East Riding Local Housing Study Addendum Note

Transcription

1 Report GVA Norfolk House 7 Norfolk Street Manchester M2 1DW East Riding Local Housing Study Addendum Note August 2014 gva.co.uk

2 Contents Summary Introduction Consideration of alternative assumptions Consideration of latest strategy context Updated household modelling Consideration of market signals Conclusions List of Acronyms Prepared By: Nicola Rigby... Status: Director... Date August Reviewed By : Status:... Date... For and on behalf of GVA August 2014 I gva.co.uk

3 Summary This Addendum Note has been prepared by GVA on behalf of East Riding of Yorkshire Council. It reflects updates to information that have been made available since the publication of the Local Housing Study in January 2014, which are relevant to be considered as part of the East Riding Local Plan Examination. The Addendum also considers representations received as part of the Local Plan process, and in response to evidence prepared by both ERYC and NLP as part of the Melton Planning Inquiry. The note is not intended to repeat or replace the LHS, but rather sensitivity test areas of the analysis on the basis of new information where relevant. The key information which has been updated since the publication of the LHS has included: 2012-based Sub-National Population Projections; Census 2011 data on key assumptions including economic activity rates; and Emerging case law of relevance to the calculation of Objectively Assessed Housing Need and defining a Local Plan housing requirement. In addition, the Addendum takes into account the announcement made on 25 th March by Siemens and Associated British Ports that they jointly will invest 310m into Hull and the East Riding to deliver wind turbine production and installation facilities at two sites in Hull and East Yorkshire, and the updated policy and strategy position including the Hull SHMA, Joint Planning Statement (JPS) between East Riding of Yorkshire Council and Hull City Council, and the Humber Local Enterprise Partnership and York, North Yorkshire and East Riding Local Enterprise Partnership Strategic Economic Plans all published since publication of the LHS. The original LHS identified a housing requirement for the East Riding alone of 1,933 (2011 headship rates) to 2,229 (2008 headship rates) dwellings per annum for the plan period. As part of this Addendum exercise this figure reduced as summarised in the bullet points below: Adjustment to reflect a reduced unemployment rate as part of the Melton Appeal: reducing the figures to 1,827 per annum (2011 headship rates), and 2,119 per annum (2008 headship rates); Adjustment to reflect the latest PopGroup methodology: changing the figures to 1,888 per annum (2011 headship rates), and 2,165 per annum (2008 headship August 2014 I gva.co.uk 1

4 rates) (NB: these figures do not assume the lower unemployment rates identified during the Melton Appeal); and Finally, the adjustment to reflect the latest PopGroup methodology and the latest assumptions as set out in this document: reducing the figures to 1,624 per annum (2011 headship rates), and 1,896 per annum (2008 headship rates). However, it is still considered appropriate to plan for higher levels of housing growth across the housing market area, as set out in the JPS. This would contribute to the delivery of the NPPF, which requires Local Plans to: Meet objectively assessed needs, with sufficient flexibility to adapt to rapid change; and Boost significantly the supply of housing. The decision in the case of Gallagher Homes Ltd / Lioncourt Homes Ltd vs Solihull MBC concluded that the final appropriate step in establishing an appropriate housing requirement is to apply any policy considerations to that figure (i.e. identifying a figure which, on policy grounds, is lower or higher than the full objectively assessed figure for housing need in that area). This is based on co-operating with adjoining or other near-by local planning authorities on the strategic matter of meeting housing requirements across the housing market area. This supports the view of considering the East Riding dwelling requirement alongside that of Hull City Council, as outlined in the Hull SHMA, and highlighted through the recently endorsed JPS. The JPS recognises the context of housing requirements and strategy aspirations across the joint housing market area spanning the East Riding and Hull, as established through the latest evidence base and strategy documents in place across the sub-region, and consistent with the requirements of NPPF. August 2014 I gva.co.uk 2

5 1. Introduction 1.1 This Addendum Note to the January 2014 East Riding Local Housing Study (LHS) has been prepared by GVA with Edge Analytics on behalf of East Riding of Yorkshire Council. 1.2 The Addendum is required in response to the issuing of new data, and a new PopGroup model (v4) (PG4) which changes the population projection method for improved alignment with ONS methods and introduces a revised approach for modelling in-migration rates to individual areas, since the undertaking of the original study, including the consideration of the following: the release (on 29 th May 2014) of the 2012-based Sub-National Population Projections (SNPP) which supersede the Interim 2011-based SNPP (which only projected forward to 2021); economic activity rates from the 2011 Census which provide the latest profile of age-specific activity, which are used directly in the jobs-led scenario in conjunction with an updated commuting ratio from the 2011 Census and the latest unemployment rate statistics. 1.3 The Addendum note is also required to address the additional household modelling undertaken as part of the preparation of evidence to inform the Melton Planning Appeal 1 (documented within the proof of evidence of Richard Wood as part of that appeal by St Modwen). Structure of Note 1.4 The Addendum note is structured as follows: Section 2: Consideration of alternative assumptions: review of alternative assumptions following review of representations put forward to the Local Plan and as part of the Melton Planning Appeal; Section 3: Consideration of latest strategic context: review of relevant policy and strategy released since the undertaking of the Local Housing Study; Section 4: Updated household modelling: summary of additional modelling undertaken since the January 2014 LHS, including explanation of why the model 1 Appeal A reference APP/E2001/A/13/ , Appeal B reference APP/E2001/A/14/ August 2014 I gva.co.uk 3

