate suggests that the market is oversupplied, and a lower rate that it

is undersupplied.

3.13 For Doncaster we do not have the necessary information to make this adjustment, as

market analysis was not part of our brief. But the employment land review does

provide some useful data, which suggests that industrial space was undersupplied.

This data is at Table 7 of the ELR, which shows an industrial vacancy rate of 3.9% -

presumably in 2017, although the date is not shown. This figure is sourced to the

commercial property database CoStar. It may not be accurate, given that the

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June 2018 30

database does not claim comprehensive coverage, and in any case it may not apply

to 2015.

3.14 If we assume that vacancy in Doncaster at 2015 was 3.9%, to bring it to the normal

level of 7.5% would increase the industrial needs estimated at Table 3.1 by 85,000 sq

m – equivalent to some 21 ha (the industrial stock at 2015 was 2,369,000 sq m). This

would be a once-for-all adjustment, which may be spread over either version of the

plan period, 2015-32 or 2016-26. But the it is a rough approximation, and it is likely to

be too high, because for most places industrial vacancy increased between 2015 and

2017.

The Local Plan

3.15 Both the existing NPPF and the proposed revisions advise that plans should aim to

meet need or demand for development across all land uses, unless an area does not

have enough sustainable capacity – in which case unmet need should be

accommodated in neighbouring areas. Therefore the forecasts at Table 3.1 provide

the starting point for employment land provision in the emerging Local Plan.

Net and gross change

3.16 In setting this planned land provision, it will be critical to take account of future losses

of existing employment space. As discussed earlier, the forecasts show net change,

which is the difference between new employment space created and existing

employment space lost over the period. By contrast, the Local Plan must supply land

to match the gross demand for new space. In other words, the plan must provide land

not only to accommodate that net growth, but also to replace any existing space that

will be lost over its period. If past rates of loss continue, this additional land area may

be very large, so gross need may be far above net need.


allowance for potential future loss of existing space. This allowance should be added

to our forecasts to determine the total amount of land that should be allocated for

employment. The allowance may be estimated by rolling forward past losses, or by a

qualitative assessment that identifies existing sites likely to be redeveloped for other

uses over the plan period. Whichever method is used, the Council should ensure that

losses of existing employment space are monitored in future. If monitoring shows that

actual losses differ significantly from the assumptions made initially, policy or

development management decisions can be adjusted to ensure that net demand is

still met.

Other considerations

3.18 When translating our forecasts into employment land provision, there are four further

important issues that the Council should have regard to.

3.19 The first issue is that all forecasts are very imperfect and approximate, so they should

not be accepted uncritically. They should be reality-tested against a commercial

property market assessment that considers demand and viability for the different

types of employment space. Without a market-facing assessment, we cannot be

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June 2018 31

confident that the new plan will be deliverable – which is a requirement in both the

current Framework and the proposed revisions. Under current national guidance,

such assessment is part of an economic development needs assessment (HEDNA),

also known as an employment land review. The new draft guidance is less specific,

merely advising that plan-making authorities should maintain a robust evidence base

to understand business needs.

3.20 In the case of Doncaster, the employment land review (ELR) published in February

2018, provides the commercial reality test. The ELR confirms that new industrial /

warehouse space is in demand and viable to deliver, largely due to demand for

strategic distribution. But future demand estimated in the ELR, at 26.8 ha p.a. for the

plan period, is not directly comparable with ours. One reasons for this is that the ELR

figure is gross take-up, while our is net take-up; so the two sets of numbers measure

different things. Another important difference is that the ELR simply assumes that the

future will be like the past, whereas our own forecast aims to take account of future

economic change. A less significant difference is that the ELR figure, unlike ours,

includes non-employment uses on employment land – which account of above 5 ha

p.a.



version. This choice should take account of the market analysis mentioned above. In

the interest of maximising economic growth, it may be right to allocate enough land

over the plan period to match the job-led scenario, even though we cannot be certain

that the corresponding demand will materialise. The new plan may even provide land

above the job-led scenario, if it aims to attract regional / national demand for strategic

warehousing; and to ensure that it is ready able to meet unexpected occupier

requirements, so that no opportunities for economic growth are missed. Over-

allocating land in this way may be a reasonable choice for an ambitious authority such

as Doncaster.

3.22 If land is to be over-allocated over and above the expected demand, the quantum of

over-allocation is a matter of judgment. A typical choice seems to be an uplift of

around 30%. But the right answer will depend on local circumstances. It is important

to avoid excessive oversupply, because if supply is too far above demand individual

sites may not have a reasonable prospect of being taken up, which would go against

para 22 of the NPPF. Also, if the land concerned is in demand for alternative uses or

requires infrastructure investment, then it will be inefficient to reserve it for

employment uses which may not materialise.

