Wider Economic Benefits of a Rail Service Between March and Wisbech

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1 Wider Economic Benefits of a Rail Service Between March and Wisbech March 2014 Cambridgeshire County Council

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3 Wider Economic Benefits of a Rail Service Between March and Wisbech ITD ITN 1 A P:\Liverpool\ITD\Projects\ March-Wisbech Rail WEB Study\02. Docs Out\Final report\ WEB March Wisbech Rail Final 13 March 2014 Rail Service Between March and Wisbech March 2014 Cambridgeshire County Council Cambridgeshire County Council, Shire Hall, Castle Hill, Cambridge, CB3 0AP Cover photo: The River Nene at North Brink, Wisbech This image was originally posted to Flickr by Jim Linwood at It was reviewed on 12 December 2009 by the FlickreviewR robot and was confirmed to be licensed under the terms of the cc-by-2.0. Mott MacDonald, 10 Fleet Place, London EC4M 7RB, United Kingdom +44 (0) (0)

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5 Issue and revision record 1 14/03/2014 M Ferrari C Heath-Brook S Cox Draft report G Owen 2 28/03/2014 M Ferrari S Cox P Hammond Final report This document is issued for the party which commissioned it and for specific purposes connected with the above-captioned project only. It should not be relied upon by any other party or used for any other purpose. We accept no responsibility for the consequences of this document being relied upon by any other party, or being used for any other purpose, or containing any error or omission which is due to an error or omission in data supplied to us by other parties. This document contains confidential information and proprietary intellectual property. It should not be shown to other parties without consent from us and from the party which commissioned it /ITD/ITN/1/A

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7 Contents Executive Summary i 1 Introduction Appointment and study team March and Wisbech Purpose and scope of study Study methodology Rail investment and wider economic benefits Methodology overview Report structure 5 2 Study Context Introduction Economic Context Current economic context Economic outlook Economic development policy Fenland s Economic Development Strategy Greater Cambridge and Greater Peterborough LEP Summary 19 3 WITA Analysis Introduction Data Summary - results 22 4 Labour market effects Introduction Reducing spatial inequalities Alleviating unemployment Move to more/less productive jobs Option and non-use values Summary 31 5 Land utilisation benefits Introduction March Wisbech Land utilisation effects Housing development Employment land development House prices 45

8 5.4 Summary 46 6 Study Findings Introduction Economic context Agglomeration, labour productivity and labour market effects primary indirect benefits Land utilisation impacts secondary indirect benefits Scenario analysis Sensitivity test Conclusion 52 Appendices 53 Appendix A. Qualitative Findings 54 A.1 Introduction 54 A.2 Findings 54 A.2.1 Potential impacts on the labour market of Wisbech 54 A.2.2 Impacts on the wider growth aspirations for the area 55 A.2.3 Specific sites 56 A.2.4 Location of the station 56 A.2.5 Developers 57 A.3 Summary 57

9 Executive Summary The proposed rail service would open up the Fenland town of Wisbech to travelling by rail to March and onwards to Cambridge and other destinations currently accessed predominantly by road. The average journey time by rail between Wisbech and Cambridge would be 58 minutes under a heavy rail service between Wisbech and March compared to 1hr10 minutes (off peak) by road. This would further reduce to 48 minutes by rail if a direct service was put in place between Wisbech and Cambridge. Although the journey time would still be high it would result in Wisbech entering the search area for Cambridge workers looking for places to live. The rail service would provide quicker transport access to key Eastern growth areas particularly the London-Stansted-Cambridge-Peterborough growth corridor, which links Cambridge University and its high tech cluster with London and its diversified business base. It is well recognised that the corridor is an area with substantial growth pressure in terms of both business and housing. Growth Context Wisbech to Cambridge Connectivity i

10 The proposal could have a significant impact on the local economy of Wisbech, given the flexible and progrowth planning framework that is in place, through a number of channels. With the rail service it would become feasible for Wisbech to provide housing to support the high level of labour demand that is centred on the key growth centres (particularly Cambridge). This in turn will provide further demand for local services and amenities creating employment and contributing to the regeneration of the town centre and longer term economic challenges, such as high levels of unemployment and social deprivation. Given the unique nature of the town s economy, one dominated by agri-food processing with a self-contained labour market, the rail service could be influential in changing the dynamics of the local labour market if it enables the town to provide housing to support the expansion of Cambridge (with more out-commuting as a result) and to diversify its employment base (as local demand and therefore services expand in response to the improved residential offer). An expanded and improved residential offer would also help to retain those higher skills within the labour market that are currently in short supply. The development of a rail station and service would also enable the town to market itself more effectively for inward investment, particularly within the agri-food sector which is not only regionally significant but developing new, high value added niches and looking to develop research links with Cambridge University. The key assumptions in this study is that, given the housing challenges for Cambridge where there is a lack of supply and continued house price increases, towns such as Wisbech (if better connected) can market themselves to the labour serving key growth hubs. There is an assumption that more additional growth (around 10-15%) can be attributable to the proposed rail service over and above the planned growth in the Fenland Core Strategy, but in-line with Core Strategy policy aspirations. Overall the proposed scheme could make a significant contribution to the local economy of Wisbech through the following identified benefits: Primary indirect benefits 1 amounting to 39.7m over a 60-year appraisal period and increasing to 56.7m if the proposals went further and implemented a direct service between the town and Cambridge. These benefits relate to those impacts where attribution to the proposed rail scheme can be reasonably made. They include agglomeration benefits of 7.7m which values the extent to which the rail service improves the accessibility of an area to a greater number of firms and workers and labour productivity benefits of 1.6m relating to the benefit the rail service has on labour supply through reducing the cost of travelling and therefore increasing the number of people who will be willing to work at a given wage rate. Finally, they include further impacts on the labour market relating to reducing unemployment ( 29.4m) and reducing spatial inequalities ( 5.0m). 1 Indirect benefits occur outside the parameters of traditional transport appraisal. The analysis in this report splits the indirect benefits into primary and secondary groups, where the secondary indirect benefits have attribution to the rail enhancements which are not easy to identify. ii

11 Secondary indirect benefits through further land utilisation (than already allocated in Fenland s Core Strategy) due to higher economic growth with the rail service than without. Overall the following benefits attributable to the rail service could occur collectively for Wisbech and March: 392 additional houses built over the Core Strategy period. 39.2m of capital expenditure associated with the house building. 161 additional FTE jobs over the Core Strategy period. 9.0m of additional GVA benefits per annum once all jobs come forward. Furthermore, the option value and non-use value analysis 2 shows a significant value is placed by residents on having access to both social and economic opportunities through the proposed rail services. This reinforces the assumption that a resident in Wisbech places significant value on having access to the Cambridge job market, not because they currently work there, but because they may wish to have the choice of working there at some point in the future. The overall value could be in the region of 19.3m- 41.5m over a 60-year period. In summary, this study has assessed the wider economic benefits that the rail service could deliver which is in addition to the work that already been undertaken by Atkins 3 relating to the commercial case and capital costs associated. Based on cost estimates supplied by Atkins and the wider economic benefit numbers supplied by Mott MacDonald, at this early stage the scheme, depending on which option is progressed, could have a benefit cost ratio (BCR) in the range of 2.3 and The above benefits are largely dependent upon the premise that Wisbech can develop a housing and wider residential offer that could attract workers serving regional growth areas, particularly Cambridge and that the town can aspire to develop and diversify its employment base. The proposed service would provide a significant boost to these aspirations and lead to additional growth over and above the growth anticipated if the town does achieve its key planning and economic development objectives. The study has broadly found stakeholders to be supportive of such a vision but there are key risks and challenges that must be addressed including: The planning regime must be supportive and proactive towards economic growth. Fenland s Core Strategy is growth orientated and there is real potential for the growth that materialises to exceed stated targets. This must remain the case if the market towns are to support the wider county and regional growth aspirations. Developing supportive infrastructure, such as the proposed rail service, which can enable transformational economic development by supporting housing growth, creating demand for local 2 Option values are the values residents place on having access to opportunities both social and economic (e.g. jobs) - in case they need to use them at some point in the future. Non-use values represent the value a household may place on a transport service even if they never intend to use it (e.g. they may wish the service to be available for other people to use). Option values are always additional to transport user benefits in an appraisal, whilst only some non-use values (those with an altruistic motive) are additional to transport user benefits. 3 Atkins (2012) March-Wisbech Rail Study, Stage 1 Final Report; and. Atkins (2014) Stage 2 March-Wisbech Rail Study, Draft Report 4 Excluding revenue clawback. Note that further detailed assessment is needed to assess the specific business case costs and benefits. iii

