Guidance

Strategic Research, Economics and Evaluation Framework 2024 to 2028

Published 20 December 2024

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 and Economic Advice and Modelling
2. Economic Appraisal
3. Evaluation
4. General Services as related to the matters referred to in 1 to 4 above

1. Strategic and 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 and delivery, as well as providing learning for the wider sector.
• 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.
• Strategic primary research to improve the evidence underpinning the costs and benefits of housing and regeneration. To date, our economics research programme has measured and monetised a broader range of impacts through primary research. It has also delivered robust methods, models and guidance for practical application. To date this includes wider area and place making impacts, brownfield development values, optimism bias (using reference class forecasting) and a broader range of environmental impacts. This has met the standard to be included (or soon to be included) in the DLUHC appraisal guide with associated guidance for practical application. We are progressing work on wellbeing, fiscal impacts and the relationship of housing and productivity. We will be commissioning future research on other consumption benefits and externalities relating to housing and regeneration. Services are needed to undertake primary research including a variety of techniques to elicit values including: market prices; generic prices; revealed preference; stated preference willingness to pay and willingness to accept, Fund level cost benefit analysis of new fund business cases and fiscal submissions to Department of Levelling Up Housing and Communities (DLUHC) / HM Treasury (HMT).
• Organisational level modelling of the impacts and social value that Homes England delivers.
• Developing economic models to capture: direct private benefits of Homes England’s interventions based on land use change (drawing from commercial and financial data such as development cashflows or appraisals, Red Book Valuations); distributional benefits of affordable housing, amenity benefits, brownfield land values, wider area and place making benefits, environmental impacts and other consumption benefits and external impacts as our economics research programme delivers additional values attributable to Homes England’s activities for use in cost benefit analysis.

2. Economic appraisal

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

This component involves the following:

• Co-ordinate HMT 5 Case Business case, working to the project manager as client, and across other disciplines, write up and produce a coherent full business case covering Strategic, Economic, Commercial, Financial and Management cases that are required for decision making as per agreed Homes England Full Business Case structure on behalf of the Project Manager. 

• Undertake Economic Appraisal (the Economic Case) working to the senior economist as client, as part of project development compliant with HM Treasury (HMT) Five Cases methodology. Help to shape, inform and evidence how and why we are intervening as the optimal approach compared to alternatives, whether this is Value for Money, and how this is aligned to Homes England’s Strategic Plan, Funds and wider government policy. This includes:

  • Diagnosis of the rationale for intervention and setting out market failure(s) or equity arguments.
  • Write up the strategic case including the theory of change and evidence underpinning this.
  • Facilitate the agreement of SMART project objectives.
  • Lead on the development and write up of the long list of options (through project stakeholder workshops where applicable).
  • Undertake short-listing of options against critical success factors considering the best way to intervene in a place along a hierarchy of intervention. This is across Homes England’s activities and may account for loan options, infrastructure and affordable housing grant, acquisition and investment grant and the optimal delivery model for the preferred option.
  • Undertake cost benefit analysis of the short-listed options
  • Monetise as many costs and benefits (as current evidence allows) across shortlisted options to arrive at a Benefits Cost Ratio (BCR) (or Net Present Social Value (NPSV) or Cost where there the public sector financial cost is zero or negative) for each option. This also includes consideration of non-monetised benefits to inform decision making.
  • Set out all assumptions in arriving at additional cost and benefits such as displacement effects in the relevant property market area using DLUHC Additionality Guide and primary evidence.
  • The economist is not expected to undertake a RICS valuation but is required to have a familiarity with the concept of a residual land valuation in order to calculate land value uplift per unit derived from the residual valuation undertaken by RICS professionals, as per DLUHC and Homes England guidance.
  • 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.
• Use an appraisal methodology that conforms to guidance from HMT’s ‘Green Book’ and DLUHC Appraisal Guidance.
• Demonstrate the impact of housing and regeneration projects supported by Homes England to inform the calculation of social value, impacts and outcomes.
• Ability to respond to questions as part of the decision-making process including the evidence base on which assumptions have been made.
• Place-based socio- economic and housing analysis to inform economic growth and regeneration, based on a defined geography.

3. Evaluation

This component involves providing a broad range of expertise in assessing the impact and value for money of Homes England’s interventions at project, portfolio and Agency level, as well as learning lessons for future delivery and programme and fund development. More specifically, this involves:

• providing evaluation services to assess how successful or otherwise an intervention has been in achieving its objectives
• being an expert in evaluation techniques, including key principles of developing a robust counterfactual position, including theory-based, experimental and quasi-experimental evaluation methodologies
• evaluating the Value for Money of a project, programme or portfolio in line with HMT Green Book and Magenta Book
• setting out what lessons can be learnt for future projects and programmes, through process evaluation that demonstrates how the way in which the Agency delivers its projects or programmes has influenced and maximised the impact it has achieved
• aligning within and adding value to Homes England’s evaluation programme, to ensure that all of its delivery interventions receive appropriate evaluation of a consistent quality

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. For example, 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.
• Analysis for local authorities. For example, employment land review; economic development and regeneration action plans; investment plans.
• 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.

4.7

The matters specified above in paragraphs 4.1 to 4.6 are not exhaustive and are for example only. The Consultant shall provide all such general services which in the opinion of Homes England are relevant and necessary for the delivery of the Services.