3.23 A third issue to be considered is whether the plan should allow a margin for churn in

the land market (‘frictional vacancy’), competition and choice. There is no

Government guidance on this point. In our view, a simple and effective approach is to

ensure that at any one time the plan provides at least five years supply of immediately

available and deliverable employment land, as it must do for housing. In the same

way as for housing, this rule of thumb does not relate to the total supply provided in

the plan, but to its phasing, or trajectory. The British Chambers of Commerce support

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June 2018 32

the approach we have suggested18. It means that a developer or occupier looking for

land should always have a reasonable choice, and more than one landowner

competing for their custom.


the balance of jobs and housing. In the current context of national planning reform this

is a complex issue. We will return to it in Chapter 4 below.

18 British Chambers of Commerce, Planning for Business, Key principles to guide the Government’s review of the planning system in England, undated (probably 2018)

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June 2018 33

4 HOUSING

Ground rules

4.1 Before we provide evidence to inform housing policy in the Local Plan, we need to

understand Government requirements.

4.2 Current national planning guidance includes a detailed method for calculating housing

need. This starts from the official household projections, which roll forward past

demographic trends. By established practice, the projected household numbers are

adjusted to allow for vacant and second homes (usually about 2-4% of the stock),

although the Guidance does not mention this. The Guidance allows four possible

adjustments to the numbers:

i Technical – to correct for any anomalies that mean the projections are not a good

reflection of past trends

ii For market signals – to correct for any past undersupply that might have

suppressed past household growth. The Guidance lists the market signals that

should be considered, but is unclear about how they should be used.

iii For future jobs – to ensure that there is enough population in future to meet the

demand for labour (fill the available jobs)

iv For affordable housing need – possibly to increase the number of market homes

so they provide more developer contributions towards affordable housing.

4.3 As noted earlier, the Government intends to replace the above with a new standard

method. This was initially published for consultation in September 2017. On 5th March

the Government issued a response to the consultation, which confirmed that the new

method would be taken forward. On 9th March 2018, it issued draft revisions to the

PPG that included a new version of the method set out in September. This new

version is for information rather than consultation.

4.4 In the new method, the assessment still starts from the official household projections.

This time there is no allowance for vacant and second homes, and ‘the most recent

official projections should be used to calculate the annual average household growth

over a 10-year period’ – regardless of the actual plan period, which may be 15 or 20

years. The adjustments to the projections are much reduced and simplified:

i The method allows the projections to be set aside in ‘exceptional circumstances’.

Those circumstances are not defined We believe they must include anomalies in

the projections, as described above.

ii Market signals are replaced by a single signal, the housing affordability ratio

(house prices divided by earnings). The method provides a fixed formula for

translating this signal into housing need.

iii-iv Future jobs and affordable need no longer impact on the total housing need. The

only link between housing and job numbers is the general advice in the Framework –

which appears both in the current draft and proposed revisions – that planning should

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June 2018 34

‘ensure an integrated approach to the location of housing, economic uses and

community facilities and services’.

4.5 Under the new method and the draft revised Framework, ‘the number produced by

the above method sets a minimum for the housing target (requirement, provision) to

be made in the Local Plan. While they cannot reduce that number; -plan-makers may

put forward proposals that lead to a local housing need above that given by [the new

method]. This could be as a result of a strategic infrastructure project, or through

increased employment (and hence housing) ambition as a result of a Local Economic

Partnership investment strategy, a bespoke housing deal with Government or through

delivering the modern Industrial Strategy.’

4.6 The consultation document that introduces the mew method adds that, the

Government wants to encourage such ambitious authorities:

‘To facilitate this we propose to amend planning guidance so that where a plan is

based on an assessment of local housing need in excess of that which the standard

method would provide, Planning Inspectors are advised to work on the assumption

that the approach adopted is sound unless there are compelling reasons to indicate

otherwise. We will also look to use the Housing Infrastructure Fund to support local

planning authorities to step up their plans for growth, releasing more land for housing

and getting homes built at pace and scale.’

4.7 The draft Guidance published on 9th March adds that, when the plan target is above

the standard-method minimum, the housing number may be expressed as a range, of

which the lower end is the standard-method minimum (and the higher end is

presumably the uplifted target, thought this is not stated).

4.8 Alongside the proposed method the Government provided illustrative numbers, to

show its results for the period 2016-26, based on the latest official household

projections – which are 2014-based. For Doncaster, the numbers show:

Projected growth 548 net new dwellings p.a. (dpa)

Market signals (affordability) adjustment 1.68%

Housing need 548 x 1.068% = 585 dpa.

4.9 Thus, for as long as the 2014-based projections remain the latest available, 585 dpa

is the minimum housing target that the Doncaster Local Plan should set. But it is free

to set a higher number, which may be based on expected future job growth among

other reasons. But once the 2016-based projections are published, in September

2018, the number will change and the change may be considerable, as discussed

earlier.