6 has been run, the assumptions applied, and the implications in terms of household projections; Section 5: Consideration of market signals: analysis of available data to document relevant market signals to be taken into account when considering potential requirement for additional allowance, in line with Planning Practice Guidance (PPG); and Section 6: Conclusions: drawing together the implications of the proceeding sections. August 2014 I gva.co.uk 4

7 2. Consideration of alternative assumptions Response to representations 2.1 Detailed representations have been received relating to the household requirements put forward in the Local Plan by seven separate parties. The representations received and a summary of their main objections are listed below. Pioneer Property Services (on behalf of a client): Requirement put forward by ERYC is too low; Requirement derived qualitatively not quantitatively; Requirement is below the upper range identified in the Local Housing Study; Peter Brett Associates (on behalf of a client): As for Pioneer Property Services, plus: Concern regarding re-basing of the plan period to 2012; Concern about unmet need from wider area; Requirement is skewed by historic constraints (i.e. past delivery); Spawforths (on behalf of a client): As for Pioneer Property Services; Home Builders Federation: As for Pioneer Property Services, plus: Concerned with alignment with 2011 household projections (considered recessionary ); Requirement should consider backlog; Barton Wilmore (on behalf of various clients): As for Pioneer Property Services; Nathaniel Lichfield and Partners (on behalf of a client): As for Pioneer Property Services, plus: Concern that evidence does not take into account market signals; Concern that LHS is too heavily based on recessionary trends; Concerns about adjustment to economic participation; Concerns about commuting and unemployment rates; Does not consider growth scenarios; and GL Hearn (on behalf of a client): As for Pioneer Property Services, plus: Reliance on demographic trends; Does not take into account the effect that past undersupply has had on these trends. 2.2 The following table summarises the key assumptions made by each representation relating to population, households, migration, jobs, and affordability, and any other issues noted. It is clear from this exercise that there is no consensus view across the representations made, with a variety of interpretations and alternative approaches / assumptions put forward in comparison / as an alternative to those applied within the LHS. This has been acknowledged within the Planning Practice Guidance (PPG) which highlights that: 'Establishing future need for housing is not an exact science. No single approach will provide a definitive answer.' August 2014 I gva.co.uk 5

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9 Figure 2.1 Alternative assumptions put forward as part of representations made Contributor Assumptions Population Households Migration Jobs Affordability Other issues Pioneer None provided Property Services Peter Brett None provided Spawforths None provided HBF None provided Barton 2010 SNPP 2011 Household 2001 to Experian based No assessment No specific Wilmore (rebased to Projections (HP) 2012 MYE Hull City Plan Target of market discussion of 2011) up to 2021 and No information on specific signals backlog 2 Migration 2008 HP from assumptions used for scenario uses 2022 onwards commuting, long term unemployment, economic migration activity rates (albeit there is reference to an increase in participation of women and older persons) NLP 2011 SNPP Index HP 2001 to Experian based Uses a range Backlog is up to 2021 and 2012 MYE Unemployment 5.1% (long of market referred to but 2008 HP from term ave 2004 to 2011 APS) signals not specifically 2 Making no allowance for backlog is supported by the appeal decision in the case of Zurich vs Westminster (2014) EWHC (Admin). August 2014 I gva.co.uk 7

10 2022 onwards Commuting 2012 APS and addressed in Catch up BRES figures 1.36 terms of OAN up to 2021 and rate partially catches up with the 2011 HP thereby exceeding the Index approach GL Hearn 2010 SNPP Household 2001 to Census growth 2001 to 2011 Looks at both Reviews Unconstrained formation 2012 MYE applied. Takes into affordable backlog and its demographic increases from account second jobs by housing need effect on past scenario increasing 2012 reaching the mid-point virtue of it being a measure of people in employment and the affordability of migration trends. migration to between the not employment market mirror that which 2011 and 2008 opportunities. housing, might have rates by Assumes rise in economic through occurred should activity and employment market signals. the housing requirement for all age groups over 25. In particular significant rises have been meet are observed for older in previous years residents and women. August 2014 I gva.co.uk 8