12 services and ultimately creating jobs and solutions to long term economic problems such as unemployment. The town must continue to seek out higher value added opportunities and diversify the economy to ensure the employment base remains sustainable moving forwards. The rail service should assist in improving the investment prospects of key emerging sectors such as those related to the agri-food and renewables industries. The local skills and regeneration programmes must be designed to help the least well off access future employment opportunities. There are long term deprivation issues within Wisbech associated with low skills and educational attainment. These can only be sensibly addressed through the town aspiring to develop and grow but there will need to be programmes to help address social exclusion. iv

13 Wisbech 1 Introduction Mott MacDonald was appointed by Cambridgeshire County Council to assess the wider economic benefits of a rail service between March and Wisbech. The study has been undertaken by Mott MacDonald s Economic, Social & Market Research Team with specialist input from Mott MacDonald s transport modellers using the Wider Impact of Transport Appraisal (WITA) model. The team has also been supported by Dr James Laird, a specialist in the wider economic benefits assessment of transport schemes. March and Wisbech are Fenland market towns (see Figure 1.1) with populations of 22,300 and 22,800 respectively, in combination they represent over 7% of the total Cambridgeshire population. Both towns have a legacy of acting as trading centres for the wider rural catchment areas they serve and are well connected by road, situated off the A47 (and A141). March is also well connected by a railway station situated on the Stansted-Cambridge-Leicester-Birmingham line; however, the passenger rail service between the two towns was closed in 1968, and subsequently closed for freight services in Figure 1.1: Context maps of March and Wisbech Source: Mott MacDonald Source: Mott MacDonald 1

14 Wisbech The Wisbech to March Railway Line, known locally as the Bramley Line, was in operation for passenger services between 1847 and 1968 by the Wisbech, St Ives and Cambridge Junction Railway. The line continued to be used for freight purposes until 2000 but has been mothballed since that time. Current rail access from Wisbech is predominately via the X1 bus service between Great Yarmouth and Peterborough. This bus service is linked to the rail timetable and takes passengers from Wisbech direct to Peterborough railway station. There is a regular bus service 7 days a week from early morning to the late evening. There is no direct bus service between Wisbech and Cambridge. There has been a desire expressed over a number of years to see the railway line reopened with passenger services available direct from Wisbech especially given the growth and development the town has seen in recent years. Given this context work has already been undertaken by Atkins examining the commercial case for reopening the line to passenger traffic and the capital costs associated 5. The Atkins studies assess the quantum of benefits attributable to the reintroduction of the rail service using traditional transport appraisal techniques. The aim of this study is to investigate the wider economic benefits that a rail service between March and Wisbech could bring to the economy and labour market of Wisbech. The study area for this work is the two settlements of March and Wisbech, although our contextual work covers the economic characteristics of Fenland District. The scope of this study is to look beyond the findings of the Atkins work and to identify additional and wider economic benefits. More specifically the study assesses the wider economic benefits of the following scenarios for reinstating the rail service against the current situation which is a bus service between March and Wisbech: 1. A light rail shuttle service between March and Wisbech. 2. A heavy rail shuttle service between March and Wisbech (central scenario). 3. A heavy rail service between Wisbech and Cambridge (direct service) operating as a peak service catering for commuters. 4. A busway service between March and Wisbech. For the purposes of reporting the in-depth analysis is performed for the central scenario - a heavy rail shuttle service between March and Wisbech. The key differences in the wider economic benefits are then discussed for the other three scenarios and presented in summary tables where applicable. Additionally, sensitivity testing regarding the differences in wider economic benefits between a station in Wisbech town centre and one located outside of the town and to the south of the A47 are also investigated. Overall, the amount of firm evidence on the economic impact of rail investment appears to be quite weak. This does not mean that the case for investment is weak, but that it has been considered less than for other forms of transport infrastructure. This reflects the Study Brief and its focus on wider economic benefits. In response, the evidence that has been gathered has been used, along with the team s existing 5 Atkins (2012) March-Wisbech Rail Study, Stage 1 Final Report; and. Atkins (2014) Stage 2 March-Wisbech Rail Study, Draft Report. 2

15 Wisbech understanding of how and why different rail investments lead to economic impacts, to produce an assessment of the wider economic benefits that may arise due to a reinstated rail service between March and Wisbech. In order to provide a frame of reference for the study the following question was therefore posed: What sorts of economic impacts of rail projects might be expected? The DfT s New Approach to Appraisal (NATA) guidance under the Economy heading suggests the following range of benefits: time savings to business users; reliability benefits to business users; wider economic benefits agglomeration, labour market, imperfect competition; and reducing costs to transport providers. More recent guidance from Delivering a Sustainable Transport System (DaSTS) under the Support Economic Growth heading has a similar, but different, set of measures: Improve Reliability. Improve Connectivity time savings to business and commuting trips. Housing Delivery use of transport to enable housing development. Enhance Resilience. Wider Economic Impacts. It is assumed that those benefits are generally well understood, but it is perhaps worth describing the Wider Economic Impacts in a little more detail. The traditional reliance on user benefits to describe the economic impacts of railways depends on the (demanding) economic assumption of perfect markets. In particular within those perfect market assumptions is one that says all jobs are equally productive because in a perfect market if that was not the case then labour would flood into the higher paying sector until wages were equalised. In reality that is clearly not the case, certain locations and certain sectors maintain higher productivity levels over long periods of time. If rail schemes can be shown to assist with delivering that higher productivity then that constitutes a Wider Economic Benefit (WEB). Recent work on WEBs for Crossrail 6, successfully argued that Central London - where productivity levels are higher than anywhere else in the UK - was both dependant on, and constrained by, rail capacity and accessibility. The arguments were broadly two-fold: by improving accessibility within Central London, Crossrail would increase competition between Central London businesses improving the efficiency of the cluster as a whole; and by overcoming a capacity constraint into Central London, Crossrail would enable growth within that highly productive cluster that would otherwise not have been possible thereby increasing UK GDP. Current DfT guidance provides relatively simple elasticities to show how productivity of jobs increases in line with accessibility to other jobs. Thus the more that employment density and accessibility can be increased the higher employment productivity grows. In addition to those from the Support Economic Growth heading (described above) other impacts from DaSTS objectives which are likely to be important are: Regeneration regeneration benefits do not necessarily increase economic output but redistribute that output in a more equitable manner, delivering other policy objectives. Railways can be powerful tools of regeneration. 6 Colin Buchanan & Partners 3

16 Wisbech Reduce Regional Economic Imbalances this seems to us to be very similar to regeneration, i.e. a redistribution of economic growth can deliver other policy objectives. The above strands of analysis are threaded through our methodology and the assessment of the various WEBs as outlined below. This study has been undertaken in five key stages, as shown below in Figure 1.2. Figure 1.2: Study methodology Source: Mott MacDonald Our approach includes the following strands: Context review assesses the overall economic context for the proposals and provides an overview of the economic development plans of the two settlements to inform the WEB assessment. Wider Impacts in Transport Appraisal (WITA) analysis an assessment of the agglomeration and labour productivity benefits using the WITA model (designed by Mott MacDonald). Labour market effects analysis of the overall benefit of people using the rail services to move to more productive jobs and the possible impacts on areas of unemployment. This analysis is undertaken alongside the assessment of secondary indirect benefits which feeds directly into the calculations. Assessment of secondary indirect benefits analysis of the land market effects of the proposed rail service. Qualitative discussion a number of face-to-face meetings and telephone interviews have been held to gather key views and evidence relating to how the rail service could provide WEBs. This research has informed the analysis within the wider economic benefits assessment. 4

17 Wisbech The remainder of this document is structured as follows: Section 2 - sets out the study context (supported by Appendix A). Section 3 - presents the WITA analysis Section 4 - presents the analysis of the labour market effects Section 5 - presents the secondary indirect benefits. Section 6 - presents the study s key conclusions. Appendix A - summarises the qualitative research that has been undertaken and key findings from local discussion that have been used as key evidence in the analysis. 5

18 Wisbech 2 Study Context This section provides the key economic context for the study in terms of the main economic characteristics of March and Wisbech (using predominantly data for Fenland District) and economic development policy. The purpose of this analysis is to understand current economic patterns, growth aspirations and drivers as important context for examining the potential labour market and land utilisation effects contained in Sections 4 and 5. The population of Fenland has grown consistently and above the county, regional and national averages since 2000, based on the official ONS mid-year population estimates as Table 2.1 and Figure 2.1 illustrate. Table 2.1: Fenland Summary - total population, 000s Total Population Growth 2000/ Absolute (%) Annual (%) Fenland Cambridgeshire East of England 5,375 5,708 5, England 49,233 51,816 53, Source: Mid Year Population Estimates, BRES/ABI, ONS Figure 2.1: Population growth in Fenland, Cambridgeshire and England, 2000/12 Source: Mid Year Population Estimates, ONS 6