Demographic projections

The demographic projections in this report have been modelled by NMSS, using the

practice’s in-house demographic model. This replicates the approach used in the

official population and household projections, with only relatively small simplifications.

The model has been used extensively in estimating objectively assessed needs for

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June 2018 35

housing in many different local authorities and has been tested repeatedly at local

plan examinations and S78 planning appeal inquiries.

Background

4.10 In both the old and new methods for estimating an authority’s objectively assessed

housing needs (OAN) the starting point is the official household projections. In the

past those projections have been produced by the Ministry for Housing, Communities

and Local Government (MHCLG), but responsibility has now been transferred to the

Office for National Statistics (ONS). In both methods, it is accepted that it may be

appropriate to adjust those projections, but in new method the hurdle is higher: the

new method may only be deviated from in exceptional circumstances.

4.11 A key question for our analysis, therefore, is whether there are exceptional

circumstances in Doncaster’s case. To determine this, it will be helpful to look at past

demographic change.

4.12 As the chart below shows, the population of Doncaster fell between 1991 and 2001,

by 4,900 people (1.7%). It then grew by 15,600 (5.4%) between 2001 and 2011,

rather slower than the growth seen in England during this period (7.4%). The

population has continued to grow since 2011, but at a slower rate. The latest ONS

projection (the 2014 Sub-national Population Projection, ‘2014 SNPP’) suggest that

the population will continue to grow, but only by an average of 0.14% p.a. over the

Plan period (2015-32).

Figure 4.1 Drivers of population change, Doncaster, 2001-11

Source: ONS

4.13 The chart below shows the ONS’s estimates for the factors that drove the change in

Doncaster’s population between 2001 and 2011. As can be seen, births exceed

deaths by 5,400. However, net outflows to the rest of the UK exceeded inflows from

the rest of the UK by 5,800, more than offsetting the population increase due to births

exceeding deaths. Inflows from abroad were 6,300 larger than international outflows,

leading to a net increase in Doncaster’s population.

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June 2018 36

Figure 4.2 Drivers of population change, Doncaster, 2001-11

Source: ONS

4.14 The ONS’s estimates of the factors that drove population change in Doncaster

between 2001 and 2011 do not fully account for the population change indicated by

the 2001 and 2011 censuses. The censuses suggest that the population grew by

15,600 over this period whilst the net effect of the estimated births, deaths and

migration flows would only account for an increase of 5,900. The difference – the

population change for which the ONS data cannot account – is 9,700. ONS call this

the “Unattributable Population Change” (UPC). UPC is 62% of the population change

suggested by the censuses.

4.15 As we have highly reliable systems in the UK for registering births and deaths, UPC is

almost certainly due to inaccuracies in either the census counts or the estimates of

the migration flows. This matters for the current analysis because the ONS method

for projecting future population growth assumes that the historical data on migration

flows is accurate. If, for example, the estimates of migration flows into Doncaster

during the base period used for a set of population projections were too low, the

projections will underestimate the likely population growth. Given the size of UPC in

Doncaster’s case (62% of the population change suggested by the censuses) there is

a real possibility that UPC will have caused the projections to underestimate

population growth.

The 2014-based projections

Doncaster borough

4.16 The latest ONS population projection, (SNPP 2014), suggests that Doncaster’s

population will grow by 7,200 during the Plan period (2015-32). Based on this, the

official household projections envisage that the number of households in Doncaster

will increase by 9,134 between 2015 and 2032. If 4.4%19 of homes are vacant or

19 The figure of 4.4% is based on the average proportion of vacant and second homes recorded in the council tax data for 2011-15.

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June 2018 37

used as second homes this implies a need for 9,600 additional homes, an average of

560 dpa.

4.17 The Government’s new method for assessing housing need is based on the projected

growth in the number of households between 2016 and 2026. For this period the

official projections suggest that the population will grow by 4,800 an average of 480

p.a. and that there will be 5,480 additional households, an average of 548 dwellings.

In the new method, there is no allowance for vacant or second homes, so numbers of

homes equal numbers of households. To arrive at the housing need figure for

Doncaster, the formula adds a market signals adjustment, which increases housing

need to 585 dpa.

4.18 The official population and household projections are trend-based: they estimate what

would happen if the trends measured in the chosen base periods continue to apply. If

for any reason the trends in those periods are not indicative of the long-term trend,

then the projections may not be a realistic indication of the likely future population or

the number of households.