11 2.3 Following on from the review of the alternative assumptions put forward by the representations, the implications for the LHS have been considered. Population 2.4 The LHS considered the 2011 Interim SNPP which was the latest set of population projections available at the time of writing. The study concluded that for East Riding the 2011-based SNPP was not a robust dataset to use because it uses a 2011 Census population figure (by age and sex) but does not update any of the underlying assumptions about fertility, mortality and migration. 2.5 Rather, the LHS utilised the 2011 Census data and published mid-year population estimates to 2021 as a basis for projecting forward, considered to be the most robust basis for East Riding based on the latest available data, in order to comply with Paragraph 159 of the NPPF. 2.6 The study considered two sensitivities within the analysis, one being a shorter term 5-yr migration trend and one a longer-term 10-yr migration trend (with the latter allowing for reduced recessionary effects being factored in to the analysis). This recognition of the need to consider the implications of the two alternative migration trends accords with the interpretation of guidance put forward by Barton Wilmore and GL Hearn, although the ultimate conclusions drawn are different. 2.7 Since undertaking the LHS, the 2012 SNPP have been published (on 29 th May 2014). This dataset has been considered as part of this Addendum exercise, documented in the following section. The 2012 SNPP does not have the same issues as a dataset as the 2011 SNPP given the latter's interim status as documented in the LHS. Households 2.8 On the basis of the summary presented, there is clearly no consistent view on whether the 2008 or the 2011 Sub National Household Projections (SNHP) are the most appropriate basis for projecting forward household requirements. A key sensitivity here is that the 2011 SNHP only projects forward to 2021, with alternative approaches to considering household formation rates after this date put forward within the various representations received. 2.9 The LHS included two sensitivities for each projection run, applying both the 2008 and the 2011 SNHP assumption in each case. It concluded that the 2011 SNHP as the latest available assumption should be applied, including the extrapolation of this assumption beyond One criticism of the 2011 dataset is that it is unduly weighted to trends based on a recessionary period. However, the 2011 SNHP are based on a range of data which minimises the risk of this, including: SNPP 2011, August 2014 I gva.co.uk 9

12 based marital status projections and 2011 update, Census data on household representative rates from 1971, 1981, 1991, 2001, 2011, and the Labour Force Survey from It is clear from the consideration of the representations that there is no fixed approach to the application of household formation rates both before 2021 and post There does appear to be a general comment that the rates will not fully catch-up with 2008 levels after 2021, but that they will partially. As such, the continued consideration of both 2008 and 2011 SNHP assumptions and recognition that the appropriate requirement sits within this range appears an appropriate response. However, this needs to be considered in light of local circumstances as identified in the PPG PPG states that plan makers may consider sensitivity testing, specific to their local circumstances, based on alternative assumptions in relation to the underlying demographic projections and household formation rates (Paragraph 17, Ref ID: ) Data from NOMIS indicates that household size in the East Riding has consistently fallen between 1981 and 2011 (from to 2.286), from being above regional average to below the regional and national average. Indeed over this period as average household size has remained relatively static nationally between 2001 and 2011, in East Riding it has fallen. This data has been taken into account within the 2011 SNHP, which therefore is consistent with the longer-term trend position. To reflect the differing views on the use of 2008 and 2011 headship rates the Addendum has continued the LHS practice of considering both sensitivities within the analysis, however the conclusions drawn in the LHS favouring the 2011 figures for East Riding remain pertinent 3. Migration 2.13 There is consistency in approach relating to assumptions around migration, with Barton Wilmore, NLP, and GL Hearn using data from the 2001 to 2012 Mid Year Population Estimates. This approach accords with the long-term migration trend considered within the LHS. 3 Applying the approach taken in South Worcestershire, which was an indexed approach, in line with the representations from NLP is not considered appropriate without looking at the particular circumstances of East Riding, which is recognised in the research paper prepared by McDonald and Williams on behalf of the RTPI: McDonald, N, and Williams, P, (2014) Planning for housing in England: Understanding recent changes in household formation rates and their implications for planning for housing in England. Critically this paper explores the wider structural influences on headship rates, and supports the need to understand the difference, look at the range, and identify the most appropriate basis considering local circumstances. August 2014 I gva.co.uk 10

