Guidance

Developing alternative forecasts for business cases: updating land use assumptions in NTEM

Published 23 July 2020

1. Treatment of Land Use Plans in forecasting with NTEM

The National Trip End Model (NTEM) is a trip generation model that is used to forecast the potential demand for travel in England and Wales. The Department for Transport’s Transport Analysis Guidance (TAG) requires that the modelling in business cases for transport schemes applying for national funding is constrained to NTEM over a sufficiently large area.

2. Purpose of this advice

From time to time, the Department for Transport (DfT) receives requests for advice on the treatment of new local development assumptions for local areas. Typically, people are interested in ensuring that some new (or planned) housing scheme, retail development, factory or similar is included when forecasting trip ends with the use of the National Trip End Model (NTEM) datasets.

NTEM is fully updated, including with details of planned local development, at infrequent intervals. In between these updates, new Local Plans may be adopted or existing plans formally revised. Furthermore, even if the model is up to date, the geographic resolution of the data capture process is variable. For example, NTEM may capture planned housing development at local authority level but the precise location of development will not be taken into account.

The purpose of this guidance is to clarify how such local knowledge can be captured in analysis and how this analysis should be presented in business cases.

3. NTEM approach to planning assumptions

NTEM is one of the department’s primary tools used to forecast travel demand. The purpose of NTEM is to forecast trip productions and attractions across Great Britain, providing trip end inputs to transport models which are used in the development of transport business cases. To this end NTEM uses projections of population, households and employment from a range of official sources^{[footnote 1]} as well as assumptions about the total provision of dwellings in local authority districts sourced from local authority plans.

The data on population, dwellings and households is used to estimate trip productions while the data on population and jobs is used to estimate trip attractions. The exact combination of data used to estimate the trip ends varies by trip purpose. The detailed technical description of the modelling can be found in

4. Supplementary Guidance: NTEM Sub Models

NTEM includes modelling of household formation and relocation. In areas of significant housing pressure, household sizes will increase, housing vacancy rates fall, the number of homes of multiple occupation may rise, and some people may relocate to places in the same region with less housing pressure. It thus allows local housing policies to be used to refine the distribution of population^{[footnote 2]} and to be captured in the forecasts of travel demand. The information about local housing policies is sourced and used in NTEM at the level of Local Authority District totals. The source of these assumptions are the latest statutory planning documents publicly available at the time of the production of the dataset (listed in Annex F of the NTEM7.2 Planning Data Guidance).

Usually, the plans in the planning documents do not extend as far into the future as NTEM can forecast. NTEM uses the trend rate of housebuilding from each Local Plan to estimate growth in dwellings beyond the final plan year.

The jobs forecasting methodology also has limited spatial resolution. The jobs in the base year are classified by industry and gender and zone^{[footnote 3]}. Growth rates are available by industry, gender and region. Thus, zones in the same region with a similar industrial mix will experience similar job growth rates.

5. Approach to detailed local information

TAG unit M4 on Forecasting and Uncertainty recognises local uncertainty about the location, timing and nature of the local developments. The dwellings data extracted from statutory planning documents is geographically coarse, with. no assumptions made about specific developments within the total or about. where within a local authority development they will take place^{[footnote 4]}.

Another way in which local conditions may differ from the assumptions in NTEM is if planned developments are brought forward so that they have an earlier opening year than originally planned. The techniques described in this note will be applicable to the intervening years if there is accompanying evidence that it is practicable to build sooner and/or more quickly.

NTEM extrapolates local trends to estimate ongoing local development beyond the planning horizon in the published documents^{[footnote 5]}. Therefore, evidence that the development is additional to the existing assumptions should include consideration of trend build rates in recent years.

6. Incorporating new local land use assumptions in forecasts

DfT recognises that the assumptions in NTEM may not be correct at the finest level of geographical detail. This section sets out how scheme promoters can incorporate more up-to-date local knowledge in business cases.