19 Wisbech Fenland contains a number of sizeable market towns of which Wisbech and March are the largest, accounting for 22,800 and 22,300 persons respectively. Both towns have experienced significant growth between 2001 and 2011 using the latest census data, with total population expanding by 17.0% in March and 13.2% in Wisbech. In Wisbech the true population figure is likely to be higher due to migrant labour not captured in the official statistics (see Box 2.1 below). Table 2.2: Employment and Population totals for towns of Cambridgeshire, 2011 (Fenland towns in highlight) Towns Population, 2011 Total As % of Cambridgeshire total 1 Cambridge City 119, % 2 St Neots 29, % 3 Wisbech 22, % 4 Huntingdon 22, % 5 March 22, % 6 Ely 18, % 7 St Ives 16, % 8 Whittlesey 16, % 9 Soham 10, % 10 Chatteris 9, % Source: For population - Census 2011 for Wisbech and March and other totals taken from Cambridgeshire Population and Dwelling Stock Estimates: , Cambridgeshire County Council Research Group. Box 2.1: Wisbech Population The total population of Wisbech according to the latest Census was 22,800 persons in The qualitative research undertaken has highlighted that this could be significantly higher around 35% - due to the substantial migrant labour population serving the agri-food industry, which are not captured in the official figures. This has strong implications for demographic planning and demand on local services especially given the official figures guide negotiations for government funding. It is also significant to this study since it highlights that local population growth is likely to have been even higher over the last decade than indicated below and that the level of households potentially accessing the rail service could be higher than figures used in our analysis (in Section 4). Population growth in Wisbech and March Source: MYE at ward level, Census 2001 and 2011, ONS 7

20 Wisbech Fenland enjoyed labour market prosperity between 2000 and 2008 (before the onset of the financial crisis), with over 4,800 jobs created in the district. This represented absolute growth of 13.6%, a rate which was in line with Cambridgeshire but outstripped both the East and the UK (8.7% and 6.3% respectively). Resident employment (those who live in the Borough and work, regardless of where they work) increased by 1,200 jobs over the same period. Both resident and workplace based employment (jobs based in Fenland regardless of where employees live) fell sharply over the recessionary period. Since 2010 economic recovery has been strong in Fenland with 4,600 workplace jobs created in the district. Table 2.3: Employment change, Fenland and Cambridgeshire, , 000s Fenland Cambridgeshire Residence based employment Workplace based employment Source: EEFM, Oxford Economics The evidence presented in Figures 2.2 and 2.3 confirms that Fenland s economy is structured towards production activities (agriculture, manufacturing and construction) and lower tier supporting services such as administration & support services and wholesale & retail. The high level of wholesale & retail services also represents the storage & logistics operations in the district. This is in contrast to Cambridgeshire which has an economy driven by education and high value added service activities (such as life sciences and high technology industries) driven by the Cambridge high tech cluster. Figure 2.2: Relative employment structure, Fenland vs Cambridgeshire, 2012 (employment percentage point difference) Source: EEFM, Oxford Economics, percentage of total employment 8

21 Wisbech Figure 2.3: Relative employment structure, Fenland vs Cambridgeshire, 2012 (employment percentage point difference) Source: EEFM, Oxford Economics, percentage of total employment Using 2001 travel to work data (2011 Census data is not yet available for travel to work 7 ) reveals that there is net out commuting from the district of approximately 6,200 persons (19% of all journeys to work). Most journeys to work from residents of Fenland are made internally (62%) and to neighbouring districts Peterborough, Huntingdonshire and King s Lynn & West Norfolk (see Figures 2.4 and 2.5 below). 7 Currently the data release is planned for summer

22 Wisbech Figure 2.4: Fenland: in-commuting, 2001 Figure 2.5: Fenland: out-commuting, 2001 Source: Census 2001 Source: Census 2001 Examining travel to work data for March and Wisbech (based on ward boundaries) reveals that whilst there is net out commuting from March there is net in-commuting to Wisbech with 27% of jobs (3,200) filled by residents from elsewhere (largely other residents of Fenland and neighbouring King s Lynn & West Norfolk). Table 2.4: Travel to work data: Fenland, March & Wisbech, 2001 Fenland March Wisbech Total journeys to work to 32,116 7,660 11,754 Total journeys to work from 38,357 8,451 8,551 Net commuting -6, ,203 Source: Census 2001, ONS This confirms that Wisbech is a key market town serving the wider rural hinterland with many retail and convenience services situated there as well as concentrations of B2 light industrial and B8 warehousing activities. Despite the data constraints this analysis does suggest clear advantages of the town as a location for sustainable growth and development both housing and employment provision, given the potential pool of labour. 10

23 Wisbech Fenland, using the Claimant Count measure, has consistently had higher unemployment than Cambridgeshire and the regional and national levels (see Figure 2.6). The levels in Wisbech are particularly high compared to Fenland and have on average been 1.6 percentage points higher over the period Figure 2.6: Unemployment, , as % of resident working age population Source: Claimant Count, NOMIS A wider measure of unemployment is the International Labour Organisation (ILO) definition, which is the official measure used by ONS and is measured in the UK by the Annual Population Survey (APS). Using this measure unemployment in Fenland was much higher, at 14.5 and 9.1 in 2012 and 2013 respectively (using Oct-Sep as the annual measuring period). This level was also significantly above the Cambridgeshire, regional and national levels. Table 2.5: Unemployment rates, 2013 Fenland Cambridgeshire East Claimant count measure ILO measure Conversion factor (difference between ILO and claimant count measure) Source: Claimant Count, APS, NOMIS This is important context given that assumptions over the unemployment level feed into the analysis of labour market effects in Section 4. The ILO level below has been estimated for March and Wisbech (given it is not available at a sub-district level) using the district conversion factor derived from comparing the claimant count rate for Fenland against the level of ILO unemployment from the East of England Forecasting Model (EEFM), which provides a consistent and seasonally adjusted rate over This has been used given the fluctuations in the APS data and the particularly high levels experienced in It also provides more consistency given this is the regional forecasting model that is used for employment projections. This results in ILO unemployment rates in 2013 of 10.1 and 5.6 for Wisbech and March respectively using a district conversion factor of 1.7 (which is lower than that derived from the 2013 APS figures in Table 2.5). 11

24 Wisbech Table 2.6: Unemployment levels, 2013 Fenland March Wisbech Claimant count measure ILO measure (e) 10.1 (e) Conversion factor Source: EEFM, Oxford Economics and Claimant Count, NOMIS Fenland clearly has more areas of deprivation than other parts of Cambridgeshire (Figure 2.7) and the most deprived areas are in Wisbech and its surrounding rural areas. The latest Indices of Multiple Deprivation figures released in 2010 indicate that 45% of those persons living within Wisbech wards are within 25% of the most deprived wards nationally. Figure 2.7: Deprivation in Fenland and Cambridgeshire Source: Indices of Multiple Deprivation,

25 Wisbech The labour supply structure of Fenland (see Figure 2.8) is attuned to its employment structure with a greater relative proportion of skilled trades and other occupations associated with a production orientated economy (this is compared to the county, regional and national averages). Similarly, the working age population has a lower qualification profile than Cambridgeshire with much higher proportions of those with no qualifications or qualified to NVQ2 only (see Figure 2.9). Clearly, Cambridgeshire s labour supply profile is unique to the country given the high level of skills and talent attracted to the high tech industries located in Cambridge, however, Fenland s profile relative to the regional and national averages is still a low skilled one. Indeed the Fenland economic development strategy highlights that there is difficulty within the district recruiting persons with the requisite skill sets and qualifications and outward migration of post-16 school leavers. Figure 2.8: Relative occupation structure Fenland vs Cambridge, 2012, occupational percentage points difference Source: APS, ONS, percentage of those in employment 13

26 Wisbech Figure 2.9: Relative skills profile Fenland vs. Cambridge, 2012, occupational percentage points difference Source: APS, ONS, percentage of those in employment The East of England Forecasting Model (EEFM) provides a summary of the likely spatial distribution of future population growth which is summarised below (Table 2.7) for Fenland and the other districts of Cambridgeshire. By 2031 it is anticipated that total population in Fenland will reach 114,160 persons, a total change of 21.7% from Fenland is forecast to account for 15% of the total population growth within Cambridgeshire to 2031, the majority of this growth in Fenland is set to arise within the district s two largest towns of March and Wisbech, as identified in the Fenland Core Strategy. Table 2.7: Population forecasts, Total, 000s % annual average change (f) 2031(f) Absolute change, 000s Fenland East Cambridgeshire Cambridge South Cambridgeshire Huntingdonshire Cambridgeshire East 5,121 5,468 5,955 6,480 1, Source: EEFM, Oxford Economics The EEFM forecasting model also provides sectoral employment outlooks which are explored below (Table 2.8) for Fenland and the key employment hubs of Cambridge, Peterborough and Kings Lynn & West 14