13 Employment / Jobs 2.14 Both Barton Wilmore and NLP apply Experian forecasts (taking no account of second jobs) within their calculation of employment-led employment projections. GL Hearn apply employment levels in line with the growth in employment recorded between the 2001 and 2011 Census, which takes into account second jobs by virtue of being a measure of people in employment not employment opportunities There is no consistent approach taken to economic activity, unemployment and commuting levels across the representations made. Barton Wilmore do not provide their assumptions, NLP apply a long term unemployment average (in both their baseline and policy-on scenarios) and Annual Population Survey commuting ratio, and GL Hearn identify an increase in economic activity rates for all age groups above 25 years including significant rises for older residents and women. In particular, by applying a long term unemployment trend to both scenarios, NLP effectively do not recognise any potential for lower levels of unemployment to stem from the delivery of transformational projects in the Plan The approach taken in the LHS applies employment growth forecast by the Regional Econometric Model (REM), drawing on the analysis undertaken within the 2013 Employment Land Review (ELR). The LHS applies the preferred econometric model identified in the ELR, which is an adjusted REM model, which forecasts 1,001 jobs per annum over the plan period The LHS took a medium term unemployment rate of 5.5% (age-groups 16+) calculated from East Riding unemployment statistics for the period (sourced from NOMIS). This unemployment rate, which largely reflects the recessionary period, remains constant throughout the projection period Using 2001 Census statistics, a commuting ratio was derived as the balance between the size of the resident labour force and the number of jobs available in East Riding. The derived ratio of 1.28 for East Riding indicates that there is a net outflow of commuters. The commuting ratio was held constant throughout the projection period Economic activity rates for East Riding were derived from a combination of 2001 Census statistics and the latest evidence from the Labour Force Survey (via NOMIS). NOMIS data provides an average economic activity rate for the period by broad age-group To account for an expected increase in the rate of labour force participation in the older age groups, resulting from changes to state pension age and economic activity the LHS assumes rates increasing in the following way: August 2014 I gva.co.uk 11

14 Women aged 60-64: 40% increase by 2020 Women aged 65-69: 20% increase by 2020 Men aged 60-64: 5% increase by 2020 Men aged 65-69: 10% increase by From 2020, economic activity rates are kept constant within the LHS. This approach has recently been considered by an Inspector as part of the examination of the South Worcester Development Plan with the same approach applied by Edge Analytics in that case and accepted through the examination Further sensitivities were run within the LHS, testing the implication of assuming a reduction in unemployment rate to 5% in line with the longer term unemployment trend for the authority, and addressing the commuting balance to show a 5% reduction in the ratio over the period, and finally a combined approach which assumes reducing unemployment and rebalancing of the commuting ratio The following section addresses the extent to which this approach has been updated in the Addendum exercise to take into account the latest data available, and further sensitivities run as part of the Melton Planning Appeal. Backlog 2.24 The question of whether backlog should or should not be included within the requirement figure has been raised within the representations made. The LHS, and this Addendum, do not include an allowance for backlog which is considered to be robust based on the evidence, national guidance, and the latest case law on the matter There are two key points here to highlight firstly, the original LHS covered an additional year to the East Riding Local Plan (2011/12), a year in which the number of completions in East Riding were higher than the hypothetical dwelling requirement (889 net completions compared to 887 dwellings required) and as such it was not considered appropriate to make any allowance. This Addendum note has been prepared for the period for consistency with the Local Plan with therefore no need to consider backlog. The consideration of backlog has been factored into the preparation of the Local Plan at various stages. In particular: The East Riding LHS and SHMA are based on a robust methodology and up to date information that, alongside the up to date information contained within the Hull SHMA, has been used to set a new housing requirement for the East Riding. August 2014 I gva.co.uk 12

15 The East Riding LHS and Hull SHMA both consider the latest official population and household projections. This addresses the first view identified in the PAS guidance 4 that suggests the household projections could potentially take into account unmet need. The East Riding and Hull SHMAs both identify the level of housing need. Within the East Riding SHMA (Figures 7.1 and 7.2), the level of affordable housing need required to clear the waiting list backlog and meet future arising needs has been identified. This takes into account those groups in unsuitable housing, such as overcrowded households. This was based on extensive primary research conducted in This addresses the second view identified in the PAS guidance that there may be an unmet need resulting from households not being able to form This approach to backlog is in line with the appeal decision in the case of Zurich vs Westminster (2014) EWHC (Admin), and is therefore considered to be wholly appropriate. Updates during Melton Planning Appeal 2.27 In the preparation of evidence as part of the Melton Planning Appeal, a further household modelling exercise was undertaken, additional to that carried out as part of the LHS This additional modelling adapted the assumptions underpinning the ELR adjusted REM scenario, specifically relating to the assumed unemployment rate within the model. In light of the Siemens announcement, and anticipated reduction in unemployment rates as a result, a further labour demand projection run was carried out This additional model assumes that the unemployment rate in the East Riding will reduce from 6.0% to 3.8% by 2031, with 3.8% being the pre-recession level for the East Riding between 2004 and The starting point of 6.0% relates to the unemployment level Importantly in the context of this assumption, since the publication of the LHS a number of key decisions have been taken which support the view of a growing local economy (and therefore a view of reducing unemployment rates in the future). In particular this relates to the Siemens and ABP announcement on 24 th March 2014 to invest 310m (jointly) into Hull and East Riding, with the intention of delivering a blade 4 Ten key principles for owning your housing number finding your objectively assessed needs, July 2013 August 2014 I gva.co.uk 13

