ANNEX C. Economic Assessment. Parking Proposals Comments of the Economic Development Team

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1 ANNEX C Economic Assessment Parking Proposals Comments of the Economic Development Team This report summaries the views of the Economic Development Team on the proposed changes to parking charges in Milton Keynes. It is based on our professional opinion and the evidence available on the local economy. Economic Background Milton Keynes has enjoyed significant economic success over recent years. The independent think tank, Centre for Cities regularly recognises Milton Keynes as one of the UK s top cities. The Cities Outlook 215 identified Milton Keynes as number one for jobs growth over the past decade; the Small Business Outlook 215 ranked Milton Keynes second for the rate of business start-ups per 1, population and second for the proportion of SMEs in high-tech and digital; and in 216 Milton Keynes was identified as one of Centre for Cities Fast Growth Cities, along with four others, with significant potential to drive future economic growth. A report by recruitment specialists, Glassdoor 1 in summer 216 identified Milton Keynes as the second best place to work in the UK. And the most recent quarterly UK Powerhouse report 2, published in January 217, ranked Milton Keynes top for growth in Gross Value Added and employment. Employment It could be argued that increasing the cost of parking could have a negative impact on both current and future levels of employment. A higher cost of parking could be viewed as detrimental to the ability of a business to attract and retain employees and could be perceived as a factor in the decision of a business to locate in, stay in or grow in a particular area. Milton Keynes has enjoyed significant success in attracting national and international companies to the city, and in supporting the growth of existing businesses and encouraging business start-ups. This success is reflected in the statistics that demonstrate continued employment growth and falling levels of unemployment. Figure 1 below demonstrates both the increase in employment and the falling percentage of individuals claiming Jobseekers Allowance over recent years UK Powerhouse Report City Growth Tracker January 217, Irwin Mitchell 1

2 JSA Claimant Rate (%) Number of Employee Jobs Figure 1: Number of employee jobs and Jobseekers Allowance Claimant Rate Number of employee jobs JSA Claimant Rate Source: ONS Business Register and Employment Survey, Jobseekers Allowance with Rates and Proportions Centre for Cities, in a recent publication, examined the drivers behind the location choices of businesses. 3 The publication found that the greatest clustering of economic activity occurs within centre cities: Despite accounting for just.8 per cent of land, they were home to 8 per cent of businesses and 14 per cent of jobs in 215 (Centre for Cities, 216, pg 7) The main reasons for this lie in the access that a city centre offers to a larger labour pool, knowledge sharing and the ability to share certain inputs, such as infrastructure and supply chains. In particular, knowledge-intensive businesses are more likely to be found in city centres given the need to access more highly skilled employees. This pattern can be seen within Milton Keynes, where approximately one quarter of all employment can be found within Central Milton Keynes and where around 2% of jobs are within private sector knowledge intensive businesses 4, placing Milton Keynes within the top five cities with the highest percentage of such businesses. Given the advantages of locating in a city centre, it is unlikely that increasing parking fees will have a significant negative impact on the number of businesses located in, or looking to locate in, Central Milton Keynes. Figure 2 below provides an indication of employment growth by sector. There are two key conclusions that can be drawn from this. Firstly, the transport and logistics sector is a key sector in the local economy. Businesses within this sector are generally concentrated on the edge of town and will not be impacted by the proposed parking fee changes. The second conclusion relates to the growth in public administration and support services, information and communication, financial and insurance, accommodation and food services, and arts, entertainment, 3 Trading Places. Why firms locate where they do. Centre for Cities, August Centre for Cities data tool 2

3 Broad sector recreation and other services. These are sectors that will predominantly cluster within the city centre. The growth of employment in these sectors has occurred during a period in which parking charges were increased. Similarly across this period, the number of parking spaces available has remained relatively static, suggesting that the availability of parking is not having a negative impact on employment growth. Figure 2: Recent Jobs Growth in Milton Keynes, Number of additional jobs 1, 2, 3, 4, 5, Agriculture, forestry & fishing Mining, quarrying & utilities Manufacturing Construction Motor trades Wholesale Retail Transport & storage (inc postal) Accommodation & food services Information & communication Financial & insurance Property Professional, scientific & technical Business administration & support services Public administration & defence Education Health Arts, entertainment, recreation & other services , 1, 1, 1, 1, 2, 2, 2, 3, 4, 4, Source: Business Register and Employment Survey Looking forward, employment is predicted to continue to grow within Milton Keynes. The East of England Forecasting Model (EEFM) 216 creates employment projections up to the year 245. The forecasts suggest that between 215 and 245, almost 58, additional jobs will be created in Milton Keynes. This equates to jobs growth of approximately 35%. Figure 3 below shows those sectors projected to see the greatest jobs growth between 215 and 23 as well as those expected to experience the greatest job losses. The sectors where the greatest growth is predicted are all sectors which can be expected to be concentrated within the city centre. 3