TAG unit M4^{[footnote 6]} advises users to construct local uncertainty logs that capture more detailed and up to date local information. It is recognised that some adjustments to NTEM forecasts at the local level may be required to reflect this local knowledge, and to understand its impact on the scheme appraisal, with NTEM serving as the source of assumptions for the overall growth in households and/or jobs for the area. TEMPro^{[footnote 7]} software provides functionality to implement such adjustments and guidance on implementation is also available in TAG Unit M4^{[footnote 8]}.

The facility to adjust land use parameters should only be used to reflect local uncertainty; national uncertainty is currently assumed to be captured within the high and low growth scenarios prescribed in TAG M4^{[footnote 9]}. Of course, large schemes create both local and national uncertainty for locations sufficiently close to the new infrastructure.

In the event of new local information becoming available, users of NTEM data are advised to review the new assumptions about the total provision of dwellings in a local authority and assess the scale of the difference from those used in the development of the latest NTEM dataset. If the promoter believes that the difference is material for their analysis and it is proportionate to use the new assumptions in modelling, users are advised to prepare alternative forecasts to assess the impact of applying these new assumptions.

Similar considerations apply if new information about the size and location of businesses becomes available. Alternative assumptions for housing should result in adjustments to the number of households or trips produced while those for businesses result in adjustments to the number of jobs or trips attracted.

‘Placing’ jobs or households in particular MSOAs within a Local Authority District (LAD) can be justified by demonstrating that the specified land use is concentrated there or will be, in the case of planned developments. Generally, we would not expect jobs or households to be moved across Local Authority boundaries although we would accept evidence indicating that relocation really will happen.

The department expects that business cases informed by alternative assumptions will include the following information:

• analysis based on NTEM totals for the study area (in line with guidance). This forecast will also act as a reference for comparisons that will help understand the difference that the new assumptions make;
• alternative forecasts based on new household or job totals for the local authority; and
• evidence describing the source of new assumptions including the status of source documents (showing if the local plans were adopted or found to be sound in the examination process), and the method of implementation in the sensitivity tests.

In forming a view about the Value for Money of a scheme, the department would anticipate using these alternative forecasts along with other relevant material. The extent to which alternative forecasts will be viewed as material for the decision at hand will in part depend on the status of the new land use assumptions and the robustness of the method of implementation into trip end forecasting.

For example, the weight applied to alternative forecasts using new dwelling assumptions sourced from a formally adopted Local Plan will – all things being equal – be given greater weight than a Local Plan in the early stages of development and will form an important output influencing the decision about the Value for Money category.

Where the developments are dependent on other infrastructure being provided, this should also be clear in the description of the alternative scenario (e.g. building new houses may depend on a new transport link or other infrastructure being provided). If the scheme on which the developments depend is the scheme being appraised, refer to TAG units A2.2 (induced investment) or A2.3 (employment effects) for how to incorporate the dependencies into the analysis.

Full background on how the final Value for Money is assessed is provided in Section 5 of the Value for Money Framework and Value for Money Supplementary Guidance on Categories.

The advice in this note reflects the principle that detailed local knowledge may only be available locally and that if the NTEM dataset were to be updated now, we would aim to take into account new information about the total provision of dwellings and employment sites in local authorities. However, as the NTEM dataset can only be updated periodically, this advice provides clarification on how to incorporate new information between updates.

1. Office of National Statistics, Ministry for Housing, Communities and Local Government, UK Commission for Employment and Skills, Office of Budget Responsibility. ↩

2. ONS population projections are based on past trends and do not take account of the local housing provision policies – please see NTEM7.2 Planning Data (version 7.2) Guidance Note (PDF, 3.7MB) for more detail on the methodology adopted by NTEM ↩

3. NTEM/TEMPro zones are Middle Layer Super Output Areas in the Census Geography. ↩

4. Please see Frequently Asked Questions ↩

5. Expected Growth Factors – please see NTEM7.2 Planning Data (version 7.2) Guidance Note (PDF, 3.7MB) for more detail ↩

6. TAG M4 Unit Section 2 ↩

7. TEMPro is a tool available from the DfT website, which allows viewing and extracting NTEM projections. ↩

8. TAG unit M4 paragraph 7.3.8 (particularly ‘Box 2’) and appendix B ↩

9. Tag unit M4 Section 4.2 (particularly ‘Box 1’). ↩