16 manufacturing plant at Paull (Hedon Haven) in the East Riding and an assembly plant at Green Port Hull (Alexandra Dock), in addition to funding secured by the Humber LEP and the York, North Yorkshire and East Riding LEP through their respective Strategic Economic Plans As a result of the scale of investment planned, and significant level of job growth underpinning the ELR, a return to the pre-recession level of unemployment that is considered to be the most appropriate basis for modelling any employment-led population and household modelling exercises undertaken It should further be noted that the modelling does not take into account any underemployment within the East Riding economy. Underemployment refers to those who are employed but either wish to work more hours in their current role or who are looking for an additional job or for a replacement job which offers more hours Levels of underemployment have grown nationally, in part as a result of the impacts of the recession which saw increasing numbers of people working in part time rather than full time roles. Within the East Riding, full time employment decreased from 57.6% in 2001 to 53.7% in 2011 (Census), and part time employment increased from 20.6% to 22.%, both trends roughly in line with the regional and national average Considering this in conjunction with available research from the ONS and others 5, which identifies substantial spare capacity in the labour force, it is clear that simply focusing on unemployment could give a misleading (and under-represented) view of capacity within the labour force in the UK The ONS identify 6 that the number of underemployed workers has increased by 980,000 people since the start of the economic downturn in Whilst the majority of this took place between 2008 and 2009, the figure has continued to increase since Given the economic potential of the East Riding, including through the recent Siemens / ABP announcements, and the ongoing delivery of other transformational projects identified in the ELR, it could be assumed that the underemployment rate within the area will decrease, as more job opportunities are taken up by existing residents and capacity in the labour force. 5 e.g. Bell, D N F & Blanchflower, D G (2013) Underemployment in the UK Revisited, National Institute Economic Review, No Source: August 2014 I gva.co.uk 14

17 2.37 Critically, this would not generate an additional housing demand, as employment growth would be accommodated by an increase in the hours worked by the existing workforce. This employment growth would not require additional economically active people to migrate to the East Riding to facilitate the level of proposed job growth However, it is not possible to apply and model an assumption related to changes in the underemployment rate and, as a consequence, no allowance has been made for its potential impact within the Local Housing Study or this Addendum. August 2014 I gva.co.uk 15

18 3. Consideration of latest strategy context 3.1 This section summarises the local policy context which has emerged following the publication of the LHS report. The summary presented supports the conclusion that these key documents and investment decisions since the publication of the LHS, provide additional support to considering the scale and distribution of housing growth across the wider Hull Housing Market Area. It is considered particularly important to ensure housing growth is aligned with the aspirations of the LEP and the significant growth that will ensue from the Siemens announcement. Hull Strategic Housing Market Assessment 3.2 The 2013 Hull SHMA represents the latest produced assessment at the time of writing this Addendum. Critically at this time the complete migration and travel to work dataset from the 2011 Census has not been released, in particular around the data at sub-local authority area level. Analysis at that geographical level is therefore still reliant on the 2001 Census and releases of the Annual Population Survey and NHS data records. 3.3 The Hull SHMA notes the need to prepare a SHMA which assesses full housing needs, working with neighbouring authorities where housing market areas cross administrative boundaries in order to be compliant with NPPF. It identifies (at paragraph 1.3) that the SHMA defines a Hull-focused Housing Market Area which includes the City and the south eastern-part of the East Riding including Hessle, Willerby, Cottingham, Beverley and extending east to the Holderness Coast. 3.4 The SHMA defined sub-areas on the basis of common characteristics in regard to housing mix and socio-economic composition, or previously defined policy areas. The SHMA included a detailed programme of stakeholder engagement, including the testing of these sub-areas. 3.5 Given the recognised housing market relationship between Hull and the East Riding, it is important to consider the conclusions drawn within the SHMA around the most appropriate basis for identifying objectively assessed housing need across the market area (including both Hull and East Riding). 3.6 The Hull SHMA concludes that the most appropriate basis for identifying an OAHN figure for Hull is based on a demographic-led approach, identifying the need for 760 dwellings per annum over the period. Given the timings of the Hull SHMA it is important to note that this figure does not take into account the latest 2012 SNPP (which projects a lower level of population growth across the City). August 2014 I gva.co.uk 16

19 3.7 The SHMA notes that the OAHN has been reached in alignment with the East Riding LHS including through the common application of assumptions around migration and commuting trends. Critically it also states that it does not make policy decisions regarding the future distribution of housing provision, with any adjustments to housing provision to be made (based on policy aspirations) and agreed by the two authorities through the duty to co-operate and with their respective plans. Joint Planning Statement for Hull and East Riding 3.8 Following on from the final point made in relation to the future distribution of housing provision across the Hull HMA within the Hull SHMA, it is relevant to highlight the Joint Planning Statement (JPS) for Hull and East Riding which was endorsed by East Riding of Yorkshire Council Cabinet on 25 th March 2014 and Hull City Council Cabinet on 19 th May The JPS covers both administrative areas but with a focus on the City and those parts of the East Riding that has a strong functional relationship to the City. The JPS provides the most up to date joint strategic planning approach between the two authorities The JPS highlights the important functional relationship of the Hull HMA and the Hull travel to work area and the significance of regeneration priority and renewal areas in Hull For the combined area, three strategic outcomes are identified in the JPS. These relate to: the regeneration of Hull and the creation of strong and sustainable communities across the East Riding; realising the potential of the Humber Ports and the growth of the renewable and low carbon energy sector; and, protecting the internationally important environmental and biodiversity designations around the Humber Estuary Key strategic principles are set out in the JPS and include: Roles of places and strategic patterns of development transform Hull as a city of regional importance and as a focus for new development and investment to create a place where people choose to live, work and spend their leisure time. Housing development support a balanced housing market which helps to transform residential areas experiencing low demand, particularly within Hull, to create a better mix of August 2014 I gva.co.uk 17