4.19 There are three particular aspects of the population projections for Doncaster that

merit comment:

SNPP 2014 take the 5-year period 2009-14 as their base period for flows within

the UK. That period includes years in which migration flows were affected by the

recent economic downturn. The impact this may have had on the projections for

Doncaster can be tested by adjusting the projections to reflect the flows which

occurred over a longer period on the basis that a longer base period is less likely

to have been distorted by cyclical factors such as the recession. For example,

revised projections can be produced using the last ten years for which statistics

are available i.e. 2006-16.

In line with the ONS’s standard practice, SNPP 2014 takes no account of UPC, in

effect assuming that there were no inaccuracies in the migration flows estimated

for the base period. However, given how large UPC is for Doncaster compared

with the population change suggested by the census, it is possible that there were

errors in the migration flows during the period 2009-14. To investigate the

potential impact of such errors on the projections, we have re-worked them on the

assumption that there were errors in the UK migration flow estimates in the base

period, equal to 50% of the average UPC over the period 2001-11.

4.20 SNPP 2014 was informed by the historical data available up to 2014. Two years on,

new data is available and the ONS is due to release their 2016-based sub-national

population projections (the 2016 SNPP) in May/June this year. Some indication of

how the new population projections may differ from SNPP 2014 can be gained for the

2016-based national population projections for England (NPP 2016) which were

published in October 2017. The 2016-based sub-national projections will be

consistent with the 2016-based national projections, with the local authority level

projections for births, deaths and migration flows summing to the national figures.

4.21 Compared with 2014-based population projections for England, the 2016-based

projections envisage fewer births, more deaths and lower net migration into England.

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June 2018 38

The result is that the projected population growth between 2016 and 2026 is 17%

lower that envisaged in the 2014-based projections.

4.22 By making assumptions about how the assumptions made in NPP 2016 projections

for England will be cascaded down to the local authority, we have estimated the

impact of these revised assumptions would be if applied to Doncaster.

4.23 The table below shows this impact on the household projections for Doncaster, and

hence on the demographically projected housing need. The figures from the latest

unadjusted official household projections (SNHP 2014) are shown for comparison.

For the plan period, we show the number of households and the number of homes –

which is slightly higher, because we make an allowance for unoccupied homes

(vacant and second homes), in line with current practice. For 2016-26 we do not

make this allowance, because as mentioned earlier the new standard method does

not include it.

Table 4.1 Household growth and housing need, Doncaster, alternative

demographic projections

Source: ONS, NMSS

4.24 The scenario which reflects NPP 2016 is based on adjustments to the population

projections in SNPP 2014 to reflect the mortality rates and international migration

flows used in NPP 2016 for England. It is important to note that:

The revised fertility rates used in NPP 2016 have not been taken into account, as

no children born between now and 2032 will form households before 2032.

The ONS may revise other assumptions or data inputs such as the historic figures

for migration flows within the UK so the population projections in the 2016 SNPP

could differ significantly from the estimates made in this analysis.

The household formation rates and assumptions about the numbers of people

living in communal establishments are taken from the MHCLG’s 2014 SNHP. The

ONS is currently reviewing the methodology used to produce the household

projections and may adopt a significantly different approach. That could have a

significant impact on the projected change in the number of households in some

authorities.

4.25 The impact of each of these alternative assumptions is significant. Over the period

2015-32 the impact ranges from an increase in the estimate of the number of homes

Change p.a. Households Homes

incl 4.4% unoccupied

2016-26 2015-32 2016-26 2015-32

SNHP 2014 548 537 562

SNHP 2014 + UK flows 2006-16 601 610 638

SNHP 2014 + 50% UPC 729 739 773

SHNP 2014 + 2016 NPP 418 425 444No a

llow

ance

for

unoccupie

d

hom

es.

Num

ber

of

hom

es

equals

num

ber

of

household

s.

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June 2018 39

needed of 38% (in the case of the 50% UPC scenario) to a reduction of 21% (in the

case of updating to reflect NPP 2016).

4.26 At this stage, we do not know just how exceptional circumstances will have to be to

justify a departure from the new method, although under the old regime there would

be a clear case for adjusting the official projections. However, on the basis that the

Doncaster Plan may based on an economic forecast that will require a substantially

larger population than any of these alternative scenarios, there is little point

investigating further whether it is appropriate to make a case for deviating from the

new standard methodology: the number of homes needed will be determined by the

population required to support the envisaged increase in jobs.

4.27 In relation to demographic projections there is a further source of uncertainty: the

ONS, who has taken over the household projections from CLG, is undertaking a

major review of household formation rates – the factor that translates population into

households and homes. The ONS review may result in a very different approach and

very large changes in housing numbers, in either direction. The outcome is

impossible to guess, even for expert demographers. Therefore, the Council should be

prepared to refresh the present assessment when the new projections come out in

September.