27 Wisbech Norfolk. The forecast job creation in Cambridge is clearly aligned to professional and scientific sectors associated with producing high value added products and services whilst those in Kings Lynn and Peterborough are lower value added services. The forecast for Fenland is more similar to Kings Lynn and Peterborough given the current structure of the economy with storage & logistics operations set to continue to grow (supporting production activities) although professional and technical services are set to increase over the period. 15

28 Table 2.8: Employment outlook for Fenland, Cambridge, King s Lynn & West Norfolk and Peterborough Fenland Cambridge Kings Lynn & West Norfolk Peterborough as % of total jobs Growth, 000s jobs as % of total jobs Growth, 000s jobs as % of total jobs Growth, 000s jobs as % of total jobs Growth, 000s jobs Agriculture 5.0% % % % -0.1 Mining and Quarrying 0.1% % % % 0.0 Manufacturing 15.1% % % % -2.1 Utilities 0.3% % % % -0.2 Construction 7.6% % % % 1.6 Wholesale & retail 18.1% % % % 3.1 Transportation & storage 6.7% % % % 0.6 Accommodation & food services 3.4% % % % 0.7 Information & communication services 0.9% % % % 0.2 Financial & insurance services 1.1% % % % 0.7 Real estate 1.0% % % % 0.8 Professional, scientific & technical services 5.6% % % % 3.3 Administrative & support services 8.4% % % % 5.9 Public admin, education and health 22.2% % % % 2.2 Arts, entertainment & other services 4.5% % % % 1.2 TOTAL 100% % % % 17.8 Source: EEFM, Oxford Economics. Green shading indicates top three and fastest three growing sectors and red shading bottom three and slowest three growing sectors. 16

29 The vision for Fenland over the period , as set out in the economic development strategy is that: Fenland's future success will be based on creating a strong and resilient economy that generates an environment of opportunities which will make a real difference to people's lives, nurturing businesses to start, stay and grow in a sustainable way, and where significant improvements in training and skills development will underpin economic prosperity for the district' Fenland Economic Development Strategy, Although the local economy is developing well the growth in employment has not matched that of the growth in economically active residents. As a result there are a large number of people who commute out of the district for work. Fenland s employment evidence report recommends that a target of around 7,000 additional jobs up until 2031 would be achievable (as a minimum) and provide support for housing growth based on anticipated demographic and sector trends. To achieve this goal there will be a key focus on the following actions: Attracting large sector-driven multinational businesses to invest and support new and existing supply chains. Ensuring these businesses are within the potential growth sectors of the district (as shown below in Figure 2.10). This will include targeting high value business services in key locations including March, Wisbech and Chatteris. Maximising opportunities arising from being part of the Stansted-Cambridge-Peterborough Growth Area which opens up funding opportunities for the key infrastructure needed to support population and housing growth. It is critical that good quality employment opportunities match the projected housing growth to create a more sustainable environment for those who live and work in Fenland. Additionally the Wisbech Port and Marina is an important asset for Fenland and will play a major marketing and development role in the long-term economic position for the district. 17

30 Figure 2.10: Current and potential growth sectors in Fenland Source: Fenland Economic Development Strategy In summary the following key strategic objectives for Fenland (Table 2.9) are relevant when considering the proposed scheme: Table 2.9: Fenland Economic Development Strategy Model for Growth Theme Details Action Plan Objectives Enterprise Workforce development Business retention & growth Inward investment The need to build a thriving enterprise culture that encourages businesses to start up and grow and improve entrepreneurial education Ensure that current and future workforce education and skills are appropriate for the global marketplace, as well as offering young people improved aspirations, increased wage levels and alternative career paths The importance of proactively targeting and supporting growth orientated employers in Fenland; helping them to grow through enhanced access to finance, expert advice, suitable premises and locations Evolving the promotion and proactively targeting of inward investment to support local sector strengths and supply chains (food, engineering, manufacturing and renewables) working with UKT&I and other partners on trade and inward investment Source: Fenland Economic Development Strategy To support the development of and survival rates in innovation and enterprise To improve access to employment, training and skills for balanced economic participation To deliver sustainable development of emerging business sectors, the rural economy and market towns To maximise economic wellbeing through inward investment Fenland, including March and Wisbech, sits within the Greater Cambridge and Greater Peterborough Local Enterprise Partnership (LEP) which is currently finalising its Strategic Economic Plan (SEP). Key priorities of the SEP include ensuring that the growth agenda for the area benefits all areas and building on the internationally recognised research and technology base. 18

31 A key prioritised intervention package is to build a transport network fit for an economically vital high growth area through identifying scalable interventions that open up access to significant growth locations. There has been considerable population growth within Fenland since 2000 which is set to continue and centre around the district s largest towns March and Wisbech. The Wisbech population could be significantly higher than that recorded in the 2011 Census which would put further pressure on the town s services. Fenland s economy is structured towards production activities (agriculture, manufacturing and construction) and lower tier supporting services such as administration and support services and wholesale & retail (retail and storage & logistics). This is in contrast to Cambridgeshire which has an economy driven by education and high value added service activities (such as life sciences and high technology industries) driven by the Cambridge high tech cluster. Fenland s labour supply profile is in line with its economic structure characterised by low skills and low qualification levels compared to the county, regional and national averages. This implies that currently there is a mismatch between the skills profile of towns such as March and Wisbech and the higher value added employment opportunities offered by Cambridge. The qualitative feedback confirmed this which highlighted the current low wage low skill equilibrium although there is an aspiration for the town to develop higher value added activities and retain more skilled labour. The Fenland economy has higher unemployment levels than Cambridgeshire and the regional rate. The level within Wisbech is particularly high compared to the district level and implies that a concentration of unemployed people have become marginalised within the labour market. This is also supported by the deprivation data which shows strong pockets of high deprivation around Wisbech. The economic outlook is one of growth for Fenland and neighbouring employment centres. This is both in terms of population and employment. Wisbech has a relatively self-contained labour market with low levels of out-commuting, this in part may be related to the lack of transport connections but also hints at the town s economic structure of production activities which serve the rural hinterland and draw on local labour (particularly those associated with agriculture and food processing). The economic development strategy for the area reflects on the need to promote sustainable economic growth and diversify the economy to attract higher value activities and larger multinational corporations. A rail link between Wisbech-March-Cambridge would assist in delivering two strategic economic objectives: to improve access to the county s labour market; and, to make Wisbech a more attractive proposition for business investment and growth 19

32 3 WITA Analysis WITA is software originally developed by Mott MacDonald for the Department for Transport. It calculates wider impacts in accordance with the methods set out in WebTAG Unit A For the current study, WITA has been used to calculate two specific impacts: Agglomeration benefits: Agglomeration refers to the concentration of economic activity over an area; the closer 9 firms are to each other and to the supply of workers, the greater the level of agglomeration. Transport improvements can increase the accessibility of an area to a greater number of firms and workers, thereby increasing the level of agglomeration. Evidence shows that increased agglomeration improves productivity and therefore increases Gross Domestic Product (GDP). Labour supply impacts: when deciding whether or not to work an individual will weigh the wage rate of a job against the cost of travelling to it (where cost includes travel time). A reduction in travel costs will increase the gains to work and therefore the number of people who will be willing to work at a given wage rate, i.e. the labour supply increases. This in turn will increase GDP. Elements of the above impacts, particularly on labour supply, are already captured by the conventional economic appraisal process (for example in people s value of travel time savings for their commute to work). WITA follows the DfT methodology in only calculating those impacts that are additional to those already captured in the conventional appraisal. WITA can also calculate two further impacts, which have not been included in the current study: Move to more or less productive jobs 10 : changes to the transport system can affect where firms locate and where workers choose to work. This can have implications for the level of productivity and GDP. However, calculation of this impact requires a land use-transport interaction model that can predict how these location choices might change in response to the schemes; such a model is not available for the current study. In any case, DfT guidance is for the core wider impacts assessment to exclude this impact. Increased output in imperfectly competitive markets: this is simply calculated as 10% of the business user benefits from the conventional economic appraisal. This is not included in the information available and therefore it isn t possible to formally estimate this particular wider impact. WITA requires two types of input data. The first is a variety of economic data by local authority, such as GDP per worker by industrial sector and number of people in employment. This was all obtained from the standard wider impacts economic data set provided by DfT (version 2.5, issued in January ) Here, closer refers not just to distance, but to the overall cost of travel, including travel time and fares. 10 An assessment of the move to more productive jobs is however made in the following section based on micro-level analysis of the rail line in the specific context of March and Wisbech

