DD145 - CACI Paycheck Data

In assessing planning applications OPDC is required to assess the affordability of the proposed housing tenures toe ensure that it can adequately meet local housing needs. This is particularly relevant for intermediate affordable housing tenures such as Discount Market Rent / London Living Rent and Shared Ownership. These tenures have broad affordability parameters set in the Mayor of London's 2021 London Plan in that the properties need to be affordable to households with household incomes of not more than £60,000 and £90,000 respectively.

There is currently a lot of interest from developers in purpose-built shared co-living housing for single people. Purpose built co-living provides small private studio units together with shared communal facilities, such as communal kitchens and dining spaces, a spa, a gym, a games room, a cinema, a library, a launderette and a co-working space. The income required to afford co-living housing is in the region of £40,000 per single person, according to research from CBE.

There are several fees to use statistics on household earnings and income, such as the Annual Survey of Hours and Earnings (ASHE) published by the Office for National Statistics and Household Below Average income (HBAI) published by the Department for Work and Pensions. These data sources can provide mean and median household and individual incomes, but they are limited in the geography they cover, which are generally at a regional or sub-regional level and not a local postcode level. They also do not provide estimates on the number of households within local areas on different incomes, different types or ages of households and how this is reflected in incomes.

CACI Limited has developed the Paycheck data series to provide consistent and reliable gross household income estimates at full postcode level across the UK. It uses information from CACI's bespoke lifestyle database, in conjunction with data from the Average Weekly Earnings and Living Costs and Food Survey published by the Office for National Statistics to build a consistent and statistically reliable model. Paycheck data is used by several local authorities and housing providers to understand household income and affordability.

Income reflected by the Paycheck directory is gross household income from all sources including earnings, benefits and investments. As well as providing the lower quartile, mean, median and mode income for each postcode, the data also breaks down the population into £5,000 bands up to £200,00 plus per annum and provides estimates of the number of households in each postcode within each income band. The standard directory is complemented by Equivalised directories.

Paycheck Equivalised provides an adjusted gross income scale which takes account of the size of a household in each postcode. It reflects the idea that a larger household will need a larger income than a smaller household in order to achieve an equivalent standard of living. In outline, the OECD-modified equivalisation scale sets the Equivalised income of a married or cohabiting couple with no children as equal to their actual income. The Equivalised income of larger households is less than their actual household income, while the Equivalised income of a single-person household is greater than its actual income. The scale considers both the greater income needs of larger families and economies of scale achieved when people live together.

The Equalised Paycheck Lifestage Directory gives a summary of the estimated Equivalised income distribution split by broad life stage within each postcode. Paycheck Lifestage uses a multilevel classification developed by CACI Limited that considers age of household reference person, working status and family structure. The classifications include single people under 35's, working couples, families with children, empty nesters and retired people.

Paycheck data can assist OPDC in understanding the affordability of different housing products to local people, particularly co-living and intermediate housing types. This will be done by comparing local incomes with data on house prices and rents. Paycheck data can also help OPDC develop a grater understanding of the working status and family structure of local people.

The core objectives is to understand local household incomes and how these impact on housing affordability. By understanding incomes at a more granular level, OPDC will be able to make informed decisions about the types of housing needed to meet local needs and at a price that local people can afford.

OPDC will be able to demonstrate through Paycheck data how affordable the housing tenure mixes proposed in planning applications are to local people. This will by comparing incomes with the projected costs of buying or renting a home in the proposed development.

In addition, the Paycheck data will provide valuable information about the income and working status of local people which can be used to develop OPDC's employment and skills initiatives.

Strategic fit

Building the right number and the right mix of new homes, and addressing the consequences of the housing crisis, are part of the Mayor of London's vision for Good Growth, ensuring that every Londoner has access to a good quality home that meets their needs and at a price they can afford. This vision is encapsulated in the Mayor's London Housing Strategy and the new London Plan.

OPDC has adopted an overarching target to deliver 50 per cent affordable housing and apply the London Plan's threshold approach to viability. OPDC's Local Plan tenure policy is to provide a minimum of 30 per cent affordable housing as either social rent or London Affordable Rent and the remainder as a range of social rent level housing or London Affordable Rent. Intermediate housing, including London Living Rent and London Shared Ownership. Intermediate housing should be affordable to people on median earnings in the host local authorities.