Jobs and housing

Doncaster borough

As discussed in Chapter 2 above, the population predicted by SNPP 2014 is not

sufficient to meet labour demand, either in the baseline economic forecast or in the

job-led scenario based on emerging SCR targets. To meet demand would require

population growth, and therefore housing growth, above the official projections. To

estimate that additional housing growth, we would normally use a re-run of the

Experian model to show the population needed to fill the gap, and then translate that

population into households and housing.

4.28 But in the baseline scenario the deficit is too small for formal modelling. Therefore we

have made a rough estimate of the number of additional dwellings required to fill the

deficit. This uses the forecast number of jobs per dwelling as shown in the baseline

forecast for 2032, which is 0.98. Based on this ratio, to eliminate unfilled jobs would

require 300x0.98 = 294 dwellings over and above CLG 2014. Over the 17-year plan

period, this would lift housing need by 17 dpa, from 562 to 579 dpa.

4.29 In relation to the job-led scenario driven by SCR targets, we have already calculated

the additional population needed to meet demand (para 2.40). To convert that

population into housing, we have used the assumptions of SNHP 2014 regarding

household formation rates and the size of the institutional (non-household) population.

The resulting housing numbers are:

For the plan period 2015-32, 1,073 dpa

For 2016-26, the assessment period used in the new standard method, 912 dpa.

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June 2018 40

4.30 The latter figure is below the former one, by as much as 114 dpa. One reason for this

is the new standard method makes no allowance for vacant and second homes, as

noted earlier. But this only accounts for around 50 dpa. The main reason for the

difference is that, as we also mentioned earlier, in the job-led scenario job numbers

grow faster every year than the baseline – in which population grows in line with the

official projections. Consequently, the longer the forecast period the greater is the

difference between the scenario and the baseline, whether in terms of jobs,

population or household numbers.

4.31 The logic of the job-led housing numbers is that, if job opportunities in Doncaster

improve against the baseline forecast, more people will be willing and able to live in

the borough. Those numbers, therefore, are a proxy measure of housing demand.

Whether they are a measure of housing need, depends on national policy and

guidance – which determines what ‘housing need’ means and how it should be

measured. We will discuss this in the concluding section of this chapter.

The Local Plan

Timetable

4.32 How Doncaster’s new Local Plan responds to this evidence, will depend on the timing

of new Government guidance in relation to the submission date of the plan.

4.33 The 5th March Government announcement says that the revised Framework will be

published ‘before summer’ 2018, alongside a draft of revised Guidance; and the

revised Framework will apply to plans that are submitted six months or more after the

publication date. In practice, before summer probably means before the

Parliamentary recess, i.e. in late July. If so, the new Framework would come into

force in late January 2019.

4.34 But it may be that the new standard method will not become effective till later,

because it is expected to appear in the Guidance rather than the Framework; and the

5th March announcement says the Guidance to be published in July will be only a

draft, presumably to be finalised later. Alternatively, it may be that the word ‘draft’ in

the 5th March document is an error – which seems likely, given that we already have

draft guidance, published on 9th March, and that draft is not for consultation. In that

case, the new method should come into effect in late January – barring of course

further slippage in the Government’s timetable, or a change of Government.

4.35 In summary, it is likely that when the Doncaster Local Plan is submitted it will come

under the new national policy and guidance, including the standard method for

assessing housing need. But it is also possible that the current system will apply to it.

Below, we discuss these two alternatives in turn.

4.36 For simplicity, in this discussion we leave aside the impact of the 2016-based official

projections, which will be published in September 2018. But it is important to bear in

mind that the new projections will change all the numbers quote below; and the

changes may be large, because the projection method is being revised.

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June 2018 41

Housing numbers under the current system

4.37 Under the existing Framework and Guidance, the demographically projected housing

need, based on officially projected household numbers for 2015-32, is 562 dpa. A

small uplift, to match population to job demand, brings the figure to 579 dpa. It is often

asserted that the ‘future jobs’ uplift should be based on policy-led targets, and

specifically on Strategic Economic Plans. In the case of Doncaster, we have

estimated that this would increase housing need to 1,073 dpa. But in our view this is

not the correct measure of objectively assessed need, because in line with the

Framework and Guidance the OAN should be based on realistic expectation of future

jobs rather than aspiration, and the Guidance specifies that the aspirations of

Strategic Economic Plans should not be treated as part of the development plan.

4.38 Under the current system, the demographically projected need may be uplifted to

account for market signals. In this study we have not assessed this uplift. Should the

plan be submitted under the old system, the Council will need to provide additional

evidence on this issue, refreshing the data in the 2016 Housing Needs Assessment.






legal judgments suggest that this would relate to the target rather than the need. As

part of this study we have not assessed affordable need or considered whether it

would justify such an uplift.