33 The second type of input data is from a transport model that includes the cost of travel between different areas, with and without the transport scheme, as well as information on the number of trips by mode. This cost data includes travel time (including waiting time) and fares. Permission was obtained from HS2 Ltd to use the version of the PLANET rail model that has been used for the calculation of wider impacts for the HS2 scheme. PLANET is a full multi-modal model that includes rail, car, and air modes. All the do-minimum (without scheme) data was taken from the PLANET model. The do-something (with scheme data) was created semi-manually by adjusting the do-minimum rail travel time data to reflect the impact of the schemes. The main impact of the schemes comes from changes in journey times and service frequencies between March and Wisbech, compared to the existing bus services. The analysis has assumed that fares between the towns would remain similar to the current bus fares. For the option with the direct service from Wisbech to Cambridge there is an additional benefit from not having to change at March. The rail industry standard forecasting procedure (PDFH v5 the Passenger Demand Forecasting Handbook) sets out service interval penalties (SIP) for different frequency levels. These represent a timeequivalent cost for the time spent waiting for services. There is also an interchange penalty, which is the time-equivalent cost of having to change between services. For simplicity the analysis has assumed that these SIPs and interchange penalties also apply to the current bus service. The sum of the journey time, the SIP and the interchange penalty is referred to as the generalised journey time (GJT) and it is the change in GJT that has been applied to the base rail travel time matrices. The changes assumed are set out in the Table 3.1 below. Table 3.1: GJT calculations for each option Base bus service Light rail shuttle service between Wisbech and March Heavy rail shuttle service between Wisbech and March (central scenario) Heavy rail service between Wisbech and Cambridge Busway between Wisbech and March Journey 30 mins 14 mins 12 mins 12 mins 12 mins time (Wisbech- March) Service 30 mins 60 mins 60 mins 60 mins 30 mins frequency SIP 23 mins 31 mins 31 mins 31 mins 23 mins In addition to the change in GJT from the table above, for the direct service to Cambridge the GJT has been reduced by a further 14.1 minutes 12 (the interchange penalty) to reflect the removal of the need to change trains at March. This was applied to trips between Wisbech and Ely/Cambridge only 13. The smallest geographical area at which WITA can operate is local authority districts (LADs). The PLANET model data in WITA is slightly coarser. For example, March and Wisbech are both in the PLANET zone 12 This is the weighted average of the full/reduced fare and season ticket values in PDFH for trips of 30 miles. 13 It has been assumed that the shuttle options would be timed to arrive at March for connection with the Cambridge service, so any interchange time savings from the direct service would be negligible. 21

34 Cambridgeshire North & West which comprises the Fenland and Huntingdonshire districts. The changes in GJTs calculated above were applied to travel within the Cambridgeshire North & West zone, as well as travel to and from the following zones: Peterborough Cambridgeshire East (includes Ely) Cambridge City and South Given the extent of the Cambridgeshire North & West zone, not all travellers within the zone will benefit from the change in GJT. The brief for the project estimates that 50,000 people could benefit from a rail connection between March and Wisbech. The population of the entire zone is about 265, It has therefore been assumed that 19% 15 of travellers in the zone will benefit. The analysis has assumed that all options would open to passengers in 2016 and have calculated benefits over the WebTAG standard 60 year appraisal period. Table 3.2 sets out the wider economic benefits calculated by WITA. The agglomeration benefits are split between four industrial sectors. Table 3.2: Wider economic benefits by option Light rail shuttle service between Wisbech and March Heavy rail shuttle service between Wisbech and March (central scenario) Heavy rail service between Wisbech and Cambridge Busway between Wisbech and March Agglomeration - manufacturing 0.3m 0.4m 0.5m 0.7m Agglomeration - construction 0.2m 0.3m 0.4m 0.5m Agglomeration - consumer services 1.0m 1.2m 1.5m 2.3m Agglomeration - producer services 4.6m 5.8m 7.0m 10.6m Agglomeration - Total 6.1m 7.7m 9.4m 14.1m Labour supply impact 1.3m 1.6m 2.0m 2.9m Total 7.4m 9.3m 11.4m 17.0m Source: WITA outputs prices discounted to 2010 It can be seen that the labour supply impact is much smaller than agglomeration. This is typical of wider impacts results; it is almost always the agglomeration benefit that dominates. Within agglomeration it is the producer services sector that has the most benefits, followed by consumer services. This is also typical and is a consequence of two main factors: (a) these are the two sectors with the highest level of employment and the highest levels of GDP in the base, and (b) GDP for producer services is much more sensitive than other sectors to changes in the level of agglomeration. 14 Combined populations of Fenland and Huntingdonshire from 2011 Census. 15 =50,000/265,000 22

35 As expected the light rail shuttle service has fewer benefits than the heavy rail shuttle due to the slightly longer journey time. The direct service to Cambridge provides more benefits than the heavy rail shuttle because it avoids the need to change services at March for passengers travelling on to Ely and Cambridge. The busway option has the highest benefits of all. It has the same journey time as the heavy rail shuttle, but the higher frequency leads to higher benefits. As far as the wider economic benefits are concerned, providing a higher frequency service is more beneficial than providing a direct service to Cambridge Noting the earlier assumption that shuttle services are assumed to be timed to arrive at March to connect with the onward services to Cambridge. 23

36 4 Labour market effects This section builds on the WITA analysis in Section 3 by providing further analysis of the potential labour market effects of the rail proposals and an assessment of option and non-use values. The WITA analysis focuses on how the productivity of existing workers alters as a consequence of the rail improvements as well as the welfare benefits of how lower commuting costs bring more people into employment (so called welfare benefits of labour supply). Both are estimated in a fairly aggregate manner. In addition to these effects the rail proposals would be expected to impact on the labour market by: Facilitating development that leads to an increase in equilibrium employment levels, and by implication a reduction in unemployment (reducing spatial inequalities). Giving workers access to new job opportunities which are better (and more well paid) than their existing job. By implication such jobs are more productive, and as a consequence this behaviour is sometimes termed a move to more productive jobs. In addition this section also explores option and non-use values. Option values are the values residents place on having access to opportunities both social and economic (e.g. jobs) - in case they need to use them at some point in the future. Non-use values represent the value a household may place on a transport service even if they never intend to use it (e.g. they may wish the service to be available for other people to use). The analysis in this section should be read in conjunction with Section 5 which analyses the secondary indirect effects from the rail proposals. One of the primary objectives of regeneration is the reduction of spatial inequalities - the reduction in the spatial variation in income and opportunities. The rail proposals can assist with such regeneration by creating employment in areas of high deprivation. Table 4.1 indicates the number of jobs that are expected to be created in Wisbech and March as a consequence of the rail investments and the trajectory of that creation, whilst Table 4.2 shows how many of those jobs will be created in high or relatively high areas of deprivation. This draws on the analysis in Section Table 4.1: Trajectory of job creation for central scenario (Heavy rail shuttle between Wisbech and March) Total Wisbech March Source: Mott MacDonald analysis in Section 5 Table 4.2: Job creation in areas with high and relatively high levels of deprivation, central scenarios (heavy rail shuttle between Wisbech and March) Level of deprivation Wisbech March Areas experiencing high deprivation (5th quintile) 68 0 Areas experiencing relatively high to high deprivation (4th quintile) 83 0 Total Source: Mott MacDonald 24

37 As can be seen from this table 151 jobs are expected to be created in or close to areas of high or relatively high deprivation. A survey of willingness to pay by government for job creation found that the public sector was on average willing to pay 27,800 for each net additional job that was created 17,18. It is possible to estimate the willingness to pay for the jobs created over the 60 year appraisal period with an opening year of 2016 through the following steps: The 27,800 government willingness to pay figure has to be adjusted to (a) the 2010 price and value base of the appraisal, (b) market prices (government perceives goods in factor prices); and (c) changes in willingness to pay preferences of the population. This gives a value per job of 51,083 (2010 market prices and values). This has been interpreted as a present value per job over the lifetime of the proposal (60 years), implying that willingness to pay per job is 1,300 per job (in 2010) rising to 3,996 (in 2069) (2010 market prices) 19. The profile of job creation is taken to be linear over each five year period in the trajectory (Table 4.1 and Table 4.4). For the central scenario (March-Wisbech heavy rail shuttle) the estimate of the willingness to pay by society for reducing spatial inequalities is 284,000 in 2031 once all the jobs have been created (2010 market prices, 2031 values). Over the 60-year appraisal period this gives a present value of 5.0 million (2010 prices and values) 20. Given the levels of employment generated are anticipated to be the same as the central scenario for the light rail and bus options these have the same benefit as the heavy rail shuttle between Wisbech and March. The higher expected levels of employment associated with the direct service to Cambridge give rise to higher benefit levels for this service option - as detailed in Table 4.3. These benefits are welfare benefits that are additional to the transport user benefits that form the backbone of a transport cost benefit analysis and the welfare benefits identified by the WITA analysis. It reflects the satisfaction and value that society places on poverty reduction. Table 4.3: Benefit from reducing spatial inequalities by option (60 year present value, 2010 prices and values) Light rail shuttle service between Wisbech and March Heavy rail shuttle service between Wisbech and March Heavy rail service between Wisbech and Cambridge Busway between Wisbech and March Reducing spatial inequalities 5.0m 5.0m 7.4m 5.0m Source: Mott MacDonald Alleviating unemployment along with reducing spatial inequalities is a primary aim of regeneration policies. The analysis in Section 5 calculates that the proposed options will create an additional 161 jobs in Wisbech and March. The focus here is whether these new jobs will firstly reduce levels of unemployment and if they do what will be the welfare benefit from reducing unemployment. 17 Here a job is full time equivalent and lasts for 10 years 18 English Partnerships (2003) Calculating cost per job. Best Practice Note 15. Issue date October Transport appraisal in the main assumes that variation in willingness to pay over time is proportional to income, and this has been assumed here. 20 Here it has been assumed that the areas of high deprivation would remain highly deprived over the full appraisal period (i.e. until 2075) in the Do Nothing counterfactual. It has also been assumed that the jobs created will be filled by people living in the deprived areas where the jobs are located. 25