Paycheck data will provide the tools to enable OPDC to assess the affordability of different housing types, including co-living and Intermediate housing, against local incomes. It will complement information already available as part of the Local Plan evidence base, such as the Strategic Housing Market Assessment which provides a broad area wide analysis of affordability.

Under Section 149 of the Equality Act 2010, as a public authority, OPDC must have 'due regard' to the need to eliminate unlawful discrimination, harassment and victimisation as well as to the need to advance equality of opportunity and foster good relations between people who share a protected characteristic and those who do not.

OPDC officers have given due regard to their duty in respect of section 149 of the Equality Act 2010. When determining planning applications, OPDC is required to consider the affordability of the proposed housing offer and the impact on people with protected characteristics. The decision to procure postcode level household income data will enable OPDC to ensure that housing proposed in planning applications is affordable for different types of households within the local area. This will include people with protected characteristics.

Project governance and assurance

OPDC will enter into a three-year licence agreement with CACI Limited to access and use the Paycheck directories. This will be managed by the Principal Housing Officer and overseen by the Head of Planning Policy.

CACI Limited will provide the 2021 Paycheck directories within three working days of the signing of the licence agreement and provide updated directorates thereafter for the years 2022 and 2023.

There are no other free to use data sources available that provide gross and contextualised income data at a postcode level.

Risk and issues

The main risk to this decision is that Paycheck data does not provide robust income data from which analysis of housing affordability can be made. This is unlikely as the data is widely used by local authorities and is based on data produced by the Office for National Statistics.

Housing affordability is regularly raised as an issue at Planning Committee. Paycheck data will enable OPDC to demonstrate the extent to which proposed affordable housing tenures are affordable to local people.

Other considerations

Contracts and Funding Code

The reason OPDC is seeking an exemption from the Contracts and Funding Code is that there are no other suppliers that can provide gross and contextualised household income estimates at a postcode level in the form required. As per OPDC's Contracts and Funding Code, exemptions from the normal procurement process are requested when there is complete absence of competition. This is a bespoke service provided by CACI Limited and the datasets are built according to OPDC's specific geography and requirements.

No other organisation provides gross and contextualised household income data at postcode level. Free to use data sources such as the Annual Survey of Hours and Earnings (ASHE) published by the Office for National Statistics and Households Below Average income (HBAI) published by the Department for Work and Pensions do not provide estimates on the number of households within local areas on different incomes or different types or ages of households and how this is reflected in incomes.

Notwithstanding this, OPDC has sought to obtain value for money in the contract by signing for three years. This enables OPDC to take advantage of a discount.

The data will enable OPDC to understand how many households can afford different housing types within different postcode areas.

Data Protection

There are no data protection issues as the data being provided by CACI Limited is anonymised and does not include identifiable personal or household characteristics.

Conflicts of interest

No one involved in the preparation or clearance of this form, or its substantive proposal, has any conflict on interest.

The expenditure of up to £25,000 required to purchase the licence detailed in the body of the report will be funded from the Planning Directorate Budget.

The report above indicates that the decision requested of the Director falls with the OPDC's object of securing the regeneration of the Old Oak and Park Royal area and its powers to do anything it considers appropriate for the purpose of its objects or purposes incidental to those purposes, as set out in the Localism Act 2011.

In taking the decision requested, the Director must have due regard to the Public Sector Equality Duty, namely the need to eliminate discrimination, harassment, victimisation and any other conduct prohibited by the Equality Act 2010, and to advance equality of opportunity between persons who share a relevant protected characteristic (race, disability, gender, age, sexual orientation, religion or belief, pregnancy and maternity and gender reassignment) and persons who do not share it and foster good relations between persons who share a relevant protected characteristic and persons who do not share it (section 149 of the Equality Act 2010). To this end, the director should have particular regard to section 6 (above) of this report.

Section 4 of OPDC's Contracts and Funding Code (the "Code") requires that OPDC to seek a call-off from a suitable framework, where possible, or if not, undertake a formal tender process which will be managed by TfL in respect of the services/supplies. However, the director may approve an exemption from this requirement under section 5 of the Code upon certain specified grounds. One of those grounds is that the approval of the exemption for complete absence of competition. Officers have indicated at paragraph 7.1 to 7.3 of this report that this ground applies and that the proposed contract provides value for money.