Guidance

Strategic Research and Economic Analysis Framework 2020-2024

Updated 1 October 2021

Scope of services

To provide a broad range of expert strategic and economic technical support and associated research and analysis specific to the housing sector and Homes England’s Mission and Objectives as set out in the Strategic Plan.

1. Strategic Economic Advice and Modelling
2. Economic Appraisal and associated research and analysis
3. Impact Assessment and Evaluation
4. General Services

1. Strategic economic advice and modelling

To provide strategic economic advice and economic modelling to inform and support corporate priorities specific to the housing sector.

This component involves:

• Strategic research and economic advice underpinning strategy development.
• Strategic economic analysis underpinning business development activity aligned to our Mission and Objectives.
• Strategic economic modelling and translation of the macro-economic context to new opportunities and impacts across the organisation.
• Economic modelling to support business planning, including stress testing and scenarios at organisational level.
• Strategic primary research to improve the evidence underpinning the costs and benefits of housing including productivity benefits of existing and new markets within the housing sector, consumption benefits and externalities relating to the provision of housing.
• Fund level economic models (using financial inputs) from site data and other sources of evidence to inform new fund business cases and fiscal even submissions to Ministry of Housing, Communities and Local Government (MHCLG)/HMT.
• Organisational level modelling of the total economic impact of Homes England.
• Developing economic models to capture the benefits of Homes England’s interventions based on land use change (development appraisals, Red Book Valuations) and including all monetised external impacts.

2. Economic appraisal and associated research and analysis

For these purposes, Economic Appraisal is the ‘before the event’ economic assessment of project, strategy or programme objectives.

This component involves the following:

• Undertake Economic Appraisal as part of project development compliant with HM Treasury (HMT) Five Cases methodology covering Strategic, Economic, Commercial, Financial and Management cases that are required for decision making. Help to shape, inform and evidence how and why we are intervening as the optimal approach compared to alternatives and how this is aligned to Homes England’s Strategic Plan.
• Co-ordinate the five cases, working with other disciplines, to produce a coherent full business case as per agreed Homes England Full Business Case structure. The economic case monetises as many costs and benefits (as current evidence allows) across shortlisted options to arrive at a BCR for each option. This also includes a weighting and scoring on non-monetised benefits to inform decision making.
• Develop an economic case that diagnoses a rationale for intervention by setting out market failure(s) or equity arguments.
• Take a lead on development, articulation and analyses of options, aligned with the strategic case and informed by the commercial case and to weigh up all of the costs and benefits of each option before a decision is made.
• Use an appraisal methodology that conforms to guidance from HMT’s ‘Green Book’ and Department for Communities and Local Government’s Appraisal Guidance.
• Review and account for displacement effects in the relevant property market area
• Demonstrate the benefits of additional housing supply brought forward by Homes England interventions, and the best way to do this, and also overall outcomes in terms of wider benefits of economic and housing growth, sustainability and place-making.
• Deliver appraisal of options including the best way to intervene in a place along a hierarchy of intervention. This may account for loan options, grant, and acquisition. and the optimal delivery model for the preferred option.
• Familiarity with the concept of residual land valuations; a key step in estimating land value uplift effects, including the ability to apply/challenge differing commercial assumptions applied across different options.
• Sensitivity analysis, switching values and scenario analysis, as necessary to test the resilience of the preferred option when key variables are changed, such as house prices and construction costs. This is likely to require worst case and best-case scenarios.
• Ability to respond to any changes in approach resulting from HMT Green Book Review.

3. Impact assessment and evaluation

This component involves:

• Providing a broad range of expertise in assessing the impact of Homes England’s interventions at project, portfolio and agency level.
• Being an expert in evaluation techniques, including key principles, and both qualitative and quantitative evaluation methodologies.
• Providing evaluation services to assess how successful or otherwise an intervention has been in achieving its objectives.
• Setting out what lessons can be learnt for future projects, programmes or policies.
• Aligning within and adding value to Homes England’s nascent evaluation programme, to ensure that all of its activity receives appropriate evaluation and consistency, while also preventing duplication.

4. General services

4.1 Management of team

• Manage sub-consultants and other consultants appointed directly by the client where instructed.
• Directly employ and manage relevant third-party companies as required to undertake the discharge of any of this service.
• Provide a single point of contact to report to the client.
• Adhere to all policies of Homes England and any issued ways of working and protocols. Respond to any queries issued.
• Build on and inform standardised templates, developed jointly with other members of the consultancy team.

4.2 Stakeholder management

Liaise, negotiate and work collaboratively with statutory and other stakeholders.

4.3 Research studies

• Research studies are likely to align closely to Homes England’s Mission and Strategic Objectives, and any emerging government priorities, as well as key economic research questions e.g. in relation to improved understanding of the housing market, and the economic costs and benefits from intervening in it, to inform corporate priorities and utilised in economic appraisal and evaluation.
• Research, advise and present impacts of emerging legislation and best practice guidance.
• Providing lessons learned, best practice and market intelligence.
• Advise, prepare, organise and submit desk top studies and reports.
• Preparation presentation material both on hard copy and electronically.
• Assist the client with the preparation of good practice guidance and research and help the client in the promotion of this material.

4.4 Policy and strategy advice and reports

• Monitor and reporting on existing and emerging government policy, innovation, research and practice in relation to all aspects of housing, regeneration and development.
• Monitor and advise the client on Government legislation relating to the specific areas of services delivered.

4.5 Training

Development of and provision of training for Homes England Staff and stakeholders.

4.6 Staffing

Provision of secondees to Homes England on a temporary basis in line with IR35.