1. How demographics and the economic downturn are affecting the way we live
LSE Seminar: 1 July 2013
Neil McDonald: Visiting Fellow CCHPR

2. Real change or noise?
England household growth 10% slower in projections
LA household growth ranges from 320% faster to 165% slower.
Large variation in small areas e.g. Surrey:+48% to -29%
Why such large variations?
Can we trust these apparently random results? 2

3. Population projections for England
2008 and based projections for 2011 similar
2011-census based estimate 450k larger
2010-based population growth 13% faster than 2008
2011-based population growth 5% faster than 2010 3

4. Reasons for changes in population projections
2008 to 2010-based projections – 13% faster
28k a year growth in natural change: bigger increase in births rather than deaths
Net migration up from 160k to 182k
2010 to 2011-based projections – 5% faster
No change in international migration
85% of increase due to more births; 15% due to fewer deaths

5. Limitations of 2011-based projections
2011-based population projections are interim: they applied 2010-based trends
2010-based fertility rate is too high
Census found 245,000 more women of child bearing age than expected: implies actual fertility rates were lower than previously thought
Too high a fertility rate, implies too many births
Similar problems with deaths and internal migration

6. Regional population projections
Much greater variation in growth rates
London projected to grow 77% faster in 2011-based projections than in 2008-based (c.f. England 19% faster) 6

7. London compared with England
Census population 4.3% higher than 2008-based projection (c.f. England 1.0%)
2011-based projected growth 77% faster than 2008-based (c.f. England 19%) 7

8. LA level population estimates for 2011
Much bigger variation c.f. London and England
Census estimate for Newham 30% higher than based projection (c.f. England 1%) 8

9. LA level population growth projections
Most boroughs projected to grow much faster in based projections than in based
WHY? 9

10. LA population growth: natural change
Natural change projection has grown from one projection to the next for most boroughs
Some variation but not the cause of big population growth variations 10

11. LA population growth: internal migration
Much greater variation than for natural change
Variation between projections appears almost random… 11

12. LA population growth: internal migration
Chart plots differences in net internal migration – making the changes easier to see. 12

13. Internal migration: sample London borough
Flow in up: 2%
Flow out down: 3%
Net (outward) flow down 51%
2-3% changes in gross flows could be due to use of based migration rates 13

14. LA population growth: international migration
Large variation
Big changes are between based and based projections… 14

15. LA population growth: international migration
2008 to changes due to
Increased England net migration
Migration Statistics Improvement Programme
Smaller changes to 2011 15

16. Migration Statistics Improvement Programme
Allocating migrants to LAs is difficult
Shouldn’t assume 2008-based data was “right”!
Old method used IPS to distribute to regions and to smaller geographies; modelling for final step to LAs
New method uses administrative data to distribute direct from national totals to LAs, e.g.:
National insurance data used to distribute workers
Higher Education Statistics Agency data to distribute students
Evidence that new method is better predictor of 2011 census results

17. LA population growth: causes of variability
Internal and international migration more significant than natural change
Some of the variation in internal migration will be due to use of 2010-based migration rates
International migration changes big – but probably due to errors in 2008-based projections 17

18. Changing household formation patterns
Changes compared with previous trends vary from region to region 18

19. Changing household formation patterns
Bigger changes in London for 25-34s
Older age groups have seen growth in household formation rates and census figure above based projections 19

20. Regional variations: headship rates: 25-34s
1991 headship rates similar
SW: rate grows 1991 to 2001
London: fall 1991 to Census figure closer to based projection 20

21. Changing household formation patterns
½ million more adults aged living with parents in than 2001.
Note increase appears to have started before credit crunch/recession 21

22. London headship rates compared
All boroughs had headship rates lower than expected…
..but the shortfall varied considerably 22

23. London household growth projections compared
Range for 63% less than based projections to 320% faster 23

24. How the household projections compare
‘Partial return to trend’ option shows what might happen if and when the economy returns to growth and housing supply improves
Household growth over 20% higher in ‘partial return to trend’ this example 24

25. Conclusions: Population projections
Projected growth rates increased – by very different amounts
Increased net international migration assumed between and 2010-based population projections
Migration Statistic Improvement Programme:
re-distributed net flows between regions and local authorities
causes significant part of changes between 2008 and 2010
probably gives better estimates
Use of internal migration rates from 2010 in 2011 interim projections
may have distorted net internal migration flows – a large factor in household growth
Case for investigating internal migration flows in detail where based projections suggest big changes

26. Conclusions: Headship rates
Changing household formation patterns
Impact varies with age: biggest on younger adults
Impact varies: region to region and LA to LA
Probably not just due to economic downturn; deteriorating affordability likely to be another factor
Return to trend likely to require economic recovery and improvements in both access to mortgage funding and improved affordability

27. Conclusions
Faster projection population growth damped by lower headship rates which rise more slowly, leading to slower household growth nationally – not in London
Are the lower headship rates derived from the census a prudent basis for planning?
They assume younger adults will find it increasingly difficult to set up home on their own
Planning for lower headship rates: a self-fulfilling prophecy?
If there is a return towards previous trends household growth will be substantially greater
Plans should be robust to recovery – and closely monitored

28. Neil McDonald is a Visiting Fellow at the Cambridge Centre for Housing and Planning Research. He was Chief Executive of the National Housing and Planning Advice Unit up to its closure in July He also held various Director-level posts at the DCLG in the housing and planning fields. Since leaving the civil service in 2011 he has developed an expertise in the application of research and analysis to assist planning practitioners plan for housing. He has advised local authorities and others on planning for housing and is the author of “What Households Where?” an analytical tool produced for the Local Housing Requirement Assessment Working Group and available through their website,