20 housing and deliver a high quality residential offer across the whole housing market. manage the scale and distribution of housing development across the Hull HMA, especially in relation to the adjoining settlements of Cottingham, Anlaby, Willerby, Kirkella and Hessle, in a way which supports housing regeneration and meets housing needs within the City. To support housing market renewal in the City, housing growth in the East Riding of Yorkshire part of the Hull HMA will be limited to around 45% of the total East Riding requirement The key strategic principles reflect and re-affirm the longstanding and agreed strategic approach between Hull City Council and East Riding of Yorkshire Council developed through the Joint Structure Plan (adopted June 2005) and the Yorkshire and Humber Plan, the Regional Spatial Strategy (published May 2008). Humber Strategic Economic Plan 3.14 The East Riding of Yorkshire is located within the Humber LEP area. Within the Humber LEP Strategic Economic Plan (SEP), the housing market areas covering the sub-region are identified and considered The SEP notes that market conditions across the Humber tend to vary widely. However, with specific reference to East Riding the SEP provides that There is, however a strong relationship between housing markets in Hull and nearby parts of East Riding Within Section 8 of the SEP, the LEP set out their objective to make the sub-region a great place to live and visit. In particular the SEP notes the aspiration to ensure that the Humber is a great place to live with the range and quality of homes for a growing workforce, with an attractive and vibrant cultural, leisure and visitor offer Strategic Priority GP1 is deliver the market and affordable homes necessary to support a growing number of households and to attract and retain the range of people necessary to support the economic ambitions of the Humber. This priority supports taking an economic-led approach to housing growth across the sub-region Strategic Priority GP3 is to develop a programme of regeneration activity to continue to transform and reposition neighbourhoods with poor quality urban fabric to ensure they have a sustainable future role. This priority supports an approach to managing housing growth within the East Riding and increasing housing development within the City. It is also underpinned by significant levels of investment ( m), which have been set out in the LEP Investment and Delivery Plan. August 2014 I gva.co.uk 18

21 York, North Yorkshire and East Riding Strategic Economic Plan 3.19 The East Riding of Yorkshire also falls within the York, North Yorkshire and East Riding LEP (YNYER LEP) area. Within the YNYER LEP Strategic Economic Plan (SEP), the housing market areas covering the sub-region are identified and considered For East Riding, the SEP recognises the inextricable links with both Hull and York through migration and travel to work patterns, with the resulting need to consider their spatial aspirations and the implications this may have for the authority area The SEP further notes the findings of the 2009 Hull SHMA (the latest SHMA was not available at the time of preparation of the SEP), which recognised the interrelated nature of the Hull and East Riding housing and employment markets and that the Hull housing market spans both authorities. The 2009 SHMA noted the historic outflow of households from Hull to East Riding which requires intervention to re-balance the markets 7. Siemens announcement 3.22 On 25 th March 2014, Siemens and Associated British Ports (ABP) announced that they jointly intend to invest 310m into Hull and the East Riding to deliver wind turbine production and installation facilities at two sites in Hull and East Yorkshire These plans include a 160m investment by Siemens in wind turbine production and installation facilities at 2 sites in East Yorkshire and Hull a blade manufacturing plant at Paull (Hedon Haven) in the East Riding (550 jobs), and an assembly plant at Green Port (Alexandra Dock) in Hull (450 jobs). ABP is investing a further 150m in the Green Port Hull development to develop supply chain opportunities The importance of this investment within the Hull and East Riding area has been recognised from the national level to the local. The Government has fully supported the Humber region s aspirations to become an internationally significant hub for the offshore wind sector and the Prime Minister, David Cameron, has been directly involved in securing a favourable investment decision. The Secretary of State for Communities and Local Government has also backed the plans with millions of Regional Growth Fund (RGF) monies to ensure the infrastructure is in place to embed the supply chain locally which includes having suitable oven ready employment sites to accommodate investment from all levels of the supply chain. 7 Taken from Page 76 of the York, North Yorkshire and East Riding LEP Strategic Economic Plan. August 2014 I gva.co.uk 19