38 Box 4.1: Unemployment rate assumptions The assumptions regarding the long term background unemployment rate are crucial to the analysis presented and the associated welfare benefit. In Section 2 (Table 2.5) the current levels of unemployment in Fenland were presented including the claimant count and the ILO definition, which is the official measure used by ONS and is measured in the UK by the Annual Population Survey (APS). In this section ILO estimates for March and Wisbech are used (given sub-district data does not exist) that are based on uplifting the Claimant Count measure for the two towns by the district uplift factor observed in the EEFM (Table 2.6). The EEFM ILO data for Fenland has been used given it provides a consistent rate over to analyse for Fenland and avoids the fluctuations in the APS data (which has a particularly high level in 2013 for Fenland that could skew the results). The EEFM forecast for ILO unemployment was also analysed to provide an indication of what might happen to unemployment over time in Fenland. The trajectory presented in Table 4.4 is based on examining this projection against historical trends for unemployment in Wisbech. This analysis provides reasonable assumptions about what is likely to happen to unemployment levels in Wisbech post Levels are likely to remain high given unemployment has consistently exceeded the district, country and regional levels and the town experiences significant levels of deprivation in a national context. Given unemployment levels did not come down significantly for both Fenland (using Claimant Count and APS data) and Wisbech (using Claimant Count data) during the boom period it is concluded that it is unlikely that the rate in the town will fall to historically low levels even if economic growth is anticipated to prevail over the coming two decades. Table 4.4 describes the unemployment rates observed and expected in Wisbech and March up until As can be seen, unemployment in Wisbech is currently high at 10.1% whilst it is much lower in March at 4.5%. High unemployment is expected to persist in Wisbech after 2031 with anticipated levels of 8.5%. The long term background unemployment rate is assumed to stay above 5% in Wisbech given the current level and nature of unemployment (see Box 4.1). Table 4.4: Expected unemployment rates and reductions in the number of unemployed in Wisbech and March, central scenario (Heavy Rail Shuttle between March and Wisbech) Wisbech March Jobs Attributed to Rail Expected unemployment rate Anticipated reduction in the number of unemployed (1) Jobs Attributed to Rail Expected unemployment rate % 4.5% % 4.5% Anticipated reduction in the number of unemployed (1) % 4.4% % % % % % % % % % % % % % % % % 0 26

39 % % % % % % % % % % % % % % % % 0 Source: Mott MacDonald Note: (1) When the unemployment rate exceeds 10% the net additional jobs created is expected to reduce unemployment by the number of jobs created. When the unemployment is frictional (the rate is <=5%) net additional jobs will not affect the level of unemployment. When the unemployment rate is between 5% and 10% a linear profiling between the previous two scenarios (no reduction in unemployment and 1:1 reduction in unemployment) is assumed. Of the 161 net additional jobs attributed to the rail enhancements, 151 are expected to be in Wisbech and 10 in March. With background unemployment rates as indicated in Table 4.4 it is expected that there will be a reduction in unemployment of 106 in 2031 and these are all located in Wisbech. There is not a full reduction in unemployment of 161 as job creation in areas where unemployment is frictional 21 do not have an impact on unemployment. The reduction in the number of unemployed is very sensitive to the anticipated unemployment rate in 2031 and onwards. If the rate from 2031 onwards falls below the frictional level of unemployment (approximately 5%) then the proposals will have no impact on unemployment levels from 2031 and onwards and effectively just reduce unemployment in the short term. This means that the welfare benefits associated with reducing unemployment are also very sensitive to the long term background unemployment rate. The high observed rates of unemployment are indicative of some form of market failure existing in the labour market such as skill mis-matches or an immobile workforce. In such situations a welfare benefit additional to transport user benefits occurs for any transport policy that reduces the level of unemployment. It is possible to estimate this welfare benefit. Taking the welfare benefit of bringing one involuntary unemployed person into employment in 2016 as 10,800 (2010 prices 2016 values) 22, and 14,400 in 2031 (2010 prices 2031 values) gives us a total benefit of just over 1.5 million in 2031 (2010 prices 2031 values) for the central scenario and a 60-year present value of 29.4 million (2010 prices and values). As discussed this benefit is very sensitive to the assumptions regarding the long run unemployment rate in Wisbech and March and as shown in Table 4.5 may effectively dissipate completely if unemployment in the long run becomes frictional (unemployment is less than 5%). Given the levels of employment generated are anticipated to be the same as the central scenario for the light rail and bus options these have the 21 Frictional unemployment is the time period between jobs when a worker is searching for, or transitioning from one job to another. It is sometimes called search unemployment and can be voluntary based on the circumstances of the unemployed individual (source: Wikipedia) 22 The welfare benefit of creating new employment is 10,800 (= 31,421 * 0.69 * 0.5). Where 31,421 is expected average wages in Fenland in 2016 (2010 prices), 0.69 is the market wage of new entrants to the labour market as a proportion of the average market wage of existing workers (source: Source: DfT 2014 wider impacts dataset v2.5), and 0.5 is the welfare benefit of creating employment as a proportion of the wage under conditions of involuntary unemployment (Source: BOARDMAN, A.E., D.H. GREENBERG, A.R. VINING and D.L. WEIMER Cost-Benefit Analysis Concepts and Practice. Fourth Edition. Upper Saddle River: New Jersey. pp ). 27

40 same benefit as the heavy rail shuttle between Wisbech and March. The higher expected levels of employment associated with the direct service to Cambridge give rise to higher benefit levels for this service option - as seen in Table 4.5. Table 4.5: Benefit from alleviating unemployment by option (60 year present value, 2010 prices and values) Long run unemployment (2031+) Main unemployment scenario Wisbech 8.5%, March 4.0% Alternative 1 unemployment scenario Wisbech 3.8%, March 3.0% Alternative 2 unemployment scenario Wisbech 6.0%, March 4.0% Light rail shuttle service between Wisbech and March Heavy rail shuttle service between Wisbech and March Heavy rail service between Wisbech and Cambridge Busway between Wisbech and March 29.4m 29.4m 43.8m 29.4m 0.2m 0.2m 0.3m 0.2m 8.6m 8.6m 12.8m 8.6m Source: Mott MacDonald The new jobs that have been created in Wisbech and March will either be additional to existing employment at a national level or will have displaced employment from elsewhere. For the employment that has been displaced a productivity gain/loss may occur to society as the productivity levels in Wisbech and March may differ from elsewhere in the UK. A productivity gain would occur if the locations from which the employment has been displaced are less productive than in Fenland, whilst a loss would occur if the productivity in Fenland is lower than the region from which the employment has been displaced. It has not been possible for this study to analyse neither where employment will be displaced from, nor what proportion of the additional employment is additional or displaced at a national level. However it is possible to estimate a worst case scenario by assuming all the employment is displaced from an average location in Britain. The DfT wider impacts guidance indicates that productivity per worker (after controlling for differences in occupation and industrial sector) is 6.56% lower in Fenland than the average level of productivity in the UK. This implies that the wages of the new workers in Fenland would be (on average) 6.56% lower than those of the workers they have displaced. From a welfare perspective this cost equals the loss in incometax revenue that this reduction in output represents. Using the DfT guidance this loss is estimated to be 195,000 in 2031 once all the jobs have been created. The 60 year present value is reduction in welfare of 4.0m. This is likely to be high as it is assumed all the jobs that have been created in Wisbech and March have been displaced from elsewhere in the UK at the average rate of productivity. Once again as the employment estimates are anticipated to be the same as the central scenario for the light rail and bus options these have the same dis-benefit as the heavy rail shuttle between Wisbech and March. The higher expected levels of employment associated with the direct service to Cambridge give rise to higher disbenefit levels for this service option. These benefits/dis-benefits are additional to the transport user benefits and the other benefits identified in the WITA analysis. 28