4.40 Under the present system Councils are free to set housing targets above the

objectively assessed need, although neither the Framework or PPG advise

specifically on this. If Doncaster Council chooses to do this, it could base its uplifted

target on our job-led scenario. But the target would not have to be the 1,073 dpa that

would result from full achievement of the SEP target. It may be more prudent to adopt

a lower number, perhaps halfway between 579 and 1,073. This is because the target

is recognised as ambitious, and hence the job growth and housing demand predicted

by the policy-led scenario may not materialise. A target between the two extremes

would follow the advice of both the current and draft revised Framework, that plans

should balance aspiration and realism.

4.41 One reason to be prudent is that that the target would be the basis for the five-year

land supply calculation. Therefore, if the plan target is unrealistically high there will be

adverse consequences.






need.

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June 2018 42






Housing numbers under the new system

4.44 If the plan is submitted under the new Guidance, it can make a voluntary uplift, so the

housing need in the plan is above the minimum of 585 dpa set by the standard

method.

4.45 This voluntary uplift can be based on a wide range of factors, of which future jobs is

only one. But if the Council did choose to base it on future jobs, it may be based on

the emerging SCR job target, which we estimate would produce a target of 912 dpa. If

so, it would be advisable to present housing need as a range, with the minimum at

585 dpa and the maximum at 912 (or an intermediate number between 585 and 912).

In this way, the assessment of five-year land supply and the delivery test would be

based on 585 dpa; while the policy requirement, and hence land allocations would be

based on 912 dpa (or the intermediate number) – unless constraints make this

undeliverable or unsustainable, in which case under para 14 of the NPPF the

requirement may be lower.

4.46 Under the draft Guidance published on 9th May, the higher number in the range will be

considered sound, unless there are compelling reasons to indicate otherwise. The big

unknown is how Inspectors and courts will interpret this in practice. In particular, it

may be that objectors will be able to challenge the Council’s uplift above the standard

number, based on alternative analysis of future labour market balance for example.

The evidence in this study aims to forestall such challenges.

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June 2018 43

5 SUMMARY AND CONCLUSIONS


inform targets (requirements) the emerging Local Plan. It considers needs and targets

for employment land and housing for the plan period 2015-32, under two alternative

economic futures, or scenarios: a business-as-usual scenario, and a policy-led

scenario in which job growth fulfils the ambitions of Sheffield City Region (SCR).

Economic futures

The baseline forecast

5.2 As a business-as-usual scenario we have used the standard, or baseline, economic

forecast published by Experian. This shows growth of 13,800 jobs (10.3%) over the

plan period, equal to 812 jobs p.a.

5.3 The Experian baseline forecast assumes that future population change will be as

shown in the official population projection, SNPP 2014. On this basis, it predicts that

by the end of the period the borough will be on the brink of a labour shortage, with not

quite enough workers to meet labour demand.

5.4 The baseline forecast shows slower job growth in the future than in the past – 0.6%

p.a. in the plan period, against 1% p.a. from 1997 to 2015. The explanation for this

slowdown lies in the macro economy, as the forecast shows UK job growth also

slowing, from 1% p.a. in 1997-2015 to 0.7% % p.a. in 2015-32.

5.5 Thus, Doncaster’s past job growth has closely tracked that of the UK in the long-term

past, and according to the Experian baseline forecast will continue to do so in the

future. The forecast significantly slower job growth for the local growth in the future

than in the past, because total growth is expected to slow down. This slowdown,

which the Office of Budget Responsibility also expects, is partly due to the ageing of

the UK population.

The policy-led scenario

5.6 Our policy-led scenario is based on future job growth of 1% p.a., part of the emerging

targets being considered by Sheffield City Region (SCR) for the forthcoming update of

its Strategic Economic Plan. This and other targets were provided by the consultancy

Metro Dynamics. The resulting job growth is 26,600 jobs over the plan period, equal

to 1,564 jobs p.a. This adds 12,800 jobs to the baseline growth of 13,800 jobs.

5.7 To estimate the implications of this additional, policy-led growth for population and

housing, we have combined Experian’s economic model with demographic modelling

to create an alternative scenario. We estimate that to meet labour demand would

require population growth of 1,259 people p.a., against 424 people p.a. in the official

demographic projection. We discuss the resulting housing need in a later section.

5.8 To allocate the policy-led job growth to economic sectors (industries and services) we

have worked with the client group to identify ‘priority sectors’, where the Council

Economic Forecasts


June 2018 44

expects growth above business-as-usual, due to policy interventions, exceptional

projects in the pipeline, or both. We have uplifted the baseline forecast for those

priority sectors, which comprise selected manufacturing industries, Civil Engineering

(construction of infrastructure) and transport and distribution. In addition, local

services such as retail and education also grow more in the policy-led scenario,

because the population attracted to the area by additional job opportunities creates

demand for such services.

5.9 Of these broad sectors, the largest uplift is for transport and distribution, which

includes both the strategic logistics and proposed growth at and around the airport.