22 3.25 In order to help unlock the potential of the Humber Energy Estuary, of which the Siemens investment forms a critical part, the Council, and the three other unitary authorities in the sub region, have worked with the Government and the Humber LEP to develop the City Deal for Hull and Humber, confirmation of which was announced in December The focus of the City Deal will be to ensure that the local workforce has the skills and ability to access new employment opportunities and that the natural resources of the Humber enable economic growth The Siemens announcement which affects employment land and sites in both Hull and the East Riding, and which will create new jobs and improve skills directly and through supply chain activities, will not only have an economic impact but also affect housing demand in both the City of Hull and the wider East Riding area. The Humber LEP SEP identifies investment in skills as being a key part of the vision for the sub-region. In particular this includes a skills system that is better aligned with the current and future needs of the sub-regional economy. Critically, this investment in skills will help local residents access employment opportunities which means that economic growth will not necessarily have a direct impact on demand for new housing or require an additional level of in-migration into the area The scale and location of the Siemens investment further supports and emphasises the on-going relationship between the Hull and East Riding housing market areas. Employment Land Review Addendum Note 3.28 An Employment Land Review Addendum Note was published by ERYC in April 2014 following the announcement made by Siemens and ABP on 25 th March The ELR Addendum Note further emphasises the importance of considering the jobs generated under the additional labour demand scenario included within the ELR giving greater confidence in the conclusions drawn In particular it notes that this investment announcement is a significant shift from historic economic activity within East Riding, and that it is above and beyond historic rates of activity / trends, and that it directly delivers transformational projects identified in the additional labour demand scenario within the ELR. This ELR Addendum note did not include additional modelling or changes to the preferred econometric model, given that that scenario did include investment within the energy industries at least in part (including for example investment at Paull). August 2014 I gva.co.uk 20

23 4. Updated household modelling Updates as part of Addendum Note 4.1 As outlined in the introduction, one of the key reasons for preparing this Addendum exercise is the availability of new data not released at the time of undertaking the LHS. Further to this, following the consideration of representations put forward as part of the Proposed Submission Local Plan consultation process there is an identified need to consider the assumptions underpinning the calculations carried out to establish an appropriate housing requirement for East Riding over the plan period. 4.2 As a result a number of re-runs and additional scenarios have been run as part of the Addendum exercise including: Running the original scenarios through the new PG4 model including the 5yr migration trend, 10yr migration trend, and Combined adjusted employmentled REM scenarios; Projections based on the 2012 SNPP applying a blend of old and where appropriate new assumptions (summarised below), using the PG4 model; and Running the preferred scenario from the LHS (the Combined adjusted employment-led REM ) applying a blend of old and where appropriate new assumptions (summarised below), using the PG4 model. 4.3 The following text summarises the new assumptions applied within the Addendum exercise. Where new assumptions are not set out, the same assumptions as in the LHS have been applied. Forecasting methodology POPGROUP The latest development in the POPGROUP suite of demographic models is POPGROUP v.4, which was released in January 2014, following the completion of the LHS. A number of changes have been made to the POPGROUP model to improve its operation and to ensure greater consistency with ONS forecasting models. 4.5 The most significant methodological change relates to the handling of internal migration in the POPGROUP forecasting model. The level of internal in-migration to an area is now calculated as a rate of migration relative to a defined reference population, rather than as a rate of migration relative to the population of an area itself (as in POPGROUP v3.1). This approach ensures a closer alignment with the multiregional approach to modelling migration that is used by ONS. August 2014 I gva.co.uk 21

24 4.6 Further detail on the POPGROUP methodology is available on the POPGROUP website: Unattributable population change (UPC) 4.7 The 2011 Census has resulted in the recalibration of previous mid-year population estimates. For ERY, the 2011 Census suggested that previous mid-year population estimates over-estimated the scale of growth since the previous Census, as illustrated on the following chart. 4.8 As births and deaths are robustly recorded through vital statistics registers and internal migration is adequately measured through the process of GP registration, it is considered to be most likely that the error in the figures is associated with the misestimation of immigration and emigration impacts at the local level. Any issues with the data accuracy of the 2001 and 2011 Census are more difficult to prove. 4.9 On the assumption that births, deaths and internal migration have been robustly measured (and that the 2001 Census provided a robust population count for ERY), the downward adjustment that resulted from the mid-year population estimate revisions is predominantly associated with the mis-estimation of international migration. Figure 4.1: ERY Mid-Year Population Estimates Source: ONS, The result of the mid-year population estimate recalibration for ERY is that birth and death totals (and therefore natural change) remain largely unaltered. Small changes to internal migration are evident but not substantial. ONS has not explicitly assigned the mid-year estimate adjustment to international migration. Instead it has identified August 2014 I gva.co.uk 22

25 an additional unattributable population change (UPC) component, suggesting that it has been unable to accurately identify the source of the over-count. Figure 4.2: ERY components of change, 2001/2 2011/12 (separated UPC) Source: ONS, For demographic analysis, the classification of the UPC is unhelpful, but given the robustness of births, deaths and internal migration statistics compared to international migration estimates, it is assumed that it is most likely to be associated with the latter. With an assumption that the UPC component is assigned to international migration (for estimates to 2011) and with the inclusion of statistics from the 2012 mid-year population estimate from ONS, an eleven-year profile of the components of change for ERY is presented. August 2014 I gva.co.uk 23