41 Table 4.6: Benefit from move to more/less productive jobs by option (60 year present value, 2010 prices and values) Light rail shuttle service between Wisbech and March Heavy rail shuttle service between Wisbech and March Heavy rail service between Wisbech and Cambridge Busway between Wisbech and March Move to more/less productive jobs - 4.0m - 4.0m - 5.9m - 4.0m Source: Mott MacDonald Option values are the values residents place on having access to opportunities both social and economic (e.g. jobs) - in case they need to use them at some point in the future. Thus they reflect the value that someone in Wisbech may place on having access to the Cambridge job market, not because they currently work there, but because they may wish to have the choice of working there at some point in the future. The non-use values represent the value a household may place on a transport service even if they never intend to use it (e.g. they may wish the service to be available for other people to use). Option values are always additional to transport user benefits in an appraisal, whilst only some non-use values (those with an altruistic motive) are additional to transport user benefits. There is very little data on option and non-use values but the DfT provides guidance on their incorporation into appraisal 23. Option and non-use values are only relevant in the context of services that provide viable commuting options to important centres of employment. Table 4.7 indicates that whilst long (>45 mins plus access/egress time) the commuting times to Cambridge and Peterborough are viable. Therefore the option and non-use values can be considered as attributable to the proposed rail services from Wisbech. The guidance also indicates that it is households that lie within a station catchment area that hold option values, and if the number of such households exceeds 1,000 then the option and non-use value impact is expected to be large. This indicates the number of households within the catchment area of the two alternative station locations. The town centre location is a lot more central and serves many more households than the alternative location of the station south of the A47. In both instances though the number of households affected is in the thousands. Table 4.7: Expected journey times by train and light rail to regional employment centres from Wisbech Heavy rail shuttle Light rail Direct service to Cambridge Wisbech Cambridge Wisbech Peterborough to to Wisbech to Kings Lynn 58 mins 48 mins (34 mins March to Cambridge + 14 mins Wisbech to (34 mins March to Cambridge + 14 mins March + 10 mins interchange) Wisbech to March) 44 mins (20mins March to Peterborough + 14 mins Wisbech to March + 10 mins interchange) 1hr 44 mins (1hr 20mins March to Kings Lynn + 14 mins Wisbech to March + 10 mins interchange) Source: Mott MacDonald 23 TAG Unit A4.1 Social Impact Appraisal 29

42 Table 4.8: Households within Wisbech station catchment area by station location. Existing station catchment (2km radius) Housing growth within catchment by 2031 Total housing affected Expected scale of impact Wisbech town centre station 9,043 3,500 12,543 Large Wisbech station south of A47 3,813 2,100 5,913 Large Source: OS address data and Mott MacDonald analysis in Section 5 The guidance indicates that the welfare benefit a household that has a bus service and gains a train service is 119 per household per year (2010 prices and values) 24. The evidence is too limited to distinguish between a train shuttle service that requires interchange (at March) to get to a major employment centre (e.g. Cambridge) and one that gives a direct service. Therefore the same option value has been attributed to both services. The guidance also indicates that unless there is a step change in the commuting opportunities by bus then no option and non-use value should be given. Whilst the proposed busway will increase journey speeds, commuting options between Wisbech and March by bus already exist. No option and non-use value associated with the busway has therefore been attributed. The guidance does not give an option value for light rail, so option and non-use values for the light rail option have not been calculated. The 60 year present values (2010 prices and values) for each of the rail station locations and for each option are presented in Table 4.9. These are, as can be seen, large. This to a certain extent reflects the fact that Wisbech is the largest settlement without direct access to the rail network. The valuation can be viewed as a monetisation of the social benefits that this link to the rail network will create. It is possible that these values represent an upper bound, as the option and non-use values in the DfT guidance stem from a study of the North Berwick to Edinburgh rail service (a service that offers shorter and therefore more viable commuting times), but a more robust valuation could only be undertaken with a specific study on option and non-use values in the area. Even if the real values are lower than in the guidance option values are likely to be significant given services with much poorer levels of service than are proposed here demonstrate significant option values 25. It is also the case that the housing growth predicted in Wisbech over the next 17 years has significantly increased the level of benefit, and to the extent that some of this growth may not occur then the benefits in Table 4.9 can also be considered high. However, our analysis also indicates that even without the housing growth the option and non-use value benefits would still be substantial (in excess of 41m for the town centre station). Although the values in Table 4.9 may be regarded as high they are a best estimate and considered broadly representative. Table 4.9: Benefit from option and non-use values by option (60 year present value, 2010 prices and values) Light rail shuttle service between Wisbech and March Heavy rail shuttle service between Wisbech and March Heavy rail service between Wisbech and Cambridge Busway between Wisbech and March Option and non-use value per household No guidance This is the difference between 249 and LAIRD, J.J.; GEURS, K.; NASH, C.A. (2009). Option and non-use values and rail appraisal. Transport Policy 16, pp

43 (2010 prices and values) Light rail shuttle service between Wisbech and March Heavy rail shuttle service between Wisbech and March Heavy rail service between Wisbech and Cambridge Busway between Wisbech and March Wisbech town centre station No guidance 41.52m 41.52m 0.0m Wisbech station south of A47 No guidance 19.28m 19.28m 0.0m The analysis presented has examined the potential impact on the labour market from the proposed rail service facilitating development that leads to an increase in the equilibrium employment levels and therefore a reduction in unemployment (reducing spatial inequalities) and through giving workers access to new job opportunities which are better than their existing work (termed a move to more productive jobs). In summary the combined impact of these labour market effects (excluding the option values and non-use values) is 30.4m over a 60 year horizon (in 2010 prices) for the central scenario and 45.3m for the direct service from Wisbech to Cambridge. The analysis is sensitive to assumptions over the long term rate of unemployment which is assumed to remain high in Wisbech given the current levels and associated deprivation issues. Additionally, the option value and non-use value analysis is significant, reflecting that Wisbech is the largest settlement without direct access to the rail network. It is not possible to evaluate these with certainty without a more in-depth study and besides even if they are lower than in the guidance they are likely to still be significant given services with much poorer levels of services than are proposed here demonstrate significant option values. These are higher if the rail station was built in Wisbech town centre given the larger catchment area (in terms of households). Even if the planned housing growth did not take place they would still be significant for the central scenario with the station located in the centre of Wisbech. 31

44 Table 4.10: Labour market effects summary of impacts, central option (60 year present value, 2010 prices and values) Reducing Unemployment (1) Increasing access to employment allows unemployed people to take up work which delivers welfare benefits to society from reduced inequalities Reducing Unemployment (2) Similarly, supporting the creation of jobs in, or close to, areas of disadvantage delivers welfare benefits from reduced unemployment. Move to More Productive Jobs Through allowing workers access to new job opportunities which are better (and higher paid) than their existing job leads to productivity gains as workers move to more productive jobs. Benefit for option and non-use values The value residents place on having access to opportunities both social and economic (e.g. jobs) - in case they need to use them at some point in the future (option values) and the value a household may place on a transport service even if they never intend to use it (non-use values). Central scenario: Heavy rail shuttle service between Wisbech and March 29.4m 5.0m - 4.0m 19.3m- 41.5m 32

45 5 Land utilisation benefits This section sets out the secondary indirect benefits that could emerge from the proposed rail service between March and Wisbech. This has involved assessing the economic context, planned housing and employment growth targets and key growth aspirations for March and Wisbech and undertaking qualitative research. Planning in March and Wisbech is governed by the Fenland Core Strategy 26 which sets out the local authority s plans for development, which the settlement profiles have been derived from. The overarching focus of the Core Strategy is to focus on growth and the conditions for growth in Fenland. The plan has been prepared to support development and the targets for development set out within it represent the minimum amount expected; in essence, the plan is pro-growth. The land utilisation analysis provides an assessment of the likely quantum of growth in March and Wisbech that can be potentially influenced by the rail service rather than precise calculation. Given this it is inherently difficult to differentiate casual links between the rail service and land utilisation across most of the scenarios. It has been assumed that the impacts are unlikely to differ substantially for the heavy rail (central scenario), the light rail/tram and busway options between March and Wisbech. However, for scenario 3, the direct service between Wisbech and Cambridge, it has been assumed that the causal link between the rail service and land utilisation could be higher given the potential of this route to open up the Cambridge (and even the London) job market for residents of Wisbech and the surrounding area. The Fenland Core Strategy identifies March as a Primary Market Town and at the top of the Fenland Settlement Hierarchy for location of new development. March s ongoing economic function as a centre of agricultural production is reflected in a number of food production businesses which are key employers in the town. As the administrative centre of the district it is home to the Council s offices and the Whitemoor Prison making the public sector an important local employer. Home to Network Rail s supply and infrastructure depot, March supports a variety of rail based jobs in freight, logistics and recycling. There is an opportunity to build on this existing strength to attract rail based engineering employment. While March s accessibility provides an opportunity to attract such higher value sectors, as well as ICT and creative sectors, this will be crucially dependent on efforts to increase skills. March is home to some pockets of relatively severe deprivation, including East March, which are characterised by a high incidence of worklessness and poor health. Although March benefits from a number of stable employers, its economic competitiveness and ability to attract new sectors is undermined by relatively low levels of educational attainment and skills. Policy CS4 of the Core Strategy aims to build 11,000 new homes in the district between 2011 and 2031 whilst a review of evidence revealed that there was a need to plan for a net increase in jobs of around 7,200 over the period Housing and employment land targets for March are as follows: 26 Fenland Local Plan Core Strategy, Submission Version, September