4 Change in number of jobs Figure 3:Employment Forecasts by Sectors in Milton Keynes , 1, 8, 6, 4, 2, -2, 1,1 8,5 8,3 7,1 6, Sector Source: East of England Forecasting Model 216 The Milton Keynes Business Survey 215 found that from over 1,4 respondents, 13% were considering relocation within the next two to three years. The main drivers of this were the need for larger premises (cited by 59% of those looking to move) and cheaper premises (cited by 41%). Improved parking was highlighted by 26%. However, when asked about constraints on business growth, only 2% citied lack of parking. Attracting/retaining customers, the general economic climate, cashflow and a number of other factors were more commonly cited constraints on growth. Similarly, the SEMLEP Business Survey 215 asked respondents to name the most important things the council and other support organisations should do to help businesses grow. Overall, 6% mentioned better/more/cheaper parking. However, when disaggregated by local authority area, parking did not appear in the top three things cited by businesses in Milton Keynes. It was mentioned by 15% of businesses in Kettering however which will have contributed to the higher overall SEMLEP figure. The Milton Keynes Business Survey 215 also asked about difficulties with recruitment. 14% of respondents reported hard to fill vacancies, with a lack of applicants with the required skills being perceived as the main cause. Lack of qualifications, limited interest in the type of work and lack of work experience were also cited as reasons. Difficulties with recruitment are therefore more strongly related to the skills, experience and interest of individuals rather than the cost of parking. According to the Census 211, over 44, individuals commute into Milton Keynes daily for employment, the majority of who travelled by car. The number of incommuters increased between 21 and 211 and it would be fair to assume that the number of in-commuters in 217 is higher still. Increasing in-commuting puts pressure on the local road network and ways to manage this have to be considered. The train station is within easy walking distance for the majority of employment concentrated in the centre and ways to promote better use of rail should be 4

5 promoted. In the future, with the development of East West Rail, accessibility by rail will be enhanced further and will give employees from across the Cambridge-Milton Keynes-Oxford Corridor quicker and easier access to Milton Keynes. Similarly, Milton Keynes is at the forefront of exciting developments around electric buses and low carbon vehicles. As this further develops, individuals will have superior alternatives to using their own vehicles. However, encouraging individuals to change how they travel will require a shift in behaviour; improved public transport combined with higher costs associated with driving and parking could help encourage such behavioural change. Commuting to Milton Keynes is more financially viable than travelling to other locations. Median weekly earnings are greater for workers in Milton Keynes than in neighbouring areas such as Central Bedfordshire, Bedford, Luton and Northamptonshire. They are also higher than the median for the UK and SEMLEP. The cost of parking in Luton and Northampton is greater than that in Milton Keynes, and whilst employee parking may be cheaper in Bedford, weekly pay is lower. Similarly, for individuals considering commuting to London, the costs of parking or travelling by train would be considerably greater than the cost of parking in Milton Keynes. Footfall The other major impact on business arising from an increase in parking fees is potentially a reduction in footfall. Total footfall across centre:mk, intu Milton Keynes and Xscape was 3.1% lower during 216 than in However, there are a number of possible reasons for this, including increases in online shopping and with increasing economic uncertainty, less expenditure by individuals on luxury items. Parking may be a factor in this, but it is very difficult to disaggregate the extent to which parking fees influence footfall. Looking wider than Milton Keynes, there is very little quantitative evidence on the relationship between the cost of parking and footfall. A report for the Welsh Government for example, found: Car park charging should not be viewed in isolation from other factors (availability of parking, signage, traffic flow) which affect willingness to drive in town centres 6 Just Economics also question the extent to which parking influences shopping patterns and cite a survey undertaken in Edinburgh in which the shoppers main concern was for a good range of shops in an attractive environment Parking was not identified as important by shoppers 7 Perhaps what is more important is that the centre has an offer that appeals to people and which makes them want to visit the area, irrespective of the cost of parking. Milton Keynes Council and partners have demonstrated a commitment to improving Central Milton Keynes. The report of the Milton Keynes Futures 25 Commission 5 MKCCM 6 Assessing the Impact of Car Parking Charges on Town Centre Footfall March 215 Prepared for the Welsh Government 7 The pedestrian pound The business case for better streets and places Just Economics on behalf of Living Streets 5

6 includes Renaissance:CMK as one of six key projects and work is already underway to bring this to fruition. The report also includes projects relating to a new style university MK:IT in the city centre and to the creative and cultural offer. Both projects will bring additional footfall to the centre. Furthermore, the smart, shared and sustainable mobility project will improve accessibility in and around the city, presenting an alternative to the car. In addition, plans for a Business Improvement District in CMK and the proposal for further development at Intu will enhance the centre and accessibility further. Milton Keynes is also a regional centre; the Local Economic Assessment 216 states that spend in Milton Keynes from surrounding areas totalled 245 million. No neighbouring city or town really presents a comparable retail or leisure offer plus the charges for hourly parking in Milton Keynes compare favourably with those in other areas. Similarly, although there are out of town retail developments, their offering is not as comprehensive as CMK, nor will there be a focus on developing these areas moving forward. In addition, the potential to enhance the retail and leisure offer in Milton Keynes has been recognised nationally. In a report for Property Week, location experts CACI ranked Milton Keynes top in their 1 hot retail locations. This was based on the potential within the area for additional or improved retail and leisure space. 8 Conclusion One of the great strengths and appeal of Milton Keynes is its connectivity and ease of movement in and around the city. It is important that such a strength is not lost, but it needs to be recognised that alternative means of accessing and travelling around Milton Keynes need to be developed. There is already some exciting work underway and implementation of the recommendations of the Milton Keynes Futures 25 Commission will see this enhanced further. This innovative and leading edge approach needs to be promoted to businesses and individuals and could act as a new selling point for the area, in attracting new businesses and residents. Milton Keynes has enjoyed significant economic growth over previous years and such growth is predicted to continue. Previous increases in parking charges and factors such as the availability of parking have not constrained this growth. The Economic Assessment undertaken by Arup following the last series of parking increases concluded economic strengths imply that Milton Keynes is well positioned to effectively absorb the proposed price rises with little effect on demand for parking in the medium to long term 9. Since this was written, the Milton Keynes economy has continued to grow and as such, it can be assumed that the local economy overall will not be adversely affected by further fee increases. 8 Hot 1 retail locations 216 Property Week 9 Milton Keynes Parking Charges Economic Assessment, Arup January 215 6