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Economic Forecasts
and Housing Needs Assessment
Peter Brett Associates
June 2018
Office Address:
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and Housing Needs Assessment
June 2018 iii
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
Economic Forecasts
and Housing Needs Assessment
June 2018 1
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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and Housing Needs Assessment
June 2018 2
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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and Housing Needs Assessment
June 2018 3
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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and Housing Needs Assessment
June 2018 4
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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and Housing Needs Assessment
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1 INTRODUCTION
1.1 This study, commissioned by Doncaster Council, is part of the evidence base that will
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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and Housing Needs Assessment
June 2018 7
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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and Housing Needs Assessment
June 2018 8
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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and Housing Needs Assessment
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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.
Economic Forecasts
and Housing Needs Assessment
June 2018 10
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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and Housing Needs Assessment
June 2018 11
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
Source: Experian, PBA
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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and Housing Needs Assessment
June 2018 12
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
Source: Experian, PBA
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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and Housing Needs Assessment
June 2018 13
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
Source: Experian, PBA
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
Economic Forecasts
and Housing Needs Assessment
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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and Housing Needs Assessment
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
Source: Experian, PBA
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
Economic Forecasts
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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
Source: Experian, PBA
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.
Economic Forecasts
and Housing Needs Assessment
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.
Economic Forecasts
and Housing Needs Assessment
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
Economic Forecasts
and Housing Needs Assessment
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
Source: Experian, PBA
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.
3.17 In setting employment land provision, therefore, the Council should make an
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.
3.21 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. 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.
3.24 Fourthly and finally, in deciding on total land supply the Council should have regard to
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.
Economic Forecasts
and Housing Needs Assessment
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.
Economic Forecasts
and Housing Needs Assessment
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.
Economic Forecasts
and Housing Needs Assessment
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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and Housing Needs Assessment
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.
Economic Forecasts
and Housing Needs Assessment
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.
4.39 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. 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.
4.42 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.
Economic Forecasts
and Housing Needs Assessment
June 2018 42
4.43 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.
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.
Economic Forecasts
and Housing Needs Assessment
June 2018 43
5 SUMMARY AND CONCLUSIONS
5.1 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).
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
and Housing Needs Assessment
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.
5.12 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.
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
and Housing Needs Assessment
June 2018 45
5.15 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.
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.
5.17 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
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
and Housing Needs Assessment
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.
5.23 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.
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.
5.25 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.
5.26 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 S87 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.
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
and Housing Needs Assessment
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).
Economic Forecasts
and Housing Needs Assessment
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
Employment activities (part) 78
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
Employment activities (part) 78
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