46 Table 5.1: Housing and employment land Core Strategy targets for March Area Housing provision % of Fenland district total Employment land targets % of Fenland district total March 4, ha 35.3 Source: Fenland District Council (2013) - Fenland Local Plan: Core Strategy Over the last ten years, the majority of Fenland housing completions (about 4,000 - or approximately 60%) were located in the four market towns of Wisbech, March, Chatteris and Whittlesey. These completions will have been through a combination of allocated sites, windfall developments and infill or replacement dwellings. Housing delivery performance and targets for March are set out in Table 5.2; the average completion (net gain) performance has been 125 dwellings per annum prior to 2013, though this is set to increase to a projected 210 dwellings (net gain) per annum for the Core Strategy period 2011/31. This increased target reflects the fact that March received the highest number and proportion of completions in Fenland between 2001/13. Table 5.2: Housing delivery performance and targets, 2001/2031 Settlement Completions (Net gains) ( ) % of Total Completions Settlement Hierarchy Total ( ) % of Settlement Hierarchy March 1, , Avg pa Source: Fenland District Council (2013): Housing Evidence Report March is identified in the Core Strategy as a main focus for housing, employment and retail growth. In line with this approach, new urban extensions to March will be supported in the following locations: South-east March (strategic allocation): this is expected to be predominantly residential (around 600 dwellings). South-west March (broad location for growth): this is expected to also be predominantly residential (around 500 dwellings) but also includes some business development in the southern part. West March (strategic allocation): this area will be predominantly residential (around 2,000 new dwellings) with potentially some business provision gaining access from the A141. Education provision will be necessary and local convenience shopping will need to be provided. March Trading Estate (broad location for growth): this area will be predominantly or entirely related to business uses. The key diagram for March from the Fenland Local Plan Core Strategy is presented in Figure 5.1 below. 34

47 Figure 5.1: Key diagram for March Source: Fenland Local Plan Core Strategy,

48 As with March, the Fenland Core Strategy identifies Wisbech as a Primary Market Town and at the top of the Fenland Settlement Hierarchy for location of new development. Although all of Fenland s settlements contain pockets of deprivation Wisbech is identified as the town with the greatest need for regeneration and where the benefits of growth could be most keenly felt. The delivery of new and improved social infrastructure will be vital in addressing health inequalities, improving skills and promoting community cohesion. While improving skills levels are vital in improving the town s competitiveness, unless there is an increase in the range of employment available, there will continue to be a skills leakage as skilled (and, indeed, unskilled) labour seeks opportunities elsewhere. There is a need for a greater variety of employment space to accommodate a range of new businesses in different sectors, in both town centre and out of town locations. Wisbech has a number of existing physical assets that can provide a catalyst for change. The town centre, although having suffered from steady decline, boasts an exceptional built heritage and a historic waterfront. There is also an important archaeological landscape within and around Wisbech. Combined with its location on the A47, this unique heritage already makes Wisbech a stopping point for tourists en route to the Norfolk coastline. There is an opportunity to capitalise more fully on the town s physical distinctiveness and attractive waterfront in order to lever greater tourist spend and boost the centre s vitality. The reuse of historic buildings can provide an attractive setting for high quality food/drink cultural, retail and visitor accommodation offer. The district boundary with Kings Lynn & West Norfolk Borough Council (KLWNBC) is close or adjacent to the north and east of the town. Development in these areas will be dependent on the continuation of joint working with KLWNBC, Cambridgeshire County Council and Norfolk County Council. Of particular importance in this regard is the need to ensure that development proposed for Wisbech in the KLWNBC Core Strategy successfully complements existing and/or new development proposed at Wisbech which falls within Fenland District area. Planning policies are the same as those for March, however, Policy CS4 of the Strategy details that an additional 550 houses are to be built on the edge of Wisbech in the KLWNBC area. Housing and employment land targets for Wisbech are set out in Table 5.3 below. Table 5.3: Area Housing and employment land Core Strategy targets for Wisbech Housing provision Wisbech 4,050 (3, in KLWNBC) % of total Fenland housing provision Employment land targets % of total Fenland employment provision ha 35.3 Source: Fenland District Council (2013): Fenland Local Plan: Core Strategy Housing delivery performance and targets for Wisbech are set out in Table 5.4; the average completion (net gain) performance has been 102 dwellings per annum prior to 2013, though this is set to increase to a projected 150 dwellings (net gain) per annum for the Core Strategy period 2011/31. This increased target 36

49 reflects the fact that Wisbech received the second highest number and proportion of completions in Fenland between 2001/13 (after March). Table 5.4: Locations for housing growth Settlement Completions (Net gains) ( ) % of Total Completions Settlement Hierarchy Total ( ) % of Settlement Hierarchy Wisbech 1, , Avg pa Source: Fenland District Council (2013): Housing Evidence Report The Core Strategy also contains a more detailed Proposals for Places section which sets out the Council s approach to development in the four market towns of Fenland. As with March, the Council states Wisbech is a main focus for housing, employment and retail growth. Box 6.1: Regionally significant food and drink sector There are a number of leading companies located in Wisbech, especially within food processing industries, such as Del Monte, Princes Foods, Moy Park, Greencore and Nestlé (Purina Petcare). The food and drink processing industry 1 accounts for 16.7% of total employment in Wisbech and accounts for 48% and 7% of the Cambridgeshire and East of England sector totals respectively. This is a significant concentration of economic activity not just for Fenland and the county but regionally and nationally also. Whilst regional levels of employment in the sector have fallen by over a third since 2003 the total level in Wisbech has remained relatively stable (although there was a significant contraction in 2012). The qualitative feedback we have received made it clear that the proposed rail service could support this vital industry moving forwards in terms of improving the attractiveness not just of Wisbech to potential employees but also as a location for future investment (in existing and new sites). The potential for the rail service to link on to Stansted Airport was cited as a key benefit for many manufacturing plants when senior executives are visiting and considering future investment locations. Food and drink industry employee totals, Source: BRES ONS 37

50 In terms of new urban extensions, the following areas in Wisbech will be supported, see Figure 5.2 for the Wisbech key diagram: East Wisbech (strategic allocation): this area is proposed to be of a predominantly residential nature. Indicatively 900 dwellings could come forward in the Fenland area and 550 dwellings in the KLWNBC area. South Wisbech (broad location for growth): this area will be predominantly for business purposes, though there is some potential for residential development in the eastern half. West Wisbech (broad location for growth): this area will provide a high quality living environment and be predominantly open space and residential although there may be some opportunities for business use. Nene Waterfront and Port (broad location for growth): the continued development of this area is key to the regeneration of the won. The southernmost part of the area (Nene Parade) will include sites around the Boathouse and be a mix of residential (around 300 new homes), leisure and retail uses. To the north of this, the area (Crab Marsh) will be predominantly for business uses with sites along the river frontage retained for marine and port related activities. To help drive forward the renaissance of Wisbech and to assist the integration of the urban extensions into the town, the Council and its partners will prepare and then keep an up-to-date town strategy currently known as the Wisbech 2020 vision. Box 6.2: Wisbech key development projects There are also a number of key development projects within Wisbech that are the focus of the 2020 vision and aim to diversify and grow the economic base. These include: The College of West Anglia which is planning to develop a new teaching centre for a range of curriculum ideas that will open in summer 2015 and a new engineering technology centre with facilities for motorsport, mechanical engineering, welding, motor vehicle, plumbing and electrical installation. The Nene Quay waterfront development both the housing and employment land developments around the Dock area. The proposal to locate an Agri-technology Centre, as part of the UK s Agri-Tech Industrial Strategy, in Wisbech which will link with the College of West Anglia and provide cutting edge scientific research into next generation farming techniques. The development of the Cromwell Road site with anchor tenant Tesco and a new high-tech cinema. 38

51 Figure 5.2: Key diagram for Wisbech Source: Fenland Local Plan Core Strategy,