Transport and distribution accounts for 7,500 policy-led jobs over and above the

baseline forecast.

Employment land

Future need

5.10 We have translated our two economic scenarios into needs for employment land and

floorspace. Over the plan period 2015-32, in the baseline scenario, the resulting need

for net additional space is for 95,203 sq m of industrial / warehouse space and 27,648

sq m of offices, which together would require an estimated land area of 28 ha. In the

policy-led scenario the net additional need is for 751,693 sq m of industrial /

warehouse space and 31,227 sq m of offices, which would need an estimated 193 ha

of employment land. These figures will be the starting point of the employment land

requirement, or target, to be included in the next Local Plan.

The Local Plan

5.11 Before the above findings are translated into Local Plan requirements, or targets, they

should be adjusted to take account of future losses. The above figures relate to net

change – which means the difference between new employment space to be created

over the period and existing employment space to be lost when employment sites are

redeveloped for other uses. But the Local Plan must supply land to match the gross

demand for new space. In other words, the plan must provide land not only to

accommodate that net growth, but also to replace any existing space that will be lost

over its period. If past rates of loss continue, this additional land area may be very

large, so gross need may be far above net need.


allowance for potential future loss of existing employment space. Going forward, the

Council should monitor actual losses as they occur. If monitoring shows that actual

losses differ significantly from the assumptions made initially, policy or development

management decisions can be adjusted to ensure that net demand is still met.

5.13 Before translating our forecasts into employment land provision, there are four other

important issues for the Council to consider.

5.14 Firstly, the forecasts should be reality-tested against market intelligence, to verify that

development in line with the forecasts is likely to be in demand and financially viable.

Economic Forecasts


June 2018 45



version. In the interest of maximising economic growth, it may be right to allocate

enough land over the plan period to match the job-led scenario, even though we

cannot be certain that the corresponding demand will materialise. The new plan may

even provide land above the job-led scenario, if it aims to attract regional / national

demand for strategic warehousing; and to ensure that it is ready able to meet

unexpected occupier requirements, so that no opportunities for economic growth are

missed.

5.16 A third issue is whether the plan should allow a margin for churn in the land market

(‘frictional vacancy’), competition and choice. In our view, a simple and effective

approach is to ensure that at any one time the plan provides at least five years supply

of immediately available and deliverable employment land, as it must do for housing.


the balance of jobs and housing. We discuss it in the next section.

Housing

5.18 A main objective of our study is to advise on the objectively assessed housing need

(OAN) and housing requirements (policy targets) that should be in Doncaster’s new

Local Plan. The issue is complicated, because the planning system is in transition.

5.19 The Government has published draft revised versions of national planning policy (the

NPPF) and national planning guidance (the PPG), which includes a new approach to

measuring housing need. It expects to finalise those new documents by the end of

July 2018. Accordingly, it is likely that the new Doncaster Local Plan will come under

the new system. But it is also possible that the current system will apply to it, perhaps

because the Government’s timetable slips, as it has done before.

5.20 These alternative outcomes have quite different implications for housing need and

housing provision. We discuss them in turn below. It is important to note that all the

numbers mentioned in this discussion may change as a result of the new official

household projection to be published by ONS in September 2018. The Council should

review the numbers in the light of that new projections as soon as it is published.

Housing numbers under the current planning system

5.21 If Doncaster’s new plan is submitted under the current NPPF and PPG, the housing

numbers in the plan should be based on projections and forecasts for the plan period,

2015-32. These figures show:

Demographic starting point, from the 2014-based official household projections:

562 net new dwellings per annum (dpa)

Adjusted need, to match business-as-usual job forecast: 579 dpa

Job-led housing need, to match the job growth aspiration of Sheffield City Region:

1,073 dpa.

Economic Forecasts


June 2018 46

5.22 If the Local Plan is submitted under the current system, it should analyse market

signals to see if they justify an uplift to the demographic starting point of 562 dpa. This

analysis was not part of the brief for the current study. The number that it produces

will be the Doncaster’s OAN.






legal judgments suggest that this would relate to the target rather than the need. In

this study we have not assessed affordable need or considered whether it would

justify such an uplift.

5.24 As a housing requirement, or target, the Council may consider a higher number,

which takes account of the aspirational, job-led figure of 1,073 dpa. But the target

would not have to be the 1,073 dpa that would result from full achievement of the SEP

target. It may be more prudent to adopt a lower number, perhaps halfway between

562 and 1,073. This is because the policy-led scenario is recognised as ambitious,

and hence the job growth and housing demand that it predicts may not materialise. A

requirement between the two extremes would follow the advice of both the current

and draft revised Framework, that plans should balance aspiration and realism.






need.