26 Figure 4.3: ERY components of change, 2001/2 2011/12 Source: ONS, These historical migration statistics have been used to derive assumptions on future migration change in the trend scenarios. In the jobs-led scenarios, migration flows are used to balance the relationship between anticipated jobs growth and the size of the resident labour force (taking account of assumptions on economic activity, unemployment and commuting). Therefore, no further allowance for UPC needs to be applied to the modelling contained within the Addendum. Internal migration 4.13 In all scenarios, historical mid-year to mid-year counts of in- and out-migration by five year age group and sex from 2001/02 to 2011/12 have been sourced from the components of change files that underpin the ONS mid-year population estimates. The original source of these internal migration statistics is the Patient Register Data Service (PRDS), which captures the movement of patients as they register with a GP. This data provides an accurate representation of inter-area flows, albeit with some issues with regard to potential under-registration in certain age groups (young males in particular) In the SNPP-2010 and SNPP-2012 scenarios, future counts of internal migrants are specified, to ensure consistency with the 2010-based and 2012-based official forecasts The Jobs-led 1001 pa scenario calculates its own internal migration assumptions to ensure an appropriate balance between the population and the target number of jobs that is defined in each year of the forecast period. A higher level of net internal migration will occur if there is insufficient population and resident labour force to meet August 2014 I gva.co.uk 24

27 the forecast number of jobs. In the jobs-led scenario, the profile of internal migrants is defined by an age-specific migration rate (ASMigR) schedule derived from the ONS 2012-based SNPP Rather than the schedule of rates being applied to the area-specific population as is the case with the other components (i.e. births, deaths and international migration) in the case of internal in-migration the ASMigR schedule of rates is applied to an external reference population (i.e. the population at-risk of migrating into the area) In the case of East Riding of Yorkshire, the reference population is derived through an analysis of migration into the two Local Enterprise Partnerships (LEPs) that East Riding is a member of: the Humber LEP and the York, North Yorkshire & East Riding LEP. The reference population is defined by considering the areas which have historically contributed the majority of migrants into the two LEP areas. In this case, the reference population comprises all districts which cumulatively contributed 70% of migrants into the combined LEP area in 2008/ /12. Economic Activity Rates 4.18 Economic activity rates by five year age group (ages 16-74) and sex have been derived from 2001 and 2011 Census statistics. The 2011 Census statistics include an open-ended 65+ age category, so economic activity rates for the and age groups have been estimated using a combination of Census 2011 tables, disaggregated using evidence from the 2001 Census. Between 2001 and 2011, the rates are linearly interpolated For East Riding of Yorkshire, rates of economic activity increased for all age groups between between the 2001 and 2011 Censuses (Figure 3), most noticeably for women. Commuting Ratio 4.20 The commuting ratio, together with the unemployment rate, controls the balance between the number of workers living in a district (i.e. the resident labour force) and the number of jobs available in the district A commuting ratio greater than 1.00 indicates that the size of the resident workforce exceeds the number of jobs available in the district, resulting in a net out-commute. A commuting ratio less than 1.00 indicates that the number of jobs in the district exceeds the size of the labour force, resulting in a net in-commute. August 2014 I gva.co.uk 25

28 4.22 Using a combination of statistics from the 2011 Census (including Workday Population statistics), a commuting ratio of 1.20 for East Riding of Yorkshire has been derived by Edge Analytics (Figure 4.4). The derived 2011 commuting ratio is shown below, presented alongside the 2001 commuting ratio for comparison. Figure 4.4: Commuting ratio comparison 2001 Census 2011 Census Workers A 146, ,451 Workday Population 308,810 Jobs B 114, ,082 Commuting Ratio A/B A further sensitivity test has been conducted, whereby the commuting ratio has been gradually reduced over the course of the projection period from 1.20 to The pattern of development that the JPS is seeking to achieve should result in a more sustainable balance of employment and housing growth with a focus on the urban area of Hull. The City of York has a planning strategy that aims to meet York s housing and economic needs within its administrative area. The level of out-commuting from the East Riding to both York and Hull should therefore reduce, supporting this assumption of a reducing commuting ratio. Vacancy Rate 4.25 The relationship between households and dwellings is modelled using a vacancy rate, sourced from the 2011 Census A vacancy rate of 4.6% for East Riding of Yorkshire has been applied, fixed throughout the forecast period This vacancy rate is higher than that recorded in 2001, but only marginally (0.4% higher), and as such is not considered an unreasonable assumption to apply within the modelling exercise Using this vacancy rate, the dwelling requirement of each household growth trajectory has been calculated. August 2014 I gva.co.uk 26