Housing numbers under the new planning system

5.27 If Doncaster’s new plan is submitted under the revised NPPF and PPG, and

assuming that the drafts previously published do not change, the housing numbers in

the new plan will be based on projections and forecasts for a 10-year period, 2016-26.

These figures show:

Housing need produced by the Government’s standard method: 585 dpa

Job-led housing need, to match the aspirations of Sheffield City region: 912 dpa.

5.28 Still assuming that the new NPPF and PPG remain as drafted, the Council may

present housing need as a range, with the minimum at 585 dpa and the maximum at

912, or perhaps an intermediate number between 585 and 912. In this way, the

assessment of five-year land supply and the delivery test would be based on 585 dpa,

Economic Forecasts


June 2018 47

while land allocations would be based on 912 dpa or the intermediate number (unless

there are supply constraints that make this undeliverable or unsustainable).

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June 2018 1

APPENDIX: TRANSLATING JOBS TO FLOORSPACE

Economic statistics and forecasts tell us nothing directly about employment space, because

they do not classify jobs according to the type of space they occupy. Rather, the statistics

split jobs into economic sectors (industries and services), according to the Standard

Industrial Classification (SIC). To estimate how many jobs will be based in offices and

industrial space, and how many in ‘non-B’ spaces such as retail premises, schools and

hospitals, we need to translate sectors into land uses.

For this, we have used a method developed by the PBA team (formerly Roger Tym &

Partners) over a series of employment land reviews, and tested in a large-scale study of the

Yorkshire and Humber region in 201020. To our knowledge there is no other published

empirical research on the relationship between activity sectors and land uses.

The tables below show the sectors that are classified to industrial space and offices

respectively. The names and numbers that identify each activity sector are from the UK

Standard Classification of Economic Activities 2007 (SIC 2007)21.

Most economic forecasts show around 20-30 broad activity sectors, a much coarser-grained

classification than the SIC sectors in the table above. For example, the table counts as a B-

space activity only part of the Construction industry (SIC 43.2, 43.3 and 43.9), whereas

forecasts typically show only Construction as a whole (SIC 43). To estimate future

employment in sub-sectors such as SIC 43.2, we assume that the share of each sub-sector’s

employment in its ‘parent’ sector stays constant.

20 Roger Tym & Partners with King Sturge for Yorkshire Forward, Planning for Employment Land: Translating Jobs into Land, March 2010 21 http://www.businessballs.com/freespecialresources/SIC-2007-explanation.pdf

Table A1 Industrial sectors

Manufacturing

Manufacturing and repairs 10-33 All manufacturing

95.00 Repair of computers and personal and household goods

Other industrial

Construction 43.2 Electrical, plumbing and other construction installation activities

43.3 Building completion and finishing

43.9 Other specialised construction activities not elsewhere specified (nec)

Motor vehicle activities 45.2 Maintenance and repair of motor vehicles

45.4 Sale, maintenance and repair of motor cycles and related parts and accessories

Sewage and refuse disposal 37 Sewage

38 Waste collection, treatment and disposal activities

Employment activities (part) 78

Warehousing

Wholesale trade except of motor vehicles and motorcycles

46

Freight transport by road 49.41

Removal services 49.42

Storage and warehousing 52.10

Other supporting land transport activities

52.21

Cargo handling 52.24

Post and courier activities 53.00

Packaging activities 82.92


Note

SIC 78, Employment Activities, covers workers employed through agencies in all activity sectors. They should be redistributed across the whole economy, both to B-class sectors and other sectors, in proportion to each sector’s share of total employment.

Table A2 Office sectors

Office sectors

Publishing 58 Motion picture production activities

Motion picture, video and TV programme activities

59.11 Motion picture, video and TV programme production activities

59.12 Motion picture, video and TV programme post-production activities

59.13 Motion picture, video and TV programme

distribution activities

59.20 Sound recording and music publishing activities

Programming and broadcasting activities

60

Computer programming, consultancy and related activities

62

Information service activities 63

Financial service activities except insurance and pension funding

64

Insurance, reinsurance and pension funding except compulsory social security

65

Activities auxiliary to financial services and insurance activities

66

Real estate activities 68

Legal and accounting activities 69

Activities of head offices, management consultancy activities

70.

Architectural and engineering activities, technical testing and analysis

71

Scientific research and development 72

Advertising and market research 73

Other professional, scientific and technical activities

74

Renting and leasing activities 77.40 Leasing of intellectual property and similar products


Security and investigation activities 80

Office admin, office support and other business support activities

82

Public administration and defence; compulsory social security

84.1 Administration of the State and the economic

and social policy of the community

84.3 Compulsory social security activities

Note

SIC 78, Employment Activities, covers workers employed through agencies in all activity sectors. They should be redistributed across the whole economy, both to B-class sectors and other sectors, in proportion to each sector’s share of total employment

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